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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 811-06650
Lord Abbett Research Fund, Inc.
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(Exact name of Registrant as specified in charter)
90 Hudson Street, Jersey City, NJ 07302
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(Address of principal executive offices) (zip code)
Christina T. Simmons, Vice President & Assistant Secretary
90 Hudson Street, Jersey City, NJ 07302
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(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 201-6984
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Date of fiscal year end: 11/30
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Date of reporting period: 11/30/2003
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ITEM 1: Report to Shareholders.
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LORD ABBETT [LORD ABBETT LOGO]
2003
ANNUAL
REPORT
LORD ABBETT
AMERICA'S VALUE FUND
FOR THE YEAR ENDED NOVEMBER 30, 2003
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LORD ABBETT AMERICA'S VALUE FUND ANNUAL REPORT
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2003
DEAR SHAREHOLDER: We are pleased to provide you with this twelve-month overview
of the Lord Abbett America's Value Fund's strategies and performance for the
fiscal year ended November 30, 2003. On this and the following pages, we discuss
the major factors that influenced performance.
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,
/s/ Robert S. Dow
ROBERT S. DOW
CHAIRMAN
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Q: WHAT WERE THE OVERALL MARKET CONDITIONS OF THE REPORTING PERIOD?
A: War and general geopolitical concerns had a negative effect on the psyche of
businesses and consumers during the first part of the period. Corporations
entered the first quarter of 2003 cautiously and remained wary, selling existing
inventories and implementing layoffs, as the economy continued to decelerate.
The unemployment rate rose during the period, reaching 6.4% by June 2003. But,
as the coalition's war effort made clear progress in the early spring, the fog
of global uncertainty lifted, and broad equity indices experienced meaningful
advances.
In June, the Federal Reserve Board (the "Fed") cut interest rates by 25
basis points to 1%, in a continued attempt to spark the economy. With interest
rates at levels not seen for over 40 years, the Fed is attempting a variety of
measures to promote and sustain economic growth. Over the past year, the U.S.
dollar weakened versus the euro. A weaker dollar can translate into more
competitive pricing for U.S. goods overseas. Additionally, imports can become
more expensive and less attractive to the U.S. consumer, resulting in higher
sales of American-made goods within the U.S.--providing further stimulus for
economic growth. During the second quarter of 2003, President Bush signed into
law a tax reform/economic stimulus package with accelerated tax cuts and
dividend exclusions.
The U.S. economy continued to show signs of improvement during the third
quarter of 2003, as domestic growth prospects and reported corporate profits
improved. Further evidence of an economic recovery sparked the equity markets,
adding to the market gains experienced in the second quarter. For the reporting
period, major indices advanced, but concerns over future growth grew as the
summer ended.
As the economy entered the final months of 2003, early gross domestic
1
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product (GDP) numbers announced showed that the U.S. economy expanded by an 8.2%
rate in the third quarter, well ahead of expectations and up from the 3.3%
growth rate reported for the second quarter. In addition, productivity data, an
important gauge for inflation, remained strong in the fourth quarter and can be
an important signal that interest rates may remain low in the near term. As the
period came to a close, October's employment report showed an increase of
126,000 jobs and the unemployment rate dropped to 5.9% in November--an
encouraging sign as the economy enters 2004.
Q: HOW DID THE FUND PERFORM OVER THE FISCAL YEAR ENDED NOVEMBER 30, 2003?
A: For the fiscal year ended November 30, 2003, Lord Abbett America's Value
Fund returned 12.0% reflecting the performance at the Net Asset Value (NAV) of
Class A shares, with all distributions reinvested for the fiscal year ended
November 30, 2003, underperforming the S&P 500 Index (the "Index"),(1) which
returned 15.1% over the same period.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS, which reflect performance at the
maximum 5.75% sales charge applicable to Class A share investments and include
the reinvestment of all distributions, as of November 30, 2003 are: 1 Year:
5.50% and Since Inception (12/27/01): 0.08%.
Q: WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
EQUITY PORTION
A: During the period, stock selection in the consumer discretionary sector
detracted from performance, as margin reductions and weaker sales lowered the
net income of certain Fund holdings. In addition, stock selection within the
materials sector negatively impacted the Fund, as higher raw material costs in
certain holdings impacted quarterly earnings. A large underweight in the
information technology sector also hurt the Fund's performance relative to the
Index, as the sector experienced strong returns.
Stock selection and an underweight within the healthcare sector contributed
positively to performance during the Fund's fiscal year. Higher net income from
the introduction of new products in certain companies benefited the Fund. In
addition, overweight within the utilities sector added to the Fund's relative
performance versus the Index.
FIXED-INCOME PORTION
A. The fixed-income component of the Fund benefited from its flexible investment
parameters, which allow the portfolio managers to allocate assets among a broad
range of fixed-income investments, depending on market opportunity. Accordingly,
the portfolio focused on the sectors and companies that offered the potential to
benefit from
2
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the increased demand, due to stronger corporate profits and greater
access to credit generated by an improving economy. The portfolio also
de-emphasized U.S. Treasury and high-grade bonds, as yields in those sectors
remained near record lows and relative value was poor.
Performance was broad-based in the convertible securities market, with
major contributions from securities in the automotive, media, electronics,
health services and paper sectors. Performance in the telecommunications sector
was less consistent with one specific credit contributing significantly to
performance and another detracting. The securities of a major wholesale food
supplier also detracted from performance in the year. The strongest contributors
in the high-yield bond market included securities in the electric, chemical and
paper sectors. Health services and a specific chemical credit were among the
detractors in the period.
(1) The S&P 500 Index is widely regarded as the standard for measuring large-cap
U.S. stock market performance and includes a representative sample of leading
companies in leading industries. Indices are unmanaged, do not reflect the
deduction of fees or expenses and are not available for direct investment.
IMPORTANT PERFORMANCE AND OTHER INFORMATION
The views of the Fund's management and the portfolio holdings described in this
report are as of November 30, 2003; these views and portfolio holdings may have
changed subsequent to this date and they do not guarantee the future performance
of the markets or the Fund. Information provided in this report should not be
considered a recommendation to purchase or sell securities.
A NOTE ABOUT RISK: See Notes to Financial Statements for a discussion of
investment risks. For a more detailed discussion of the risks associated with
the Fund, please see the Fund's Prospectus.
PERFORMANCE: PERFORMANCE DATA QUOTED ABOVE IS HISTORICAL. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE
PERFORMANCE DATA QUOTED. BECAUSE OF ONGOING MARKET VOLATILITY, FUND PERFORMANCE
MAY BE SUBJECT TO SUBSTANTIAL FLUCTUATION. The investment return and principal
value of an investment in the Fund will fluctuate so that shares, on any given
day or when redeemed, may be worth more or less than their original cost. Except
where noted, comparative fund performance does not account for the deduction of
sales charges and would be different if sales charges were included. The Fund
offers additional classes of shares with distinct pricing options. For a full
description of the differences in pricing alternatives, please see the Fund's
Prospectus.
The Fund is actively managed and, as a result, asset allocation may change.
Sectors may include many industries.
MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS
OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
YOU CAN OBTAIN PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END (AVAILABLE
WITHIN SEVEN BUSINESS DAYS OF THE MOST RECENT MONTH END) BY CALLING LORD ABBETT
AT 800-821-5129 OR REFER TO OUR WEBSITE AT www.LordAbbett.com.
FOR MORE COMPLETE INFORMATION ABOUT ANY LORD ABBETT MUTUAL FUND, INCLUDING
RISKS, INVESTMENT OBJECTIVES, CHARGES AND ONGOING EXPENSES, PLEASE CALL YOUR
INVESTMENT PROFESSIONAL OR LORD ABBETT DISTRIBUTOR LLC AT 888-522-2388 FOR A
PROSPECTUS. AN INVESTOR SHOULD READ THE PROSPECTUS CAREFULLY BEFORE
INVESTING.
3
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INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares with the same
investment in the S&P 500(R) Index assuming reinvestment of all dividends and
distributions. The performance of other classes will be greater than or less
than the performance shown in the graph below due to different sales loads and
expenses applicable to such classes. The graph and performance table below do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND (CLASS A SHARES) THE FUND (CLASS A SHARES)
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(1) S&P 500(R) INDEX(2)
12/27/2001 $ 10,000 $ 9,425 $ 10,000
3/31/2002 $ 10,739 $ 10,122 $ 10,028
6/30/2002 $ 10,163 $ 9,579 $ 8,685
9/30/2002 $ 8,818 $ 8,311 $ 7,185
12/31/2002 $ 9,232 $ 8,701 $ 7,791
3/31/2003 $ 8,671 $ 8,172 $ 7,546
6/30/2003 $ 9,708 $ 9,150 $ 8,707
9/30/2003 $ 9,997 $ 9,422 $ 8,938
11/30/2003 $ 10,627 $ 10,016 $ 9,526
</Table>
FISCAL YEAR-END 11/30
AVERAGE ANNUAL TOTAL RETURN AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE YEAR ENDED NOVEMBER 30, 2003
<Table>
<Caption>
1 YEAR LIFE OF CLASS
CLASS A(3) 5.50% 0.08%
CLASS B(4) 7.35% 0.53%
CLASS C(5) 11.27% 2.62%
CLASS P(6) 12.03% 3.18%
CLASS Y(7) 12.47% 3.59%
</Table>
(1) Reflects the deduction of the maximum initial sales charge of 5.75%
(2) Performance of the unmanaged Index does not reflect transaction costs,
management fees or sales charges. The performance of the Index is not
necessarily representative of the Fund's performance. Performance of the Index
begins on December 31, 2001.
(3) Class A shares were first offered on December 27, 2001. Total return, which
is the percentage change in net asset value, after deduction of the maximum
initial sales charge of 5.75% applicable to Class A shares, with all dividends
and distributions reinvested for the periods shown ended November 30, 2003 using
the SEC-required uniform method to compute such return.
(4) Class B shares were first offered on December 27, 2001. Performance reflects
the deduction of a CDSC of 4% for 1 year and life of the class.
(5) Class C shares were first offered on December 27, 2001. The 1% CDSC for
Class C shares normally applies before the anniversary of the purchase date.
Performance is at net asset value.
(6) Class P shares were first offered on December 27, 2001. Performance is at
net asset value.
(7) Class Y shares were first offered on December 27, 2001. Performance is at
net asset value.
