UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-03691
LORD ABBETT MID cap stock FUND, INC.
(Exact name of Registrant as specified in charter)
90 Hudson Street, Jersey City, NJ 07302
(Address of principal executive offices) (Zip code)
John T. Fitzgerald, Esq., Vice President & Assistant Secretary
90 Hudson Street, Jersey City, NJ 07302
(Name and address of agent for service)
Registrant’s telephone number, including area code:(888) 522-2388
Date of fiscal year end: 12/31
Date of reporting period: 12/31/2019
| Item 1: | Report(s) to Shareholders. |
LORD ABBETT
ANNUAL REPORT
Lord Abbett
Mid Cap Stock Fund
For the fiscal year ended December 31, 2019
Important Information on Paperless Delivery
Beginning in February 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer, investment advisor or bank. Instead, the reports will be made available on Lord Abbett’s website and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Shareholders who hold accounts directly with the Fund may elect to receive shareholder reports and other communications from the Fund electronically by signing into your Lord Abbett online account at lordabbett.com and selecting “Log In.” For further information, you may also contact the Fund at (800) 821-5129. Shareholders who hold accounts through a financial intermediary should contact them directly.
You may elect to receive all future reports in paper free of charge by contacting the Fund at (800) 821-5129. Your election to receive reports in paper will apply to all funds held with Lord Abbett. If your fund shares are held through a financial intermediary please contact them directly. Your election applies to all funds held with that intermediary.
Table of Contents
Lord Abbett Mid Cap Stock Fund
Annual Report
For the fiscal year ended December 31, 2019
From left to right: James L.L. Tullis, Independent Chairman of the Lord Abbett Funds and Douglas B. Sieg, Director, President, and Chief Executive Officer of the Lord Abbett Funds.
Dear Shareholders:We are pleased to provide you with this overview of the performance of Lord Abbett Mid Cap Stock Fund for the fiscal year ended December 31, 2019. On this page and the following pages, we discuss the major factors that influenced fiscal year performance. For additional information about the Fund, please visit our website at www.lordabbett.com, where you also can access quarterly commentaries that provide updates on the Fund’s performance and other portfolio related updates.
Thank you for investing in Lord Abbett mutual funds. We value the trust that you place in us and look forward to serving your investment needs in the years to come.
Best regards,
Douglas B. Sieg
Director, President, and Chief Executive Officer
For the fiscal year ended December 31, 2019, the Fund returned 22.91%, reflecting performance at the net asset value (NAV) of Class A shares with all distributions reinvested, compared to its benchmark, the Russell Midcap® Value Index1, which returned 27.06% over the same period.
Domestic equity returns were positive over the past year, with large cap stocks, as represented by the S&P 500® Index,2rising 31.49% during the period, while small cap stocks, as represented by the Russell 2000® Index,3were up 25.52%. Following a tumultuous fourth quarter of 2018, where trade tensions and monetary policy
uncertainty sent many investors toward safety, the market staged a strong recovery. After the worst December since 1931, the S&P 500 posted its best January performance since 1987. Trade tensions continued to dominate headlines, as trade negotiations between the U.S. and China remained volatile throughout the period. Since the beginning of 2019, both the U.S. and China have imposed tariffs of roughly $550 billion and $185 billion on each country’s products, respectively. One of the more notable shifts over the year was the U.S. Federal Reserve’s (the “Fed”) transition to a more dovish policy stance, with
1
Chairman Jerome Powell stating that the Fed would act appropriately to sustain economic growth. Given an uncertain market outlook and muted inflation pressures, the Fed announced its decision to cut interest rates by 25 basis points on July 31, 2019 to a range of 2.00-2.25%. This was the first time that the Fed had cut interest rates since December 2008. The Fed followed that decision with two more 25 basis point rate cuts in September and October, citing “implications of global developments for the economic outlook as well as muted inflation pressures”. After the October rate cut, Fed Chairman Powell signaled a likely pause on future rate cuts. The combination of a dovish Fed, trade pressures, and slowing economic growth resulted in falling rates across the U.S. Treasury yield curve. In fact, in July, the yield on the 10-year U.S. Treasury fell to its lowest level since 2016. Bond yields continued to fall, and in August, the spread between the U.S. 10-year Treasury and the 2-year Treasury temporarily inverted. In September, a large rotation from growth stocks into value took place and continued through November. Geopolitics also contributed to market volatility. Following a coordinated drone strike on Saudi Arabia in the third quarter, Brent crude oil prices increased 20% in one trading session. Despite the record increase, oil prices retracted their gains within weeks. Investor sentiment was buoyed in November as the market grew optimistic about the possibility of a “Phase One” trade deal between the U.S. and China, which was
ultimately reached in December. The agreement included structural reforms to China’s trade regime in areas such as intellectual property and agriculture, as well as a commitment from China to make additional purchases of U.S. goods and services moving forward. In return, the U.S. would not proceed with tariffs that were scheduled to go into effect in December on nearly $160 billion worth of Chinese goods and would cut the tariff rate imposed on September 1, 2019 on $120 billion worth of Chinese goods from 15% to 7.5%.
Over the period, the Fund’s holding of Conduent, Inc., a business process services provider, was the largest detractor from relative performance. The firm’s stock price dropped precipitously after CEO Ashok Vemuri announced his intention to step down. The announcement came after litigation issues with the state of Texas. Foot Locker, Inc., an athletic shoes and apparel retailer, also detracted from relative performance. Shares of Foot Locker traded down 16% following the company’s first quarter earnings release. Both revenue and earnings came in lower than the market expected and management lowered fiscal year guidance. PG&E Corp., an electricity and natural gas company, also detracted from relative performance. PG&E’s stock price fell as the company prepared to file for bankruptcy in an attempt to dismiss the liability charges stemming from wildfires in 2017 and 2018.
Over the period, the Fund’s holding of Oneok, Inc., a company that processes, transports, and stores natural gas,
2
contributed most to relative performance. Shares of Oneok rose after the company announced the completion of the Elk Creek Pipeline project, which investors anticipate will strengthen the company’s position in the high production Montana to Kansas region. Graphic Packaging Holding Corp., a paper-based packaging solutions provider, also contributed to relative performance. Shares of Graphic Packaging increased as the firm continued to exhibit strong execution on productivity and cost strategies throughout the year. More specifically, the firm reported third quarter earnings per share that topped market
expectations. The Western Union Company also contributed to relative performance. Shares of the payment services company increased following a positive Investors’ Day, where the company announced a three-year outlook as well as a new platform strategy, which investors anticipate will increase the company’s total addressable market.
The Fund’s portfolio is actively managed and, therefore, its holdings and the weightings of a particular issuer or particular sector as a percentage of portfolio assets are subject to change. Sectors may include many industries.
1 The Russell Midcap®Value Index measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000® Value index.
2 The S&P 500®Index is widely regarded as the standard for measuring large cap U.S. stock market performance and includes a representative sample of leading companies in leading industries.
3 The Russell 2000®Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents approximately 10% of the total market capitalization of the Russell 3000® Index.
Unless otherwise specified, indexes reflect total return, with all dividends reinvested. Indexes are unmanaged, do not reflect the deduction of fees or expenses, and are not available for direct investment.
Important Performance and Other Information
Performance data quoted in the following pages reflect past performance and are no guarantee of future results. Current performance may be higher or lower than the performance quoted. 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. You can obtain performance data current to the most recent month end by calling Lord Abbett at 888-522-2388 or referring to www.lordabbett.com.
The annual commentary above discusses the views of the Fund’s management and various portfolio holdings of the Fund as of December 31, 2019. These views and portfolio holdings may have changed after this date. Information provided in the commentary is not a recommendation to buy or sell securities. Because the Fund’s portfolio is actively managed and may change significantly, the Fund may no longer own the securities described above or may have otherwise changed its position in the securities. For more recent information about the Fund’s portfolio holdings, please visit www.lordabbett.com.
A Note about Risk:See Notes to Financial Statements for a discussion of investment risks. For a more detailed discussion of the risks associated with the Fund, please see the Fund’s prospectus.
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.
3
Investment Comparison
Below is a comparison of a $10,000 investment in Class A shares with the same investment in the Russell Midcap® Value Index and the S&P MidCap 400® Value Index, assuming reinvestment of all dividends and distributions. The performance of the other classes will be greater than or less than the performance shown in the graph below due to different sales loads and expenses applicable to such classes. The graph and performance table below do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.Past performance is no guarantee of future results.
Average Annual Total Returns at Maximum Applicable
Sales Charge for the Periods Ended December 31, 2019 |
| | | | | | | | | | |
| | | 1 Year | | 5 Years | | 10 Years | | Life of Class |
| Class A3 | | 15.86% | | 3.57% | | 9.12% | | – | |
| Class C4 | | 21.04% | | 4.02% | | 9.00% | | – | |
| Class F5 | | 23.14% | | 4.97% | | 9.99% | | – | |
| Class F36 | | 23.36% | | – | | – | | 3.88% | |
| Class I5 | | 23.26% | | 5.07% | | 10.09% | | – | |
| Class P5 | | 22.69% | | 4.61% | | 9.65% | | – | |
| Class R25 | | 22.46% | | 4.43% | | 9.43% | | – | |
| Class R35 | | 22.65% | | 4.57% | | 9.56% | | – | |
| Class R47 | | 22.96% | | – | | – | | 4.86% | |
| Class R57 | | 23.22% | | – | | – | | 5.10% | |
| Class R67 | | 23.32% | | – | | – | | 5.21% | |
1 Reflects the deduction of the maximum initial sales charge of 5.75%.
2 Performance of each unmanaged index does not reflect any fees or expenses. The performance of each index is not necessarily representative of the Fund’s performance.
3 Total return, which is the percentage change in net asset value, after deduction of the maximum initial sales charge of 5.75% applicable to Class A shares, with all dividends and distributions reinvested for the periods shown ended December 31, 2019, is calculated using the SEC-required uniform method to compute such return.
4 The 1% CDSC for Class C shares normally applies before the first anniversary of the purchase date. Performance for other periods is at net asset value.
5 Performance is at net asset value.
6 Commenced operations and performance for the Class began on April 4, 2017. Performance is at net asset value.
7 Commenced operations and performance for the Class began on June 30, 2015. Performance is at net asset value.
4
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments (these charges vary among the share classes); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees (these charges vary among the share classes); and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2019 through December 31, 2019).
