<PAGE>
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-------------------------------------------------------------
Lord Abbett FUNDAMENTAL VALUE FUND
-------------------------------------------------------------
1995 Annual Report
A mutual fund
with the objective
of providing
growth of [ARTWORK Father and Son with paper airplane]]
capital and
growth of income
consistent with
reasonable risk.
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<PAGE>
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REPORT TO SHAREHOLDERS For the Fiscal Year Ended June 30, 1995
[PHOTO - Ronald P. Lynch]
-----------------------------
Ronald P. Lynch, Chairman
July 20, 1995
Lord Abbett Fundamental Value Fund ended its fiscal year on June 30, 1995 with a
net asset value of $13.60 per share, 18.5% over the $11.48 per share posted at
the close of fiscal 1994 (after adjustment for capital gains distributions
totaling $1.0325 per share paid the previous August and December). Dividends of
$.19 per share were paid during the period. The Fund's total return (the percent
change in net asset value assuming the reinvestment of all distributions) was
20.2% for the past twelve months, which compares with a 26.0% total return for
the unmanaged S&P 500 over the same period. Recently, the Fund's Board of
Directors declared a dividend of $.09 per share, a long-term capital gains
distribution of $.41 per share and a short-term capital gains distribution of
$.12 per share, payable on August 4 to shareholders of record on July 27.
After a relatively flat 1994, the stock market rose impressively over the
first six months of 1995. The broad upswing in stock prices reflected a
confluence of positive events, including lower interest rates and an
acceleration in corporate profit gains.
Some very positive forces should continue to support stock prices in the
months to come. We believe that the recent slowing of economic growth, induced
by the Federal Reserve's sharp increases in interest rates during 1994, is a
favorable development that should prolong the ultimate duration of the economy's
expansion. We also believe the credit environment in 1995 will prove much kinder
to the stock market than was the case last year. Corporate earnings, though
likely to be dampened by the economic slowdown, should rise over the balance of
the year with the help of further benefits from cost reduction, continuing
strength in overseas business and improved pricing.
Over the past year, the market's advance has been heavily aided by gains in
economically-sensitive manufacturing stocks as well as in technology stocks,
many of which do not have the dividend growth characteristics that are sought by
the Fund. Still, we have found a combination of value and dividend growth in
some of the globally-diversified electronic equipment and components companies.
We maintain major holdings in the defense industry, where consolidations
continue and the resulting strong cash flows allow the surviving companies to
invest in commercial technologies for future earnings and dividend growth.
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"...we moved to rebuild these positions [in the interest-sensitive sector]...
many of the financial service companies...have excellent prospects for earnings
and dividend growth..."
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In anticipation of last year's run-up in interest rates, we had reduced our
holdings in interest-sensitive stocks. This year, as the scenario began to
change, we moved to rebuild these positions. Good values are now available
throughout the sector, and many of the financial service companies (especially
banks and insurance companies) have excellent prospects for earnings and
dividend growth in the years ahead. This positive outlook is based largely on
our analysis of demographic trends, which favor financial asset growth, as the
"baby boomers" move from their primary consumption years into their primary
savings and investment years. Consolidation is also taking place throughout the
sector, further enhancing the expected returns of the surviving companies
through cost savings and product line extensions.
In keeping with the Fund's objective of seeking long-term appreciation of
capital and income through investments in undervalued stocks of large and medium
sized companies, we continue to focus on companies with good prospects for
growth in earnings and, especially, in dividends. We appreciate your continued
trust and confidence in Lord Abbett Fundamental Value Fund and we welcome any
questions or comments you may have about the Fund or its investment policies.
<PAGE>
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Fund Facts
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SOME ADVANTAGES OF LORD ABBETT FUNDAMENTAL VALUE FUND:
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. Flexibility The Fund seeks to invest in undervalued stocks of large
and midsized companies. This policy allows management to look at
opportunities for value in a very large universe.
. Maneuverability The Fund's portfolio manager can quickly implement
investment decisions because of the Fund's size and investment
flexibility.
. Professional Management Thorough, value-driven research is the basis
for portfolio selections. There are currently 55 issues in the Fund's
portfolio.