4
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SCHEDULE OF INVESTMENTS
NOVEMBER 30, 2003
<Table>
<Caption>
SHARES
INVESTMENTS (000) VALUE
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LONG-TERM INVESTMENTS 91.98%
COMMON STOCKS 61.26%
AUTO COMPONENTS 0.98%
Dana Corp. 87 $ 1,403,556
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CHEMICALS 7.40%
Crompton Corp. 181 1,095,655
Dow Chemical Co. 89 3,345,705
Eastman Chemical Co. 98 3,499,227
IMC Global, Inc. 93 674,656
Monsanto Co. 74 1,993,320
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TOTAL 10,608,563
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COMMERCIAL SERVICES & SUPPLIES 1.52%
R.R. Donnelley & Sons Co. 78 2,177,456
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CONTAINERS & PACKAGING 0.94%
Ball Corp. 24 1,348,395
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DIVERSIFIED TELECOMMUNICATION SERVICES 2.10%
SBC Communications, Inc. 129 3,005,448
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ELECTRIC UTILITIES 5.79%
Ameren Corp. 79 3,473,031
CMS Energy Corp.* 58 457,620
Northeast Utilities 101 2,006,970
Puget Energy, Inc. 102 2,364,525
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TOTAL 8,302,146
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ENERGY EQUIPMENT & SERVICES 1.39%
Halliburton Co. 85 1,994,090
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FOOD & STAPLES RETAILING 0.94%
Albertson's, Inc. 64 1,351,280
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FOOD PRODUCTS 4.26%
Archer-Daniels-Midland Co. 22 310,093
H. J. Heinz Co. 96 3,480,040
Kellogg Co. 65 2,307,165
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TOTAL 6,097,298
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</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
5
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SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2003
<Table>
<Caption>
SHARES
INVESTMENTS (000) VALUE
- --------------------------------------------------------------------------------------------------------
GAS UTILITIES 1.89%
NiSource, Inc. 130 $ 2,705,800
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HOUSEHOLD DURABLES 5.20%
Newell Rubbermaid, Inc. 116 2,643,772
Snap-on, Inc. 92 2,752,834
Tupperware Corp. 133 2,052,612
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TOTAL 7,449,218
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INDUSTRIAL CONGLOMERATES 2.00%
Hubbell, Inc. 65 2,868,800
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INSURANCE 6.19%
Arthur J. Gallagher & CO. 40 1,264,520
Max Re Capital Ltd.(a) 41 845,420
Partner Re Ltd.(a) 24 1,348,424
SAFECO Corp. 37 1,366,195
Travelers Property Casualty Corp. A Shares 87 1,358,760
XL Capital Ltd. Class A(a) 36 2,692,160
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TOTAL 8,875,479
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LEISURE EQUIPMENT & PRODUCTS 0.72%
Foot Locker, Inc. 47 1,034,280
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MACHINERY 2.96%
CNH Global N.V.(a) 50 690,946
Cummins, Inc. 21 989,385
The Timken Co. 150 2,564,361
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TOTAL 4,244,692
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MULTI-LINE RETAIL 2.37%
J.C. Penney Co., Inc. 72 1,791,360
May Department Stores Co. 54 1,609,995
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TOTAL 3,401,355
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OIL & GAS 3.70%
ChevronTexaco Corp. 45 3,356,970
EOG Resources, Inc. 9 360,684
Kerr-McGee Corp. 38 1,583,023
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TOTAL 5,300,677
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</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2003
<Table>
<Caption>
SHARES
INVESTMENTS (000) VALUE
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PAPER & FOREST PRODUCTS 3.61%
Georgia-Pacific Corp. 93 $ 2,527,054
Meadwestvaco Corp. 104 2,646,424
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TOTAL 5,173,478
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PHARMACEUTICALS 2.44%
Bristol-Myers Squibb Co. 112 2,938,025
Mylan Laboratories, Inc. 22 562,104
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TOTAL 3,500,129
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REAL ESTATE INVESTMENT TRUSTS 2.46%
Health Care Properties 40 1,859,548
Healthcare Realty Trust, Inc. 48 1,664,730
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TOTAL 3,524,278
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TRADING COMPANIES & DISTRIBUTORS 2.40%
Genuine Parts Co. 109 3,431,320
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TOTAL COMMON STOCKS (Cost $82,643,096) 87,797,738
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<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
RATE DATE (000)
---- ---- -----
CONVERTIBLE BONDS 9.22%
AUTOMOBILES 1.15%
Wabash National Corp.+ 3.25% 8/1/2008 $ 1,000 1,647,500
-------------
BIOTECHNOLOGY 1.30%
Amgen, Inc. Zero Coupon 3/1/2032 1,000 748,750
Fisher Scientific Int'l., Inc.+ 2.50% 10/1/2023 1,000 1,112,500
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TOTAL 1,861,250
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COMMUNICATIONS EQUIPMENT 0.32%
Corning, Inc. 3.50% 11/1/2008 350 460,250
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ELECTRICAL EQUIPMENT 0.64%
Artesyn Tech, Inc. 5.50% 8/15/2010 700 920,500
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ELECTRONIC EQUIPMENT & INSTRUMENTS 0.37%
Flir Systems, Inc.+ 3.00% 6/1/2023 500 530,625
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</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2003
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
INVESTMENTS RATE DATE (000) VALUE
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ENERGY EQUIPMENT & SERVICES 0.35%
Hanover Compressor Co. 4.75% 3/15/2008 $ 555 $ 506,438
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FOOD PRODUCTS 0.49%
General Mills, Inc. Zero Coupon 10/28/2022 1,000 701,250
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HEALTHCARE PROVIDERS & SERVICES 0.48%
Lifepoint Hospitals Holdings 4.50% 6/1/2009 350 348,250
Universal Hlth Services, Inc. 0.426% 6/23/2020 500 331,875
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TOTAL 680,125
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LEISURE EQUIPMENT & PRODUCTS 0.11%
Eastman Kodak Co.+ 3.375% 10/15/2033 150 162,750
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MEDIA 1.72%
Alloy, Inc.+ 5.375% 8/1/2023 250 249,688
Interpublic Group of Cos. 1.87% 6/1/2006 300 276,750
Lamar Advertising Co. 2.875% 12/31/2010 1,000 997,500
Liberty Media Corp. Class A 3.25% 3/15/2031 750 744,375
Sinclair Broadcast Grp., Inc. 4.875%# 7/15/2018 200 198,000
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TOTAL 2,466,313
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SEMICONDUCTOR EQUIPMENT &
PRODUCTS 0.80%
RF Micro Devices, Inc. 1.50% 7/1/2010 670 1,147,375
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SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT 0.28%
LSI Logic Corp.+ 4.00% 5/15/2010 350 398,562
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SOFTWARE 1.21%
Documentum, Inc. 4.50% 4/1/2007 750 927,187
Mentor Graphics Corp. 6.875% 6/15/2007 750 807,188
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TOTAL 1,734,375
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TOTAL CONVERTIBLE BONDS (Cost $11,576,196) 13,217,313
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</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
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SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2003
<Table>
<Caption>
INTEREST SHARES
INVESTMENTS RATE (000) VALUE
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CONVERTIBLE PREFERRED STOCKS 2.32%
AEROSPACE & DEFENSE 0.18%
Raytheon Co. 8.25% 5 $ 256,500
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CONTAINERS & PACKAGING 0.19%
Temple-Inland, Inc. 7.50% 5 271,500
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DIVERSIFIED FINANCIALS 0.11%
Doral Financial Corp.+ 4.75% 1 156,938
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ELECTRIC UTILITIES 0.58%
FPL Group, Inc. 8.00% 15 828,000
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HEALTHCARE PROVIDERS & SERVICES 0.30%
Anthem, Inc. 6.00% 5 426,450
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INSURANCE 0.55%
Chubb Corp. 7.00% 29 789,250
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MEDIA 0.31%
Sinclair Broadcast Grp., Inc. 6.00% 10 445,000
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WIRELESS TELECOMMUNICATION SERVICES 0.10%
Sprint Corp. 7.125% 25 151,250
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TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $3,246,511) 3,324,888
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<Caption>
PRINCIPAL
MATURITY AMOUNT
DATE (000)
---- -----
GOVERNMENT SPONSORED ENTEPRISES
PASS-THROUGH AGENCY 0.08%
DIVERSIFIED FINANCIALS 0.08%
Federal National Mortgage Assoc.