Actual Expenses
For each class of the Fund, the first line of the table on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled “Expenses Paid During Period 7/1/19 – 12/31/19” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
For each class of the Fund, the second line of the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
5
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | Beginning
Account
Value | | Ending
Account
Value | | Expenses
Paid During
Period† | |
| | | 7/1/19 | | 12/31/19 | | 7/1/19 -
12/31/19 | |
| Class A | | | | | | | |
| Actual | | $1,000.00 | | $1,068.80 | | $5.21 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.16 | | $5.09 | |
| Class C | | | | | | | |
| Actual | | $1,000.00 | | $1,064.70 | | $9.11 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,016.38 | | $8.89 | |
| Class F | | | | | | | |
| Actual | | $1,000.00 | | $1,069.60 | | $4.43 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.92 | | $4.33 | |
| Class F3 | | | | | | | |
| Actual | | $1,000.00 | | $1,070.40 | | $3.50 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,021.83 | | $3.41 | |
| Class I | | | | | | | |
| Actual | | $1,000.00 | | $1,070.20 | | $3.91 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,021.42 | | $3.82 | |
| Class P | | | | | | | |
| Actual | | $1,000.00 | | $1,068.00 | | $6.25 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,019.16 | | $6.11 | |
| Class R2 | | | | | | | |
| Actual | | $1,000.00 | | $1,066.90 | | $7.03 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,018.40 | | $6.87 | |
| Class R3 | | | | | | | |
| Actual | | $1,000.00 | | $1,067.60 | | $6.51 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,018.90 | | $6.36 | |
| Class R4 | | | | | | | |
| Actual | | $1,000.00 | | $1,068.80 | | $5.21 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,020.16 | | $5.09 | |
| Class R5 | | | | | | | |
| Actual | | $1,000.00 | | $1,070.30 | | $3.91 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,021.42 | | $3.82 | |
| Class R6 | | | | | | | |
| Actual | | $1,000.00 | | $1,070.50 | | $3.50 | |
| Hypothetical (5% Return Before Expenses) | | $1,000.00 | | $1,021.83 | | $3.41 | |
| † | For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (1.00% for Class A, 1.75% for Class C, 0.85% for Class F, 0.67% for Class F3, 0.75% for Class I, 1.20% for Class P, 1.35% for Class R2, 1.25% for Class R3, 1.00% for Class R4, 0.75% for Class R5 and 0.67% for Class R6) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
6
Portfolio Holdings Presented by Sector
December 31, 2019
| Sector* | | %** | |
| Communication Services | | 2.02 | % | |
| Consumer Discretionary | | 9.87 | % | |
| Consumer Staples | | 4.01 | % | |
| Energy | | 6.35 | % | |
| Financials | | 18.24 | % | |
| Health Care | | 8.03 | % | |
| Industrials | | 13.88 | % | |
| Information Technology | | 9.16 | % | |
| Materials | | 6.95 | % | |
| Real Estate | | 9.85 | % | |
| Utilities | | 11.25 | % | |
| Repurchase Agreement | | 0.39 | % | |
| Total | | 100.00 | % | |
| * | | A sector may comprise several industries. |
| ** | | Represents percent of total investments. |
7
Schedule of Investments
December 31, 2019
| Investments | | Shares | | | Fair
Value
(000) | |
| LONG-TERM INVESTMENTS 99.70% | |
| | | | | | | | | |
| COMMON STOCKS 98.71% | |
| | | | | | | | | |
| Auto Components 1.57% | |
| Lear Corp. | | | 197,600 | | | $ | 27,111 | |
| | | | | | | | | |
| Banks 6.57% | | | | | | | | |
| BankUnited, Inc. | | | 697,618 | | | | 25,505 | |
| CIT Group, Inc. | | | 415,284 | | | | 18,949 | |
| Citizens Financial Group, Inc. | | | 583,100 | | | | 23,680 | |
| East West Bancorp, Inc. | | | 486,900 | | | | 23,712 | |
| Sterling Bancorp | | | 1,017,336 | | | | 21,446 | |
| Total | | | | | | | 113,292 | |
| | | | | | | | | |
| Building Products 1.54% | | | | | | | | |
| A.O. Smith Corp. | | | 557,834 | | | | 26,575 | |
| | | | | | | | | |
| Capital Markets 3.66% | | | | | | | | |
| Ares Capital Corp. | | | 1,306,100 | | | | 24,359 | |
| Brightsphere Investment Group, Inc.* | | | 803,164 | | | | 8,208 | |
| E*TRADE Financial Corp. | | | 675,000 | | | | 30,625 | |
| Total | | | | | | | 63,192 | |
| | | | | | | | | |
| Chemicals 3.18% | | | | | | | | |
| Axalta Coating Systems Ltd.* | | | 422,831 | | | | 12,854 | |
| Corteva, Inc.* | | | 831,206 | | | | 24,571 | |
| PPG Industries, Inc. | | | 130,003 | | | | 17,354 | |
| Total | | | | | | | 54,779 | |
| | | | | | | | | |
| Communications Equipment 0.74% | |
| F5 Networks, Inc.* | | | 91,455 | | | | 12,772 | |
| | | | | | | | | |
| Construction & Engineering 1.45% | |
| EMCOR Group, Inc. | | | 290,883 | | | | 25,103 | |
| | | | | | | | | |
| Containers & Packaging 1.56% | |
| Graphic Packaging Holding Co. | | | 1,620,864 | | | | 26,987 | |
| | | | | | | | | |
| Electric: Utilities 7.13% | | | | | | | | |
| Edison International | | | 353,900 | | | | 26,688 | |
| Entergy Corp. | | | 202,574 | | | | 24,268 | |
| Evergy, Inc. | | | 460,216 | | | | 29,955 | |
| Investments | | Shares | | | Fair
Value
(000) | |
| FirstEnergy Corp. | | | 617,059 | | | $ | 29,989 | |
| Portland General Electric Co. | | | 215,267 | | | | 12,010 | |
| Total | | | | | | | 122,910 | |
| | | | | | | | | |
| Electrical Equipment 2.75% | | | | | | | | |
| Acuity Brands, Inc. | | | 157,931 | | | | 21,794 | |
| Hubbell, Inc. | | | 173,298 | | | | 25,617 | |
| Total | | | | | | | 47,411 | |
| | | | | | | | | |
| Electronic Equipment, Instruments & Components 1.51% | |
| Avnet, Inc. | | | 612,839 | | | | 26,009 | |
| | | | | | | | | |
| Energy Equipment & Services 1.14% | |
| National Oilwell Varco, Inc. | | | 783,300 | | | | 19,622 | |
| | | | | | | | | |
| Equity Real Estate Investment Trusts 9.86% | |
| Alexandria Real Estate Equities, Inc. | | | 190,411 | | | | 30,767 | |
| Camden Property Trust | | | 237,200 | | | | 25,167 | |
| Duke Realty Corp. | | | 837,599 | | | | 29,039 | |
| Healthcare Trust of America, Inc. Class A | | | 750,234 | | | | 22,717 | |
| Highwoods Properties, Inc. | | | 372,300 | | | | 18,209 | |
| UDR, Inc. | | | 544,368 | | | | 25,422 | |
| Weingarten Realty Investors | | | 599,700 | | | | 18,735 | |
| Total | | | | | | | 170,056 | |
| | | | | | | | | |
| Food & Staples Retailing 1.00% | |
| Sprouts Farmers Market, Inc.* | | | 890,700 | | | | 17,235 | |
| | | | | | | | | |
| Food Products 2.04% | | | | | | | | |
| General Mills, Inc. | | | 375,600 | | | | 20,117 | |
| J.M. Smucker Co. (The) | | | 145,300 | | | | 15,130 | |
| Total | | | | | | | 35,247 | |
| | | | | | | | | |
| Health Care Equipment & Supplies 1.31% | |
| Zimmer Biomet Holdings, Inc. | | | 151,200 | | | | 22,632 | |
| | | | | | | | | |
| Health Care Providers & Services 6.73% | |
| AmerisourceBergen Corp. | | | 196,300 | | | | 16,689 | |
| Centene Corp.* | | | 477,168 | | | | 29,999 | |
| Humana, Inc. | | | 44,000 | | | | 16,127 | |
| 8 | See Notes to Financial Statements. |
Schedule of Investments (continued)
December 31, 2019
| Investments | | Shares | | | Fair
Value
(000) | |
| Health Care Providers & Services (continued) | |
| Laboratory Corp. of America Holdings* | | | 74,000 | | | $ | 12,519 | |
| Quest Diagnostics, Inc. | | | 121,100 | | | | 12,932 | |
| Universal Health Services, Inc. Class B | | | 193,849 | | | | 27,810 | |
| Total | | | | | | | 116,076 | |
| | | | | | | | | |
| Household Products 0.97% | | | | | | | | |
| Clorox Co. (The) | | | 109,300 | | | | 16,782 | |
| | | | | | | | | |
| Industrial Conglomerates 1.26% | | | | | | | | |
| Carlisle Cos., Inc. | | | 134,152 | | | | 21,711 | |
| | | | | | | | | |
| Information Technology Services 2.68% | |
| Amdocs Ltd. | | | 243,042 | | | | 17,545 | |
| Western Union Co. (The) | | | 1,071,322 | | | | 28,690 | |
| Total | | | | | | | 46,235 | |
| | | | | | | | | |
| Insurance 8.03% | | | | | | | | |
| Argo Group International Holdings Ltd. | | | 242,156 | | | | 15,922 | |
| Axis Capital Holdings Ltd. | | | 429,100 | | | | 25,505 | |
| Everest Re Group Ltd. | | | 77,800 | | | | 21,538 | |
| Hanover Insurance Group, Inc. (The) | | | 120,047 | | | | 16,407 | |
| Hartford Financial Services Group, Inc. (The) | | | 541,532 | | | | 32,909 | |
| RenaissanceRe Holdings Ltd. | | | 133,471 | | | | 26,163 | |
| Total | | | | | | | 138,444 | |
| | | | | | | | | |
| Internet & Direct Marketing Retail 1.52% | |
| eBay, Inc. | | | 726,400 | | | | 26,230 | |
| | | | | | | | | |
| Leisure Products 1.50% | | | | | | | | |
| Brunswick Corp. | | | 430,400 | | | | 25,815 | |
| | | | | | | | | |
| Machinery 5.16% | | | | | | | | |
| Cummins, Inc. | | | 162,400 | | | | 29,063 | |
| Stanley Black & Decker, Inc. | | | 192,783 | | | | 31,952 | |
| Westinghouse Air Brake Technologies Corp. | | | 360,754 | | | | 28,067 | |
| Total | | | | | | | 89,082 | |
| Investments | | Shares | | | Fair
Value
(000) | |
| Media 2.02% | | | | | | | | |
| Interpublic Group of Cos., Inc. (The) | | | 390,443 | | | $ | 9,020 | |
| Nexstar Media Group, Inc. Class A | | | 84,888 | | | | 9,953 | |
| Omnicom Group, Inc. | | | 196,300 | | | | 15,904 | |
| Total | | | | | | | 34,877 | |
| | | | | | | | | |
| Metals & Mining 2.22% | | | | | | | | |
| Lundin Mining Corp.(a) | | CAD | 4,183,743 | | | | 25,001 | |
| Nucor Corp. | | | 235,000 | | | | 13,226 | |
| Total | | | | | | | 38,227 | |
| | | | | | | | | |
| Multi-Utilities 3.15% | | | | | | | | |
| CMS Energy Corp. | | | 480,191 | | | | 30,175 | |
| Consolidated Edison, Inc. | | | 266,387 | | | | 24,100 | |
| Total | | | | | | | 54,275 | |
| | | | | | | | | |
| Oil, Gas & Consumable Fuels 5.22% | |
| Marathon Petroleum Corp. | | | 255,773 | | | | 15,410 | |
| Noble Energy, Inc. | | | 1,206,804 | | | | 29,977 | |
| ONEOK, Inc. | | | 305,085 | | | | 23,086 | |
| Parsley Energy, Inc. Class A | | | 1,137,500 | | | | 21,510 | |
| Total | | | | | | | 89,983 | |
| | | | | | | | | |
| Road & Rail 1.72% | | | | | | | | |
| Landstar System, Inc. | | | 261,100 | | | | 29,732 | |
| | | | | | | | | |
| Semiconductors & Semiconductor Equipment 2.76% | |
| Marvell Technology Group Ltd. | | | 634,494 | | | | 16,852 | |
| Teradyne, Inc. | | | 451,501 | | | | 30,788 | |
| Total | | | | | | | 47,640 | |
| | | | | | | | | |
| Software 1.47% | | | | | | | | |
| Cadence Design Systems, Inc.* | | | 124,476 | | | | 8,634 | |
| Synopsys, Inc.* | | | 120,475 | | | | 16,770 | |
| Total | | | | | | | 25,404 | |
| | See Notes to Financial Statements. | 9 |
Schedule of Investments (concluded)
December 31, 2019
| Investments | | Shares | | | Fair
Value
(000) | |
| Specialty Retail 3.69% | | | | | | | | |
| Foot Locker, Inc. | | | 582,585 | | | $ | 22,715 | |
| Ross Stores, Inc. | | | 220,556 | | | | 25,677 | |
| Urban Outfitters, Inc.* | | | 552,773 | | | | 15,351 | |
| Total | | | | | | | 63,743 | |
| | | | | | | | | |
| Textiles, Apparel & Luxury Goods 1.60% | |
| Columbia Sportswear Co. | | | 274,700 | | | | 27,522 | |
Total Common Stocks
(cost $1,545,090,140) | | | | | | $ | 1,702,711 | |
| | | | | | | | | |
| | | Principal
Amount
(000) | | | | | |
| CORPORATE BONDS 0.99% | | | | | | | | |
| | | | | | | | | |
| Electric: Utilities | | | | | | | | |
Pacific Gas & Electric Co.(b)(c)
(cost $17,657,991) | | $ | 16,215 | | | | 17,015 | |
Total Long-Term Investments
(cost $1,562,748,131) | | | | | | $ | 1,719,726 | |
| Investments | | Principal
Amount
(000) | | | Fair
Value
(000) | |
| SHORT-TERM INVESTMENT 0.39% | |
| | | | | | | | | |
| Repurchase Agreement | | | | | | | | |
Repurchase Agreement dated 12/31/2019, 0.85% due 1/2/2020 with Fixed Income Clearing Corp. collateralized by $6,640,000 of U.S. Treasury Note at 2.75% due 8/15/2021; value: $6,829,260; proceeds: $6,690,862
(cost $6,690,546) | | $ | 6,691 | | | $ | 6,691 | |
Total Investments in Securities 100.09%
(cost $1,569,438,677) | | | | | | | 1,726,417 | |
| Liabilities in Excess of Cash, and Other Assets (0.09)% | | | | | | | (1,499 | ) |
| Net Assets 100.00% | | | | | | $ | 1,724,918 | |
| CAD | | Canadian dollar. |
| * | | Non-income producing security. |
