Lord Abbett Stock Appreciation Fund N-CSRS Certified semi-annual shareholder report (management investment company)

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 – 09597

LORD ABBETT STOCK APPRECIATION FUND

(Exact name of Registrant as specified in charter)

90 Hudson Street, Jersey City, NJ 07302

(Address of principal executive offices) (Zip code)

Thomas R. Phillips, 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: (800) 201-6984

Date of fiscal year end: 7/31

Date of reporting period: 1/31/10

Item 1: Report(s) to Shareholders.

2010

LORD ABBETT

SEMIANNUAL

REPORT    

Lord Abbett

Stock Appreciation Fund

For the six-month period ended January 31, 2010

Lord Abbett Stock Appreciation Fund

Semiannual Report

For the six-month period ended January 31, 2010

From left to right: Robert S. Dow, Director and Chairman of the Lord Abbett Funds; E. Thayer Bigelow, Independent Lead Director of the Lord Abbett Funds; and Daria L. Foster, Director and President of the Lord Abbett Funds.

Dear Shareholders: We are pleased to provide you with this semiannual report for the Lord Abbett Stock Appreciation Fund for the six-month period ended January 31, 2010. For detailed and more timely information about the Fund, please visit our Website at www.lordabbett.com, where you can access the quarterly commentaries by the Fund’s portfolio managers. General information about Lord Abbett mutual funds, as well as in-depth discussions of market trends and investment strategies, is also provided in Lord Abbett Insights, a quarterly newsletter available on our Website.

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,

Robert S. Dow

Chairman

1

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 (August 1, 2009 through January 31, 2010).

Actual Expenses

For each class of the Fund, the first line of the applicable 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 the Period 8/1/09 – 1/31/10” 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 applicable 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.

2

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†
	8/1/09		1/31/10		8/1/09 - 1/31/10
Class A
Actual	$	1,000.00	$	1,080.00	$	7.86
Hypothetical (5% Return Before Expenses)	$	1,000.00	$	1,017.64	$	7.63
Class B
Actual	$	1,000.00	$	1,075.70	$	11.25
Hypothetical (5% Return Before Expenses)	$	1,000.00	$	1,014.35	$	10.92
Class C
Actual	$	1,000.00	$	1,075.70	$	11.25
Hypothetical (5% Return Before Expenses)	$	1,000.00	$	1,014.35	$	10.92
Class F
Actual	$	1,000.00	$	1,079.60	$	6.55
Hypothetical (5% Return Before Expenses)	$	1,000.00	$	1,018.90	$	6.36
Class I
Actual	$	1,000.00	$	1,081.10	$	6.03
Hypothetical (5% Return Before Expenses)	$	1,000.00	$	1,019.41	$	5.85
Class P
Actual	$	1,000.00	$	1,079.50	$	7.39
Hypothetical (5% Return Before Expenses)	$	1,000.00	$	1,018.07	$	7.17
Class R2
Actual	$	1,000.00	$	1,081.70	$	6.40
Hypothetical (5% Return Before Expenses)	$	1,000.00	$	1,019.08	$	6.21
Class R3
Actual	$	1,000.00	$	1,078.00	$	8.64
Hypothetical (5% Return Before Expenses)	$	1,000.00	$	1,016.89	$	8.39

^† For each class of the Fund, net expenses are equal to the annualized expense ratio for such class (1.50% for Class A, 2.15% for Classes B and C, 1.25% for Class F, 1.15% for Class I, 1.41% for Class P, 1.22% for Class R2 and 1.65% for Class R3) multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period).

Portfolio Holdings Presented by Sector

January 31, 2010

Sector*	%**	Sector*	%**
Consumer Discretionary	18.08%	Materials & Processing	3.24%
Consumer Staples	5.73%	Producer Durables	8.32%
Energy	6.12%	Technology	31.31%
Financial Services	11.00%	Short-Term Investment	0.24%
Healthcare	15.96%	Total	100.00%

* A sector may comprise several industries.

** Represents percent of total investments.

3

Schedule of Investments (unaudited)

January 31, 2010

Investments	Shares	Value (000)
LONG-TERM INVESTMENTS 100.07%
COMMON STOCKS 99.91%
Advertising Agencies 0.79%
Lamar Advertising Co. Class A*	49,202	$	1,407
Aerospace 1.29%
United Technologies Corp.	34,082		2,300
Asset Management & Custodian 1.58%
BlackRock, Inc.	8,517		1,821
Franklin Resources, Inc.	10,000		990
Total			2,811
Auto Services 0.42%
Goodyear Tire & Rubber Co. (The)*	56,120		749
Back Office Support, Human Resources, and Consulting 1.19%
Monster Worldwide, Inc.*	76,620		1,194
Robert Half International, Inc.	34,089		918
Total			2,112
Banks: Diversified 4.18%
Bank of America Corp.	126,168		1,915
Fifth Third Bancorp	86,423		1,075
KeyCorp	217,568		1,562
PNC Financial Services Group, Inc. (The)	20,346		1,128
SunTrust Banks, Inc.	42,017		1,022
Wells Fargo & Co.	25,595		728
Total			7,430
Beverage: Soft Drinks 2.15%
Coca-Cola Co. (The)	18,685		1,014
PepsiCo, Inc.	47,053		2,805
Total			3,819

Investments	Shares	Value (000)
Biotechnology 2.95%
Alexion Pharmaceuticals, Inc.*	20,570	$	954
Amgen, Inc.*	35,295		2,064
Celgene Corp.*	16,901		960
Human Genome Sciences, Inc.*	48,230		1,277
Total			5,255
Casinos & Gambling 1.19%
International Game Technology	54,038		991
MGM Mirage*	101,439		1,122
Total			2,113
Chemical: Diversified 1.15%
Albemarle Corp.	33,088		1,182
Celanese Corp. Series A	29,694		864
Total			2,046
Coal 1.12%
CONSOL Energy, Inc.	21,941		1,023
Peabody Energy Corp.	22,990		968
Total			1,991
Communications Technology 4.15%
Cisco Systems, Inc.*	220,222		4,948
Juniper Networks, Inc.*	37,636		935
QUALCOMM, Inc.	38,066		1,492
Total			7,375
Computer Services, Software & Systems 9.04%
Adobe Systems, Inc.*	39,663		1,281
Equinix, Inc.*	12,894		1,241
Google, Inc. Class A*	9,393		4,973
Microsoft Corp.	148,905		4,196
Nuance Communications, Inc.*	95,616		1,436
Oracle Corp.	71,307		1,644
VMware, Inc. Class A*	28,981		1,316
Total			16,087

See Notes to Financial Statements.