(Cost $115,175) 7.00% 1/1/2032 $ 113 119,786
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HIGH YIELD CORPORATE BONDS 19.10%
AEROSPACE & DEFENSE 0.36%
DRS Tech, Inc.+ 6.875% 11/1/2013 500 510,000
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AIR FREIGHT & COURIERS 0.06%
Delta Airlines 7.711% 9/18/2011 100 87,955
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</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2003
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
INVESTMENTS RATE DATE (000) VALUE
- --------------------------------------------------------------------------------------------------------
AIRLINES 0.15%
American Airlines 8.608% 4/1/2011 $ 250 $ 220,587
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AUTO COMPONENTS 0.15%
Eagle-picher, Inc.+ 9.75% 9/1/2013 200 213,500
-------------
BEVERAGES 0.15%
Le-Natures, Inc.+ 9.00% 6/15/2013 200 208,000
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BUILDING PRODUCTS 0.15%
Koppers Industry, Inc.+ 9.875% 10/15/2013 200 218,000
-------------
CHEMICALS 0.49%
Nalco Company+ 8.875% 11/15/2013 350 365,750
Terra Capital, Inc. 11.50% 6/1/2010 325 336,375
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TOTAL 702,125
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COMMERCIAL SERVICES & SUPPLIES 0.51%
Iron Mountain, Inc. 6.625% 1/1/2016 750 735,000
-------------
CONSTRUCTION MATERIALS 0.18%
American Standard Cos., Inc. 8.25% 6/1/2009 125 144,375
William Lyon Homes 10.75% 4/1/2013 100 112,625
-------------
TOTAL 257,000
-------------
CONTAINERS & PACKAGING 1.80%
Anchor Glass Container 11.00% 2/15/2013 200 231,000
BWAY Corp.+ 10.00% 10/15/2010 200 214,500
Crown Cork & Seal, Inc. 7.375% 12/15/2026 750 663,750
Graham Packaging / GPC Cap. 10.75% 1/15/2009 100 103,750
Owens-Brockway Glass Co. 8.875% 2/15/2009 150 163,125
Rayovac Corp.+ 8.50% 10/1/2013 1,000 1,045,000
Stone Container Corp. 8.375% 7/1/2012 150 161,812
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TOTAL 2,582,937
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DIVERSIFIED TELECOMMUNICATION SERVICES 1.15%
Cincinnati Bell, Inc.+ 8.375% 1/15/2014 375 394,687
Qwest Communications Int'l. 7.50% 11/1/2008 750 775,313
Qwest Services Corp.+ 13.50% 12/15/2010 400 472,500
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TOTAL 1,642,500
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</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2003
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
INVESTMENTS RATE DATE (000) VALUE
- --------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES 0.41%
PSEG Energy Holdings, Inc. 8.625% 2/15/2008 $ 250 $ 266,563
TECO Energy, Inc. 7.50% 6/15/2010 300 319,875
-------------
TOTAL 586,438
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS 0.08%
PerkinElmer, Inc. 8.875% 1/15/2013 100 113,250
-------------
FOOD & STAPLES RETAILING 0.26%
Rite Aid Corp. 8.125% 5/1/2010 350 378,000
-------------
FOOD PRODUCTS 1.25%
B&G Foods, Inc. 9.625% 8/1/2007 300 310,500
Dole Food Co. 8.875% 3/15/2011 350 380,187
Land O Lakes, Inc. 8.75% 11/15/2011 175 161,875
Michael Foods, Inc.+ 8.00% 11/15/2013 650 669,500
Parmalat Capital Finance(a) 6.625% 8/13/2008 300 273,209
-------------
TOTAL 1,795,271
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HEALTHCARE EQUIPMENT & SUPPLIES 0.27%
Medex, Inc.+ 8.875% 5/15/2013 355 382,513
-------------
HEALTHCARE PROVIDERS & SERVICES 1.06%
Iasis Healthcare Corp. 8.50% 10/15/2009 250 257,500
Natl. Nephrology Assoc.+ 9.00% 11/1/2011 150 155,250
PacifiCare Health System, Inc. 10.75% 6/1/2009 104 119,860
Tenet Healthcare Corp. 7.375% 2/1/2013 500 486,250
Triad Hospitals, Inc.+ 7.00% 11/15/2013 500 501,250
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TOTAL 1,520,110
-------------
HOTELS, RESTAURANTS & LEISURE 1.03%
Hard Rock Hotel+ 8.875% 6/1/2013 500 530,000
Mohegan Tribal Gaming 6.375% 7/15/2009 140 144,200
River Rock Entertainment+ 9.75% 11/1/2011 750 798,750
-------------
TOTAL 1,472,950
-------------
HOUSEHOLD DURABLES 0.18%
Fedders North America 9.375% 8/15/2007 255 257,231
-------------
HOUSEHOLD PRODUCTS 0.17%
Jacuzzi Brands, Inc.+ 9.625% 7/1/2010 220 240,900
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</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2003
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
INVESTMENTS RATE DATE (000) VALUE
- -----------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES 0.42%
Allied Waste No. America, Inc. 10.00% 8/1/2009 $ 250 $ 271,250
Tyco Int'l. Group+(a) 6.00% 11/15/2013 325 329,062
-------------
TOTAL 600,312
-------------
IT SERVICES 0.16%
Titan Corp.+ 8.00% 5/15/2011 200 230,000
-------------
MACHINERY 0.63%
Blount, Inc. 13.00% 8/1/2009 275 280,500
Case New Holland, Inc.+ 9.25% 8/1/2011 100 112,500
Manitowoc Co., Inc. 7.125% 11/1/2013 500 513,750
-------------
TOTAL 906,750
-------------
MEDIA 3.26%
Block Communications, Inc. 9.25% 4/15/2009 200 213,500
Charter Communications Holdings 10.00% 4/1/2009 700 584,500
Dex Media West+ 9.875% 8/15/2013 170 193,800
Direct TV Holdings/Finance 8.375% 3/15/2013 150 170,438
Gaylord Entertainment Co.+ 8.00% 11/15/2013 1,000 1,045,000
General Motors Corp. 7.20% 1/15/2011 500 529,186
Houghton Mifflin Co. 8.25% 2/1/2011 450 478,125
Insight Comm Co., Inc.** 0.00% / 12.25% 2/15/2006 & 2011 500 399,375
Paxson Comm. 10.75% 7/15/2008 500 542,500
Primedia, Inc. 8.875% 5/15/2011 500 520,000
-------------
TOTAL 4,676,424
-------------
METALS & MINING 0.37%
Owens-Brockway Glass Co. 7.75% 5/15/2011 500 527,500
-------------
MULTI-UTILITIES & UNREGULATED POWER 0.46%
Calpine Corp.+ 8.50% 7/15/2010 400 373,000
The Williams Co., Inc. 8.625% 6/1/2010 250 277,500
-------------
TOTAL 650,500
-------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2003
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
INVESTMENTS RATE DATE (000) VALUE
- --------------------------------------------------------------------------------------------------------
OIL & GAS 1.33%
Dynegy, Inc.+ 9.875% 7/15/2010 $ 340 $ 374,000
El Paso Production+ 7.75% 6/1/2013 500 480,000
J Ray McDermott SA+(a)(b) 11.00% 12/15/2013 280 282,800
Range Resources Corp. 7.375% 7/15/2013 245 246,225
Semco Energy, Inc.+ 7.125% 5/15/2008 500 515,625
-------------
TOTAL 1,898,650
-------------
PAPER & FOREST PRODUCTS 1.09%
Boise Cascade Corp. 6.50% 11/1/2010 750 760,925
Buckeye Technologies, Inc. 8.00% 10/15/2010 350 334,250
JSG Funding plc(a) 9.625% 10/1/2012 150 167,250
Longview Fibre Co. 10.00% 1/15/2009 150 165,375
Tembec Industries, Inc.(a) 7.75% 3/15/2012 150 141,375
-------------
TOTAL 1,569,175
-------------
PHARMACEUTICALS 0.19%
Alpharma, Inc.+ 8.625% 5/1/2011 275 274,313
-------------
SPECIALTY RETAIL 0.24%
JC Penney Co., Inc. 8.00% 3/1/2010 300 345,000
-------------
WIRELESS TELECOMMUNICATION SERVICES 1.09%
Centennial Cell Communication 10.125% 6/15/2013 500 530,000
Dobson Communications Corp.+ 8.875% 10/1/2013 200 202,250
Nextel Partners, Inc.+ 8.125% 7/1/2011 500 522,500
Western Wireless Corp. 9.25% 7/15/2013 300 313,500
-------------
TOTAL 1,568,250
-------------
TOTAL HIGH YIELD CORPORATE BONDS
(Cost $26,532,623) 27,371,141
=============
TOTAL LONG-TERM INVESTMENTS
(Cost $124,113,600) 131,830,866
=============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
NOVEMBER 30, 2003
<Table>
<Caption>
PRINCIPAL
AMOUNT
INVESTMENTS (000) VALUE
- --------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT 8.77%
REPURCHASE AGREEMENT 8.77%
Repurchase Agreement dated 11/28/2003,
0.98% due 12/1/2003 with State Street
Bank & Trust Co. collateralized by
$795,000 of Federal Home Loan Mortgage
Corp. at 1.25% due 8/27/2004 and
$12,065,000 Federal Home Loan Bank at
1.50% due 7/15/2005; value $12,832,872;
proceeds: $12,575,063
(Cost $12,574,036) $ 12,574 $ 12,574,036
=============
TOTAL INVESTMENTS 100.75% (Cost $136,687,637) $ 144,404,902
=============
</Table>
* Non-income producing security.
** Deferred-interest debentures. These pay no interest for a stipulated
number of years, after which they pay a predetermined interest rate.
+ Restricted security under Rule 144A.
# Variable rate security. The interest rate represents the rate at
November 30, 2003.
(a) Foreign security traded/denominated in U.S. dollars.
(b) Securities purchased on a when-issued basis.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2003
<Table>
ASSETS:
Investment in securities, at value (cost $ 136,687,637) $ 144,404,902
Cash 545,140
Receivables:
Interest and dividends 899,515
Investment securities sold 56,234
Capital shares sold 4,077,668
From Lord, Abbett & Co. LLC 9,717
Prepaid expenses and other assets 29,463
- --------------------------------------------------------------------------------------------------------
TOTAL ASSETS 150,022,639
- --------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 6,386,847
Capital shares reacquired 92,094
Management fee 76,502
12b-1 distribution fees 43,156
Administration fees 4,114
To affiliate 11,447
Accrued expenses and other liabilities 76,082
- --------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 6,690,242
========================================================================================================
NET ASSETS $ 143,332,397
========================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 135,620,711
Undistributed net investment income 1,140,219
Accumulated net realized loss on investments (1,145,798)
Net unrealized appreciation on investments 7,717,265
- --------------------------------------------------------------------------------------------------------
NET ASSETS $ 143,332,397
========================================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 128,030,100
Class B Shares $ 9,397,802
Class C Shares $ 5,902,133
Class P Shares $ 1,177
Class Y Shares $ 1,185
OUTSTANDING SHARES BY CLASS:
Class A Shares 12,439,069
Class B Shares 918,246
Class C Shares 575,742
Class P Shares 114.141
Class Y Shares 114.744
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 10.29
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) $ 10.92
Class B Shares-Net asset value $ 10.23
Class C Shares-Net asset value $ 10.25
Class P Shares-Net asset value $ 10.31
Class Y Shares-Net asset value $ 10.33
========================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<Page>
STATEMENT OF OPERATIONS
For the Year Ended November 30, 2003
<Table>
INVESTMENT INCOME:
Dividends $ 1,480,366
Interest 1,085,369
Foreign withholding tax (1,375)
- --------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 2,564,360
- --------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees 416,878
12b-1 distribution plan-Class A 174,529
12b-1 distribution plan-Class B 45,098
12b-1 distribution plan-Class C 35,281
12b-1 distribution plan-Class P 4
Shareholder servicing 71,617
Market data 1,287
Professional 11,037
Reports to shareholders 35,128
Fund accounting 837
Fund administration 21,391
Custody 11,483
Directors' fees 115
Registration 40,818
- --------------------------------------------------------------------------------------------------------
Gross expenses 865,503
Expense reductions (497)
Expenses assumed by Lord, Abbett & Co. LLC (59,641)
- --------------------------------------------------------------------------------------------------------
NET EXPENSES 805,365
- --------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,758,995
- --------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on investments (995,194)
Net change in unrealized appreciation/depreciation on investments 9,363,448
========================================================================================================
NET REALIZED AND UNREALIZED GAIN 8,368,254
========================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,127,249
========================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE PERIOD
DECEMBER 19, 2001*
FOR THE YEAR ENDED TO
INCREASE IN NET ASSETS NOVEMBER 30, 2003 NOVEMBER 30, 2002
OPERATIONS:
Net investment income $ 1,758,995 $ 420,747
Net realized loss on investments (995,194) (144,633)
Net change in unrealized appreciation/depreciation on investments 9,363,448 (1,646,183)
- -------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 10,127,249 (1,370,069)
=========================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (860,700) (82,380)
Class B (73,731) (8,158)
Class C (62,644) (9,286)
Class P (28) (4)
Class Y (32) (6)
- -------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (997,135) (99,834)
=========================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 117,230,186 31,808,444
Reinvestment of distributions 901,903 90,894
Cost of shares reacquired (10,219,641) (6,139,600)
- -------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS 107,912,448 25,759,738
=========================================================================================================================
NET INCREASE IN NET ASSETS 117,042,562 24,289,835
=========================================================================================================================
NET ASSETS
Beginning of year 26,289,835 2,000,000
- -------------------------------------------------------------------------------------------------------------------------
END OF YEAR $ 143,332,397 $ 26,289,835
=========================================================================================================================
UNDISTRIBUTED NET INVESTMENT INCOME $ 1,140,219 $ 372,046
=========================================================================================================================
</Table>
*Commencement of investment operations.