| (a) | | Investment in non-U.S. dollar denominated securities. |
| (b) | | Defaulted (non-income producing security). |
| (c) | | The security has an interest rate of 6.05% with a maturity of 03/01/2034. |
The following is a summary of the inputs used as of December 31, 2019 in valuing the Fund’s investments carried at fair value(1):
| Investment Type(2) | | Level 1
(000) | | | Level 2
(000) | | | Level 3
(000) | | | Total
(000) | |
| Long-Term Investments | | | | | | | | | | | | | | | | |
| Common Stocks | | $ | 1,702,711 | | | $ | – | | | $ | – | | | $ | 1,702,711 | |
| Corporate Bonds | | | – | | | | 17,015 | | | | – | | | | 17,015 | |
| Short-Term Investment | | | | | | | | | | | | | | | | |
| Repurchase Agreement | | | – | | | | 6,691 | | | | – | | | | 6,691 | |
| Total | | $ | 1,702,711 | | | $ | 23,706 | | | $ | – | | | $ | 1,726,417 | |
| (1) | | Refer to Note 2(h) for a description of fair value measurements and the three-tier hierarchy of inputs. |
| (2) | | See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. |
| 10 | See Notes to Financial Statements. |
Statement of Assets and Liabilities
December 31, 2019
| ASSETS: | | | | |
| Investments in securities, at fair value (cost $1,569,438,677) | | $ | 1,726,416,700 | |
| Cash | | | 27 | |
| Receivables: | | | | |
| Investment securities sold | | | 2,306,429 | |
| Interest and dividends | | | 1,783,376 | |
| Capital shares sold | | | 756,299 | |
| Prepaid expenses and other assets | | | 10,816 | |
| Total assets | | | 1,731,273,647 | |
| LIABILITIES: | | | | |
| Payables: | | | | |
| Capital shares reacquired | | | 2,744,464 | |
| 12b-1 distribution plan | | | 910,794 | |
| Investment securities purchased | | | 811,238 | |
| Management fee | | | 808,904 | |
| Directors’ fees | | | 646,347 | |
| Fund administration | | | 58,258 | |
| Accrued expenses | | | 375,518 | |
| Total liabilities | | | 6,355,523 | |
| Commitments and contingent liabilities | | | | |
| NET ASSETS | | $ | 1,724,918,124 | |
| COMPOSITION OF NET ASSETS: | | | | |
| Paid-in capital | | $ | 1,594,941,275 | |
| Total distributable earnings (loss) | | | 129,976,849 | |
| Net Assets | | $ | 1,724,918,124 | |
| | See Notes to Financial Statements. | 11 |
Statement of Assets and Liabilities (concluded)
December 31, 2019
| Net assets by class: | | | |
| Class A Shares | | $ | 978,196,606 | |
| Class C Shares | | $ | 54,897,205 | |
| Class F Shares | | $ | 146,125,045 | |
| Class F3 Shares | | $ | 23,827,740 | |
| Class I Shares | | $ | 407,722,967 | |
| Class P Shares | | $ | 39,511,471 | |
| Class R2 Shares | | $ | 2,509,660 | |
| Class R3 Shares | | $ | 26,023,987 | |
| Class R4 Shares | | $ | 18,203,490 | |
| Class R5 Shares | | $ | 3,951,203 | |
| Class R6 Shares | | $ | 23,948,750 | |
| Outstanding shares by class: | | | | |
| Class A Shares (1.18 billion shares of common stock authorized, $.001 par value) | | | 34,209,622 | |
| Class C Shares (200 million shares of common stock authorized, $.001 par value) | | | 2,073,686 | |
| Class F Shares (472.5 million shares of common stock authorized, $.001 par value) | | | 5,156,225 | |
| Class F3 Shares (472.5 million shares of common stock authorized, $.001 par value) | | | 837,139 | |
| Class I Shares (472.5 million shares of common stock authorized, $.001 par value) | | | 14,390,496 | |
| Class P Shares (200 million shares of common stock authorized, $.001 par value) | | | 1,428,100 | |
| Class R2 Shares (200 million shares of common stock authorized, $.001 par value) | | | 89,109 | |
| Class R3 Shares (381.6 million shares of common stock authorized, $.001 par value) | | | 918,910 | |
| Class R4 Shares (381.6 million shares of common stock authorized, $.001 par value) | | | 638,779 | |
| Class R5 Shares (381.6 million shares of common stock authorized, $.001 par value) | | | 139,507 | |
| Class R6 Shares (381.6 million shares of common stock authorized, $.001 par value) | | | 841,676 | |
Net asset value, offering and redemption price per share
(Net assets divided by outstanding shares): | | | | |
| Class A Shares-Net asset value | | | $28.59 | |
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) | | | $30.33 | |
| Class C Shares-Net asset value | | | $26.47 | |
| Class F Shares-Net asset value | | | $28.34 | |
| Class F3 Shares-Net asset value | | | $28.46 | |
| Class I Shares-Net asset value | | | $28.33 | |
| Class P Shares-Net asset value | | | $27.67 | |
| Class R2 Shares-Net asset value | | | $28.16 | |
| Class R3 Shares-Net asset value | | | $28.32 | |
| Class R4 Shares-Net asset value | | | $28.50 | |
| Class R5 Shares-Net asset value | | | $28.32 | |
| Class R6 Shares-Net asset value | | | $28.45 | |
| 12 | See Notes to Financial Statements. |
Statement of Operations
For the Year Ended December 31, 2019
| Investment income: | | | |
| Dividends (net of foreign withholding taxes of $108,430) | | $ | 36,995,150 | |
| Interest | | | 163,819 | |
| Total investment income | | | 37,158,969 | |
| Expenses: | | | | |
| Management fee | | | 9,893,168 | |
| 12b-1 distribution plan-Class A | | | 2,455,297 | |
| 12b-1 distribution plan-Class C | | | 559,835 | |
| 12b-1 distribution plan-Class F | | | 144,783 | |
| 12b-1 distribution plan-Class P | | | 194,010 | |
| 12b-1 distribution plan-Class R2 | | | 45,718 | |
| 12b-1 distribution plan-Class R3 | | | 131,041 | |
| 12b-1 distribution plan-Class R4 | | | 43,376 | |
| Shareholder servicing | | | 1,594,685 | |
| Fund administration | | | 715,453 | |
| Registration | | | 226,086 | |
| Professional | | | 98,199 | |
| Reports to shareholders | | | 71,718 | |
| Directors’ fees | | | 53,680 | |
| Other | | | 481,594 | |
| Gross expenses | | | 16,708,643 | |
| Expense reductions (See Note 8) | | | (43,989 | ) |
| Net expenses | | | 16,664,654 | |
| Net investment income | | | 20,494,315 | |
| Net realized and unrealized gain: | | | | |
| Net realized gain on investments | | | 63,417,842 | |
| Net realized gain on foreign currency related transactions | | | 238 | |
| Net change in unrealized appreciation/depreciation on investments | | | 229,777,226 | |
| Net realized and unrealized gain | | | 293,195,306 | |
| Net Increase in Net Assets Resulting From Operations | | $ | 313,689,621 | |
| | See Notes to Financial Statements. | 13 |
Statements of Changes in Net Assets
| INCREASE (DECREASE) IN NET ASSETS | | For the Year Ended
December 31, 2019 | | | For the Year Ended
December 31, 2018 | |
| Operations: | | | | | | |
| Net investment income | | $ | 20,494,315 | | | $ | 14,537,711 | |
| Net realized gain on investments and foreign currency related transactions | | | 63,418,080 | | | | 65,768,990 | |
| Net change in unrealized appreciation/depreciation on investments | | | 229,777,226 | | | | (314,849,569 | ) |
| Net increase (decrease) in net assets resulting from operations | | | 313,689,621 | | | | (234,542,868 | ) |
| Distributions to shareholders: | | | | | | | | |
| Class A | | | (30,486,342 | ) | | | (54,545,424 | ) |
| Class C | | | (1,477,383 | ) | | | (1,628,142 | ) |
| Class F | | | (4,846,408 | ) | | | (6,222,664 | ) |
| Class F3 | | | (803,694 | ) | | | (1,255,112 | ) |
| Class I | | | (13,985,736 | ) | | | (16,222,251 | ) |
| Class P | | | (1,198,874 | ) | | | (2,642,091 | ) |
| Class R2 | | | (59,699 | ) | | | (712,298 | ) |
| Class R3 | | | (750,772 | ) | | | (1,238,468 | ) |
| Class R4 | | | (565,397 | ) | | | (774,992 | ) |
| Class R5 | | | (132,960 | ) | | | (27,410 | ) |
| Class R6 | | | (826,820 | ) | | | (1,057,104 | ) |
| Total distributions to shareholders | | | (55,134,085 | ) | | | (86,325,956 | ) |
| Capital share transactions (Net of share conversions) (See Note 14): | | | | | |
| Net proceeds from sales of shares | | | 86,792,867 | | | | 108,334,448 | |
| Net proceeds from reorganizations (See Note 15) | | | 646,764,945 | | | | – | |
| Reinvestment of distributions | | | 50,479,551 | | | | 77,406,047 | |
| Cost of shares reacquired | | | (689,172,319 | ) | | | (493,016,502 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | 94,865,044 | | | | (307,276,007 | ) |
| Net increase (decrease) in net assets | | | 353,420,580 | | | | (628,144,831 | ) |
| NET ASSETS: | | | | | | | | |
| Beginning of year | | $ | 1,371,497,544 | | | $ | 1,999,642,375 | |
| End of year | | $ | 1,724,918,124 | | | $ | 1,371,497,544 | |
| 14 | See Notes to Financial Statements. |
This page is intentionally left blank.
Financial Highlights
| | | | | Per Share Operating Performance: |
| | | | | Investment operations: | | Distributions to
shareholders from: |
| | | Net asset
value,
beginning
of period | | Net
invest-
ment
income
(loss)(a) | | Net
realized
and
unrealized
gain (loss) | | Total
from
invest-
ment
oper-
ations | | Net
investment
income | | Net
realized
gain | | Total
distri-
butions |
| Class A | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | $ | 24.01 | | | $ | 0.30 | | | $ | 5.19 | | | $ | 5.49 | | | $ | (0.25 | ) | | $ | (0.66 | ) | | $ | (0.91 | ) |
| 12/31/2018 | | | 29.90 | | | | 0.25 | | | | (4.56 | ) | | | (4.31 | ) | | | (0.26 | ) | | | (1.32 | ) | | | (1.58 | ) |
| 12/31/2017 | | | 28.69 | | | | 0.23 | | | | 1.78 | | | | 2.01 | | | | (0.27 | ) | | | (0.53 | ) | | | (0.80 | ) |
| 12/31/2016 | | | 24.75 | | | | 0.18 | | | | 3.93 | | | | 4.11 | | | | (0.17 | ) | | | – | | | | (0.17 | ) |
| 12/31/2015 | | | 25.87 | | | | 0.19 | | | | (1.11 | ) | | | (0.92 | ) | | | (0.20 | ) | | | – | | | | (0.20 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class C | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | | 22.29 | | | | 0.09 | | | | 4.81 | | | | 4.90 | | | | (0.06 | ) | | | (0.66 | ) | | | (0.72 | ) |
| 12/31/2018 | | | 27.80 | | | | (0.03 | ) | | | (4.16 | ) | | | (4.19 | ) | | | – | (c) | | | (1.32 | ) | | | (1.32 | ) |
| 12/31/2017 | | | 26.69 | | | | – | (c) | | | 1.66 | | | | 1.66 | | | | (0.02 | ) | | | (0.53 | ) | | | (0.55 | ) |
| 12/31/2016 | | | 23.07 | | | | (0.01 | ) | | | 3.63 | | | | 3.62 | | | | – | (c) | | | – | | | | – | |
| 12/31/2015 | | | 24.11 | | | | – | (c) | | | (1.03 | ) | | | (1.03 | ) | | | (0.01 | ) | | | – | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class F | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | | 23.80 | | | | 0.34 | | | | 5.16 | | | | 5.50 | | | | (0.30 | ) | | | (0.66 | ) | | | (0.96 | ) |
| 12/31/2018 | | | 29.65 | | | | 0.29 | | | | (4.52 | ) | | | (4.23 | ) | | | (0.30 | ) | | | (1.32 | ) | | | (1.62 | ) |
| 12/31/2017 | | | 28.45 | | | | 0.27 | | | | 1.77 | | | | 2.04 | | | | (0.31 | ) | | | (0.53 | ) | | | (0.84 | ) |
| 12/31/2016 | | | 24.55 | | | | 0.22 | | | | 3.90 | | | | 4.12 | | | | (0.22 | ) | | | – | | | | (0.22 | ) |
| 12/31/2015 | | | 25.67 | | | | 0.23 | | | | (1.11 | ) | | | (0.88 | ) | | | (0.24 | ) | | | – | | | | (0.24 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class F3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | | 23.88 | | | | 0.39 | | | | 5.18 | | | | 5.57 | | | | (0.33 | ) | | | (0.66 | ) | | | (0.99 | ) |
| 12/31/2018 | | | 29.74 | | | | 0.35 | | | | (4.55 | ) | | | (4.20 | ) | | | (0.34 | ) | | | (1.32 | ) | | | (1.66 | ) |
| 4/4/2017 to 12/31/2017(d) | | | 29.19 | | | | 0.30 | | | | 1.13 | | | | 1.43 | | | | (0.35 | ) | | | (0.53 | ) | | | (0.88 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class I | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | | 23.79 | | | | 0.37 | | | | 5.16 | | | | 5.53 | | | | (0.33 | ) | | | (0.66 | ) | | | (0.99 | ) |
| 12/31/2018 | | | 29.66 | | | | 0.30 | | | | (4.52 | ) | | | (4.22 | ) | | | (0.33 | ) | | | (1.32 | ) | | | (1.65 | ) |
| 12/31/2017 | | | 28.47 | | | | 0.30 | | | | 1.77 | | | | 2.07 | | | | (0.35 | ) | | | (0.53 | ) | | | (0.88 | ) |
| 12/31/2016 | | | 24.57 | | | | 0.24 | | | | 3.90 | | | | 4.14 | | | | (0.24 | ) | | | – | | | | (0.24 | ) |
| 12/31/2015 | | | 25.68 | | | | 0.26 | | | | (1.11 | ) | | | (0.85 | ) | | | (0.26 | ) | | | – | | | | (0.26 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class P | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | | 23.25 | | | | 0.23 | | | | 5.04 | | | | 5.27 | | | | (0.19 | ) | | | (0.66 | ) | | | (0.85 | ) |