4

Schedule of Investments (unaudited)(continued)

January 31, 2010

Investments	Shares	Value (000)
Computer Technology 11.82%
Apple, Inc.*	39,267	$	7,544
Dell, Inc.*	34,396		444
EMC Corp.*	59,944		999
Hewlett-Packard Co.	98,023		4,614
International Business Machines Corp.	30,176		3,693
NetApp, Inc.*	53,268		1,552
NVIDIA Corp.*	76,797		1,182
Palm, Inc.*	95,527		992
Total			21,020
Copper 0.69%
Freeport-McMoRan Copper & Gold, Inc.	18,512		1,235
Diversified Financial Services 2.54%
Capital One Financial Corp.	39,440		1,454
Goldman Sachs Group, Inc. (The)	6,976		1,037
Lazard Ltd. Class A	30,300		1,168
Morgan Stanley	31,898		854
Total			4,513
Diversified Manufacturing Operations 0.54%
Honeywell International, Inc.	24,626		952
Diversified Retail 4.91%
Amazon.com, Inc.*	11,918		1,495
Costco Wholesale Corp.	16,504		948
J.C. Penney Co., Inc.	21,794		541
Kohl’s Corp.*	18,417		928
Nordstrom, Inc.	27,287		942
Target Corp.	45,185		2,317
Wal-Mart Stores, Inc.	29,390		1,570
Total			8,741
Drug & Grocery Store Chains 0.92%
Walgreen Co.	45,358		1,635

Investments	Shares	Value (000)
Education Services 0.75%
DeVry, Inc.	21,779	$	1,330
Electronic Components 0.50%
Amphenol Corp. Class A	22,141		882
Entertainment 0.94%
DreamWorks Animation SKG, Inc. Class A*	20,129		784
Walt Disney Co. (The)	30,178		892
Total			1,676
Financial Data & Systems 1.36%
MasterCard, Inc. Class A	4,450		1,112
Visa, Inc. Class A	15,860		1,301
Total			2,413
Gold 0.36%
Newmont Mining Corp.	15,153		649
Healthcare Facilities 0.59%
DaVita, Inc.*	17,482		1,045
Healthcare Management Services 1.37%
CIGNA Corp.	21,111		713
Humana, Inc.*	35,351		1,719
Total			2,432
Healthcare Services 2.97%
athenahealth, Inc.*	19,000		747
Cerner Corp.*	11,062		837
Express Scripts, Inc.*	20,514		1,720
McKesson Corp.	15,717		925
Medco Health Solutions, Inc.*	17,132		1,053
Total			5,282
Hotel/Motel 1.31%
Marriott International, Inc. Class A	40,129		1,052
Starwood Hotels & Resorts Worldwide, Inc.	38,434		1,281
Total			2,333

See Notes to Financial Statements.

5

Schedule of Investments (unaudited)(continued)

January 31, 2010

Investments	Shares	Value (000)
Insurance: Life 0.76%
Prudential Financial, Inc.	27,096	$	1,355
Machinery: Construction & Handling 0.64%
Caterpillar, Inc.	21,740		1,136
Machinery: Industrial 0.52%
Kennametal, Inc.	37,909		928
Medical & Dental Instruments & Supplies 2.88%
Edwards Lifesciences Corp.*	11,538		1,034
Kinetic Concepts, Inc.*	34,110		1,408
ResMed, Inc.*	24,825		1,270
Stryker Corp.	27,239		1,414
Total			5,126
Metal Fabricating 0.40%
Precision Castparts Corp.	6,823		718
Offshore Drilling & Other Services 0.56%
Atwood Oceanics, Inc.*	29,812		999
Oil: Crude Producers 2.95%
Cabot Oil & Gas Corp.	33,048		1,265
Continental Resources, Inc.*	29,799		1,131
EOG Resources, Inc.	10,100		913
Range Resources Corp.	15,623		719
Southwestern Energy Co.*	28,442		1,220
Total			5,248
Oil Well Equipment & Services 1.51%
Cameron International Corp.*	21,183		798
Helmerich & Payne, Inc.	20,471		856
Schlumberger Ltd.	16,277		1,033
Total			2,687
Personal Care 1.66%
Colgate-Palmolive Co.	17,942		1,436
Procter & Gamble Co. (The)	24,622		1,515
Total			2,951

Investments	Shares	Value (000)
Pharmaceuticals 5.25%
Abbott Laboratories	59,376	$	3,143
AmerisourceBergen Corp.	39,017		1,064
Johnson & Johnson	15,058		947
Vertex Pharmaceuticals, Inc.*	26,927		1,034
Warner Chilcott plc Class A (Ireland)*(a)	81,928		2,239
Watson Pharmaceuticals, Inc.*	23,769		912
Total			9,339
Production Technology Equipment 0.59%
Lam Research Corp.*	31,608		1,043
Railroads 2.06%
Kansas City Southern*	58,148		1,727
Union Pacific Corp.	32,000		1,936
Total			3,663
Restaurants 0.97%
Panera Bread Co. Class A*	15,123		1,080
Starbucks Corp.*	29,340		639
Total			1,719
Scientific Instruments: Gauges & Meters 0.51%
Itron, Inc.*	14,814		912
Securities Brokerage & Services 0.46%
Charles Schwab Corp. (The)	44,684		817
Semiconductors & Components 4.74%
Avnet, Inc.*	27,479		727
Broadcom Corp. Class A*	48,353		1,292
Cree, Inc.*	17,692		989
Cypress Semiconductor Corp.*	90,494		909
Intel Corp.	56,657		1,099
Linear Technology Corp.	26,417		690
Marvell Technology Group Ltd.*	34,000		593
PMC-Sierra, Inc.*	108,340		861

See Notes to Financial Statements.

6

Schedule of Investments (unaudited)(concluded)

January 31, 2010

Investments	Shares	Value (000)
Semiconductors & Components (continued)
Silicon Laboratories, Inc.*	17,516	$	740
Texas Instruments, Inc.	23,616		531
Total			8,431
Specialty Retail 5.28%
Abercrombie & Fitch Co. Class A	36,423		1,149
American Eagle Outfitters, Inc.	63,878		1,015
Bed Bath & Beyond, Inc.*	34,143		1,321
CarMax, Inc.*	38,134		787
Dress Barn, Inc. (The)*	44,626		1,051
Limited Brands, Inc.	103,491		1,968
Staples, Inc.	49,704		1,166
Urban Outfitters, Inc.*	29,832		942
Total			9,399
Steel 0.64%
United States Steel Corp.	25,606		1,138
Telecommunications Equipment 0.58%
Crown Castle International Corp.*	27,688		1,023
Textiles Apparel & Shoes 1.57%
Coach, Inc.	30,000		1,046
NIKE, Inc. Class B	13,102		835
Timberland Co. (The) Class A*	53,160		914
Total			2,795
Tobacco 1.02%
Philip Morris International, Inc.	39,757		1,809
Transportation: Miscellaneous 1.00%
United Parcel Service, Inc. Class B	30,760		1,777

Investments	Shares		Value (000)
Truckers 0.59%
J.B. Hunt Transport Services, Inc.		34,486	$	1,057
Total Common Stocks (cost $153,660,648)				177,703
PREFERRED STOCK 0.16%
Banks: Diversified
Bank of America Corp.* (cost $286,500)		19,100		288
Total Long-Term Investments (cost $153,947,148)				177,991
	Principal Amount (000)
SHORT-TERM INVESTMENT 0.24%
Repurchase Agreement
Repurchase Agreement dated 1/29/2010, 0.01% due 2/1/2010 with Fixed Income Clearing Corp. collateralized by $435,000 of Federal Home Loan Bank at 0.93% due 3/30/2010; value: $438,806; proceeds: $429,857 (cost $429,856)	$	430		430
Total Investments in Securities 100.31% (cost $154,377,004)				178,421
Liabilities in Excess of Other Assets (0.31%)				(558	)
Net Assets 100.00%			$	177,863

* Non-income producing security.