SEE NOTES TO FINANCIAL STATEMENTS.
17
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
12/19/2001(a)
YEAR ENDED TO
11/30/2003 11/30/2002
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.45 $ 10.00
================== ==================
Unrealized appreciation on investments .01
------------------
NET ASSET VALUE ON SEC EFFECTIVE DATE $ 10.01
==================
Investment operations
Net investment income(b) .31 .29
Net realized and unrealized gain (loss) .79 (.80)
------------------ ------------------
Total from investment operations 1.10 (.51)
------------------ ------------------
Distributions to shareholders from:
Net investment income (.26) (.05)
------------------ ------------------
NET ASSET VALUE, END OF PERIOD $ 10.29 $ 9.45
================== ==================
Total Return(c) .10%(d)(e)
Total Return(c) 11.97% (5.10)%(d)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions 1.35% 1.29%(d)
Expenses, excluding waiver and expense reductions 1.46% 2.25%(d)
Net investment income 3.24% 2.99%(d)
<Caption>
12/19/2001(a)
YEAR ENDED TO
SUPPLEMENTAL DATA: 11/30/2003 11/30/2002
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 128,030 $ 21,467
Portfolio turnover rate 28.71% 33.71%
- -------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
12/19/2001(a)
YEAR ENDED TO
11/30/2003 11/30/2002
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.40 $ 10.00
================== ==================
Unrealized appreciation on investments .01
------------------
NET ASSET VALUE ON SEC EFFECTIVE DATE $ 10.01
==================
Investment operations
Net investment income(b) .25 .24
Net realized and unrealized gain (loss) .79 (.81)
------------------ ------------------
Total from investment operations 1.04 (.57)
------------------ ------------------
Distributions to shareholders from:
Net investment income (.21) (.04)
------------------ ------------------
NET ASSET VALUE, END OF PERIOD $ 10.23 $ 9.40
================== ==================
Total Return(c) .10%(d)(e)
Total Return(c) 11.35% (5.69)%(d)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions 1.99% 1.85%(d)
Expenses, excluding waiver and expense reductions 2.10% 2.81%(d)
Net investment income 2.60% 2.43%(d)
<Caption>
12/19/2001(a)
YEAR ENDED TO
SUPPLEMENTAL DATA: 11/30/2003 11/30/2002
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 9,398 $ 2,283
Portfolio turnover rate 28.71% 33.71%
- -------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
12/19/2001(a)
YEAR ENDED TO
11/30/2003 11/30/2002
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.41 $ 10.00
================== ==================
Unrealized appreciation on investments .01
------------------
NET ASSET VALUE ON SEC EFFECTIVE DATE $ 10.01
==================
Investment operations
Net investment income(b) .24 .24
Net realized and unrealized gain (loss) .80 (.79)
------------------ ------------------
Total from investment operations 1.04 (.55)
------------------ ------------------
Distributions to shareholders from:
Net investment income (.20) (.05)
------------------ ------------------
NET ASSET VALUE, END OF PERIOD $ 10.25 $ 9.41
================== ==================
Total Return(c) .10%(d)(e)
Total Return(c) 11.27% (5.54)%(d)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions 1.99% 1.85%(d)
Expenses, excluding waiver and expense reductions 2.10% 2.81%(d)
Net investment income 2.60% 2.43%(d)
<Caption>
12/19/2001(a)
YEAR ENDED TO
SUPPLEMENTAL DATA: 11/30/2003 11/30/2002
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 5,902 $ 2,538
Portfolio turnover rate 28.71% 33.71%
- -------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
12/19/2001(a)
YEAR ENDED TO
11/30/2003 11/30/2002
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.45 $ 10.00
================== ==================
Unrealized appreciation on investments .01
------------------
NET ASSET VALUE ON SEC EFFECTIVE DATE $ 10.01
==================
Investment operations
Net investment income(b) .31 .28
Net realized and unrealized gain (loss) .80 (.80)
------------------ ------------------
Total from investment operations 1.11 (.52)
------------------ ------------------
Distributions to shareholders from:
Net investment income (.25) (.04)
------------------ ------------------
NET ASSET VALUE, END OF PERIOD $ 10.31 $ 9.45
================== ==================
Total Return(c) .10%(d)(e)
Total Return(c) 12.03% (5.20)%(d)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions 1.44% 1.35%(d)
Expenses, excluding waiver and expense reductions 1.55% 2.31%(d)
Net investment income 3.15% 2.93%(d)
<Caption>
12/19/2001(a)
YEAR ENDED TO
SUPPLEMENTAL DATA: 11/30/2003 11/30/2002
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 1 $ 1
Portfolio turnover rate 28.71% 33.71%
- -------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
<Table>
<Caption>
12/19/2001(a)
YEAR ENDED TO
11/30/2003 11/30/2002
PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.47 $ 10.00
================== ==================
Unrealized appreciation on investments .01
------------------
NET ASSET VALUE ON SEC EFFECTIVE DATE $ 10.01
==================
Investment operations
Net investment income(b) .34 .32
Net realized and unrealized gain (loss) .80 (.80)
------------------ ------------------
Total from investment operations 1.14 (.48)
------------------ ------------------
Distributions to shareholders from:
Net investment income (.28) (.06)
------------------ ------------------
NET ASSET VALUE, END OF PERIOD $ 10.33 $ 9.47
================== ==================
Total Return(c) .10%(d)(e)
Total Return(c) 12.47% (4.83)%(d)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions .99%+ .93%(d)
Expenses, excluding waiver and expense reductions 1.10%+ 1.89%(d)
Net investment income 3.60%+ 3.35%(d)
<Caption>
12/19/2001(a)
YEAR ENDED TO
SUPPLEMENTAL DATA: 11/30/2003 11/30/2002
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 1 $ 1
Portfolio turnover rate 28.71% 33.71%
- -------------------------------------------------------------------------------------------------------------------------
</Table>
+ The ratios have been determined on a Fund basis.
(a) Commencement of investment operations; SEC effective date and date shares
first became available to the public is 12/27/2001.
(b) Calculated using average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(d) Not annualized.
(e) Total return for the period 12/19/2001 through 12/26/2001.
(f) Total return for the period 12/27/2001 through 11/30/2002.
SEE NOTES TO FINANCIAL STATEMENTS.
22
<Page>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Lord Abbett Research Fund, Inc. (the "Company") is registered under the
Investment Company Act of 1940 (the "Act") as a diversified open-end management
investment company incorporated under Maryland law on April 6, 1992. The Company
currently consists of four separate funds. This report covers one of the funds
- -- Lord Abbett America's Value Fund (the "Fund"). The Fund's investment
objective is to seek current income and capital appreciation.
The Fund offers five classes of shares: Classes A, B, C, P and Y, each with
different expenses and dividends. A front-end sales charge is normally added to
the NAV for Class A shares. There is no front-end sales charge in the case of
the Class B, C, P and Y shares, although there may be a contingent deferred
sales charge ("CDSC") as follows: certain redemptions of Class A shares made
within 24 months following any purchase made without a sales charge; 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 convert
to Class A shares on the eighth anniversary of the original purchase of 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
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 traded on any recognized U.S. or non-U.S.
exchange or on NASDAQ, Inc. are valued at the last sale price or official
closing price on the exchange or system on which they are principally
traded. Unlisted equity securities are valued at the last quoted sales price
or, if no sales price is available, at the mean between the most recently
quoted bid and asked prices. Fixed income securities are valued at the mean
between the bid and asked prices on the basis of prices supplied by
independent pricing services, which reflect broker/dealer supplied
valuations and electronic data processing techniques. 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
Directors. 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
from sales of portfolio securities are calculated using the identified-cost
method. Realized and unrealized gains or losses are allocated to each class
of shares based upon the relative proportion of net assets at the beginning
of the day.
(c) INVESTMENT INCOME-Dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. Discounts are accreted and
premiums are amortized using the effective interest method. Investment
income is allocated to each class of shares based upon the relative
proportion of net assets at the beginning of the day.
(d) FEDERAL 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
23
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
substantially all taxable income and capital gains to its shareholders.
Therefore, no federal income tax provision is required.
(e) EXPENSES-Expenses incurred by the Company that do not specifically relate to
an individual fund are allocated to the funds within the Company on a
pro-rata basis. 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, Class B, Class C and Class P shares bear
all expenses and fees relating to their respective 12b-1 Distribution Plans.
(f) SECURITIES LENDING-The Fund may lend its securities to member banks of the
Federal Reserve System and to registered broker/dealers approved by the
Fund. The loans are collateralized at all times by cash and/or U.S. Treasury
securities in an amount at least equal to 102% of the market value of
domestic securities loaned (105% in the case of foreign securities loaned)
as determined at the close of business on the preceding business day. The
dividend and interest income earned on the securities loaned is accounted
for in the same manner as other dividend and interest income. Lending
portfolio securities could result in a loss or delay in recovering the
Fund's securities if the borrower defaults.
(g) REPURCHASE AGREEMENTS--The Fund may enter into repurchase agreements with
respect to securities. A repurchase agreement is a transaction in which the
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, U.S. Government securities or U.S.
government sponsored enterprises securities having a value equal to, or in
excess of, the value of the repurchase agreement. If the seller of the
agreement defaults on its obligation to repurchase the underlying securities
at a time when the value of those securities has declined, the Fund may
incur a loss upon disposition of the securities.
3. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE
The Company 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, pays the remuneration of
officers, 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 an annual rate of .75%.