| 12/31/2018 | | | 28.99 | | | | 0.18 | | | | (4.41 | ) | | | (4.23 | ) | | | (0.19 | ) | | | (1.32 | ) | | | (1.51 | ) |
| 12/31/2017 | | | 27.83 | | | | 0.16 | | | | 1.74 | | | | 1.90 | | | | (0.21 | ) | | | (0.53 | ) | | | (0.74 | ) |
| 12/31/2016 | | | 24.02 | | | | 0.12 | | | | 3.81 | | | | 3.93 | | | | (0.12 | ) | | | – | | | | (0.12 | ) |
| 12/31/2015 | | | 25.10 | | | | 0.14 | | | | (1.07 | ) | | | (0.93 | ) | | | (0.15 | ) | | | – | | | | (0.15 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class R2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | | 23.54 | | | | 0.18 | | | | 5.10 | | | | 5.28 | | | | – | (c) | | | (0.66 | ) | | | (0.66 | ) |
| 12/31/2018 | | | 29.40 | | | | 0.15 | | | | (4.48 | ) | | | (4.33 | ) | | | (0.21 | ) | | | (1.32 | ) | | | (1.53 | ) |
| 12/31/2017 | | | 28.29 | | | | 0.15 | | | | 1.73 | | | | 1.88 | | | | (0.24 | ) | | | (0.53 | ) | | | (0.77 | ) |
| 12/31/2016 | | | 24.44 | | | | 0.09 | | | | 3.86 | | | | 3.95 | | | | (0.10 | ) | | | – | | | | (0.10 | ) |
| 12/31/2015 | | | 25.49 | | | | 0.09 | | | | (1.08 | ) | | | (0.99 | ) | | | (0.06 | ) | | | – | | | | (0.06 | ) |
| 16 | See Notes to Financial Statements. |
| | | | | Ratios to Average Net Assets: | | Supplemental Data: |
| | | | | | | |
Net
asset
value,
end of
period | | Total
return(b)
(%) | | Total
expenses
(%) | | Net
investment
income
(loss)
(%) | | Net
assets, end
of period
(000) | | Portfolio
turnover
rate
(%) |
| | | | | | | | | | | |
| $ | 28.59 | | | | 22.91 | | | | 0.98 | | | | 1.08 | | | $ | 978,197 | | | | 69 | |
| | 24.01 | | | | (14.54 | ) | | | 0.98 | | | | 0.85 | | | | 872,864 | | | | 47 | |
| | 29.90 | | | | 7.03 | | | | 0.95 | | | | 0.77 | | | | 1,091,071 | | | | 67 | |
| | 28.69 | | | | 16.61 | | | | 1.01 | | | | 0.69 | | | | 1,157,503 | | | | 69 | |
| | 24.75 | | | | (3.55 | ) | | | 1.01 | | | | 0.74 | | | | 1,138,632 | | | | 63 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 26.47 | | | | 22.04 | | | | 1.73 | | | | 0.36 | | | | 54,897 | | | | 69 | |
| | 22.29 | | | | (15.20 | ) | | | 1.73 | | | | (0.11 | ) | | | 28,694 | | | | 47 | |
| | 27.80 | | | | 6.25 | | | | 1.69 | | | | – | (c) | | | 142,724 | | | | 67 | |
| | 26.69 | | | | 15.70 | | | | 1.75 | | | | (0.06 | ) | | | 196,441 | | | | 69 | |
| | 23.07 | | | | (4.27 | ) | | | 1.75 | | | | (0.01 | ) | | | 199,956 | | | | 63 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 28.34 | | | | 23.14 | | | | 0.83 | | | | 1.25 | | | | 146,125 | | | | 69 | |
| | 23.80 | | | | (14.38 | ) | | | 0.83 | | | | 0.99 | | | | 96,500 | | | | 47 | |
| | 29.65 | | | | 7.20 | | | | 0.80 | | | | 0.91 | | | | 123,997 | | | | 67 | |
| | 28.45 | | | | 16.77 | | | | 0.86 | | | | 0.85 | | | | 144,220 | | | | 69 | |
| | 24.55 | | | | (3.41 | ) | | | 0.86 | | | | 0.90 | | | | 116,935 | | | | 63 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 28.46 | | | | 23.36 | | | | 0.66 | | | | 1.42 | | | | 23,828 | | | | 69 | |
| | 23.88 | | | | (14.25 | ) | | | 0.64 | | | | 1.19 | | | | 19,137 | | | | 47 | |
| | 29.74 | | | | 4.94 | (e) | | | 0.63 | (f) | | | 1.35 | (f) | | | 21,007 | | | | 67 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 28.33 | | | | 23.26 | | | | 0.73 | | | | 1.36 | | | | 407,723 | | | | 69 | |
| | 23.79 | | | | (14.34 | ) | | | 0.73 | | | | 1.04 | | | | 249,326 | | | | 47 | |
| | 29.66 | | | | 7.29 | | | | 0.70 | | | | 1.01 | | | | 484,925 | | | | 67 | |
| | 28.47 | | | | 16.90 | | | | 0.76 | | | | 0.95 | | | | 687,856 | | | | 69 | |
| | 24.57 | | | | (3.31 | ) | | | 0.76 | | | | 1.00 | | | | 604,278 | | | | 63 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 27.67 | | | | 22.69 | | | | 1.19 | | | | 0.88 | | | | 39,511 | | | | 69 | |
| | 23.25 | | | | (14.71 | ) | | | 1.18 | | | | 0.63 | | | | 43,079 | | | | 47 | |
| | 28.99 | | | | 6.84 | | | | 1.15 | | | | 0.56 | | | | 63,371 | | | | 67 | |
| | 27.83 | | | | 16.35 | | | | 1.21 | | | | 0.48 | | | | 73,204 | | | | 69 | |
| | 24.02 | | | | (3.68 | ) | | | 1.15 | | | | 0.57 | | | | 78,293 | | | | 63 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 28.16 | | | | 22.46 | | | | 1.33 | | | | 0.70 | | | | 2,510 | | | | 69 | |
| | 23.54 | | | | (14.84 | ) | | | 1.33 | | | | 0.51 | | | | 11,616 | | | | 47 | |
| | 29.40 | | | | 6.68 | | | | 1.29 | | | | 0.50 | | | | 8,068 | | | | 67 | |
| | 28.29 | | | | 16.20 | | | | 1.35 | | | | 0.35 | | | | 1,097 | | | | 69 | |
| | 24.44 | | | | (3.92 | ) | | | 1.36 | | | | 0.35 | | | | 966 | | | | 63 | |
| | See Notes to Financial Statements. | 17 |
Financial Highlights (concluded)
| | | | | Per Share Operating Performance: |
| | | | | Investment operations: | | Distributions to
shareholders from: |
| | | Net asset
value,
beginning
of period | | Net
invest-
ment
income
(loss)(a) | | Net
realized
and
unrealized
gain (loss) | | Total
from
invest-
ment
oper-
ations | | Net
investment
income | | Net
realized
gain | Total
distri-
butions |
| Class R3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | $ | 23.78 | | | $ | 0.23 | | | $ | 5.15 | | | $ | 5.38 | | | $ | (0.18 | ) | | $ | (0.66 | ) | | $ | (0.84 | ) |
| 12/31/2018 | | | 29.58 | | | | 0.17 | | | | (4.47 | ) | | | (4.30 | ) | | | (0.18 | ) | | | (1.32 | ) | | | (1.50 | ) |
| 12/31/2017 | | | 28.39 | | | | 0.16 | | | | 1.75 | | | | 1.91 | | | | (0.19 | ) | | | (0.53 | ) | | | (0.72 | ) |
| 12/31/2016 | | | 24.51 | | | | 0.11 | | | | 3.88 | | | | 3.99 | | | | (0.11 | ) | | | – | | | | (0.11 | ) |
| 12/31/2015 | | | 25.61 | | | | 0.13 | | | | (1.10 | ) | | | (0.97 | ) | | | (0.13 | ) | | | – | | | | (0.13 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class R4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | | 23.93 | | | | 0.30 | | | | 5.19 | | | | 5.49 | | | | (0.26 | ) | | | (0.66 | ) | | | (0.92 | ) |
| 12/31/2018 | | | 29.79 | | | | 0.24 | | | | (4.54 | ) | | | (4.30 | ) | | | (0.24 | ) | | | (1.32 | ) | | | (1.56 | ) |
| 12/31/2017 | | | 28.59 | | | | 0.23 | | | | 1.78 | | | | 2.01 | | | | (0.28 | ) | | | (0.53 | ) | | | (0.81 | ) |
| 12/31/2016 | | | 24.72 | | | | 0.37 | | | | 3.74 | | | | 4.11 | | | | (0.24 | ) | | | – | | | | (0.24 | ) |
| 6/30/2015 to 12/31/2015(g) | | | 26.44 | | | | 0.15 | | | | (1.64 | ) | | | (1.49 | ) | | | (0.23 | ) | | | – | | | | (0.23 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class R5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | | 23.79 | | | | 0.38 | | | | 5.14 | | | | 5.52 | | | | (0.33 | ) | | | (0.66 | ) | | | (0.99 | ) |
| 12/31/2018 | | | 29.66 | | | | 0.34 | | | | (4.56 | ) | | | (4.22 | ) | | | (0.33 | ) | | | (1.32 | ) | | | (1.65 | ) |
| 12/31/2017 | | | 28.47 | | | | 0.31 | | | | 1.76 | | | | 2.07 | | | | (0.35 | ) | | | (0.53 | ) | | | (0.88 | ) |
| 12/31/2016 | | | 24.57 | | | | 0.28 | | | | 3.86 | | | | 4.14 | | | | (0.24 | ) | | | – | | | | (0.24 | ) |
| 6/30/2015 to 12/31/2015(g) | | | 26.28 | | | | 0.18 | | | | (1.63 | ) | | | (1.45 | ) | | | (0.26 | ) | | | – | | | | (0.26 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class R6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/31/2019 | | | 23.88 | | | | 0.39 | | | | 5.17 | | | | 5.56 | | | | (0.33 | ) | | | (0.66 | ) | | | (0.99 | ) |
| 12/31/2018 | | | 29.74 | | | | 0.36 | | | | (4.56 | ) | | | (4.20 | ) | | | (0.34 | ) | | | (1.32 | ) | | | (1.66 | ) |
| 12/31/2017 | | | 28.52 | | | | 0.36 | | | | 1.74 | | | | 2.10 | | | | (0.35 | ) | | | (0.53 | ) | | | (0.88 | ) |
| 12/31/2016 | | | 24.58 | | | | 0.28 | | | | 3.91 | | | | 4.19 | | | | (0.25 | ) | | | – | | | | (0.25 | ) |
| 6/30/2015 to 12/31/2015(g) | | | 26.28 | | | | 0.20 | | | | (1.63 | ) | | | (1.43 | ) | | | (0.27 | ) | | | – | | | | (0.27 | ) |
| (a) | Calculated using average shares outstanding during the period. |
| (b) | Total return for Classes A and C does not consider the effects of sales loads and assumes the reinvestment of all distributions. Total return for all other classes assumes the reinvestment of all distributions. |
| (c) | Amount less than $0.01. |
| (d) | Commenced on April 4, 2017. |
| (e) | Not annualized. |
| (f) | Annualized. |
| (g) | Commenced on June 30, 2015. |
| 18 | See Notes to Financial Statements. |
| | | | | Ratios to Average Net Assets: | | Supplemental Data: |
| | | | | | | |
Net
asset
value,
end of
period | | Total
return(b)
(%) | | Total
expenses
(%) | | Net
investment
income
(loss)
(%) | | Net
assets, end
of period
(000) | | Portfolio
turnover
rate
(%) |
| | | | | | | | | | | | | | | | | | | | | | | |
| $ | 28.32 | | | | 22.65 | | | | 1.23 | | | | 0.84 | | | $ | 26,024 | | | | 69 | |
| | 23.78 | | | | (14.66 | ) | | | 1.23 | | | | 0.59 | | | | 20,815 | | | | 47 | |
| | 29.58 | | | | 6.76 | | | | 1.18 | | | | 0.53 | | | | 30,343 | | | | 67 | |
| | 28.39 | | | | 16.29 | | | | 1.25 | | | | 0.45 | | | | 37,228 | | | | 69 | |
| | 24.51 | | | | (3.77 | ) | | | 1.24 | | | | 0.51 | | | | 30,030 | | | | 63 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 28.50 | | | | 22.96 | | | | 0.98 | | | | 1.09 | | | | 18,203 | | | | 69 | |
| | 23.93 | | | | (14.54 | ) | | | 0.98 | | | | 0.83 | | | | 12,678 | | | | 47 | |
| | 29.79 | | | | 7.04 | | | | 0.95 | | | | 0.78 | | | | 21,071 | | | | 67 | |
| | 28.59 | | | | 16.61 | | | | 0.97 | | | | 1.30 | | | | 9,430 | | | | 69 | |
| | 24.72 | | | | (5.61 | )(e) | | | 1.01 | (f) | | | 1.17 | (f) | | | 9 | | | | 63 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 28.32 | | | | 23.22 | | | | 0.73 | | | | 1.38 | | | | 3,951 | | | | 69 | |
| | 23.79 | | | | (14.33 | ) | | | 0.73 | | | | 1.17 | | | | 424 | | | | 47 | |
| | 29.66 | | | | 7.30 | | | | 0.70 | | | | 1.05 | | | | 100 | | | | 67 | |
| | 28.47 | | | | 16.86 | | | | 0.74 | | | | 1.05 | | | | 69 | | | | 69 | |
| | 24.57 | | | | (5.48 | )(e) | | | 0.76 | (f) | | | 1.42 | (f) | | | 9 | | | | 63 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 28.45 | | | | 23.32 | | | | 0.66 | | | | 1.42 | | | | 23,949 | | | | 69 | |
| | 23.88 | | | | (14.25 | ) | | | 0.64 | | | | 1.22 | | | | 16,363 | | | | 47 | |
| | 29.74 | | | | 7.40 | | | | 0.62 | | | | 1.21 | | | | 11,878 | | | | 67 | |
| | 28.52 | | | | 17.03 | | | | 0.63 | | | | 1.06 | | | | 895 | | | | 69 | |
| | 24.58 | | | | (5.43 | )(e) | | | 0.63 | (f) | | | 1.56 | (f) | | | 26 | | | | 63 | |
| | See Notes to Financial Statements. | 19 |
Notes to Financial Statements
Lord Abbett Mid Cap Stock Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company and was incorporated under Maryland law on March 14, 1983.
The Fund’s investment objective is to seek capital appreciation through investments, primarily in equity securities, which are believed to be undervalued in the marketplace. The Fund has eleven active classes of shares: Class A, C, F, F3, I, P, R2, R3, R4, R5 and R6, each with different expenses and dividends. A front-end sales charge is normally added to the net asset value (“NAV”) for Class A shares. There is no front-end sales charge in the case of Class C, F, F3, I, P, R2, R3, R4, R5 and R6 shares, although there may be a contingent deferred sales charge (“CDSC”) in certain cases as follows: Class A shares purchased without a sales charge and redeemed before the first day of the month in which the one-year anniversary of the purchase falls (subject to certain exceptions as set forth in the Fund’s prospectus); and Class C shares redeemed before the first anniversary of purchase. Class C shares will convert automatically into Class A shares on the 25thday of the month (or, if the 25thday is not a business day, the next business day thereafter) following the tenth anniversary of the month on which the purchase order was accepted. The Fund’s Class P shares are closed to substantially all new investors, with certain exceptions as set forth in the Fund’s prospectus. On February 22, 2019, the Fund acquired the net assets of Lord Abbett Calibrated Mid Cap Value Fund (“Calibrated Mid Cap Value Fund”). Refer to Note 15 Reorganization for additional information.