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Statement of Net Assets June 30, 1995
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<TABLE>
<CAPTION>
Number Market Value
Security of Shares (Note 1a)
-----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
INVESTMENTS IN COMMON STOCKS 92.15%
-----------------------------------------------------------------------------------------------------------------------------------
Aerospace Boeing Co.-World's leading commercial aircraft manufacturer 12,000 $ 751,500
4.03% ----------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp.-Leading producer of military aircraft
and space systems technology 5,000 315,625
----------------------------------------------------------------------------------------------------------------
Rockwell International Corp.-Leading producer of space systems and electrical and
electronic products including defense, telecommunications and factory automation systems 10,000 457,500
----------------------------------------------------------------------------------------------------------------
Total 1,524,625
-----------------------------------------------------------------------------------------------------------------------------------
Airlines 1.78% British Airways plc ADR-One of the world's largest international airlines 10,000 672,500
-----------------------------------------------------------------------------------------------------------------------------------
Auto Parts Genuine Parts Company-National distributor of automotive replacement parts 15,000 568,125
5.33% ----------------------------------------------------------------------------------------------------------------
Snap-On, Inc.-Manufactures and distributes hand tools and diagnostic
equipment for the automotive industry 25,000 968,750
----------------------------------------------------------------------------------------------------------------
TRW Inc.-Diversified manufacturer of auto parts 6,000 479,250
----------------------------------------------------------------------------------------------------------------
Total 2,016,125
-----------------------------------------------------------------------------------------------------------------------------------
Automobiles 1.18% Ford Motor Co.-World's second largest producer of cars and trucks 15,000 446,250
-----------------------------------------------------------------------------------------------------------------------------------
Banks: Comerica Inc.-Midwestern regional bank holding company 10,000 321,250
Regional ----------------------------------------------------------------------------------------------------------------
3.56% Fleet Financial Group, Inc.-Northeastern regional bank holding company 15,000 556,875
----------------------------------------------------------------------------------------------------------------
KeyCorp-Multi-regional bank holding company serving the Northwest U.S. 15,000 470,625
----------------------------------------------------------------------------------------------------------------
Total 1,348,750
-----------------------------------------------------------------------------------------------------------------------------------
Building Materials Masco Corp.-Manufactures home furnishings, kitchen and bathroom products and
.36% other building and home improvement products 5,000 135,000
-----------------------------------------------------------------------------------------------------------------------------------
Chemicals Hanna, M.A. Co.-Leading producer and distributor of plastic compounds,
2.06% resins and additives 30,000 780,000
-----------------------------------------------------------------------------------------------------------------------------------
Containers 2.06% Sonoco Products Co.-Leading U.S. producer of paper and plastic packaging components 31,500 779,625
-----------------------------------------------------------------------------------------------------------------------------------
Data Processing H & R Block Inc.-Leader in preparation of income tax returns and
Services on-line computer systems (CompuServe) 15,000 616,875
3.35% ----------------------------------------------------------------------------------------------------------------
General Motors Corp. Class E (Electronic Data Systems)-
Leading computer services company 15,000 652,500
----------------------------------------------------------------------------------------------------------------
Total 1,269,375
-----------------------------------------------------------------------------------------------------------------------------------
Drugs/Health Baxter International Inc.-World's leading distributor and major manufacturer of hospital
Care Products supplies and related medical equipment 15,000 545,625
6.06% ----------------------------------------------------------------------------------------------------------------
Merck & Co., Inc.-Nation's largest ethical drug manufacturer 15,000 735,000
----------------------------------------------------------------------------------------------------------------
SmithKline Beecham plc ADR-United Kingdom-based health care company
providing prescription and over-the-counter drugs and clinical laboratory services 22,400 1,013,600
----------------------------------------------------------------------------------------------------------------
Total 2,294,225
-----------------------------------------------------------------------------------------------------------------------------------
Electric Power Carolina Power & Light Co.-Electric utility company serving North and South Carolina 25,000 756,250
5.76% ----------------------------------------------------------------------------------------------------------------
CINergy Corp.-Supplier of electricity and natural gas in Southwestern Ohio and
adjacent Kentucky and Indiana territories 30,000 787,500
----------------------------------------------------------------------------------------------------------------
Ipalco Enterprises Inc.-Major midwestern electric utility holding company 20,000 637,500
----------------------------------------------------------------------------------------------------------------
Total 2,181,250
----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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Statement of Net Assets June 30, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market Value
Security of Shares (Note 1a)