^(a) Foreign security traded in U.S. dollars.

See Notes to Financial Statements.

7

Statement of Assets and Liabilities (unaudited)

January 31, 2010

ASSETS:
Investments in securities, at value (cost $154,377,004)	$	178,421,367
Receivables:
Capital shares sold		221,458
Interest and dividends		71,766
Prepaid expenses and other assets		61,043
Total assets		178,775,634
LIABILITIES:
Payables:
Capital shares reacquired		473,234
Management fee		125,493
12b-1 distribution fees		114,121
Trustees’ fees		24,767
Fund administration		11,422
To affiliates (See Note 3)		6,281
Accrued expenses and other liabilities		157,016
Total liabilities		912,334
NET ASSETS	$	177,863,300
COMPOSITION OF NET ASSETS:
Paid-in capital	$	242,751,841
Accumulated net investment loss		(555,622	)
Accumulated net realized loss on investments and foreign currency related transactions		(88,377,282	)
Net unrealized appreciation on investments		24,044,363
Net Assets	$	177,863,300

See Notes to Financial Statements.

8

Statement of Assets and Liabilities (unaudited)(concluded)

January 31, 2010

Net assets by class:
Class A Shares	$	94,012,948
Class B Shares	$	19,419,064
Class C Shares	$	34,723,668
Class F Shares	$	1,881,909
Class I Shares	$	27,789,333
Class P Shares	$	547
Class R2 Shares	$	7,506
Class R3 Shares	$	28,325
Outstanding shares by class: (unlimited number of authorized shares of beneficial interest):
Class A Shares		19,350,932
Class B Shares		4,265,052
Class C Shares		7,634,331
Class F Shares		385,397
Class I Shares		5,638,748
Class P Shares		111.852
Class R2 Shares		1,533
Class R3 Shares		5,847
Net asset value, offering and redemption price per share (Net assets divided by outstanding shares):
Class A Shares-Net asset value		$4.86
Class A Shares-Maximum offering price (Net asset value plus sales charge of 5.75%)		$5.16
Class B Shares-Net asset value		$4.55
Class C Shares-Net asset value		$4.55
Class F Shares-Net asset value		$4.88
Class I Shares-Net asset value		$4.93
Class P Shares-Net asset value		$4.89
Class R2 Shares-Net asset value		$4.90
Class R3 Shares-Net asset value		$4.84

See Notes to Financial Statements.

9

Statement of Operations (unaudited)

For the Six Months Ended January 31, 2010

Investment income:
Dividends (net of foreign withholding taxes of $3,183)	$	1,010,422
Interest and other		9,313
Total investment income		1,019,735
Expenses:
Management fee		708,804
12b-1 distribution plan-Class A		177,311
12b-1 distribution plan-Class B		106,012
12b-1 distribution plan-Class C		185,864
12b-1 distribution plan-Class F		1,042
12b-1 distribution plan-Class P		4
12b-1 distribution plan-Class R2		23
12b-1 distribution plan-Class R3		71
Shareholder servicing		271,331
Registration		53,093
Fund administration		37,803
Subsidy (See Note 3)		33,775
Professional		32,700
Reports to shareholders		25,638
Custody		4,056
Trustees’ fees		3,388
Other		6,409
Gross expenses		1,647,324
Expense reductions (See Note 7)		(60	)
Management fees waived and expenses reimbursed (See Note 3)		(90,124	)
Net expenses		1,557,140
Net investment loss		(537,405	)
Net realized and unrealized gain:
Net realized gain on investments and foreign currency related transactions		6,295,228
Net change in unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		8,522,792
Net realized and unrealized gain		14,818,020
Net Increase in Net Assets Resulting From Operations	$	14,280,615

See Notes to Financial Statements.

10

Statements of Changes in Net Assets

DECREASE IN NET ASSETS	For the Six Months Ended January 31, 2010 (unaudited)			For the Year Ended July 31, 2009
Operations:
Net investment loss	$	(537,405	)	$	(466,099	)
Net realized gain (loss) on investments and foreign currency related transactions		6,295,228			(61,460,376	)
Net change in unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		8,522,792			13,968,505
Net increase (decrease) in net assets resulting from operations		14,280,615			(47,957,970	)
Capital share transactions (Net of share conversions) (See Note 11):
Net proceeds from sales of shares		15,744,001			53,723,699
Cost of shares reacquired		(30,962,549	)		(52,960,354	)
Net increase (decrease) in net assets resulting from capital share transactions		(15,218,548	)		763,345
Net decrease in net assets		(937,933	)		(47,194,625	)
NET ASSETS:
Beginning of period	$	178,801,233		$	225,995,858
End of period	$	177,863,300		$	178,801,233
Accumulated net investment loss	$	(555,622	)	$	(18,217	)

See Notes to Financial Statements.

11

Financial Highlights

	Class A Shares
	Six Months Ended 1/31/2010 (unaudited)		Year Ended 7/31
			2009		2008		2007		2006		2005
Per Share Operating Performance
Net asset value, beginning of period	$  4.50		$  5.74		$  5.98		$  5.07		$  5.19		$4.62
Investment operations:
Net investment loss(a)	(.01	)	–	(b)	(.03	)	(.04	)	(.03	)	(.01	)
Net realized and unrealized gain (loss)	.37		(1.24	)	(.21	)	.95		(.09	)	.58
Total from investment operations	.36		(1.24	)	(.24	)	.91		(.12	)	.57
Net asset value, end of period	$  4.86		$  4.50		$  5.74		$  5.98		$  5.07		$  5.19
Total Return(c)	8.00	%(d)	(21.60	)%	(4.01	)%	17.95	%	(2.31	)%	12.34	%
Ratios to Average Net Assets:
Expenses, excluding expense reductions and including management fees waived and expenses reimbursed	.76	%(d)	1.50	%	1.50	%	1.50	%	1.49	%	1.65	%
Expenses, including expense reductions, management fees waived and expenses reimbursed	.76	%(d)	1.50	%	1.50	%	1.50	%	1.49	%	1.65	%
Expenses, excluding expense reductions, management fees waived and expenses reimbursed	.81	%(d)	1.70	%	1.56	%	1.61	%	1.68	%	1.85	%
Net investment loss	(.21	)%(d)	(.10	)%	(.50	)%	(.62	)%	(.61	)%	(.25	)%
Supplemental Data:
Net assets, end of period (000)	$94,013		$96,736		$119,321		$120,513		$110,300		$88,882
Portfolio turnover rate	50.43	%(d)	160.11	%	174.14	%	158.74	%	188.26	%	103.08	%

^(a) Calculated using average shares outstanding during the period.