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
| (a) | Investment Valuation–Under procedures approved by the Fund’s Board of Directors (the “Board”), Lord, Abbett & Co. LLC (“Lord Abbett”), the Fund’s investment manager, has formed a Pricing Committee to administer the pricing and valuation of portfolio investments and to ensure that prices utilized reasonably reflect fair value. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value. |
| | |
| | Securities actively traded on any recognized U.S. or non-U.S. exchange or on The NASDAQ Stock Market LLC are valued at the last sale price or official closing price on the exchange or system on which they are principally traded. Events occurring after the close of trading on non-U.S. exchanges may result in adjustments to the valuation of foreign securities to reflect their fair value as of the close of regular trading on the New York Stock Exchange. The Fund may utilize an independent fair valuation service in adjusting the valuations of foreign securities. Unlisted equity securities are valued at the last quoted sale price or, if no sale price is available, at the mean between the most recently quoted bid and asked prices. Fixed income securities are valued based on evaluated prices supplied by independent pricing services, which reflect broker/dealer supplied valuations and the independent pricing services’ own electronic data processing techniques. |
20
Notes to Financial Statements (continued)
| | Securities for which prices are not readily available are valued at fair value as determined by the Pricing Committee. The Pricing Committee considers a number of factors, including observable and unobservable inputs, when arriving at fair value. The Pricing Committee may use related or comparable assets or liabilities, recent transactions, market multiples, book values and other relevant information to determine the fair value of portfolio investments. The Board or a designated committee thereof regularly reviews fair value determinations made by the Pricing Committee and may employ techniques such as reviewing related market activity, reviewing inputs and assumptions, and retrospectively comparing prices of subsequent purchases and sales transactions to fair value determinations made by the Pricing Committee. |
| | |
| | Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates fair value. |
| | |
| (b) | Security Transactions–Security transactions are recorded as of the date that the securities are purchased or sold (trade date). Realized gains and losses on sales of portfolio securities are calculated using the identified-cost method. Realized and unrealized gains (losses) are allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. |
| | |
| (c) | Investment Income–Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis as earned. Discounts are accreted and premiums are amortized using the effective interest method and are included in Interest on the Statement of Operations. Withholding taxes on foreign dividends have been provided for in accordance with the applicable country’s tax rules and rates. Investment income is allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. |
| | |
| (d) | Income Taxes–It is the policy of the Fund to meet the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all taxable income and capital gains to its shareholders. Therefore, no income tax provision is required. |
| | |
| | The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s filed U.S. federal tax returns remains open for the fiscal years ended December 31, 2016 through December 31, 2019. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. |
| | |
| (e) | Expenses–Expenses, excluding class-specific expenses, are allocated to each class of shares based upon the relative proportion of net assets at the beginning of the day. Class A, C, F, P, R2, R3, and R4 shares bear their class-specific share of all expenses and fees relating to the Fund’s 12b-1 Distribution Plan. |
| | |
| (f) | Foreign Transactions–The books and records of the Fund are maintained in U.S. dollars and transactions denominated in foreign currencies are recorded in the Fund’s records at the rate prevailing when earned or recorded. Asset and liability accounts that are denominated in foreign currencies are adjusted daily to reflect current exchange rates and any unrealized gain (loss), if applicable, is included in Net change in unrealized appreciation/depreciation on translation of assets and liabilities denominated in foreign currencies in the Fund’s Statement of Operations. The resultant exchange gains and losses upon settlement of such transactions are included in Net realized gain (loss), if applicable, on foreign currency related transactions in the Fund’s Statement of Operations. The Fund does not isolate that portion of the results of |
21
Notes to Financial Statements (continued)
| | operations arising as a result of changes in the foreign exchange rates from the changes in market prices of the securities. |
| | |
| | The Fund uses foreign currency exchange contracts to facilitate transactions in foreign denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts’ terms. |
| | |
| (g) | Repurchase Agreements–The Fund may enter into repurchase agreements with respect to securities. A repurchase agreement is a transaction in which a fund acquires a security and simultaneously commits to resell that security to the seller (a bank or securities dealer) at an agreed-upon price on an agreed-upon date. The Fund requires at all times that the repurchase agreement be collateralized by cash, or by securities of the U.S. Government, its agencies, its instrumentalities, or U.S. Government sponsored enterprises having a value equal to, or in excess of, the value of the repurchase agreement (including accrued interest). If the seller of the agreement defaults on its obligation to repurchase the underlying securities at a time when the fair value of these securities has declined, the Fund may incur a loss upon disposition of the securities. |
| | |
| (h) | Fair Value Measurements–Fair value is defined as the price that the Fund would receive upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk—for example, the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The three-tier hierarchy classification is determined based on the lowest level of inputs that is significant to the fair value measurement, and is summarized in the three broad Levels listed below: |
| | • | Level 1 – | unadjusted quoted prices in active markets for identical investments; |
| | | | |
| | • | Level 2 – | other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.); and |
| | | | |
| | • | Level 3 – | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
| | A summary of inputs used in valuing the Fund’s investments as of December 31, 2019 and, if applicable, Level 3 rollforwards for the fiscal year then ended is included in the Fund’s Schedule of Investments. |
| | |
| | Changes in valuation techniques may result in transfers into or out of an assigned level within the three-tier hierarchy. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. |
22
Notes to Financial Statements (continued)
| 3. | MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES |
Management Fee
The Fund has a management agreement with Lord Abbett, pursuant to which Lord Abbett supplies the Fund with investment management services and executive and other personnel, provides office space and pays for ordinary and necessary office and clerical expenses relating to research and statistical work and supervision of the Fund’s investment portfolio.
The Fund has a management fee is based on the Fund’s average daily net assets at the following annual rate:
| First $200 million | .75% |
| Next $300 million | .65% |
| Over $500 million | .50% |
For the fiscal year ended December 31, 2019, the effective management fee was at an annualized rate of .55% of the Fund’s average daily net assets.
In addition, Lord Abbett provides certain administrative services to the Fund pursuant to an Administrative Services Agreement in return for a fee at an annual rate of .04% of the Fund’s average daily net assets.
12b-1 Distribution Plan
The Fund has adopted a distribution plan with respect to Class A, C, F, P, R2, R3 and R4 shares pursuant to Rule 12b-1 under the Act, which provides for the payment of ongoing distribution and service fees to Lord Abbett Distributor LLC (the “Distributor”), an affiliate of Lord Abbett. The following annual rates have been authorized by the Board pursuant to the plan:
| Fees* | | Class A | | Class C | | Class F(1) | | Class P | | Class R2 | | Class R3 | | Class R4 |
| Service | | .25% | (2) | .25% | | – | | .25% | | .25% | | .25% | | .25% |
| Distribution | | – | | .75% | | .10% | | .20% | | .35% | | .25% | | – |
| * | The Fund may designate a portion of the aggregate fee as attributable to service activities for purposes of calculating Financial Industry Regulatory Authority, Inc. (“FINRA”) sales charge limitations. |
| (1) | The Class F share Rule 12b-1 fee may be designated as a service fee in limited circumstances as described in the Fund’s prospectus. |
| (2) | Annual service fee on shares sold prior to June 1, 1990 is .15% of the average daily net assets attributable to Class A shares. |
Class F3, Class I, Class R5 and Class R6 shares do not have a distribution plan.
Commissions
Distributor received the following commissions on sales of shares of the Fund, after concessions were paid to authorized dealers, for the fiscal year ended December 31, 2019:
Distributor
Commissions | | Dealers’
Concessions |
| $38,979 | | $214,657 |
Distributor received CDSCs of $1,655 and $3,391 for Class A and Class C shares, respectively, for the fiscal year ended December 31, 2019.
Other Related Parties
As of December 31, 2019, the percentages of the Fund’s outstanding shares owned by Lord Abbett Multi-Asset Balanced Opportunity Fund and Lord Abbett Multi-Asset Income Fund, were 14.58% and 6.23%, respectively.
One Director and certain of the Fund’s officers have an interest in Lord Abbett.
23
Notes to Financial Statements (continued)
| 4. | DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARDS |
Dividends from net investment income, if any, are declared and paid at least semi-annually. Taxable net realized gains from investment transactions, reduced by allowable capital loss carryforwards, if any, are declared and distributed to shareholders at least annually. The capital loss carryforward amount, if any, is available to offset future net capital gains. Dividends and distributions to shareholders are recorded on the ex-dividend date. The amounts of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. These book/tax differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the components of net assets based on their federal tax basis treatment; temporary differences do not require reclassification. Dividends and distributions that exceed earnings and profits for tax purposes are reported as a tax return of capital.
The tax character of distributions paid during the fiscal years ended December 31, 2019 and December 31, 2018 was as follows:
| | | Year Ended
12/31/2019 | | | Year Ended
12/31/2018 | |
| Distributions paid from: | | | | | | | | |
| Ordinary income | | $ | 15,903,350 | | | $ | 14,516,355 | |
| Net long-term capital gains | | | 39,230,735 | | | | 71,809,601 | |
| Total distributions paid | | $ | 55,134,085 | | | $ | 86,325,956 | |
As of December 31, 2019, the components of accumulated gains (losses) on a tax-basis were as follows:
| Undistributed ordinary income – net | | $ | – | | | | | |
| Total undistributed earnings | | $ | – | | | | | |
| Capital loss carryforwards* | | | (21,034,819 | ) | | | | |
| Temporary differences | | | (736,413 | ) | | | | |
| Unrealized gains – net | | | 151,748,081 | | | | | |
| Total accumulated gains – net | | $ | 129,976,849 | | | | | |
| * | The capital losses will carry forward indefinitely and are subject to merger limitations. |
At the Fund’s election, certain losses incurred within the taxable year (Qualified Late-Year Losses) are deemed to arise on the first business day of the Fund’s next taxable year. The Fund incurred and will elect to defer post-October capital losses of $90,066 during fiscal year 2019.
As of December 31, 2019, the aggregate unrealized security gains (losses) on investments and other financial instruments, if any, based on cost for U.S. federal income tax purposes were as follows:
| Tax cost | | $ | 1,574,668,619 | | | | | |
| Gross unrealized gain | | | 180,605,985 | | | | | |
| Gross unrealized loss | | | (28,857,904 | ) | | | | |
| Net unrealized security gain | | $ | 151,748,081 | | | | | |
The difference between book-basis and tax basis unrealized gains (losses) is attributable to the tax treatment of wash sales.
Permanent items identified during the fiscal year ended December 31, 2019 have been reclassified among the components of net assets based on their tax basis treatment as follows:
Total Distributable
Earnings (Loss) | | Paid-in
Capital | |
| $170,034 | | $(170,034 | ) |
24
Notes to Financial Statements (continued)
The permanent differences are primarily attributable to certain distributions and certain expenses.
| 5. | PORTFOLIO SECURITIES TRANSACTIONS |
Purchases and sales of investment securities (excluding short-term investments) for the fiscal year ended December 31, 2019 were as follows:
| Purchases | | Sales |
| $1,227,534,463 | | $1,776,117,965 |
There were no purchases or sales of U.S. Government securities for the fiscal year ended December 31, 2019.
The Fund is permitted to purchase and sell securities (“cross-trade”) from and to other Lord Abbett funds or client accounts pursuant to procedures approved by the Board in compliance with Rule 17a-7 under the Act (the “Rule”). Each cross-trade is executed at a fair market price in compliance with provisions of the Rule. For the fiscal year ended December 31, 2019, the Fund engaged in cross-trades purchases of $1,640,919 and sales of $10,911,959 which resulted in net realized gains of $1,170,622.
| 6. | DISCLOSURES ABOUT OFFSETTING ASSETS AND LIABILITIES |
The Financial Accounting Standards Board (“FASB”) requires disclosures intended to help better assess the effect or potential effect of offsetting arrangements on a fund’s financial position. The following tables illustrate gross and net information about recognized assets and liabilities eligible for offset in the Statement of Assets and Liabilities; and disclose such amounts subject to an enforceable master netting agreement or similar agreement, by counterparty. A master netting agreement is an agreement between the Fund and a counterparty which provides for the net settlement of amounts owed under all contracts traded under that agreement, as well as cash collateral, through a single payment by one party to the other in the event of default on or termination of any one contract. The Fund’s accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the master netting agreement does not result in an offset of reported amounts of financial assets and liabilities in the Statement of Assets and Liabilities across transactions between the Fund and the applicable counterparty:
| Description | | Gross Amounts of
Recognized Assets | | | Gross Amounts
Offset in the
Statement of Assets
and Liabilities | | | Net Amounts of
Assets Presented
in the Statement of
Assets and Liabilities |
| Repurchase Agreement | | | $6,690,546 | | | $ | – | | | | $6,690,546 |
| Total | | | $6,690,546 | | | $ | – | | | | $6,690,546 |
| | | Net Amounts
of Assets
Presented in | | | Amounts Not Offset in the
Statement of Assets and Liabilities | | | |
| Counterparty | | the Statement
of Assets and
Liabilities | | | Financial
Instruments | | | Cash
Collateral
Received(a) | | | Securities
Collateral
Received(a) | | | Net
Amount(b) |
| Fixed Income Clearing Corp. | | | $6,690,546 | | | $ | – | | | $ | – | | | | $(6,690,546 | ) | | $ | – |
| Total | | | $6,690,546 | | | $ | – | | | $ | – | | | | $(6,690,546 | ) | | $ | – |
| (a) | Collateral disclosed is limited to an amount not to exceed 100% of the net amount of assets (liabilities) presented in the Statement of Assets and Liabilities, for each respective counterparty. |
| (b) | Net amount represents the amount owed to the Fund by the counterparty as of December 31, 2019. |
25
Notes to Financial Statements (continued)
| 7. | DIRECTORS’ REMUNERATION |
The Fund’s officers and one Director, who are associated with Lord Abbett, do not receive any compensation from the Fund for serving in such capacities. Independent Directors’ fees are allocated among all Lord Abbett-sponsored funds based on the net assets of each fund. There is an equity-based plan available to all Independent Directors under which Independent Directors must defer receipt of a portion of, and may elect to defer receipt of an additional portion of Directors’ fees. The deferred amounts are treated as though equivalent dollar amounts had been invested in the funds. Such amounts and earnings accrued thereon are included in Directors’ fees on the Statement of Operations and in Directors’ fees payable on the Statement of Assets and Liabilities and are not deductible for U.S. federal income tax purposes until such amounts are paid.
The Fund has entered into an arrangement with its transfer agent and custodian, whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund’s expenses.
For the period ended August 7, 2019, the Fund and certain other funds managed by Lord Abbett (collectively, the “Participating Funds”) entered into a Syndicated Facility with various lenders for $1.1 billion whereas State Street Bank and Trust Company (“SSB”) participated as a lender and as agent for the lenders. The Participating Funds are subject to graduated borrowing limits of one-third of Fund net assets (if Fund net assets are less than $750 million), $250 million, $300 million, $350 million, or $1 billion, based on past borrowings and likelihood of future borrowings, among other factors.