-----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Electrical
Equipment Emerson Electric Co.-Diversified manufacturer of consumer and
2.27% industrial electrical components 12,000 $ 858,000
-----------------------------------------------------------------------------------------------------------------------------------
Electronics: Harris Corp.-Manufacturer of advanced electronic systems and
Communications communications equipment 15,000 774,375
2.05%
-----------------------------------------------------------------------------------------------------------------------------------
Electronics:
Components 2.23% AMP Incorporated-World's leading producer of electronic connection devices 20,000 845,000
-----------------------------------------------------------------------------------------------------------------------------------
Electronics: Perkin-Elmer Corporation-Manufacturer of analytical instruments 30,000 1,065,000
Equipment ----------------------------------------------------------------------------------------------------------------
4.45% Raytheon Company-A leading factor in air-defense missiles and military
electronic products 8,000 621,000
----------------------------------------------------------------------------------------------------------------
Total 1,686,000
-----------------------------------------------------------------------------------------------------------------------------------
Financial: American Express Company-Operates largest travel and entertainment
Miscellaneous charge card business 20,000 702,500
1.86%
-----------------------------------------------------------------------------------------------------------------------------------
Food Archer-Daniels-Midland Co.-Leading processor and seller of agricultural commodities 40,000 745,000
10.54% ----------------------------------------------------------------------------------------------------------------
Conagra Inc.-Major producer of agricultural and consumer products 10,000 348,750
----------------------------------------------------------------------------------------------------------------
Dean Foods Co.-Major producer of dairy foods, canned and frozen vegetables 30,000 840,000
----------------------------------------------------------------------------------------------------------------
Hershey Foods Corp.-Major U.S. maker of chocolate and confectionary products 10,000 552,500
----------------------------------------------------------------------------------------------------------------
Sara Lee Corp.-A diversified maker of branded food products, apparel and
household consumer products 20,000 570,000
----------------------------------------------------------------------------------------------------------------
Supervalu Inc.-Second largest U.S. food wholesaler 32,000 932,000
----------------------------------------------------------------------------------------------------------------
Total 3,988,250
-----------------------------------------------------------------------------------------------------------------------------------
Insurance American General Corporation-A leading provider of financial services, including
6.96% life/health insurance, annuities, consumer credit and mortgage financing 10,000 337,500
----------------------------------------------------------------------------------------------------------------
Chubb Corp.-Broad-based property and casualty insurance organization 15,000 1,201,875
----------------------------------------------------------------------------------------------------------------
Lincoln National Corp.-Holding company with operations in insurance,
reinsurance and investment-related services 16,000 700,000
----------------------------------------------------------------------------------------------------------------
St. Paul Companies Inc.-Large property and casualty insurance company 8,000 394,000
----------------------------------------------------------------------------------------------------------------
Total 2,633,375
-----------------------------------------------------------------------------------------------------------------------------------
Machinery:
Diversified 1.15% Goulds Pumps, Inc.-Largest U.S. producer of industrial and residential pump systems 20,000 435,000
-----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Minnesota Mining & Mfg. Co.-Diversified global manufacturer of value-added
2.42% industrial, consumer and medical products 16,000 916,000
-----------------------------------------------------------------------------------------------------------------------------------
Natural Gas
Diversified 1.91% Equitable Resources, Inc.-Natural gas distributor in Appalachia; oil and gas exploration 25,000 721,875
-----------------------------------------------------------------------------------------------------------------------------------
Oil: Domestic Amoco Corporation-Major integrated petroleum and natural gas company with
1.23% sizable interests in chemicals 7,000 466,375
-----------------------------------------------------------------------------------------------------------------------------------
Oil: Chevron Corp.-Worldwide petroleum company with important interests
International in chemicals and minerals 12,000 559,500
3.62% ----------------------------------------------------------------------------------------------------------------
Exxon Corp.-World's largest integrated oil company 8,000 565,000
----------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co.-Major international oil company 2,000 243,750
----------------------------------------------------------------------------------------------------------------
Total 1,368,250
-----------------------------------------------------------------------------------------------------------------------------------
Paper and Forest
Products 1.17% Westvaco Corporation-Major producer of paper and paperboard products 10,000 442,500
-----------------------------------------------------------------------------------------------------------------------------------
Printing and
Publishing 2.38% Donnelley, R.R. & Sons Co.-Largest commercial printer in the U.S. 25,000 900,000
-----------------------------------------------------------------------------------------------------------------------------------
Retail Dayton Hudson Corp.-Diversified retailer servicing the discount and
3.32% department store markets 5,000 358,750
----------------------------------------------------------------------------------------------------------------