^(b) Amount is less than $.01.

^(c) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.

^(d) Not annualized.

See Notes to Financial Statements.

12

Financial Highlights (continued)

	Class B Shares
	Six Months Ended 1/31/2010 (unaudited)		Year Ended 7/31
			2009		2008		2007		2006		2005
Per Share Operating Performance
Net asset value, beginning of period	$  4.23		$  5.43		$  5.70		$  4.86		$  5.01		$  4.48
Investment operations:
Net investment loss(a)	(.02	)	(.03	)	(.07	)	(.07	)	(.07	)	(.04	)
Net realized and unrealized gain (loss)	.34		(1.17	)	(.20	)	.91		(.08	)	.57
Total from investment operations	.32		(1.20	)	(.27	)	.84		(.15	)	.53
Net asset value, end of period	$  4.55		$  4.23		$  5.43		$  5.70		$  4.86		$  5.01
Total Return(b)	7.57	%(c)	(22.10	)%	(4.74	)%	17.28	%	(2.99	)%	11.83	%
Ratios to Average Net Assets:
Expenses, excluding expense reductions and including management fees waived and expenses reimbursed	1.09	%(c)	2.15	%	2.15	%	2.15	%	2.14	%	2.29	%
Expenses, including expense reductions, management fees waived and expenses reimbursed	1.09	%(c)	2.15	%	2.15	%	2.15	%	2.14	%	2.29	%
Expenses, excluding expense reductions, management fees waived and expenses reimbursed	1.13	%(c)	2.35	%	2.21	%	2.26	%	2.33	%	2.49	%
Net investment loss	(.54	)%(c)	(.75	)%	(1.16	)%	(1.27	)%	(1.26	)%	(.90	)%
Supplemental Data:
Net assets, end of period (000)	$19,419		$20,890		$31,989		$34,012		$30,200		$25,924
Portfolio turnover rate	50.43	%(c)	160.11	%	174.14	%	158.74	%	188.26	%	103.08	%

^(a) Calculated using average shares outstanding during the period.

^(b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.

^(c) Not annualized.

See Notes to Financial Statements.

13

Financial Highlights (continued)

	Class C Shares
	Six Months Ended 1/31/2010 (unaudited)		Year Ended 7/31
			2009		2008		2007		2006		2005
Per Share Operating Performance
Net asset value, beginning of period	$  4.23		$  5.43		$  5.69		$  4.86		$  5.00		$  4.48
Investment operations:
Net investment loss(a)	(.02	)	(.03	)	(.07	)	(.07	)	(.07	)	(.04	)
Net realized and unrealized gain (loss)	.34		(1.17	)	(.19	)	.90		(.07	)	.56
Total from investment operations	.32		(1.20	)	(.26	)	.83		(.14	)	.52
Net asset value, end of period	$  4.55		$  4.23		$  5.43		$  5.69		$  4.86		$  5.00
Total Return(b)	7.57	%(c)	(22.10	)%	(4.57	)%	17.08	%	(2.80	)%	11.61	%
Ratios to Average Net Assets:
Expenses, excluding expense reductions and including management fees waived and expenses reimbursed	1.09	%(c)	2.15	%	2.15	%	2.15	%	2.14	%	2.29	%
Expenses, including expense reductions, management fees waived and expenses reimbursed	1.09	%(c)	2.15	%	2.15	%	2.15	%	2.14	%	2.29	%
Expenses, excluding expense reductions, management fees waived and expenses reimbursed	1.13	%(c)	2.35	%	2.21	%	2.26	%	2.33	%	2.49	%
Net investment loss	(.54	)%(c)	(.75	)%	(1.15	)%	(1.28	)%	(1.26	)%	(.90	)%
Supplemental Data:
Net assets, end of period (000)	$34,724		$35,198		$50,103		$45,041		$33,206		$22,867
Portfolio turnover rate	50.43	%(c)	160.11	%	174.14	%	158.74	%	188.26	%	103.08	%

^(a) Calculated using average shares outstanding during the period.

^(b) Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.

^(c) Not annualized.

See Notes to Financial Statements.

14

Financial Highlights (continued)

	Class F Shares
	Six Months Ended 1/31/2010 (unaudited)		Year Ended 7/31/2009		9/28/2007(a) to 7/31/2008
Per Share Operating Performance
Net asset value, beginning of period	$4.52		$5.75		$6.53
Investment operations:
Net investment income (loss)(b)	–	(c)	–	(c)	(.02	)
Net realized and unrealized gain (loss)	.36		(1.23	)	(.76	)
Total from investment operations	.36		(1.23	)	(.78	)
Net asset value, end of period	$4.88		$4.52		$5.75
Total Return(d)	7.96	%(e)	(21.39	)%	(11.94	)%(e)
Ratios to Average Net Assets:
Expenses, excluding expense reductions and including management fees waived and expenses reimbursed	.63	%(e)	1.25	%	1.02	%(e)
Expenses, including expense reductions, management fees waived and expenses reimbursed	.63	%(e)	1.25	%	1.02	%(e)
Expenses, excluding expense reductions, management fees waived and expenses reimbursed	.68	%(e)	1.45	%	1.10	%(e)
Net investment income (loss)	(.07	)%(e)	.05	%	(.33	)%(e)
Supplemental Data:
Net assets, end of period (000)	$1,882		$1,980		$654
Portfolio turnover rate	50.43	%(e)	160.11	%	174.14	%

^(a) Commencement of investment operations was 9/28/2007, SEC effective date was 9/14/2007 and date shares first became available to the public was 10/1/2007.

^(b) Calculated using average shares outstanding during the period.

^(c) Amount is less than $.01.

^(d) Total return assumes the reinvestment of all distributions.

^(e) Not annualized.

See Notes to Financial Statements.

15

Financial Highlights (continued)

	Class I Shares
	Six Months Ended 1/31/2010 (unaudited)		Year Ended 7/31
			2009		2008		2007		2006		2005
Per Share Operating Performance
Net asset value, beginning of period	$4.56		$5.79		$6.01		$5.08		$5.18		$4.59
Investment operations:
Net investment income (loss)(a)	–	(b)	.01		(.01	)	(.02	)	(.01	)	.01
Net realized and unrealized gain (loss)	.37		(1.24	)	(.21	)	.95		(.09	)	.58
Total from investment operations	.37		(1.23	)	(.22	)	.93		(.10	)	.59
Net asset value, end of period	$4.93		$4.56		$5.79		$6.01		$5.08		$5.18
Total Return(c)	8.11	%(d)	(21.24	)%	(3.66	)%	18.31	%	(1.93	)%	12.85	%
Ratios to Average Net Assets:
Expenses, excluding expense reductions and including management fees waived and expenses reimbursed	.58	%(d)	1.15	%	1.15	%	1.15	%	1.14	%	1.26	%
Expenses, including expense reductions, management fees waived and expenses reimbursed	.58	%(d)	1.15	%	1.15	%	1.15	%	1.14	%	1.26	%
Expenses, excluding expense reductions, management fees waived and expenses reimbursed	.63	%(d)	1.35	%	1.21	%	1.25	%	1.30	%	1.52	%
Net investment income (loss)	(.04	)%(d)	.25	%	(.16	)%	(.29	)%	(.19	)%	.23	%
Supplemental Data:
Net assets, end of period (000)	$27,789		$23,962		$23,883		$54,603		$27,371		$1,676
Portfolio turnover rate	50.43	%(d)	160.11	%	174.14	%	158.74	%	188.26	%	103.08	%

^(a) Calculated using average shares outstanding during the period.