Effective August 8, 2019, the Participating Funds entered into a Syndicated Facility with various lenders for $1.17 billion whereas SSB participates as a lender and as agent for the lenders. The Participating Funds are subject to graduated borrowing limits of one-third of Fund net assets (if net assets are less than $750 million), $250 million, $300 million, $500 million, or $1 billion, based on past borrowings and likelihood of future borrowings, among other factors.
For the period ended August 7, 2019, the Participating Funds entered into an additional line of credit facility with SSB for $250 million (the “Bilateral Facility” and together with the Syndicated Facility, the “Facilities”). Under the Bilateral Facility, each Participating Fund may borrow up to the lesser of $250 million or one-third of Fund net assets.
Effective August 8, 2019, the Participating Funds entered into a Bilateral Facility with SSB for $330 million ($250 million committed and $80 million uncommitted). Under the Bilateral Facility, the Participating Funds are subject to graduated borrowing limits of one-third of Fund net assets (if net assets are less than $750 million), $250 million, $300 million, or $330 million, based on past borrowings and likelihood of future borrowings, among other factors.
The Facilities are to be used for temporary or emergency purposes as an additional source of liquidity to satisfy redemptions.
For the fiscal year ended December 31, 2019, the Fund did not utilize the Facilities.
| 10. | INTERFUND LENDING PROGRAM |
Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC exemptive order”), certain registered open-end management investment companies managed by
26
Notes to Financial Statements (continued)
Lord Abbett, including the Fund, participate in a joint lending and borrowing program (the “Interfund Lending Program”). The SEC exemptive order allows the Funds to borrow money from and lend money to each other for temporary or emergency purposes subject to limitations and conditions.
For the fiscal year ended December 31, 2019, the Fund did not participate as a borrower or lender in the Interfund Lending Program.
| 11. | CUSTODIAN AND ACCOUNTING AGENT |
SSB is the Fund’s custodian and accounting agent. SSB performs custodial, accounting and recordkeeping functions relating to portfolio transactions and calculating the Fund’s NAV.
| 12. | SECURITIES LENDING AGREEMENT |
The Fund has established a securities lending agreement with Citibank, N.A. for the lending of securities to qualified brokers in exchange for securities or cash collateral equal to at least the market value of securities loaned, plus interest, if applicable. Cash collateral is invested in an approved money market fund. In accordance with the Fund’s securities lending agreement, the market value of securities on loan is determined each day at the close of business and any additional collateral required to cover the value of securities on loan is delivered to the Fund on the next business day. As with other extensions of credit, the Fund may experience a delay in the recovery of its securities or incur a loss should the borrower of the securities breach its agreement with the Fund or become insolvent at a time when the collateral is insufficient to cover the cost of repurchasing securities on loan. Any income earned from lending securities will be noted on the Statement of Operations.
For the fiscal year ended December 31, 2019, the Fund did not loan any securities.
The Fund is subject to the general risks and considerations associated with equity investing, as well as the particular risks associated with value and mid-sized company stocks. The value of an investment will fluctuate in response to movements in the equity securities market in general, and to the changing prospects of individual companies in which the Fund invests. The market may fail to recognize for a long time the intrinsic value of particular value stocks the Fund may hold. Value investing is also subject to the risk that a company judged to be undervalued may actually be appropriately priced or even overpriced. The mid-sized company stocks in which the Fund invests may be less able to weather economic shifts or other adverse developments than those of larger, more established companies. Accordingly, mid-sized company securities tend to be more sensitive to changing economic, market, and industry conditions and tend to be more volatile and less liquid than equity securities of larger companies, especially over the short term. In addition, if the Fund’s assessment of a company’s value or prospects for exceeding earnings expectations or market conditions is wrong, the Fund could suffer losses or produce poor performance relative to other funds, even in a favorable market.
Because the Fund invests in real estate investment trusts (“REITS”), it may be subject to the risks that impact the value of the underlying properties or mortgages of the REITs in which it invests. These risks include loss to casualty or condemnation, and changes in supply and demand, interest rates, zoning laws, regulatory limitations on rents, property taxes, and operating expenses. Other factors that may adversely affect REITs include poor performance by management of the REIT, changes to the tax laws, or failure by the REIT to qualify for tax-free distribution of income, and changes in local, regional, or general economic conditions.
27
Notes to Financial Statements (continued)
Due to the Fund’s investment exposure to foreign companies and American Depositary Receipts, the Fund may experience increased market, liquidity, currency, political, information, and other risks. As compared with companies organized and operated in the U.S., these companies may be more vulnerable to economic, political and social instability and subject to less government supervision, lack of transparency, inadequate regulatory and accounting standards, and foreign taxes. The securities of foreign companies also may be subject to inadequate exchange control regulations, the imposition of economic sanctions or other government restrictions, higher transaction and other costs, and delays in settlement to the extent they are traded on non-U.S. exchanges or markets.
These factors can affect the Fund’s performance.
| 14. | SUMMARY OF CAPITAL TRANSACTIONS |
Transactions in shares of capital stock were as follows:
| | | | | | Year Ended | | | | | | Year Ended | |
| | | December 31, 2019 | | | December 31, 2018 | |
| Class A Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 936,724 | | | $ | 25,724,869 | | | | 1,291,956 | | | $ | 36,605,855 | |
| Converted from Class B* | | | – | | | | – | | | | 29,117 | | | | 875,749 | |
| Converted from Class C** | | | 158,454 | | | | 4,363,468 | | | | 3,041,220 | | | | 91,283,998 | |
| Reinvestment of distributions | | | 965,757 | | | | 27,388,263 | | | | 1,968,587 | | | | 48,188,593 | |
| Shares reacquired | | | (6,862,887 | ) | | | (188,683,867 | ) | | | (6,464,698 | ) | | | (189,187,135 | ) |
| Shares issued in reorganization (See Note 15) | | | 2,653,151 | | | | 73,439,211 | | | | – | | | | – | |
| Decrease | | | (2,148,801 | ) | | $ | (57,768,056 | ) | | | (133,818 | ) | | $ | (12,232,940 | ) |
| Class B Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | – | | | $ | – | | | | 214 | | | $ | 5,877 | |
| Reinvestment of distributions | | | – | | | | – | | | | – | | | | 5 | |
| Shares reacquired | | | – | | | | – | | | | (7,940 | ) | | | (220,630 | ) |
| Converted to Class A* | | | – | | | | – | | | | (31,201 | ) | | | (875,749 | ) |
| Decrease | | | – | | | $ | – | | | | (38,927 | ) | | $ | (1,090,497 | ) |
| Class C Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 123,873 | | | $ | 3,133,712 | | | | 116,741 | | | $ | 3,054,489 | |
| Reinvestment of distributions | | | 52,901 | | | | 1,389,109 | | | | 66,504 | | | | 1,511,640 | |
| Shares reacquired | | | (642,874 | ) | | | (16,400,668 | ) | | | (748,474 | ) | | | (20,505,917 | ) |
| Converted to Class A** | | | (171,390 | ) | | | (4,363,468 | ) | | | (3,280,552 | ) | | | (91,283,998 | ) |
| Shares issued in reorganization (See Note 15) | | | 1,423,606 | | | | 36,543,958 | | | | – | | | | – | |
| Increase (decrease) | | | 786,116 | | | $ | 20,302,643 | | | | (3,845,781 | ) | | $ | (107,223,786 | ) |
| Class F Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 663,952 | | | $ | 18,034,100 | | | | 689,963 | | | $ | 19,857,195 | |
| Reinvestment of distributions | | | 141,066 | | | | 3,965,253 | | | | 203,229 | | | | 4,932,038 | |
| Shares reacquired | | | (1,951,692 | ) | | | (53,205,476 | ) | | | (1,021,347 | ) | | | (29,749,648 | ) |
| Shares issued in reorganization (See Note 15) | | | 2,248,677 | | | | 61,726,178 | | | | – | | | | – | |
| Increase (decrease) | | | 1,102,003 | | | $ | 30,520,055 | | | | (128,155 | ) | | $ | (4,960,415 | ) |
28
Notes to Financial Statements (continued)
| | | | | | Year Ended | | | | | | Year Ended | |
| | | December 31, 2019 | | | December 31, 2018 | |
| Class F3 Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 123,174 | | | $ | 3,360,990 | | | | 253,852 | | | $ | 7,488,033 | |
| Reinvestment of distributions | | | 28,470 | | | | 803,694 | | | | 51,549 | | | | 1,255,112 | |
| Shares reacquired | | | (221,134 | ) | | | (6,047,901 | ) | | | (210,631 | ) | | | (6,149,648 | ) |
| Shares issued in reorganization (See Note 15) | | | 105,423 | | | | 2,905,469 | | | | – | | | | – | |
| Increase | | | 35,933 | | | $ | 1,022,252 | | | | 94,770 | | | $ | 2,593,497 | |
| Class I Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 751,057 | | | $ | 20,106,226 | | | | 259,054 | | | $ | 7,646,635 | |
| Reinvestment of distributions | | | 496,921 | | | | 13,963,152 | | | | 667,767 | | | | 16,198,940 | |
| Shares reacquired | | | (13,732,966 | ) | | | (373,518,951 | ) | | | (6,796,641 | ) | | | (203,302,001 | ) |
| Shares issued in reorganization (See Note 15) | | | 16,396,802 | | | | 450,092,202 | | | | – | | | | – | |
| Increase (decrease) | | | 3,911,814 | | | $ | 110,642,629 | | | | (5,869,820 | ) | | $ | (179,456,426 | ) |
| Class P Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 78,920 | | | $ | 2,077,072 | | | | 89,822 | | | $ | 2,583,528 | |
| Reinvestment of distributions | | | 43,641 | | | | 1,197,459 | | | | 111,371 | | | | 2,639,417 | |
| Shares reacquired | | | (547,579 | ) | | | (14,463,081 | ) | | | (534,246 | ) | | | (15,219,914 | ) |
| Decrease | | | (425,018 | ) | | $ | (11,188,550 | ) | | | (333,053 | ) | | $ | (9,996,969 | ) |
| Class R2 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 47,671 | | | $ | 1,269,340 | | | | 322,587 | | | $ | 9,559,142 | |
| Reinvestment of distributions | | | 1,240 | | | | 34,645 | | | | 3,518 | | | | 84,436 | |
| Shares reacquired | | | (495,159 | ) | | | (13,215,618 | ) | | | (107,020 | ) | | | (3,094,951 | ) |
| Shares issued in reorganization (See Note 15) | | | 41,830 | | | | 1,134,851 | | | | – | | | | – | |
| Increase (decrease) | | | (404,418 | ) | | $ | (10,776,782 | ) | | | 219,085 | | | $ | 6,548,627 | |
| Class R3 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 122,531 | | | $ | 3,357,654 | | | | 131,320 | | | $ | 3,821,757 | |
| Reinvestment of distributions | | | 26,728 | | | | 750,772 | | | | 51,062 | | | | 1,238,155 | |
| Shares reacquired | | | (313,683 | ) | | | (8,451,604 | ) | | | (332,818 | ) | | | (9,818,706 | ) |
| Shares issued in reorganization (See Note 15) | | | 208,132 | | | | 5,706,973 | | | | – | | | | – | |
| Increase (decrease) | | | 43,708 | | | $ | 1,363,795 | | | | (150,436 | ) | | $ | (4,758,794 | ) |
| Class R4 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 136,937 | | | $ | 3,769,522 | | | | 164,292 | | | $ | 4,922,436 | |
| Reinvestment of distributions | | | 15,393 | | | | 435,003 | | | | 29,175 | | | | 711,812 | |
| Shares reacquired | | | (195,223 | ) | | | (5,329,378 | ) | | | (370,940 | ) | | | (11,154,469 | ) |
| Shares issued in reorganization (See Note 15) | | | 151,870 | | | | 4,191,624 | | | | – | | | | – | |
| Increase (decrease) | | | 108,977 | | | $ | 3,066,771 | | | | (177,473 | ) | | $ | (5,520,221 | ) |
| Class R5 Shares | | | | | | | | | | | | | | | | |
| Shares sold | | | 34,279 | | | $ | 938,042 | | | | 19,828 | | | $ | 582,466 | |
| Reinvestment of distributions | | | 1,820 | | | | 51,135 | | | | 1,130 | | | | 27,410 | |
| Shares reacquired | | | (66,912 | ) | | | (1,829,829 | ) | | | (6,504 | ) | | | (193,491 | ) |
| Shares issued in reorganization (See Note 15) | | | 152,480 | | | | 4,184,055 | | | | – | | | | – | |
| Increase | | | 121,667 | | | $ | 3,343,403 | | | | 14,454 | | | $ | 416,385 | |
29
Notes to Financial Statements (continued)
| | | | | | Year Ended | | | | | | Year Ended | |
| | | December 31, 2019 | | | December 31, 2018 | |
| Class R6 Shares | | Shares | | | Amount | | | Shares | | | Amount | |
| Shares sold | | | 183,016 | | | $ | 5,021,340 | | | | 409,539 | | | $ | 12,207,035 | |
| Reinvestment of distributions | | | 17,756 | | | | 501,066 | | | | 25,411 | | | | 618,489 | |
| Shares reacquired | | | (292,687 | ) | | | (8,025,946 | ) | | | (149,037 | ) | | | (4,419,992 | ) |
| Shares issued in reorganization (See Note 15) | | | 248,291 | | | | 6,840,424 | | | | – | | | | – | |
| Increase | | | 156,376 | | | $ | 4,336,884 | | | | 285,913 | | | $ | 8,405,532 | |
| * | | Automatic conversion of Class B shares occurred on the 25th day of the month (or, if the 25th day was not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted. Class B shares were closed on April 25, 2018. |
| ** | | Automatic conversion of Class C shares occurs on the 25th day of the month (or, if the 25th day was not a business day, the next business day thereafter) following the tenth anniversary of the day on which the purchase order was accepted. |
As of the close of business on February 22, 2019, Mid Cap Stock Fund acquired the net assets of Calibrated Mid Cap Value Fund, pursuant to a plan of reorganization approved by Calibrated Mid Cap Value Fund’s shareholders on February 8, 2019. The reorganization permitted Calibrated Mid Cap Value Fund shareholders to pursue a substantially similar investment goal, but as a part of a larger fund with a lower expense ratio. The acquisition was accomplished by a tax-free exchange whereby holders of shares of Calibrated Mid Cap Value Fund outstanding on February 22, 2019 received shares valued at $646,764,945 of Mid Cap Stock Fund. Calibrated Mid Cap Value Fund’s net assets at the date of acquisition, including $8,845,860 of net unrealized appreciation, $(4,704,349) of undistributed net investment loss and $(33,066,869) of accumulated net realized losses, were combined with those of Mid Cap Stock Fund. The cost basis of securities received from Calibrated Mid Cap Value Fund was carried forward.