Sears, Roebuck & Co.-Major U.S. retailer 15,000 898,125
----------------------------------------------------------------------------------------------------------------
Total 1,256,875
-----------------------------------------------------------------------------------------------------------------------------------
Savings and Loan
.89% Standard Federal Bancorporation Inc.-Regional savings and loan company 10,000 336,250
-----------------------------------------------------------------------------------------------------------------------------------
Textiles: National Service Industries, Inc.-Diversified manufacturer of lighting equipment,
Apparel rental uniforms and specialty chemicals 25,000 721,875
2.62% ----------------------------------------------------------------------------------------------------------------
V.F. Corp.-Leading producer of blue jeans and other apparel 5,000 268,750
----------------------------------------------------------------------------------------------------------------
Total 990,625
----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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Statement of Net Assets June 30, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal Market Value
Security Amount (Note 1a)
-----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Tire and Rubber Cooper Tire & Rubber Company-Major manufacturer of replacement tires and
Goods 1.29% inner tubes for cars, trucks and buses 20,000 $ 487,500
-----------------------------------------------------------------------------------------------------------------------------------
Waste Disposal Browning Ferris Industries Inc.-A leading international provider of solid waste
4.26% disposal services 25,000 903,125
----------------------------------------------------------------------------------------------------------------
WMX Technologies Inc.-A leading international provider of solid waste
disposal and other environmental services 25,000 709,375
----------------------------------------------------------------------------------------------------------------
Total 1,612,500
----------------------------------------------------------------------------------------------------------------
Total Investments in Common Stocks (Cost $29,429,699) 34,868,975
-----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES 7.85%
-----------------------------------------------------------------------------------------------------------------------------------
Corporate American Express Credit Corp. 5.50% due 7/3/1995 650M 650,000
Obligations, ----------------------------------------------------------------------------------------------------------------
at Cost Beneficial Corp. 5.88% due 7/5/1995 450M 450,000
----------------------------------------------------------------------------------------------------------------
General Electric Co. 5.85% due 7/7/1995 100M 1,000,000
----------------------------------------------------------------------------------------------------------------
Prudential Funding Corp. 5.94% due 7/6/1995 700M 700,000
----------------------------------------------------------------------------------------------------------------
Total Corporate Obligations 2,800,000
-----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 169,202
----------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 2,969,202
-----------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $13.60 a share on 2,781,213 shares of $.10 par value capital stock
100.00% outstanding; authorized, 150,000,000 shares) $37,838,177
----------------------------------------------------------------------------------------------------------------
The descriptions of the companies shown in the portfolio, which were obtained from published reports and other
sources believed to be reliable, are supplemental and are not covered by the Independent Auditors' Report.
See Notes to Financial Statements.
</TABLE>
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Statement of Operations For the Year Ended June 30, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
-------------------------------------------------------------------------------------------------------------------
Income Dividends $ 920,767
-----------------------------------------------------------------------------------------------------
Interest 174,122
-----------------------------------------------------------------------------------------------------
Total income $1,094,889
-------------------------------------------------------------------------------------------------------------------
Expenses Management fee (Note 5) 255,109
-----------------------------------------------------------------------------------------------------
12b-1 distribution plan (Note 5) 71,138
-----------------------------------------------------------------------------------------------------
Shareholder servicing 60,000
-----------------------------------------------------------------------------------------------------
Audit 27,000
-----------------------------------------------------------------------------------------------------
Reports to shareholders 18,000
-----------------------------------------------------------------------------------------------------
Registration 15,050
-----------------------------------------------------------------------------------------------------
Other 23,432
-----------------------------------------------------------------------------------------------------
Total expenses 469,729
-----------------------------------------------------------------------------------------------------
Net investment income 625,160
-----------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments (Note 4)
-------------------------------------------------------------------------------------------------------------------
Net realized gain from security transactions (excluding short-term securities)
-----------------------------------------------------------------------------------------------------
Proceeds from sales 16,890,801
-----------------------------------------------------------------------------------------------------
Cost of securities sold 14,128,469
-----------------------------------------------------------------------------------------------------
Net realized gain 2,762,332
-------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments
-----------------------------------------------------------------------------------------------------