^(b) Amount is less than $.01.

^(c) Total return assumes the reinvestment of all distributions.

^(d) Not annualized.

See Notes to Financial Statements.

16

Financial Highlights (continued)

	Class P Shares
	Six Months Ended 1/31/2010 (unaudited)		Year Ended 7/31
			2009		2008		2007		2006		2005
Per Share Operating Performance
Net asset value, beginning of period	$4.53		$5.77		$6.02		$5.11		$5.23		$4.65
Investment operations:
Net investment loss(a)	(.01	)	–	(b)	(.04	)	(.04	)	(.03	)	(.01	)
Net realized and unrealized gain (loss)	.37		(1.24	)	(.21	)	.95		(.09	)	.59
Total from investment operations	.36		(1.24	)	(.25	)	.91		(.12	)	.58
Net asset value, end of period	$4.89		$4.53		$5.77		$6.02		$5.11		$5.23
Total Return(c)	7.95	%(d)	(21.49	)%	(4.15	)%	17.81	%	(2.29	)%	12.47	%
Ratios to Average Net Assets:
Expenses, excluding expense reductions and including management fees waived and expenses reimbursed	.71	%(d)	1.51	%	1.55	%	1.60	%	1.57	%	1.53	%
Expenses, including expense reductions, management fees waived and expenses reimbursed	.71	%(d)	1.51	%	1.55	%	1.60	%	1.57	%	1.53	%
Expenses, excluding expense reductions, management fees waived and expenses reimbursed	.82	%(d)	1.70	%	1.61	%	1.70	%	1.70	%	1.64	%
Net investment loss	(.16	)%(d)	(.08	)%	(.67	)%	(.72	)%	(.60	)%	(.17	)%
Supplemental Data:
Net assets, end of period (000)	$1		$2		$3		$11		$12		$1
Portfolio turnover rate	50.43	%(d)	160.11	%	174.14	%	158.74	%	188.26	%	103.08	%

^(a) Calculated using average shares outstanding during the period.

^(b) Amount is less than $.01.

^(c) Total return assumes the reinvestment of all distributions.

^(d) Not annualized.

See Notes to Financial Statements.

17

Financial Highlights (continued)

	Class R2 Shares
	Six Months Ended 1/31/2010 (unaudited)		Year Ended 7/31/2009		9/28/2007(a) to 7/31/2008
Per Share Operating Performance
Net asset value, beginning of period	$4.53		$5.75		$6.53
Investment operations:
Net investment income (loss)(b)	–	(c)	.01		(.01	)
Net realized and unrealized gain (loss)	.37		(1.23	)	(.77	)
Total from investment operations	.37		(1.22	)	(.78	)
Net asset value, end of period	$4.90		$4.53		$5.75
Total Return(d)	8.17	%(e)	(21.22	)%	(11.94	)%(e)
Ratios to Average Net Assets:
Expenses, excluding expense reductions and including management fees waived and expenses reimbursed	.61	%(e)	1.12	%	.98	%(e)
Expenses, including expense reductions, management fees waived and expenses reimbursed	.61	%(e)	1.12	%	.98	%(e)
Expenses, excluding expense reductions, management fees waived and expenses reimbursed	.92	%(e)	1.92	%	1.03	%(e)
Net investment income (loss)	(.07	)%(e)	.27	%	(.12	)%(e)
Supplemental Data:
Net assets, end of period (000)	$8		$7		$9
Portfolio turnover rate	50.43	%(e)	160.11	%	174.14	%

^(a) Commencement of investment operations was 9/28/2007, SEC effective date was 9/14/2007 and date shares first became available to the public was 10/1/2007.

^(b) Calculated using average shares outstanding during the period.

^(c) Amount is less than $.01.

^(d) Total return assumes the reinvestment of all distributions.

^(e) Not annualized.

See Notes to Financial Statements.

18

Financial Highlights (concluded)

	Class R3 Shares
	Six Months Ended 1/31/2010 (unaudited)		Year Ended 7/31/2009		9/28/2007(a) to 7/31/2008
Per Share Operating Performance
Net asset value, beginning of period	$4.49		$5.73		$6.53
Investment operations:
Net investment loss(b)	(.01	)	(.01	)	(.02	)
Net realized and unrealized gain (loss)	.36		(1.23	)	(.78	)
Total from investment operations	.35		(1.24	)	(.80	)
Net asset value, end of period	$4.84		$4.49		$5.73
Total Return(c)	7.80	%(d)	(21.64	)%	(12.25	)%(d)
Ratios to Average Net Assets:
Expenses, excluding expense reductions and including management fees waived and expenses reimbursed	.83	%(d)	1.63	%	1.24	%(d)
Expenses, including expense reductions, management fees waived and expenses reimbursed	.83	%(d)	1.63	%	1.24	%(d)
Expenses, excluding expense reductions, management fees waived and expenses reimbursed	.88	%(d)	1.83	%	1.30	%(d)
Net investment loss	(.29	)%(d)	(.23	)%	(.40	)%(d)
Supplemental Data:
Net assets, end of period (000)	$28		$27		$34
Portfolio turnover rate	50.43	%(d)	160.11	%	174.14	%

^(a) Commencement of investment operations was 9/28/2007, SEC effective date was 9/14/2007 and date shares first became available to the public was 10/1/2007.

^(b) Calculated using average shares outstanding during the period.

^(c) Total return assumes the reinvestment of all distributions.

^(d) Not annualized.

See Notes to Financial Statements.

19

Notes to Financial Statements (unaudited)

1.    ORGANIZATION

Lord Abbett Stock Appreciation Fund (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. The Fund was organized as a Delaware statutory trust on September 29, 1999.