The total net assets of Calibrated Mid Cap Value Fund immediately before the transfer were $646,764,945. Total net assets of Mid Cap Stock Fund immediately before the transfer were $1,546,274,568. Total net assets of Mid Cap Stock Fund immediately after the transfer were $2,193,039,513.
The following table illustrates share conversion ratios and dollar amounts of the reorganization on February 22, 2019:
| Class | | Calibrated
Mid Cap Value
Fund Shares | | Conversion
Ratio | | Mid Cap
Stock Fund
Shares | | Mid Cap
Stock Fund
Amount | |
| A | | 3,790,511 | | 0.699946 | | 2,653,151 | | $ | 73,439,211 | |
| C | | 1,925,263 | | 0.739435 | | 1,423,606 | | | 36,543,958 | |
| F | | 3,177,195 | | 0.707756 | | 2,248,677 | | | 61,726,178 | |
| F3 | | 149,545 | | 0.704960 | | 105,423 | | | 2,905,469 | |
| I | | 23,175,414 | | 0.707508 | | 16,396,802 | | | 450,092,202 | |
| R2 | | 58,294 | | 0.717575 | | 41,830 | | | 1,134,851 | |
| R3 | | 294,160 | | 0.707546 | | 208,132 | | | 5,706,973 | |
| R4 | | 217,154 | | 0.699366 | | 151,870 | | | 4,191,624 | |
| R5 | | 215,468 | | 0.707668 | | 152,480 | | | 4,184,055 | |
| R6 | | 352,058 | | 0.705256 | | 248,291 | | | 6,840,424 | |
30
Notes to Financial Statements (concluded)
Had the acquisition been completed on January 1, 2019, the beginning of Mid Cap Stock Fund’s 2019 fiscal year, the Fund’s condensed pro-forma results of operations for the fiscal year ended December 31, 2019 would be as follows:
| Net investment income: | | $ | 31,758,209 | |
| Net realized and unrealized gain: | | $ | 256,519,295 | |
| Net increase in net assets resulting from operations: | | $ | 288,277,504 | |
The combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed. Revenue and earnings of Calibrated Mid Cap Value Fund’s portfolio holdings have been included in Mid Cap Stock Fund’s Statement of Operations since the date of acquisition.
31
Report of Independent Registered Public Accounting Firm
To the shareholders and Board of Directors of Lord Abbett Mid Cap Stock Fund, Inc.
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of Lord Abbett Mid Cap Stock Fund, Inc. (the “Fund”), including the schedule of investments, as of December 31, 2019, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
New York, New York
February 26, 2020
We have served as the auditor of one or more Lord Abbett Family of Funds’ investment companies since 1932.
32
Supplemental Proxy Information (unaudited)
A joint special meeting of shareholders of the Fund was held on August 26, 2019. The joint special meeting was held for the purpose of electing members of the Fund’s Board of Directors. Shareholders elected the following ten (10) Directors at the joint special meeting:
| • | Eric C. Fast |
| • | Evelyn E. Guernsey |
| • | Julie A. Hill |
| • | Kathleen M. Lutito |
| • | James M. McTaggart |
| • | Charles O. Prince |
| • | Karla M. Rabusch |
| • | Mark A. Schmid |
| • | Douglas B. Sieg |
| • | James L.L. Tullis |
The results of the proxy solicitation on the preceding matter were as follows:
Lord Abbett Mid Cap Stock Fund, Inc.
| Nominee Votes | Votes For | Votes Withheld |
| Eric C. Fast | 52,772,946.649 | 1,521,748.584 |
| Evelyn E. Guernsey | 52,708,738.680 | 1,585,956.553 |
| Julie A. Hill | 52,707,660.559 | 1,587,034.674 |
| Kathleen M. Lutito | 52,818,510.692 | 1,476,184.541 |
| James M. McTaggart | 52,716,827.294 | 1,577,867.939 |
| Charles O. Prince | 52,661,757.729 | 1,632,937.504 |
| Karla M. Rabusch | 52,732,452.279 | 1,562,242.954 |
| Mark A. Schmid | 52,772,710.018 | 1,521,985.215 |
| Douglas B. Sieg | 52,840,579.891 | 1,454,115.342 |
| James L.L. Tullis | 52,692,480.063 | 1,602,215.170 |
33
Basic Information About Management
The Board is responsible for the management of the business and affairs of the Fund in accordance with the laws of the State of Maryland. The Board elects officers who are responsible for the day-to-day operations of the Fund and who execute policies authorized by the Board. The Board also approves an investment adviser to the Fund and continues to monitor the cost and quality of the services the investment adviser provides, and annually considers whether to renew the contract with the investment adviser. Generally, each Director holds office until his/her successor is elected and qualified or until his/her earlier resignation or removal, as provided in the Fund’s organizational documents.
Lord Abbett, a Delaware limited liability company, is the Fund’s investment adviser. Designated Lord Abbett personnel are responsible for the day-to-day management of the Fund.
Interested Director
Mr. Sieg is affiliated with Lord Abbett and is an “interested person” of the Fund as defined in the Act. Mr. Sieg is director/trustee of each of the 12 investment companies in the Lord Abbett Family of Funds, which consist of 57 investment portfolios. Mr. Sieg is an officer of the Lord Abbett Family of Funds.
Name, Address and
Year of Birth | | Current Position and
Length of Service
with the Fund | | Principal Occupation and Other Directorships
During the Past Five Years |
Douglas B. Sieg
Lord, Abbett & Co. LLC
90 Hudson Street
Jersey City, NJ 07302
(1969) | | Director since 2016; President and Chief Executive Officer since 2018 | | Principal Occupation:Managing Partner (since 2018) and was formerly Head of Client Services, joined Lord Abbett in 1994. Other Directorships:None. |
Independent Directors
The following Independent Directors also are directors/trustees of each of the 12 investment companies in the Lord Abbett Family of Funds, which consist of 57 investment portfolios.
Name, Address and
Year of Birth | | Current Position and
Length of Service
with the Fund | | Principal Occupation and Other Directorships
During the Past Five Years |
Evelyn E. Guernsey
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1955) | | Director since 2011 | | Principal Occupation:None. Other Directorships:None. |
| | | | | |
Julie A. Hill
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1946) | | Director since 2004 | | Principal Occupation:Owner and CEO of The Hill Company, a business consulting firm (since 1998). Other Directorships:Currently serves as director of Anthem, Inc., a health benefits company (since 1994). |
| | | | | |
Kathleen M. Lutito
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1963) | | Director since 2017 | | Principal Occupation:President and Chief Investment Officer of CenturyLink Investment Management Company (since 2006). Other Directorships:None. |
34
Basic Information About Management (continued)
Name, Address and
Year of Birth | | Current Position and
Length of Service
with the Fund | | Principal Occupation and Other Directorships
During the Past Five Years |
James M. McTaggart
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1947) | | Director since 2012 | | Principal Occupation:Independent management advisor and consultant (since 2012). Other Directorships:Blyth, Inc., a home products company (2004–2015). |
| | | | | |
Charles O. Prince
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1950) | | Director since 2019 | | Principal Occupation:None. Formerly Chairman and Chief Executive Officer, Citigroup, Inc. Other Directorships:Currently serves as director of Johnson & Johnson (2006–Present). Previously served as director of Xerox Corporation (2008–2018). |
| | | | | |
Karla M. Rabusch
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1959) | | Director since 2017 | | Principal Occupation:President and Director of Wells Fargo Funds Management, LLC (2003–2017); President of Wells Fargo Funds (2003–2016). Other Directorships:None. |
| | | | | |
Mark A. Schmid
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1959) | | Director/Trustee since 2016 | | Principal Occupation:Vice President and Chief Investment Officer of the University of Chicago (since 2009). Other Directorships:None. |
| | | | | |
James L.L. Tullis
Lord, Abbett & Co. LLC
c/o Legal Dept.
90 Hudson Street
Jersey City, NJ 07302
(1947) | | Director since 2006; Chairman since 2017 | | Principal Occupation:Chairman of Tullis Health Investors—FL LLC (since 2018); CEO of Tullis-Dickerson and Co. Inc., a venture capital management firm (1990–2016). Other Directorships:Currently serves as director of Crane Co. (since 1998), Alphatec Spine, Inc. (since 2018), and electroCore, Inc. (since 2018). |
Officers
None of the officers listed below have received compensation from the Fund. All of the officers of the Fund also may be officers of the other Lord Abbett Funds and maintain offices at 90 Hudson Street, Jersey City, NJ 07302. Unless otherwise indicated, the position(s) and title(s) listed under the “Principal Occupation During the Past Five Years” column indicate each officer’s position(s) and title(s) with Lord Abbett. Each officer serves for an indefinite term (i.e., until his or her death, resignation, retirement, or removal).
Name and
Year of Birth | | Current Position
with the Fund | | Length of Service
of Current
Position | | Principal Occupation
During the Past Five Years |
Douglas B. Sieg
(1969) | | President and Chief Executive Officer | | Elected as President and Chief Executive Officer in 2018 | | Managing Partner of Lord Abbett (since 2018) and was formerly Head of Client Services, joined Lord Abbett in 1994. |
35
Basic Information About Management (concluded)
Name and
Year of Birth | | Current Position
with the Fund | | Length of Service
of Current
Position | | Principal Occupation
During the Past Five Years |
Jackson C. Chan
(1964) | | AML Compliance Officer | | Elected in 2018 | | Deputy Chief Compliance Officer and Director of Regulatory Affairs, joined Lord Abbett in 2014. |
| | | | | | | |
Pamela P. Chen
(1978) | | Vice President, Assistant Secretary and Privacy Officer | | Elected as Vice President and Assistant Secretary in 2018 and Privacy Officer in 2019 | | Associate General Counsel, joined Lord Abbett in 2017 and was formerly Special Counsel at Schulte, Roth & Zabel LLP (2005–2017). |
| | | | | | | |
John T. Fitzgerald
(1975) | | Vice President and Assistant Secretary | | Elected in 2018 | | Deputy General Counsel, joined Lord Abbett in 2018 and was formerly Deputy Head of U.S. Funds Legal, Executive Director and Assistant General Counsel at JPMorgan Chase (2005–2018). |
| | | | | | | |
Vito A. Fronda
(1969) | | Treasurer | | Elected in 2018 | | Partner and Director of Fund Treasury and Tax, joined Lord Abbett in 2003. |
| | | | | | | |
Bernard J. Grzelak
(1971) | | Chief Financial Officer and Vice President | | Elected in 2017 | | Partner and Chief Operating Officer, Global Funds and Risk, joined Lord Abbett in 2003. |
| | | | | | | |
Linda Y. Kim
(1980) | | Vice President and Assistant Secretary | | Elected in 2016 | | Counsel, joined Lord Abbett in 2015. |
| | | | | | | |
Joseph M. McGill
(1962) | | Chief Compliance Officer | | Elected in 2014 | | Partner and Chief Compliance Officer, joined Lord Abbett in 2014. |
| | | | | | | |
Amanda S. Ryan
(1978) | | Vice President and Assistant Secretary | | Elected in 2018 | | Counsel, joined Lord Abbett in 2016 and was formerly a Director and Corporate Counsel at PGIM Investments (2012–2016). |
| | | | | | | |
Lawrence B. Stoller
(1963) | | Vice President, Secretary and Chief Legal Officer | | Elected as Vice President and Secretary in 2007 and Chief Legal Officer in 2019 | | Partner and General Counsel, joined Lord Abbett in 2007. |
Please call 888-522-2388 for a copy of the statement of additional information, which contains further information about the Fund’s Directors. It is available free upon request.
36
Approval of Advisory Contract
The Board, including all of the Directors who are not “interested persons” of the Fund or of Lord Abbett, as defined in the Investment Company Act of 1940, as amended (the “Independent Directors”), annually considers whether to approve the continuation of the existing management agreement between the Fund and Lord Abbett (the “Agreement”). In connection with its most recent approval, the Board reviewed materials relating specifically to the Agreement, as well as numerous materials received throughout the course of the year, including information about the Fund’s investment performance compared to the performance of its benchmarks. Before making its decision as to the Fund, the Board had the opportunity to ask questions and request further information, taking into account its knowledge of Lord Abbett gained through its meetings and discussions. These meetings and discussions included reviews of Fund performance conducted by members of the Contract Committee, the deliberations of the Contract Committee, and discussions between the Contract Committee and Lord Abbett’s management. The Independent Directors also met with their independent legal counsel in various private sessions at which no representatives of management were present.
The materials received by the Board included, but were not limited to: (1) information provided by Broadridge Financial Solutions (“Broadridge”) regarding the investment performance of the Fund compared to the investment performance of certain funds with similar investment styles as determined by Broadridge, based, in part, on the Fund’s Morningstar category (the “performance peer group”), and the investment performance of two appropriate benchmarks; (2) information provided by Broadridge regarding the expense ratios, contractual and actual management fee rates, and other expense components for the Fund and certain funds in the same Morningstar category, with generally the same or similar share classes and operational characteristics, including asset size (the “expense peer group”); (3) certain supplemental investment performance information provided by Lord Abbett; (4) information provided by Lord Abbett on the expense ratios, management fee rates, and other expense components for the Fund; (5) sales and redemption information for the Fund; (6) information regarding Lord Abbett’s financial condition; (7) an analysis of the relative profitability of the Agreement to Lord Abbett; and (8) information regarding the personnel and other resources devoted by Lord Abbett to managing the Fund.