For the year ended November 30, 2003, Lord Abbett voluntarily reimbursed the
Fund's other expenses (excluding management fee and 12b-1 distribution fees) in
the amount of $59,641. Lord Abbett may stop limiting expenses at any time.
In addition, effective January 1, 2003, Lord Abbett began providing 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. This
results in Lord Abbett paying fund accounting expenses that were previously
charged to the Fund.
12b-1 DISTRIBUTION PLANS
The Company has adopted a distribution plan with respect to one or more classes
of shares pursuant to Rule 12b-1 of the Act, which provides for the payment of
ongoing distribution and
24
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
service fees to Lord Abbett Distributor LLC ("Distributor"), an affiliate of
Lord Abbett. The fees are accrued daily at annual rates based upon average daily
net assets as follows:
<Table>
<Caption>
FEE CLASS A CLASS B CLASS C CLASS P
- -----------------------------------------------------------------------------------------
Service .25% .25% .25% .20%
Distribution .10%(1)(2) .75% .75% .25%
</Table>
(1) In addition, the Fund pays a one-time distribution fee of up to 1% on
certain qualifying purchases, which is generally amortized over a two-year
period.
(2) In addition, until January 1, 2003, the Fund paid an incremental marketing
expense of approximately .03% of the average daily net assets attributable
to Class A.
Class Y does not have a distribution plan.
COMMISSIONS
Distributor received the following commissions on sales of Class A shares of the
Fund, after concessions were paid to authorized dealers, for the year ended
November 30, 2003:
<Table>
<Caption>
DISTRIBUTOR DEALERS'
COMMISSIONS CONCESSIONS
- --------------------------------
$ 450,393 $ 2,370,362
</Table>
One Director 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
semi-annually. Taxable net realized gains from securities transactions, reduced
by capital loss carryforwards, if any, are declared and distributed to
shareholders at least annually. The capital loss carryforward amount is
available to offset future net capital gains. Dividends and distributions to
shareholders are recorded on the ex-dividend date. The amount 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 net investment income and net realized
capital gains for tax purposes are reported as distributions of paid-in capital.
On December 11, 2003, a net investment income distribution of $1,500,000 was
declared for the Fund. The distribution was paid on December 12, 2003, to
shareholders of record on December 11, 2003.
The tax character of distributions paid during the fiscal years ended November
30, 2003 and November 30, 2002 are as follows:
<Table>
<Caption>
11/30/2003 11/30/2002
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 997,135 $ 99,834
Net long-term capital gains -- --
- --------------------------------------------------------------------------------
Total distributions paid $ 997,135 $ 99,834
================================================================================
</Table>
25
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As of November 30, 2003, the components of accumulated earnings on a tax basis
are as follows:
<Table>
- -------------------------------------------------------------------------------
Undistributed ordinary income - net $ 1,140,219
- -------------------------------------------------------------------------------
Total undistributed earnings 1,140,219
Capital loss carryforwards* (1,008,182)
Temporary differences (47,569)
Unrealized gains - net 7,627,218
- -------------------------------------------------------------------------------
Total accumulated earnings - net $ 7,711,686
===============================================================================
</Table>
*As of November 30, 2003, the capital loss carryforwards along with the related
expiration dates are as follows:
<Table>
<Caption>
2010 2011 TOTAL
- --------------------------------------------------
$ 108,198 $ 899,984 $ 1,008,182
</Table>
Capital losses incurred after October 31 ("post-October"), within the taxable
year are deemed to arise on the first business day of the Fund's next taxable
year. The Fund incurred and will elect to defer net capital losses of $47,569
during fiscal 2003.
As of November 30, 2003, the Fund's aggregate unrealized security gains and
losses based on cost for U.S. federal income tax purposes are as follows:
<Table>
- -------------------------------------------------------------------------------
Tax Cost $ 136,777,684
- -------------------------------------------------------------------------------
Gross unrealized gain 8,690,603
Gross unrealized loss (1,063,385)
- -------------------------------------------------------------------------------
Net unrealized security gain $ 7,627,218
===============================================================================
</Table>
The difference between book-basis and tax-basis unrealized gains (losses) is
primarily attributable to wash sales and other temporary tax adjustments.
Permanent items identified during the year ended November 30, 2003 have been
reclassified among the components of net assets based on their tax basis
treatment as follows:
<Table>
<Caption>
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN
INCOME GAIN (LOSS) CAPITAL
- ----------------------------------------------------------------
$ 6,313 $ (5,896) $ (417)
</Table>
5. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and sales of investment securities (other than short-term investments)
for the year-ended November 30, 2003 are as follows:
<Table>
<Caption>
U.S. GOVERNMENT NON-U.S. GOVERNMENT U.S. GOVERNMENT NON-U.S. GOVERNMENT
PURCHASES* PURCHASES SALES* SALES
- --------------------------------------------------------------------------------
$ - $ 114,427,705 $ 90,839 $ 15,433,801
</Table>
*Includes U.S. government sponsored enterprises securities.
As of November 30, 2003, there were no securities on loan and no securities
lending activity during the year ended November 30, 2003.
26
<Page>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
6. DIRECTORS' REMUNERATION
The Company's officers and the one Director who are associated with Lord Abbett
do not receive any compensation from the Company for serving in such capacities.
Outside Directors' fees are allocated among all Lord Abbett-sponsored funds
based on the net assets of each fund. There is an equity based plan available to
all outside Directors under which outside Directors must defer receipt of a
portion of, and may elect to defer receipt of an additional portion of
Directors' fees. The deferred amounts are treated as though equivalent dollar
amounts have been invested proportionately in the Fund. Such amounts and
earnings accrued thereon are included in Directors' fees on the Statement of
Operations and in Directors' fees payable on the Statement of Assets and
Liabilities and are not deductible for federal income tax purposes until such
amounts are paid.
7. EXPENSE REDUCTIONS
The Company has entered into arrangements with its transfer agent and custodian
whereby credits realized as a result of uninvested cash balances are used to
reduce a portion of the Fund's expenses.
8. LINE OF CREDIT
The Fund, along with certain other funds managed by Lord Abbett, has available a
$200,000,000 unsecured revolving credit facility ("Facility") from a consortium
of banks, to be used for temporary or emergency purposes as an additional source
of liquidity to fund redemptions of investor shares. Any borrowings under this
Facility will bear interest at current market rates as defined in the agreement.
The fee for this Facility is an annual rate of .09%. At November 30, 2003, there
were no loans outstanding pursuant to this Facility nor was the Facility
utilized at any time during the year ended November 30, 2003.
9. CUSTODIAN AND ACCOUNTING AGENT
State Street Bank & Trust Company ("SSB") is the Company's custodian and
accounting agent. SSB performs custodian, accounting and recordkeeping functions
relating to portfolio transactions and calculating the Fund's net asset value.
10. INVESTMENT RISKS
The Fund is subject to the general risks and considerations associated with
investing in equity and fixed income securities.
The values of the Fund's equity security holdings and, consequently, the value
of an investment in the Fund will fluctuate in response to movements in the
stock market in general and to the changing prospects of the individual
companies involved. With its emphasis on value stocks, the Fund may perform
differently than the market as a whole and other types of stocks, such as growth
stocks. The market may fail to recognize the intrinsic value of particular value
stocks for a long time. The Fund may invest a significant portion of its assets
in mid-sized companies that may be less able to weather economic shifts or other
adverse developments than larger, more established companies. Because the Fund
is not limited to investing in equity securities, the Fund may have smaller
gains in a rising stock market than a fund investing solely in equity
securities. In addition, if the Fund's assessment of a company's value or
prospects for market appreciation or market conditions is wrong, the Fund could
suffer losses or produce poor performance relative to other funds, even in a
rising market.
27
<Page>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
The values of the Fund's fixed income holdings, and consequently, the value of
an investment in the Fund will change as interest rates fluctuate and in
response to market movements. When interest rates rise, the prices of these
holdings are likely to decline. There is also the risk that an issuer of a fixed
income security will fail to make timely payments of principal or interest to
the Fund, a risk that is greater with high yield bonds (sometimes called "junk
bonds") in which the Fund may invest. Some issuers, particularly of high yield
bonds, may default as to principal and/or interest payments after the Fund
purchases their securities. A default, or concerns in the market about an
increase in risk of default, may result in losses to the Fund. High yield bonds
are subject to greater price fluctuations, as well as additional risks.
The Fund may invest up to 20% of its assets in foreign securities which present
increased market, liquidity, currency, political and other risks.
These factors can affect Fund performance.
11. SUMMARY OF CAPITAL TRANSACTIONS
The Fund has authorized 150 million shares of $0.001 par value capital stock
designated as follows: 50 million Class A shares; 30 million Class B shares, 20
million Class C shares, 20 million Class P shares and 30 million Class Y shares.
<Table>
<Caption>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 2003 NOVEMBER 30, 2002*
- ------------------------------------------------------------------------------------------------------------------
CLASS A SHARE SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------
Shares sold 10,952,741 $ 105,792,218 2,550,856 $ 25,027,828
Reinvestment of distributions 86,219 800,563 7,860 79,548
Shares reacquired (872,630) (8,067,786) (485,577) (4,561,723)
- ------------------------------------------------------------------------------------------------------------------
Increase 10,166,330 $ 98,524,995 2,073,139 $ 20,545,653
- ------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ------------------------------------------------------------------------------------------------------------------
Shares sold 763,447 $ 7,240,325 302,701 $ 3,010,750
Reinvestment of distributions 6,858 63,496 551 5,566
Shares reacquired (94,792) (862,300) (60,619) (579,658)
- ------------------------------------------------------------------------------------------------------------------
Increase 675,513 $ 6,441,521 242,633 $ 2,436,658
- ------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- ------------------------------------------------------------------------------------------------------------------
Shares sold 439,543 $ 4,197,443 380,215 $ 3,769,866
Reinvestment of distributions 4,100 37,788 571 5,770
Shares reacquired (137,742) (1,289,555) (111,045) (998,219)
- ------------------------------------------------------------------------------------------------------------------
Increase 305,901 $ 2,945,676 269,741 $ 2,777,417
- ------------------------------------------------------------------------------------------------------------------
CLASS P SHARES
- ------------------------------------------------------------------------------------------------------------------
Shares sold 10.776 $ 100 - $ -
Reinvestment of distributions 2.847 26 0.418 4.23
- ------------------------------------------------------------------------------------------------------------------
Increase 13.623 $ 126 0.418 $ 4.23
- ------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
- ------------------------------------------------------------------------------------------------------------------
Shares sold 10.752 $ 100 - $ -
Reinvestment of distributions 3.293 30 0.599 6.07
- ------------------------------------------------------------------------------------------------------------------
Increase 14.045 $ 130 0.599 $ 6.07
- ------------------------------------------------------------------------------------------------------------------
</Table>
*For the period December 27, 2001 (SEC effective date and date shares first
became available to the public) to NOVEMBER 30, 2002.