Beginning of year 2,466,631
-----------------------------------------------------------------------------------------------------
End of year 5,439,276
-----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 2,972,645
-----------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 5,734,977
-----------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $6,360,137
-------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<PAGE>
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Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------
Increase (Decrease) in Net Assets 1995 1994
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations Net investment income $ 625,160 $ 594,696
------------------------------------------------------------------------------------------------------------------
Net realized gain from security transactions 2,762,332 1,766,719
------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 2,972,645 (1,635,632)
------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,360,137 725,783
-------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of shares sold and reacquired (Note 1d) 41,884 37,572
-------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from (Note 2)
------------------------------------------------------------------------------------------------------------------
Net investment income (499,978) (446,994)
------------------------------------------------------------------------------------------------------------------
Net realized gain from security transactions (2,715,942) (3,904,007)
------------------------------------------------------------------------------------------------------------------
Total distributions (3,215,920) (4,351,001)
-------------------------------------------------------------------------------------------------------------------------------
Capital share transactions (exclusive of amounts allocated to net investment income)
------------------------------------------------------------------------------------------------------------------
Net proceeds from sales of 630,907 and 560,304 shares, respectively 7,724,276 7,125,135
------------------------------------------------------------------------------------------------------------------
Net asset value of 243,978 and 314,457 shares, respectively, issued to
shareholders in reinvestment of net investment income and realized gains
from security transactions 2,855,092 3,912,365
------------------------------------------------------------------------------------------------------------------
Total 10,579,368 11,037,500
------------------------------------------------------------------------------------------------------------------
Cost of 697,373 and 416,822 shares reacquired, respectively (8,490,607) (5,289,694)
------------------------------------------------------------------------------------------------------------------
Increase in net assets derived from capital share transactions (net increase of 177,512
and 457,939 shares, respectively) 2,088,761 5,747,806
-------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 5,274,862 2,160,160
-------------------------------------------------------------------------------------------------------------------------------
Net Assets
-------------------------------------------------------------------------------------------------------------------------------
Beginning of year 32,563,315 30,403,155
------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income of $871,975
and $667,937, respectively) $37,838,177 $32,563,315
-------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
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Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended June 30,
Per Share Operating Performance: 1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 12.51 $ 14.17 $ 13.11 $ 12.22 $ 12.64
--------------------------------------------------------------------------------------------------------------
Income from investment operations
------------------------------------------------------------------------------------------------------
Net investment income .23 .21 .20 .22 .26
------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.0825 .12 1.86 1.36 .12
------------------------------------------------------------------------------------------------------
Total from investment operations 2.3125 .33 2.06 1.58 .38
--------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.19) (.19) (.22) (.27) (.24)
------------------------------------------------------------------------------------------------------
Distributions from net realized gain (1.0325) (1.80) (.78) (.42) (.56)
-----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 13.60 $ 12.51 $ 14.17 $ 13.11 $ 12.22
-----------------------------------------------------------------------------------------------------------------------
Total Return* 20.15% 2.64% 16.95% 13.46% 3.22%
-----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
-----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $37,838 $32,563 $30,403 $25,827 $24,200
------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
--------------------------------------------------------------------------------------------------------------
Expenses 1.38% 1.28% 1.60% 1.60% 1.86%
------------------------------------------------------------------------------------------------------
Net investment income 1.84% 1.83% 1.61% 1.85% 2.30%
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51.35% 67.88% 82.48% 57.86% 47.07%
-----------------------------------------------------------------------------------------------------------------------
*Total return does not consider the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
<PAGE>
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Notes to Financial Statements
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1. Significant Accounting Policies The Company is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The following is a summary of significant accounting policies
consistently followed by the Company. The policies are in conformity with
generally accepted accounting principles. (a) Market value is determined as
follows: Securities listed or admitted to trading privileges on any national
securities exchange are valued at the last sales price on the principal
securities exchange on which such securities are traded, or, if there is no
sale, at the mean between the last bid and asked price on such exchange.