Investment Management and Related Services Generally.The Board considered the services provided by Lord Abbett to the Fund, including investment research, portfolio management, and trading, and Lord Abbett’s commitment to compliance with all applicable legal requirements. The Board also observed that Lord Abbett was solely engaged in the investment management business and accordingly did not experience the conflicts of interest that may result from being engaged in other lines of business. The Board considered the investment advisory services provided by Lord Abbett to other clients, the fees charged for the services, and the differences in the nature of the services provided to the Fund and other Lord Abbett Funds, on the one hand, and the services provided to other clients, on the other. After reviewing these and related factors, the Board concluded that the Fund was likely to continue to benefit from the nature, extent and quality of the investment services provided by Lord Abbett under the Agreement.
Investment Performance.The Board reviewed the Fund’s investment performance in relation to that of the performance peer group and two appropriate benchmarks as of various periods ended June 30, 2019. The Board observed that the Fund’s investment performance was below the median of the performance peer group for the one-, three-, five-, and ten-year periods and took into account actions taken by Lord Abbett to attempt to improve equity fund performance. The Board further considered Lord Abbett’s performance and reputation generally, the performance of other
37
Approval of Advisory Contract (continued)
Lord Abbett-managed funds overseen by the Board, and the willingness of Lord Abbett to take steps intended to improve performance when appropriate. After reviewing these and related factors, the Board concluded that the Fund’s Agreement should be continued.
Lord Abbett’s Personnel and Methods.The Board considered the qualifications of the personnel providing investment management services to the Fund, in light of its investment objective and discipline, and other services provided to the Fund by Lord Abbett. Among other things, the Board considered the size, experience, and turnover of Lord Abbett’s staff, Lord Abbett’s investment methodology and philosophy, and Lord Abbett’s approach to recruiting, training, and retaining personnel.
Nature and Quality of Other Services.The Board considered the nature, quality, and extent of compliance, administrative, and other services performed by Lord Abbett and the nature and extent of Lord Abbett’s supervision of third party service providers, including the Fund’s transfer agent and custodian.
Expenses.The Board considered the expense level of the Fund, including the contractual and actual management fee rates, and the expense levels of the Fund’s expense peer group. It also considered how the expense level of the Fund related to those of the expense peer group and the amount and nature of the fees paid by shareholders. The Board observed that the net total expense ratio of the Fund was below the median of the expense peer group. After reviewing these and related factors, the Board concluded, within the context of its overall approval of the Agreement, that the management fees paid by, and expense level of, the Fund were reasonable in light of all of the factors it considered and supported the continuation of the Agreement.
Profitability.The Board considered the level of Lord Abbett’s operating margin in managing the Fund, including a review of Lord Abbett’s methodology for allocating its costs to its management of the Fund. It considered whether the Fund was profitable to Lord Abbett in connection with the Fund’s operation, including the fee that Lord Abbett receives from the Fund for providing administrative services to the Fund. The Board also considered the profits realized from other business segments of Lord Abbett, which may benefit from or be related to the Fund’s business. The Board considered Lord Abbett’s profit margins excluding Lord Abbett’s marketing and distribution expenses. The Board also considered Lord Abbett’s profit margins, without those exclusions, in comparison with available industry data and how those profit margins could affect Lord Abbett’s ability to recruit and retain personnel. The Board recognized that Lord Abbett’s overall profitability was a factor in enabling it to attract and retain qualified personnel to provide services to the Fund. After reviewing these and related factors, the Board concluded, within the context of its overall approval of the Agreement, that Lord Abbett’s profitability with respect to the Fund was not excessive.
Economies of Scale.The Board considered the extent to which there had been economies of scale in managing the Fund, whether the Fund’s shareholders had appropriately benefited from such economies of scale, and whether there was potential for realization of any further economies of scale. The Board concluded that the existing management fee schedule, with its breakpoints in the level of the management fee, adequately addressed any economies of scale in managing the Fund.
Other Benefits to Lord Abbett.The Board considered the amount and nature of the fees paid by the Fund and the Fund’s shareholders to Lord Abbett and the Distributor for services other than investment advisory services, such as the fee that Lord Abbett receives from the Fund for providing administrative services to the Fund. The Board also considered the revenues and profitability of Lord Abbett’s investment advisory business apart from its mutual fund business, and the intangible
38
Approval of Advisory Contract (concluded)
benefits enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board observed that the Distributor receives 12b-1 fees from certain of the Lord Abbett Funds as to shares held in accounts for which there is no other broker of record, may retain a portion of the 12b-1 fees it receives, and receives a portion of the sales charges on sales and redemptions of some classes of shares of the Lord Abbett Funds. In addition, the Board observed that Lord Abbett accrues certain benefits for its business of providing investment advice to clients other than the Lord Abbett Funds, but that business also benefits the Funds. The Board also noted that Lord Abbett, as disclosed in the prospectus of the Fund, has entered into revenue sharing arrangements with certain entities that distribute shares of the Lord Abbett Funds. The Board also took into consideration the investment research that Lord Abbett receives as a result of client brokerage transactions.
Alternative Arrangements.The Board considered whether, instead of approving continuation of the Agreement, it might be in the best interests of the Fund to implement one or more alternative arrangements, such as continuing to employ Lord Abbett, but on different terms. After considering all of the relevant factors, the Board unanimously found that continuation of the Agreement was in the best interests of the Fund and its shareholders and voted unanimously to approve the continuation of the Agreement. In considering whether to approve the continuation of the Agreement, the Board did not identify any single factor as paramount or controlling. Individual Directors may have evaluated the information presented differently from one another, giving different weights to various factors. This summary does not discuss in detail all matters considered.
39
Householding
The Fund has adopted a policy that allows it to send only one copy of the Fund’s prospectus, proxy material, annual report and semiannual report to certain shareholders residing at the same “household.” This reduces Fund expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be “householded,” please call Lord Abbett at 888-522-2388 or send a written request with your name, the name of your fund or funds and your account number or numbers to Lord Abbett Family of Funds, P.O. Box 219336, Kansas City, MO 64121.
Proxy Voting Policies, Procedures and Records
A description of the policies and procedures that Lord Abbett uses to vote proxies related to the Fund’s portfolio securities, and information on how Lord Abbett voted the Fund’s proxies during the 12-month period ended December 31 are available without charge, upon request, (i) by calling 888-522-2388; (ii) on Lord Abbett’s Website at www.lordabbett.com; and (iii) on the Securities and Exchange Commission’s (“SEC”) Website at www.sec.gov.
Shareholder Reports and Quarterly Portfolio Disclosure
The Fund is required to file its complete schedule of portfolio holdings with the SEC for its first and third fiscal quarters as an attachment to Form N-PORT. Copies of the filings are available without charge, upon request on the SEC’s Website at www.sec.gov and may be available by calling Lord Abbett at 888-522-2388.
Tax Information
100% of the ordinary income distributions paid by the Fund during the fiscal year ended December 31, 2019 is qualified dividend income. For corporate shareholders, 100% of the Fund’s ordinary income distributions qualified for the dividend received deduction.
Additionally, of the distributions paid to the shareholders during the year ended December 31, 2019, $39,230,735 represent long-term capital gains.
40
| This report, when not used for the general information of shareholders of the Fund, is to be distributed only if preceded or accompanied by a current fund prospectus. | | | |
| | | | |
Lord Abbett mutual fund shares are distributed by
LORD ABBETT DISTRIBUTOR LLC. | | Lord Abbett Mid Cap Stock Fund, Inc. | LAMCVF-2
(2/20) |
| (a) | In accordance with applicable requirements, the Registrant adopted a Sarbanes-Oxley Code of Ethics on June 19, 2003 that applies to the principal executive officer and senior financial officers of the Registrant (“Code of Ethics”). The Code of Ethics was in effect during the fiscal year ended December 31, 2019 (the “Period”). |
| | | |
| (b) | Not applicable. |
| | | |
| (c) | The Registrant has not amended the Code of Ethics as described in Form N-CSR during the Period. |
| | | |
| (d) | The Registrant has not granted any waiver, including an implicit waiver, from a provision of the Code of Ethics as described in Form N-CSR during the Period. |
| | | |
| (e) | Not applicable. |
| | | |
| (f) | See Item 12(a)(1) concerning the filing of the Code of Ethics. |
| Item 3: | Audit Committee Financial Expert. |
| | |
| | The Registrant’s board of directors has determined that each of the following independent directors who are members of the audit committee is an audit committee financial expert: Evelyn E. Guernsey, Karla M. Rabusch and Mark A. Schmid. Each of these persons is independent within the meaning of the Form N-CSR. |
| | |
| Item 4: | Principal Accountant Fees and Services. |
In response to sections (a), (b), (c) and (d) of Item 4, the aggregate fees billed to the Registrant for the fiscal years ended December 31, 2019 and 2018 by the Registrant’s principal accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively, “Deloitte”) were as follows:
| | | Fiscal year ended: | |
| | | 2019 | | | 2018 | |
| Audit Fees {a} | | $ | 41,300 | | | $ | 40,100 | |
| Audit-Related Fees | | | - 0 - | | | | - 0 - | |
| Total audit and audit-related fees | | | 41,300 | | | | 40,100 | |
| | | | | | | | | |
| Tax Fees {b} | | | 5,051 | | | | 7,971 | |
| All Other Fees | | | - 0 - | | | | - 0 - | |
| | | | | | | | | |
| Total Fees | | $ | 46,351 | | | $ | 48,071 | |
{a} Consists of fees for audits of the Registrant’s annual financial statements.
{b} Fees for the fiscal year ended December 31, 2019 and 2018 consist of fees for preparing the U.S. Income Tax Return for Regulated Investment Companies, New Jersey Corporation Business Tax Return, New Jersey Annual Report Form, U.S. Return of Excise Tax on Undistributed Income of Investment Companies, IRS Forms 1099-MISC and 1096 Annual Summary and Transmittal of U.S. Information Returns.
(e) (1) Pursuant to Rule 2-01(c) (7) of Regulation S-X, the Registrant’s Audit Committee has adopted pre-approval policies and procedures. Such policies and procedures generally provide that the Audit Committee must pre-approve:
| · | any audit, audit-related, tax, and other services to be provided to the Lord Abbett Funds, including the Registrant, and |
| · | any audit-related, tax, and other services to be provided to the Registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to one or more Funds comprising the Registrant if the engagement relates directly to operations and financial reporting of a Fund, by the independent auditor to assure that the provision of such services does not impair the auditor’s independence. |
The Audit Committee has delegated pre-approval authority to its Chairman, subject to a fee limit of $10,000 per event, and not to exceed $25,000 annually. The Chairman will report any pre-approval decisions to the Audit Committee at its next scheduled meeting. Unless a type of service to be provided by the independent auditor has received general pre-approval, it must be pre-approved by the Audit Committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee.
(e) (2) The Registrant’s Audit Committee has approved 100% of the services described in this Item 4 (b) through (d).
(f) Not applicable.
(g) The aggregate non-audit fees billed by Deloitte for services rendered to the Registrant are shown above in the response to Item 4 (a), (b), (c) and (d) as “All Other Fees”.
The aggregate non-audit fees billed by Deloitte for services rendered to the Registrant’s investment adviser, Lord, Abbett & Co. LLC (“Lord Abbett”), for the fiscal years ended December 31, 2019 and 2018 were:
| | | Fiscal year ended: | |
| | | | 2019 | | | | 2018 | |
| All Other Fees {a} | | | $215,383 | | | | $200,339 | |
{a} Consist of fees for Independent Services Auditors’ Report on Controls Placed in Operation and Tests of Operating Effectiveness related to Lord Abbett’s Asset Management Services (“SOC-1 Report”).
The aggregate non-audit fees billed by Deloitte for services rendered to entities under the common control of Lord Abbett for the fiscal years ended December 31, 2019 and 2018 were:
| | | Fiscal year ended: | |
| | | | 2019 | | | | 2018 | |
| All Other Fees | | | $ - 0 - | | | | $ - 0- | |
(h) The Registrant’s Audit Committee has considered the provision of non-audit services that were rendered to the Registrant’s investment adviser, and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant, that were not pre-approved pursuant to Rule 2-01 (c)(7)(ii) of Regulation S-X and has determined that the provision of such services is compatible with maintaining Deloitte’s independence.
| Item 5: | Audit Committee of Listed Registrants. |
| | |
| | Not applicable. |
| | |
| Item 6: | Investments. |
| | |
| | Not applicable. |
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| Item 7: | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
| | |
| | Not applicable. |
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| Item 8: | Portfolio Managers of Closed-End Management Investment Companies. |
| | |
| | Not applicable. |
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| Item 9: | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
| | |
| | Not applicable. |
| | |
| Item 10: | Submission of Matters to a Vote of Security Holders. |
| | |
| | Not applicable. |
| | |
| Item 11: | Controls and Procedures. |
| (a) | Based on their evaluation of the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days prior to the filing date of this report, the Chief Executive Officer and Chief Financial Officer of the Registrant have concluded that such disclosure controls and procedures are reasonably designed and effective to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to them by others within those entities. |
| (b) | There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
| (a)(1) | The Lord Abbett Family of Funds Sarbanes Oxley Code of Ethics for the Principal Executive Officer and Senior Financial Officers is attached hereto as part of Ex-99. CODEETH. |
| (a)(2) | Certification of each Principal Executive Officer and Principal Financial Officer of the Registrant as required by Rule 30a-2 under the Investment Company Act of 1940 is attached hereto as a part of EX-99.CERT. |
| (b) | Certification of each Principal Executive Officer and Principal Financial Officer of the Registrant as required by Section 906 of the Sarbanes-Oxley Act of 2002 is provided as a part of EX-99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | By: | /s/Douglas B. Sieg |
| | | Douglas B. Sieg |
| | | President and Chief Executive Officer |
Date: February 26, 2020
| | By: | /s/Bernard J. Grzelak |
| | | Bernard J. Grzelak |
| | | Chief Financial Officer and Vice President |
Date: February 26, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| | By: | /s/Douglas B. Sieg |
| | | Douglas B. Sieg |
| | | President and Chief Executive Officer |
Date:February 26, 2020
| | By: | /s/Bernard J. Grzelak |
| | | Bernard J. Grzelak |
| | | Chief Financial Officer and Vice President |
Date:February 26, 2020