28
<Page>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
LORD ABBETT RESEARCH FUND, INC. - LORD ABBETT AMERICA'S VALUE FUND:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments of Lord Abbett Research Fund, Inc. - Lord Abbett
America's Value Fund (the "Fund") as of November 30, 2003, and the related
statement of operations for the year then ended and the statements of changes in
net assets and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 as of November 30, 2003 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Lord
Abbett Research Fund, Inc. - Lord Abbett America's Value Fund as of November 30,
2003, the results of its operations for the year then ended and the changes in
its net assets and the financial highlights for each of the periods presented,
in conformity with accounting principles generally accepted in the United States
of America.
/s/ Deloitte & Touche LLP
New York, New York
January 23, 2004
29
<Page>
BASIC INFORMATION ABOUT MANAGEMENT
The Company's Board of Directors is responsible for the management of the
business and affairs of each Fund in accordance with the laws of the State of
Maryland. The Board appoints officers who are responsible for the day-to-day
operations of each Fund and who execute policies authorized by the Board. The
Board also approves an investment adviser to each Fund and continues to monitor
the cost and quality of the services provided by the investment adviser, and
annually considers whether to renew the contract with the adviser. Generally,
each Director holds office until his successor is elected and qualified or until
his earlier resignation or removal, as provided in the Fund's organizational
documents.
Lord, Abbett & Co. LLC ("Lord Abbett"), a Delaware limited liability company, is
the Funds' investment adviser.
INTERESTED DIRECTOR
The following Director is the Managing Partner of Lord Abbett and is an
"interested person" as defined in the Act. Mr. Dow is also an officer, director,
or trustee of each of the fourteen Lord Abbett-sponsored funds, which consist of
49 portfolios or series.
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH WITH COMPANY DURING PAST FIVE YEARS DIRECTORSHIPS
- -------------------------------------------------------------------------------------------------
ROBERT S. DOW Director and Managing Partner and N/A
Lord, Abbett & Co. LLC Chairman since 1996 Chief Investment
90 Hudson Street Officer of Lord
Jersey City, NJ Abbett since 1996.
Date of Birth: 3/8/1945
</Table>
----------
INDEPENDENT DIRECTORS
The following independent or outside Directors are also directors or trustees of
each of the fourteen Lord Abbett-sponsored funds, which consist of 49 portfolios
or series.
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH WITH COMPANY DURING PAST FIVE YEARS DIRECTORSHIPS
- --------------------------------------------------------------------------------------------------------
E. THAYER BIGELOW Director since 1996 Managing General Partner, Currently serves as
Bigelow Media, LLC Bigelow Media, LLC (since director of Adelphia
41 Madison Ave., 2000); Senior Adviser, Communications, Inc.,
Suite 3810 Time Warner Inc. (1998 - Crane Co., and Huttig
New York, NY 2000); Acting Chief Building Products Inc.
Date of Birth: 10/22/1941 Executive Officer of
Courtroom Television
Network (1997 - 1998);
President and Chief
Executive Officer of Time
Warner Cable Programming,
Inc. (1991 - 1997).
WILLIAM H.T. BUSH Director since 1998 Co-founder and Chairman Currently serves as
Bush-O'Donnell & Co., of the Board of the director of Wellpoint
Inc. financial advisory firm Health Network, Inc.,
101 South Hanley Road of Bush-O'Donnell & DT Industries Inc.,
Suite 1250 Company (since 1986). and Engineered Support
St. Louis, MO Systems, Inc.
Date of Birth: 7/14/1938
</Table>
30
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH WITH COMPANY DURING PAST FIVE YEARS DIRECTORSHIPS
- -------------------------------------------------------------------------------------------------------
ROBERT B. CALHOUN, JR. Director since 1998 Managing Director of Currently serves as
Monitor Clipper Partners Monitor Clipper Partners director of Avondale,
650 Madison Ave., 9th Fl. (since 1997) and Inc. and Interstate
New York, NY President of Clipper Bakeries Corp.
Date of Birth: 10/25/1942 Asset Management Corp.
(since 1991), both
private equity investment
funds.
STEWART S. DIXON Director since 1996; Partner in the law firm N/A
Wildman, Harrold, Allen & retired 12/31/2002 of Wildman, Harrold,
Dixon Allen & Dixon (since 1967).
225 W. Wacker Drive,
Suite 2800
Chicago, IL
Date of Birth: 11/5/1930
FRANKLIN W. HOBBS Director since 2001 Senior Advisor (since Currently serves as
Houlihan Lokey Howard & April 2003) and Former director of Adolph
Zukin Chief Executive Officer Coors Company.
685 Third Ave. of Houlihan Lokey Howard
New York, NY & Zukin, an investment
Date of Birth: 7/30/1947 bank (January 2002 -
April 2003); Chairman of
Warburg Dillon Read (1999
- 2001); Global Head of
Corporate Finance of SBC
Warburg Dillon Read (1997
- 1999); Chief Executive
Officer of Dillon, Read &
Co. (1994 - 1997).
C. ALAN MACDONALD Director since 1996 Retired - General Currently serves as
415 Round Hill Road Business and Governance director of Fountainhead
Greenwich, CT Consulting (since 1992); Water Company, Lincoln
Date of Birth: 5/19/1933 formerly President and Snacks, H.J. Baker, and
CEO of Nestle Foods. Seix Fund, Inc.*
THOMAS J. NEFF Director since 1992 Chairman of Spencer Currently serves as
Spencer Stuart Stuart, an executive director of Ace, Ltd.
277 Park Avenue search consulting firm and Exult, Inc.
New York, NY (since 1996); President
Date of Birth: 10/2/1937 of Spencer Stuart (1979 -
1996).
JAMES F. ORR, III Director since 2002 President and CEO of Currently serves as
80 Pinckney Street resigned 3/3/2003 LandingPoint Capital Chairman of Rockefeller
Boston, MA (since 2002); Chairman Foundation, Director of
Date of Birth: 3/5/1943 and CEO of United Asset Nashua Corp. and
Management Corporation SteelPoint Technologies.
(2000 to 2001); Chairman
and CEO of UNUM Provident
Corporation (1999 -
merger); Chairman and CEO
of UNUM Corporation (1988
- 1999).
</Table>
- ----------
* Seix Fund, Inc. is a registered investment company that is advised by Seix
Investment Advisors Inc. Seix Investment Advisors Inc.'s Chairman, CEO, and
Chief Investment Officer is married to Robert Dow, the Company's Chairman, CEO,
and President and the Managing Partner of Lord Abbett.
31
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
None of the officers listed below have received compensation from the Company.
All the officers of the Company may also be officers of the other Lord
Abbett-sponsored funds and maintain offices at 90 Hudson Street, Jersey City,
NJ 07302.
<Table>
<Caption>
NAME AND CURRENT POSITION LENGTH OF SERVICE PRINCIPAL OCCUPATION
(DATE OF BIRTH) WITH COMPANY OF CURRENT POSITION DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------
ROBERT S. DOW Chief Executive Elected in 1996 Managing Partner and
(3/8/1945) Officer and President Chief Investment
Officer of Lord
Abbett since 1996.
SHOLOM DINSKY Executive Vice Elected in 2002 Partner and Large
(3/24/1944) President Cap Value Investment
Manager, joined Lord
Abbett in 2000,
formerly Managing
Director of
Prudential Asset
Management, prior
thereto Director of
Equity Research and
Senior Vice
President at
Mitchell Hutchins
Asset Management.
KEVIN P. FERGUSON Executive Vice Elected in 2001 Partner and Mid Cap
(10/3/1964) President Growth Investment
Manager, joined Lord
Abbett in 1999,
formerly Portfolio
Manager/Senior Vice
President at Lynch &
Mayer, Inc.
ROBERT P. FETCH Executive Vice Elected in 1997 Partner and
(2/18/1953) President Small-Cap Value
Senior Investment
Manager, joined Lord
Abbett in 1995.
ROBERT G. MORRIS Executive Vice Elected in 1996 Partner and Director
(11/6/1944) President of Equity Investments,
joined Lord Abbett
in 1991.
ELI M. SALZMANN Executive Vice Elected in 1999 Partner and Director
(3/24/1964) President. of Institutional
Equity Investments,
joined Lord Abbett
in 1997.
CHRISTOPHER J. TOWLE Executive Vice Elected in 2001 Partner and Investment
(10/12/1957) President Manager, joined
Lord Abbett in 1987.
</Table>
32
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
<Table>
<Caption>
NAME AND CURRENT POSITION LENGTH OF SERVICE PRINCIPAL OCCUPATION
(DATE OF BIRTH) WITH COMPANY OF CURRENT POSITION DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------
EDWARD K. VON DER LINDE Executive Vice Elected in 2001 Partner and Investment
(6/12/1960) President Manager, joined Lord
Abbett in 1988.
TRACIE E. AHERN Vice President and Elected in 1999 Partner and Director of
(1/12/1968) Treasurer. Portfolio Accounting and
Operations, joined Lord
Abbett in 1999, prior
thereto Vice President -
Head of Fund
Administration of Morgan
Grenfell.
JOAN A. BINSTOCK Chief Financial Elected in 1999 Partner and Chief
(3/4/1954) Officer and Vice Operations Officer,
President joined Lord Abbett
in 1999, prior
thereto Chief
Operating Officer of
Morgan Grenfell.
DANIEL E. CARPER Vice President Elected in 1993 Partner, joined Lord
(1/22/1952) Abbett in 1979.
PAUL A. HILSTAD Vice President and Elected in 1995 Partner and General
(12/13/1942) Secretary Counsel, joined Lord
Abbett in 1995.
LAWRENCE H. KAPLAN Vice President and Elected in 1997 Partner and Deputy
(1/16/1957) Assistant Secretary General Counsel, joined
Lord Abbett in 1997.
A. EDWARD OBERHAUS, III Vice President Elected in 1996 Partner and Manager of
(12/21/1959) Equity Trading, joined
Lord Abbett in 1983.