The Fund’s investment objective is long-term capital growth. The Fund offers eight classes of shares: Class A, B, C, F, I, P, R2 and R3, 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 B, C, F, I, P, R2 and R3 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); Class B shares redeemed before the sixth anniversary of purchase; and Class C shares redeemed before the first anniversary of purchase. Class B shares will automatically convert to Class A shares on the 25^th day of the month (or, if the 25^th is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted. The Fund’s Class P shares are closed to substantially all new retirement and benefit plans and fee-based programs, with certain exceptions as set forth in the Fund’s prospectus. Effective March 31, 2010, the Fund will no longer offer Class B shares.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

2.    SIGNIFICANT ACCOUNTING POLICIES

(a) Investment Valuation–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 more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange LLC. The Fund may rely on 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. Securities for which market quotations are not readily available are valued at fair value as determined by management and approved in good faith by the Board of Trustees. Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates current market 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

20

Notes to Financial Statements (unaudited)(continued)

using the effective interest method. 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 U.S. federal tax returns remains open for the fiscal years ended July 31, 2007 through July 31, 2009. 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, B, C, F, P, R2 and R3 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) is included in Net change in unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies on the Fund’s Statement of Operations. The resultant exchange gains and losses upon settlement of such transactions are included in Net realized gain on investments and foreign currency related transactions on the Fund’s Statement of Operations. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in market prices of the securities.

(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 value of these securities has declined, a fund may incur a loss upon disposition of the securities.

(h) Fair Value Measurements–In accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, fair value is defined as the price that the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. ASC 820 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and

21

Notes to Financial Statements (unaudited)(continued)

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 of inputs is summarized in the three broad Levels listed below:

• Level 1 – 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).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used as of January 31, 2010 in valuing the Fund’s investments carried at value:

Investment Type*	Level 1 (000)		Level 2 (000)		Level 3 (000)		Total (000)
Common Stocks	$	177,703	$	—	$	—	$	177,703
Preferred Stock		288		—		—		288
Repurchase Agreement		—		430		—		430
Total	$	177,991	$	430	$	—	$	178,421

* See Schedule of Investments for values in each industry.

3.    MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Management Fee

The Fund has a management agreement with Lord, Abbett & Co. LLC (“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 management fee is based on the Fund’s average daily net assets at the following annual rates:

First $1 billion	.75%
Next $1 billion	.70%
Over $2 billion	.65%

For the six months ended January 31, 2010, the effective management fee, before management fee waivers and expenses reimbursed, was at an annualized rate of .75% of the Fund’s average daily net assets.

22

Notes to Financial Statements (unaudited)(continued)

Lord Abbett provides certain administrative services to the Fund pursuant to an Administrative Services Agreement at an annual rate of .04% of the Fund’s average daily net assets.

For the period from August 1, 2009 through November 30, 2009, Lord Abbett contractually agreed to reimburse the Fund to the extent necessary so that each class’ total net annual operating expenses did not exceed the annualized rates below. Effective December 1, 2009, Lord Abbett voluntarily agreed to waive all or a portion of its management fee and, if necessary, reimburse the Fund to the extent necessary so that each class’ total net annual operating expenses do not exceed the following annualized rates:

Class	% of Average Daily Net Assets
A	1.50%
B	2.15%
C	2.15%
F	1.25%
I	1.15%
P	1.60%
R2	1.75%
R3	1.65%

Lord Abbett may stop or change the level of the voluntary waiver or reimbursement at any time.

The Fund, along with certain other funds managed by Lord Abbett (collectively, the “Underlying Funds”), has entered into a Servicing Arrangement with Lord Abbett Diversified Equity Strategy Fund and Lord Abbett Growth & Income Strategy Fund of Lord Abbett Investment Trust (each, a “Fund of Funds”), pursuant to which each Underlying Fund pays a portion of the expenses (excluding management fees and distribution and service fees) of each Fund of Funds in proportion to the average daily value of the Underlying Fund shares owned by each Fund of Funds. Amounts paid pursuant to the Servicing Arrangement are included in Subsidy expense on the Fund’s Statement of Operations and Payable to affiliates on the Fund’s Statement of Assets and Liabilities.

As of January 31, 2010, the percentages of the Fund’s outstanding shares owned by Lord Abbett Diversified Equity Strategy Fund and Lord Abbett Growth & Income Strategy Fund were 7.04% and 6.14%, respectively.

12b-1 Distribution Plan

The Fund has adopted a distribution plan with respect to Class A, B, C, F, P, R2 and R3 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 fees are accrued daily at annual rates based upon the Fund’s average daily net assets as follows:

Fees*	Class A	Class B	Class C	Class F	Class P	Class R2	Class R3
Service	.25%	.25%	.25%	–	.25%	.25%	.25%
Distribution	.10%	.75%	.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.

Class I shares do not have a distribution plan.

23

Notes to Financial Statements (unaudited)(continued)

Commissions

Distributor received the following commissions on sales of shares of the Fund, after concessions were paid to authorized dealers, for the six months ended January 31, 2010:

Distributor Commissions	Dealers’ Concessions
$17,114	$	93,826

Distributor received CDSCs of $1,295 and $3,747 for Class A and Class C shares, respectively, for the six months ended January 31, 2010.

Two Trustees and certain of the Fund’s officers have an interest in Lord Abbett.

4.    DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARDS

Dividends from net investment income, if any, are declared and paid at least 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 accounting principles generally accepted in the United States of America. 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, which exceed earnings and profits for tax purposes, are reported as a tax return of capital.

As of July 31, 2009, the capital loss carryforwards, along with the related expiration dates, were as follows:

2011	2012		2017		Total
$26,241,370	$	3,496,442	$	15,061,139	$	44,798,951

As of January 31, 2010, the aggregate unrealized security gains and losses based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	160,132,435
Gross unrealized gain		20,650,644
Gross unrealized loss		(2,361,712	)
Net unrealized security gain	$	18,288,932

The difference between book-basis and tax-basis unrealized gains (losses) is primarily attributable to wash sales.

5.    PORTFOLIO SECURITIES TRANSACTIONS

Purchases and sales of investment securities (excluding short-term investments) for the six months ended January 31, 2010 were as follows:

Purchases	Sales
$92,442,858	$	107,627,598

24

Notes to Financial Statements (unaudited)(continued)

There were no purchases or sales of U.S. Government securities for the six months ended January 31, 2010.

6.    TRUSTEES’ REMUNERATION

The Fund’s officers and the two Trustees who are associated with Lord Abbett do not receive any compensation from the Fund for serving in such capacities. Outside Trustees’ 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 outside Trustees under which outside Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, Trustees’ fees. The deferred amounts are treated as though equivalent dollar amounts have been invested in the funds. Such amounts and earnings accrued thereon are included in Trustees’ fees on the Statement of Operations and in Trustees’ 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.

7.    EXPENSE REDUCTIONS

The Fund has entered into arrangements with the Fund’s 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.

8.    LINE OF CREDIT

The Fund and certain other funds managed by Lord Abbett have available an unsecured revolving credit facility (“Facility”) from State Street Bank and Trust Company (“SSB”), to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. The Facility is renewed annually under terms that depend on market conditions at the time of the renewal. Accordingly, effective December 4, 2009, the amount available under the Facility remains $200,000,000 and the annual fee to maintain the Facility (of which each participating fund pays its pro rata share based on the net assets of each participating fund) was changed from .125% of the amount available under the Facility to .15%. This amount is included in Other expenses on the Fund’s Statement of Operations. In connection with the renewal, the Fund paid an upfront commitment fee of .05% on December 4, 2009, which is included in Prepaid expenses and other assets on the Statement of Assets and Liabilities, and is amortized through Other expenses on the Statement of Operations over the annual period. Any borrowings under this Facility will bear interest at current market rates as set forth in the credit agreement. As of January 31, 2010, there were no loans outstanding pursuant to this Facility nor was the Facility utilized at any time during the six months ended January 31, 2010.