Securities traded in the over-the-counter market are valued at the mean between
the last bid and asked price in such market, except that securities admitted to
trading on the NASDAQ National Market System are valued at the last sales price
if it is determined that such price more accurately reflects the value of such
securities. Securities for which market quotations are not available are valued
at fair value under procedures approved by the Board of Directors. (b) It is
the policy of the Company to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income in taxable distributions. Therefore, no federal income tax
provision is required. (c) Security transactions are accounted for on the date
that the securities are purchased or sold (trade date). Dividend income and
distributions to shareholders are recorded on the ex-dividend date. (d) A
portion of proceeds from sales and costs of repurchases of capital shares,
equivalent to the amount of distributable net investment income on the date of
the transaction, is credited or charged to undistributed income. Undistributed
net investment income per share thus is unaffected by sales or repurchases of
shares. 2. Distributions Net realized gains from security transactions are
expected to be declared and distributed to shareholders in July and December. At
June 30, 1995, the accumulated undistributed net realized gain for financial
reporting purposes, which is substantially the same as for federal income tax
purposes, aggregated $1,033,328. A distribution of $.53 a share aggregating
$1,483,088 was declared on July 27, 1995 from net realized gains from sales of
securities and paid August 4, 1995 to each shareholder of record on July 27,
1995. A dividend of $.09 a share from net investment income aggregating $251,845
was declared on July 27, 1995 and paid August 4, 1995 to each shareholder of
record on July 27, 1995. Income and capital gains distributions are determined
in accordance with income tax regulations which may differ from methods used to
determine the corresponding income and capital gains amounts in accordance with
generally accepted accounting principles. These differences are primarily caused
by differences in the timing of the recognition of certain components of income,
expense, or capital gain. Where such differences are permanent in nature, they
are reclassified in the Sources of Net Assets based upon their ultimate
characterization for federal income tax purposes. Any such reclassifications
will have no effect on net assets, results of operations, or net asset value of
the fund. 3. Capital Paid In At June 30, 1995, capital paid in aggregated
$30,493,598. 4. Purchases and Sales of Securities Purchases and sales of
investment securities (other than short-term investments) aggregated $16,109,850
and $16,890,801, respectively. Security gains and losses are computed on the
identified cost basis. As of June 30, 1995, net unrealized appreciation for
federal income tax purposes aggregated $5,439,276, of which $5,601,138 related
to appreciated securities and $161,862 related to depreciated securities. For
federal income tax purposes, the identified cost of investments owned at June
30, 1995 was substantially the same as the cost for financial reporting
purposes. 5. Management Fee and Other Transactions with Affiliates Lord, Abbett
& Co. received a management fee of $255,109 for which it supplied investment
management, research, statistical and advisory services and paid officers'
remuneration and certain other expenses of the Company. The management fee is
based on average daily net assets at the following annual rates: .75 of 1% on
the first $200 million; .65 of 1% on the next $300 million; and .50 of 1% on the
excess over $500 million. Lord, Abbett & Co. also received $11,296 representing
payment of commissions on sales of capital stock of the Company after deducting
$70,999 allowed to authorized distributors as concessions. Certain of the
Company's officers and directors have an interest in Lord, Abbett & Co. The
Company has a Rule 12b-1 Plan providing for (a) the payment of a service fee at
the annual rate of .25% of the average daily net asset value of shares sold by
dealers and (b) a one-time 1% distribution fee at the time of sale on shares
sold at net asset value of $1 million or more. 6. Directors' Remuneration The
Directors of the Company associated with Lord, Abbett & Co. and all officers of
the Company receive no compensation from the Company for acting as such. Outside
Directors' fees, including attendance fees for board and committee meetings, and
outside Directors' retirement costs, are allocated among all funds in the Lord
Abbett group based on net assets of each fund. The direct remuneration accrued
during the period for outside Directors of the Company as a group was $641
(exclusive of expenses), which has been deemed invested in shares of the Company
under a deferred compensation plan contemplating future payment of the value of
those shares. As of June 30, 1995, the aggregate amount in Directors' accounts
maintained under the plan was $67,143. Retirement costs accrued during the
period amounted to $360.
--------------------------------------------------------------------------------
Copyright (C) 1995 by Lord Abbett Fundamental Value Fund, Inc., 767 Fifth
Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Fundamental Value Fund, Inc., is to be distributed only if preceded
or accompanied by a current prospectus which includes information concerning the
Fund's investment objectives and policies, sales charges and other matters.
All rights reserved. Printed in the U.S.A.
--------------------------------------------------------------------------------
<PAGE>
================================================================================
Independent Auditors' Report
--------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Lord Abbett Fundamental Value Fund, Inc.:
We have audited the accompanying statement of net assets of Lord Abbett
Fundamental Value Fund, Inc. as of June 30, 1995, the related statements of
operations for the year then ended and of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial statements and
the financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at June 30,
1995 by correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Lord Abbett
Fundamental Value Fund, Inc. at June 30, 1995, the results of its operations,
the changes in its net assets and the financial highlights for the above-stated
periods in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
August 3, 1995
================================================================================
Our Management
--------------------------------------------------------------------------------
Investment Manager and
Underwriter
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Custodian
Morgan Guaranty Trust Company
of New York
Transfer Agent
United Missouri Bank of
Kansas City, N.A.
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, MO 64141
800-821-5129
--------------------------------------------------------------------------------
<PAGE>
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[LOGO APPEARS HERE] Lord, Abbett & Co.
Investment Management
A Tradition of Performance Through Disciplined Investing
LAFV-2-695
The GM Building * 767 Fifth Avenue * New York, NY 10153-0203 (8/95)