CHRISTINA T. SIMMONS Vice President and Elected in 2000 Assistant General
(11/12/1957) Assistant Secretary Counsel, joined Lord
Abbett in 1999, formerly
Assistant General Counsel
of Prudential Investments
from 1998 to 1999, prior
thereto Counsel of
Drinker, Biddle & Reath
LLP, a law firm.
</Table>
33
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONCLUDED)
<Table>
<Caption>
NAME AND CURRENT POSITION LENGTH OF SERVICE PRINCIPAL OCCUPATION
(DATE OF BIRTH) WITH COMPANY OF CURRENT POSITION DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------
BERNARD J. GRZELAK Assistant Treasurer Elected in 2003 Director of Fund
(6/12/1971) Administration,
joined Lord Abbett
in 2003, formerly
Vice President,
Lazard Asset
Management from 2000
to 2003, prior
thereto Manager of
Deloitte & Touche
LLP.
</Table>
Please call 888-522-2388 for a copy of the Statement of Additional Information
(SAI), which contains further information about the Company's Directors. It is
available free upon request.
34
<Page>
HOUSEHOLDING
The Company has adopted a policy that allows it to send only one copy of the
Fund's Prospectus, proxy material, annual report and semi-annual 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 800-821-5129 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 AND PROCEDURES
A description of the policies and procedures that Lord Abbett uses to vote
proxies related to the Fund's portfolio securities is available without charge,
upon request, by calling 888-522-2388 or on Lord Abbett's web site at
www.LordAbbett.com.
TAX INFORMATION
44.48% of the ordinary income distribution paid by the Fund during fiscal
2003 is qualifying dividend income. For corporate shareholders, only 70.62%
of the Fund's ordinary income distribution qualified for the dividends
received deduction.
The above percentages are based upon the Funds' fiscal year end and may not
agree to calendar year 2003 percentages.
35
<Page>
<Table>
[LORD ABBETT(R) LOGO]
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 Lord Abbett Research Fund, Inc.
Fund prospectus. Lord Abbett America's Value Fund
Lord Abbett Mutual Fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC LAAMF-2-1103
90 Hudson Street - Jersey City, New Jersey 07302-3973 (1/04)
</Table>
<Page>
[LORD ABBETT LOGO]
2003
ANNUAL
REPORT
LORD ABBETT
GROWTH OPPORTUNITIES FUND
FOR THE YEAR ENDED NOVEMBER 30, 2003
<Page>
- --------------------------------------------------------------------------------
LORD ABBETT GROWTH OPPORTUNITIES FUND
ANNUAL REPORT
FOR THE YEAR ENDED NOVEMBER 30, 2003
DEAR SHAREHOLDERS: We are pleased to provide you with this twelve-month overview
of the Lord Abbett Growth Opportunities Fund's strategies and performance for
the fiscal year ended November 30, 2003. On this and the following pages, we
discuss the major factors that influenced performance.
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,
/s/ Robert S. Dow
ROBERT S. DOW
CHAIRMAN
- --------------------------------------------------------------------------------
Q: WHAT WERE THE OVERALL MARKET CONDITIONS OF THE REPORTING PERIOD?
A: War and general geopolitical concerns had a negative effect on the psyche of
businesses and consumers during the first part of the period. Corporations
entered the first quarter of 2003 cautiously and remained wary, selling existing
inventories and implementing layoffs, as the economy continued to decelerate.
The unemployment rate rose during the period, reaching 6.4% by June 2003. But,
as the coalition's war effort made clear progress in the early spring, the fog
of global uncertainty lifted, and broad equity indices experienced meaningful
advances.
In June, the Federal Reserve Board (the "Fed") cut interest rates by 25
basis points to 1%, in a continued attempt to spark the economy. With interest
rates at levels not seen for over 40 years, the Fed is attempting a variety of
measures to promote and sustain economic growth. Over the past year, the U.S.
dollar weakened versus the euro. A weaker dollar can translate into more
competitive pricing for U.S. goods overseas. Additionally, imports can become
more expensive and less attractive to the U.S. consumer, resulting in higher
sales of American-made goods within the U.S. -- providing further stimulus for
economic growth. During the second quarter of 2003, President Bush signed into
law a tax reform/economic stimulus package with accelerated tax cuts and
dividend exclusions.
The U.S. economy continued to show signs of improvement during the third
quarter of 2003, as domestic growth prospects and reported corporate profits
improved. Further evidence of an economic recovery sparked the equity markets,
adding to the market gains experienced in the second quarter. For the reporting
period, major indices advanced, but concerns over future growth grew as the
summer ended.
As the economy entered the final months of 2003, early gross domestic
product (GDP) numbers announced
1
<Page>
- --------------------------------------------------------------------------------
showed that the U.S. economy expanded by an 8.2% rate in the third quarter, well
ahead of expectations and up from the 3.3% growth rate reported for the second
quarter. In addition, productivity data, an important gauge for inflation,
remained strong in the fourth quarter and can be an important signal that
interest rates may remain low in the near term. As the period came to a close,
October's employment report showed an increase of 126,000 jobs and the
unemployment rate dropped to 5.9% in November -- an encouraging sign as the
economy enters 2004.
Q: HOW DID THE FUND PERFORM OVER THE FISCAL YEAR ENDED NOVEMBER 30, 2003?
A: Lord Abbett Growth Opportunities Fund returned 24.0%. This reflects
performance at the Net Asset Value (NAV) of Class A shares, with all
distributions reinvested for the fiscal year ended November 30, 2003. The
Fund underperformed the Russell Midcap(R) Growth Index,(1) which returned
32.6% over the same period. STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS, which
reflect performance at the maximum 5.75% sales charge applicable to Class A
share investments and include the reinvestment of all distributions, as of
November 30, 2003 are: 1 Year: 16.86%, 5 Years: 6.22% and Since Inception
(8/1/95): 11.07%.
Q: WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
A: The Fund's largest detractor from relative performance was stock selection
within the technology sector. Although the Fund's technology holdings had strong
absolute returns, performance lagged the benchmark. In particular, certain
holdings in the computer security category declined as a result of lower
revenues and higher research and development and restructuring charges. Stock
selection in the healthcare sector also detracted from relative performance, as
certain facilities holdings declined due to persistent debt problems.
During the Fund's fiscal year, strong stock selection within the financial
services sector added to total returns. Stronger interest income and earnings
growth in regional bank holdings helped performance. In addition, stock
selection within the utilities sector added to performance, as strong
year-over-year revenue increases and a better overall environment for
communications companies helped Fund holdings.
(1) The Russell Midcap(R) Growth Index measures the performance of those Russell
Midcap companies with higher price-to-book ratios and higher forecasted growth
values. The stocks are also members of the Russell 1000(R) Growth Index. Indices
are unmanaged, do not reflect the deductions of fees or expenses and are not
available for direct investment.
2
<Page>
- --------------------------------------------------------------------------------
IMPORTANT PERFORMANCE AND OTHER INFORMATION
The views of the Fund's management and the portfolio holdings described in this
report are as of November 30, 2003; these views and portfolio holdings may have
changed subsequent to this date and they do not guarantee the future performance
of the markets or the Fund. Information provided in this report should not be
considered a recommendation to purchase or sell securities.
A NOTE ABOUT RISK: See Notes to Financial Statements for a discussion of
investment risks. For a more detailed discussion of the risks associated with
the Fund, please see the Fund's Prospectus.
PERFORMANCE: PERFORMANCE DATA QUOTED ABOVE IS HISTORICAL. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE
PERFORMANCE DATA QUOTED. BECAUSE OF ONGOING MARKET VOLATILITY, FUND PERFORMANCE
MAY BE SUBJECT TO SUBSTANTIAL FLUCTUATION. The investment return and principal
value of an investment in the Fund will fluctuate so that shares, on any given
day or when redeemed, may be worth more or less than their original cost. Except
where noted, comparative fund performance does not account for the deduction of
sales charges and would be different if sales charges were included. The Fund
offers additional classes of shares with distinct pricing options. For a full
description of the differences in pricing alternatives, please see the Fund's
Prospectus.
The Fund is actively managed and, as a result, asset allocation may change.
Sectors may include many industries.
MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS
OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
YOU CAN OBTAIN PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END
(AVAILABLE WITHIN SEVEN BUSINESS DAYS OF THE MOST RECENT MONTH END) BY
CALLING LORD ABBETT AT 800-821-5129 OR REFER TO OUR WEBSITE AT
www.LordAbbett.com.
FOR MORE COMPLETE INFORMATION ABOUT ANY LORD ABBETT MUTUAL FUND, INCLUDING
RISKS, INVESTMENT OBJECTIVES, CHARGES AND ONGOING EXPENSES, PLEASE CALL YOUR
INVESTMENT PROFESSIONAL OR LORD ABBETT DISTRIBUTOR LLC AT 888-522-2388 FOR A
PROSPECTUS. AN INVESTOR SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
3
<Page>
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares with the same
investment in the Russell Midcap(R) Growth Index and the S&P MidCap 400/Barra
Growth Index, assuming reinvestment of all dividends and distributions. The
performance of other classes will be greater than or less than the performance
shown in the graph below due to different sales loads and expenses applicable to
such classes. The graph and performance table below do not reflect the deduction
of taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND (CLASS A SHARES) THE FUND (CLASS A SHARES) RUSSELL MIDCAP(R) S&P MIDCAP 400/
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(1) GROWTH INDEX(2) BARRA GROWTH INDEX(2)
Jul 31, 95 $ 10,000 $ 9,425 $ 10,000 $ 10,000
Nov 30, 95 $ 10,180 $ 9,595 $ 10,524 $ 10,372
Nov 30, 96 $ 13,011 $ 12,263 $ 12,581 $ 12,207
Nov 30, 97 $ 16,771 $ 15,807 $ 14,962 $ 15,475
Nov 30, 98 $ 17,727 $ 16,708 $ 16,190 $ 17,732
Nov 30, 99 $ 26,598 $ 25,069 $ 23,042 $ 25,076
Nov 30, 00 $ 27,276 $ 25,708 $ 22,662 $ 28,352
Nov 30, 01 $ 24,857 $ 23,428 $ 18,351 $ 26,375
Nov 30, 02 $ 20,517 $ 19,337 $ 14,718 $ 23,209
Nov 30, 03 $ 25,439 $ 23,976 $ 19,522 $ 29,108
</Table>
FISCAL YEAR-END 11/30
AVERAGE ANNUAL TOTAL RETURN AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE YEAR ENDED NOVEMBER 30, 2003
<Table>
<Caption>
1 YEAR 5 YEARS LIFE OF CLASS
CLASS A(3) 16.86% 6.22% 11.07%
CLASS B(4) 19.22% 6.71% 10.59%
CLASS C(5) 23.15% 6.82% 10.11%
CLASS P(6) 23.84% -- -5.35%
CLASS Y(7) 24.24% 7.77% 7.52%
</Table>
(1) Reflects the deduction of the maximum initial sales charge of 5.75%.