9.    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.

10.    INVESTMENT RISKS

The Fund is subject to the general risks and considerations associated with equity investing, as well as the particular risks associated with growth stocks. The value of an investment in the Fund will fluctuate in response to movements in the equity securities market in general, and to the changing

25

Notes to Financial Statements (unaudited)(continued)

prospects of the individual companies in which the Fund invests. Large growth stocks may perform differently than the market as a whole and other types of stocks, such as small company stocks and bargain stocks. Different types of stocks tend to shift in and out of favor depending on market and economic conditions. Growth stocks tend to be more volatile than other stocks. In addition, if the Fund’s assessment of a company’s value or prospects for meeting or exceeding earnings expectations or market conditions is wrong, it could suffer losses or produce poor performance relative to other funds, even in a rising market.

These factors can affect the Fund’s performance.

11.    SUMMARY OF CAPITAL TRANSACTIONS

Transactions in shares of beneficial interest were as follows:

	Six Months Ended January 31, 2010 (unaudited)					Year Ended July 31, 2009
Class A Shares	Shares		Amount			Shares		Amount
Shares sold	1,151,100		$	5,609,253		7,842,342		$	31,413,003
Converted from Class B*	127,274			623,444		257,048			1,053,812
Shares reacquired	(3,416,163	)		(16,833,153	)	(7,400,526	)		(30,585,600	)
Increase (decrease)	(2,137,789	)	$	(10,600,456	)	698,864		$	1,881,215
Class B Shares
Shares sold	347,611		$	1,580,426		914,448		$	3,621,754
Shares reacquired	(882,397	)		(4,013,414	)	(1,596,359	)		(6,265,137	)
Converted to Class A*	(135,638	)		(623,444	)	(272,650	)		(1,053,812	)
Decrease	(670,424	)	$	(3,056,432	)	(954,561	)	$	(3,697,195	)
Class C Shares
Shares sold	845,266		$	3,867,897		2,367,753		$	9,381,356
Shares reacquired	(1,535,241	)		(7,074,834	)	(3,278,244	)		(12,805,618	)
Decrease	(689,975	)	$	(3,206,937	)	(910,491	)	$	(3,424,262	)
Class F Shares
Shares sold	448,326		$	2,127,733		564,752		$	2,087,131
Shares reacquired	(501,030	)		(2,390,454	)	(240,449	)		(977,287	)
Increase (decrease)	(52,704	)	$	(262,721	)	324,303		$	1,109,844
Class I Shares
Shares sold	516,847		$	2,558,114		1,730,031		$	7,208,839
Shares reacquired	(134,840	)		(647,851	)	(598,369	)		(2,314,152	)
Increase	382,007		$	1,910,263		1,131,662		$	4,894,687
Class P Shares
Shares sold	–		$	1		171		$	704
Shares reacquired	(361.148	)		(1,829	)	(165	)		(707	)
Increase (decrease)	(361.148	)	$	(1,828	)	6		$	(3	)

26

Notes to Financial Statements (unaudited)(concluded)

	Six Months Ended January 31, 2010 (unaudited)					Year Ended July 31, 2009
Class R2 Shares	Shares		Amount			Shares		Amount
Shares sold	–		$	–		2		$	5
Increase	–		$	–		2		$	5
Class R3 Shares
Shares sold	118		$	577		2,489		$	10,907
Shares reacquired	(214	)		(1,014	)	(2,564	)		(11,853	)
Decrease	(96	)	$	(437	)	(75	)	$	(946	)

* Automatic conversion of Class B shares occurs on the 25^th day of the month (or, if the 25^th is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted.

12.    SUBSEQUENT EVENTS

In accordance with the provisions set forth in ASC Topic 855, Subsequent Events, management has evaluated subsequent events existing in the Fund’s financial statements through the date of issuance. Management has determined that there were no material subsequent events that would require recognition or additional disclosure in the Fund’s financial statements.

13.    RECENT ACCOUNTING PRONOUNCEMENTS

In January 2010, the FASB issued Accounting Standards Update 2010-06 “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”). ASU 2010-06 provides clarifications to existing disclosures required by ASC 820 as well as amends ASC 820 to require certain new disclosures. ASU 2010-06 is substantially effective for interim and annual reporting periods beginning after December 15, 2009. Management is currently evaluating the impact the adoption of ASU 2010-06 will have on the Fund’s financial statement disclosures.

27

Approval of Advisory Contract

At meetings held on December 16 and 17, 2009, the Board, including all of the Directors who are not interested persons of the Fund or Lord, Abbett & Co. LLC. (“Lord Abbett”), considered whether to approve the continuation of the existing management agreement between the Fund and Lord Abbett. In addition to the materials the Board had reviewed throughout the course of the year, the Board received materials relating to the management agreement before the meeting and had the opportunity to ask questions and request further information in connection with its consideration. The Board also took into account its familiarity with Lord Abbett gained through its previous meetings and discussions, and the examination of the portfolio management team conducted by members of the Contract Committee during the year.

The materials received by the Board included, but were not limited to, (1) information provided by Lipper Inc. regarding the investment performance of the Fund compared to the investment performance of one or more groups of funds with substantially similar investment objectives (the “performance universe”) and to the investment performance of an appropriate securities index, (2) information on the expense ratios, effective management fee rates, and other expense components, for the Fund and one or more groups of funds with similar objectives and of similar size (the “peer group”), (3) sales and redemption information for the Fund, (4) information regarding Lord Abbett’s financial condition, (5) an analysis of the relative profitability of the management agreement to Lord Abbett, (6) information regarding the distribution arrangements of the Fund, and (7) information regarding the personnel and other resources devoted by Lord Abbett to managing the Fund.

Investment Management Services Generally. The Board considered the investment management services provided by Lord Abbett to the Fund, including investment research, portfolio management, and trading, and Lord Abbett’s commitment to compliance with all relevant 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 resulting from being engaged in other lines of business. The Board noted that in recent years Lord Abbett had not used brokerage commissions to purchase third-party research, but had changed this practice in 2009, as it had previously discussed with the Board. 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.

Investment Performance and Compliance. The Board reviewed the Fund’s investment performance in relation to that of the performance universe, both in terms of total return and in terms of other statistical measures. The Board observed that the investment performance of the Class A shares of the Fund was in the fourth quintile of its performance universe for the nine month, one-year, three-year, and five-year periods and lower than that of the Lipper Large-Cap Growth Index for each of those periods.

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. Among other things, the Board considered the size, experience, and turnover of Lord Abbett’s investment management staff, Lord Abbett’s investment methodology and philosophy, and Lord Abbett’s approach to recruiting, training, and retaining investment management personnel. The Board also noted that Lord Abbett had made significant changes in its personnel for the Fund in 2009, replacing Bruce Bartlett and Christopher Yates with David J. Linsen

28

and Paul J. Volovich, and that the recent investment performance of Growth Opportunities Fund under the management of Mr. Linsen and Mr. Volovich was encouraging. The Board determined that Lord Abbett had the expertise and resources to manage the Fund effectively.

Nature and Quality of Other Services. The Board considered the nature, quality, costs, and extent of compliance, administrative, and other services performed by Lord Abbett and Lord Abbett Distributor LLC (“Distributor”) 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 levels of the Fund and the expense levels of the peer group. The Board considered the fiscal periods on which the peer group information was based, and noted that most such periods ended before July 31, 2009. The Board noted that the expense levels of the peer group likely would have been different for periods ending July 31, 2009, due to the lower asset levels prevailing in the mutual fund industry during much of 2009. The Board also observed that the Fund’s transfer agency expenses were likely to decrease in 2010, as a result of renegotiation of the transfer agency agreement. It also considered the amount and nature of the fees paid by shareholders. The Board noted that it and Lord Abbett had agreed to an expense reimbursement agreement through November 30, 2009 that limited the total expense ratio of Class A to not more than 1.50%, the total expense ratios of Class B and Class C to not more than 2.15%, the total expense ratio of Class F to not more than 1.25%, the total expense ratio of Class I to not more than 1.15%, the total expense ratio of Class P to not more than 1.60%, the total expense ratio of Class R2 to not more than 1.75%, and the total expense ratio of Class R3 to not more than 1.65%. The Board also observed that Lord Abbett did not intend to renew the agreement, but instead intended to continue to make reimbursements to keep the expense ratio of each class at the same level through February 28, 2010 and that Lord Abbett also intended to increase the reimbursement levels on March 1, 2010, so that each class’s expense ratio would be five basis points lower, which reimbursements it could end at any time. The Board observed that for the fiscal year ended July 31, 2009 the contractual and actual management and administrative services fee rates were approximately one basis point above the median of the peer group. The Board observed that for the fiscal year ended July 31, 2009 the total expense ratio of Class A was approximately twenty-seven basis points above the median of the peer group, the total expense ratios of Class B and Class C were approximately nine basis points above the median of the peer group, the total expense ratio of Class F was approximately fourteen basis points above the median of the peer group, the total expense ratio of Class I was approximately thirty basis points above the median of the peer group, the total expense ratio of Class P was approximately twenty-five basis points above the median of the peer group, the total expense ratio of Class R2 was approximately twenty basis points below the median of the peer group, and the total expense ratio of Class R3 was approximately thirty basis points above the median of the peer group. The Board also observed that the Rule 12b-1 plan had not been operational for Class R2 and that had it been operational the expense ratio of Class R2 would have been approximately sixty basis points higher. The Board also considered what the expense ratio of each class likely would be if Lord Abbett did not reimburse any expenses and how each of those expense ratios would compare to those of the peer group. The Board also observed that the Fund had a relatively high level of transfer agent and shareholder servicing costs, due to its relatively small average account size.

Profitability. The Board considered the level of Lord Abbett’s profits in managing the Fund, including a review of Lord Abbett’s methodology for allocating its costs to its management of the Fund. The Board concluded that the allocation methodology had a reasonable basis and was appropriate. It considered any profits realized by Lord Abbett in connection with the operation of

29

the Fund and whether the amount of profit was fair for the management of the Fund. The Board also considered the profits realized from other businesses of Lord Abbett, which may benefit from or be related to the Fund’s business. The Board considered Lord Abbett’s profit margins in comparison with available industry data, both accounting for and ignoring marketing and distribution expenses, and how those profit margins could affect Lord Abbett’s ability to recruit and retain investment personnel. The Board recognized that Lord Abbett’s profitability was a factor in enabling it to attract and retain qualified investment management personnel to provide services to the Fund. The Board noted that Lord Abbett’s overall profitability had decreased in its 2009 fiscal year, largely due to declines in market prices and shareholder redemptions. The Board concluded that Lord Abbett’s profitability overall and as to the Fund was not excessive.

Economies of Scale. The Board considered whether there had been any economies of scale in managing the Fund, whether the Fund had appropriately benefited from any such economies of scale, and whether there was potential for realization of any further economies of scale. The Board concluded that the existing advisory fee schedule, with its breakpoints in the level of the advisory fee, adequately addressed any economies of scale in managing the Fund.

Other Benefits to Lord Abbett. The Board considered the character and amount of fees paid by the Fund and the Fund’s shareholders to Lord Abbett and Distributor for services other than investment advisory services. The Board also considered the revenues and profitability of Lord Abbett’s investment advisory business apart from its mutual fund business, and the intangible benefits enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board observed that 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 from the Funds, and receives a portion of the sales charges on sales and redemptions of some classes of shares. The Board observed that, in addition, Lord Abbett accrues certain benefits for its business of providing investment advice to clients other than the Lord Abbett Funds, but that 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 Fund. The Board also took into consideration the investment research that Lord Abbett receives as a result of Fund brokerage transactions.

Alternative Arrangements. The Board considered whether, instead of approving continuation of the management 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.

In considering whether to approve the continuation of the management agreement, the Board did not identify any single factor as paramount or controlling. This summary does not discuss in detail all matters considered. After considering all of the relevant factors, the Board unanimously found that continuation of the existing management agreement was in the best interests of the Fund and its shareholders and voted unanimously to approve the continuation.

30

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 each Fund’s proxies during the 12-month period ended June 30 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 on Form N-Q. 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. You can also obtain copies of Form N-Q by (i) visiting the SEC’s Public Reference Room in Washington, DC (information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330); (ii) sending your request and duplicating fee to the SEC’s Public Reference Section, Washington, DC 20549-1520; or (iii) sending your request electronically, after paying a duplicating fee, to publicinfo@sec.gov.

31

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 Stock Appreciation Fund

LASA-3-0110

(03/10)

Item 2: Code of Ethics.

Not applicable.

Item 3: Audit Committee Financial Expert.

Not applicable.

Item 4: Principal Accountant Fees and Services.

Not applicable.

Item 5: Audit Committee of Listed Registrants.

Not applicable.

Item 6: Investments.

Not applicable.

Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8: Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

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 second fiscal quarter of 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.

Item 12: Exhibits.

(a)(1) Amendments to Code of Ethics – Not applicable.

(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.

(a)(3) Not applicable.

(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.

LORD ABBETT STOCK APPRECIATION FUND
By:	/s/ Robert S. Dow
Robert S. Dow
Chief Executive Officer and Chairman

Date: March 24, 2010

By:	/s/ Joan A. Binstock
Joan A. Binstock
Chief Financial Officer and Vice President

Date: March 24, 2010

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/ Robert S. Dow
Robert S. Dow
Chief Executive Officer and Chairman

Date: March 24, 2010

By:	/s/ Joan A. Binstock
Joan A. Binstock
Chief Financial Officer and Vice President

Date: March 24, 2010