(2) Performance for each unmanaged Index does not reflect transaction costs,
management fees or sales charges. The performance of the indices is not
necessarily representative of the Fund's performance. Performance of the indices
begin on July 31, 1995.
(3) Class A shares were first offered on August 1, 1995. Total return, which is
the percentage change in net asset value, after deduction of the maximum initial
sales charge of 5.75% applicable to Class A shares, with all dividends and
distributions reinvested for the periods shown ended November 30, 2003, using
the SEC-required uniform method to compute such return.
(4) Class B shares were first offered on October 16, 1998. Performance reflects
the deduction of a CDSC of 4% for 1 year and 1% for 5 years and life of class.
(5) Class C shares were first offered on October 19, 1998. The 1% CDSC for Class
C shares normally applies before the first anniversary of the purchase date.
Performance is at net asset value.
(6) Class P shares commenced operations on August 15, 2000. Performance is at
net asset value.
(7) Class Y shares were first offered on December 9, 1998. Performance is at net
asset value.
4
<Page>
SCHEDULE OF INVESTMENTS
NOVEMBER 30, 2003
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------------
COMMON STOCKS 98.81%
AUTO COMPONENTS 1.28%
Paccar, Inc. 97,600 $ 7,828
----------
BANKS: OUTSIDE NEW YORK CITY 0.54%
Southwest Bancorp of
Texas, Inc.^ 86,800 3,318
----------
BIOTECHNOLOGY RESEARCH &
PRODUCTION 2.73%
Biogen Idec, Inc.* 125,200 4,780
Genzyme Corp.* 226,900 10,605
NPS Pharmaceuticals, Inc.*^ 42,800 1,292
----------
TOTAL 16,677
----------
CABLE TELEVISION SERVICES 1.58%
EchoStar Communications
Corp.* 280,300 9,665
----------
COMMUNICATIONS TECHNOLOGY 1.55%
Avaya, Inc.* 697,200 9,482
----------
COMPUTER SERVICES SOFTWARE &
SYSTEMS 8.55%
Amdocs Ltd.*(a) 342,200 8,562
Business Objects S.A. ADR*^ 160,600 5,477
Cognos, Inc.*^(a) 198,400 6,654
Electronics for
Imaging, Inc.*^ 219,400 6,055
Informatica Corp.* 572,600 6,459
Intuit, Inc.* 163,800 8,236
Macrovision Corp.* 290,500 6,652
Synopsys, Inc.* 139,800 4,188
----------
TOTAL 52,283
----------
COMPUTER TECHNOLOGY 1.07%
Ingram Micro, Inc.* 449,700 6,557
----------
CONSUMER ELECTRONICS 1.69%
Activision, Inc.* 353,000 $ 5,401
Harman International
Industries, Inc. 36,000 4,906
----------
TOTAL 10,307
----------
CONTAINERS & PACKAGING:
PAPER & PLASTIC 1.39%
Pactiv Corp.* 377,900 8,480
----------
DIVERSIFIED FINANCIAL SERVICES 0.48%
CIT Group, Inc. 84,500 2,947
----------
DIVERSIFIED PRODUCTION 1.41%
Danaher Corp. 103,600 8,620
----------
DRUGS & PHARMACEUTICALS 8.96%
Allergan, Inc. 31,600 2,361
AmerisourceBergen Corp. 111,924 7,084
Barr Laboratories, Inc.* 94,900 7,833
Cephalon, Inc.*^ 187,500 8,811
Gilead Sciences, Inc.* 173,200 10,163
ICOS Corp.*^ 74,900 3,385
Teva Pharmaceutical
Industries Ltd. ADR 126,300 7,608
Watson Pharmaceutical, Inc.* 159,100 7,500
----------
TOTAL 54,745
----------
ELECTRICAL EQUIPMENT &
COMPONENTS 1.19%
Molex, Inc.^ 227,100 7,304
----------
ELECTRONICS: SEMI-CONDUCTORS /
COMPONENTS 3.62%
Agere Systems, Inc.* 1,665,800 5,630
Integrated Circuit
Systems, Inc.* 180,800 5,379
Jabil Circuit, Inc.* 265,100 7,293
Marvell Technology
Group*(a) 96,400 3,807
----------
TOTAL 22,109
----------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2003
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------------
ELECTRONICS: TECHNOLOGY 1.71%
Kroll, Inc.*^ 260,700 $ 6,244
Symbol Technologies, Inc. 302,200 4,216
----------
TOTAL 10,460
----------
ENGINEERING & CONTRACTING
SERVICES 1.20%
Jacobs Engineering
Group, Inc.* 159,100 7,309
----------
FINANCE: SMALL LOAN 0.51%
SLM Corp. 83,400 3,097
----------
FINANCIAL DATA PROCESSING
SERVICES & SYSTEMS 4.52%
Affiliated Computers
Services, Inc.* 233,400 11,703
Alliance Data
Systems Corp.* 226,700 6,796
Fiserv, Inc.* 242,900 9,109
----------
TOTAL 27,608
----------
FINANCIAL MISCELLANEOUS 2.59%
Providian Financial Corp.*^ 707,800 7,998
Radian Group, Inc. 158,700 7,832
----------
TOTAL 15,830
----------
HEALTH & PERSONAL CARE 4.30%
Anthem, Inc.* 108,600 7,832
Omnicare, Inc. 235,800 9,413
Province Healthcare Co.*^ 590,049 9,045
----------
TOTAL 26,290
----------
HEALTHCARE MANAGEMENT
SERVICES 3.98%
Caremark Rx, Inc.* 537,400 14,349
Cerner Corp.*^ 223,200 9,961
----------
TOTAL 24,310
----------
HOMEBUILDING 1.36%
Pulte Homes, Inc. 87,000 $ 8,312
----------
INSURANCE: PROPERTY-CASUALTY 2.55%
Berkley Corp. 142,150 4,854
Everest Re Group Ltd.(a) 130,600 10,734
----------
TOTAL 15,588
----------
INVESTMENT MANAGEMENT
COMPANIES 1.48%
Affiliated Managers
Group, Inc.*^ 136,200 9,057
----------
MACHINERY: OIL WELL EQUIPMENT &
SERVICES 2.89%
Patterson-UTI Energy, Inc.* 295,200 8,481
Rowan Cos., Inc.* 434,400 9,196
----------
TOTAL 17,677
----------
MANUFACTURING 1.72%
Ingersoll-Rand Co.(a) 168,200 10,486
----------
MEDICAL & DENTAL INSTRUMENTS &
SUPPLIES 1.34%
Boston Scientific Corp.* 227,600 8,169
----------
MULTI-SECTOR COMPANIES 0.99%
ITT Industries, Inc. 92,200 6,078
----------
OIL: CRUDE PRODUCERS 2.47%
Westport Resources Corp.*^ 291,600 7,902
XTO Energy, Inc. 285,800 7,225
----------
TOTAL 15,127
----------
RADIO & TV BROADCASTERS 2.89%
Entercom Communications
Corp.* 192,000 8,870
Univision
Communications, Inc.*^ 243,100 8,771
----------
TOTAL 17,641
----------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
NOVEMBER 30, 2003
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------------
RENTAL & LEASING SERVICES:
COMMERCIAL 1.05%
United Rentals, Inc.*^ 347,600 $ 6,438
----------
RETAIL 11.33%
Advance Auto Parts* 144,200 11,770
American Eagle
Outfitters, Inc.*^ 418,500 7,721
Dollar Tree Stores, Inc.* 301,800 9,582
GameStop Corp.*^ 179,960 2,906
Linens 'N Things, Inc.* 384,500 11,308
Michaels Stores, Inc. 227,700 10,759
MSC Industrial
Direct Co., Inc. 249,600 6,574
Petco Animal
Supplies, Inc.*^ 258,700 8,656
----------
TOTAL 69,276
----------
SAVINGS & LOAN 2.36%
New York Community
Bancorp, Inc.^ 371,600 14,437
----------
SECURITIES BROKERAGE &
SERVICES 1.34%
Franklin Resources 171,800 8,217
----------
SERVICES: COMMERCIAL 5.58%
Ase Test Ltd.*^(a) 486,800 6,742
InterActiveCorp.* 275,523 9,051
Iron Mountain, Inc.* 212,100 7,805
Kelly Services, Inc. Class A 171,300 4,879
Robert Half Int'l., Inc.* 252,000 5,610
----------
TOTAL 34,087
----------
TRUCKERS 3.20%
CNF Transportation, Inc. 225,900 7,550
Heartland Express, Inc. 212,300 5,153
Swift
Transportation Co., Inc.* 345,800 6,888
----------
TOTAL 19,591
----------
UTILITIES: TELECOMMUNICATIONS 1.41%
Nextel Partners, Inc.
Class A*^ 728,600 $ 8,590
----------
TOTAL COMMON STOCKS
(Cost $495,265,892) 603,997
==========
SHORT-TERM INVESTMENTS 15.93%
COLLATERAL FOR SECURITIES
ON LOAN 14.42%
State Street Navigator
Securities Lending Prime
Portfolio, 1.06%(b) 88,171,266 88,171
----------
<Caption>
PRINCIPAL
AMOUNT
(000)
-----
REPURCHASE AGREEMENT 1.51%
Repurchase Agreement
dated 11/28/2003, 0.98%
due 12/1/2003 with State
Street Bank & Trust Co.
collateralized by
$9,335,000 of Federal
Home Loan Mortgage
Corp. at 2.15%
due 1/21/2005;
value $9,416,681;
proceeds: $9,232,600 $ 9,232 9,232
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $97,403,112) 97,403
==========
TOTAL INVESTMENTS 114.74%
(Cost $592,669,004) $ 701,400
==========
</Table>
* Non-income producing security.
^ Security (or a portion of security) on loan. See Note 5.
(a) Foreign security traded in U.S. dollars.
(b) Rate shown reflects 7 day yield as of November 30, 2003.
ADR-American Depository Receipt.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<Page>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2003
<Table>
ASSETS:
Investment in securities, at value (cost $592,669,004) $ 701,399,915
Receivables:
Interest and dividends 124,052
Investment securities sold 719,239
Capital shares sold 4,962,042
Prepaid expenses and other assets 196,842
- ----------------------------------------------------------------------------------------
TOTAL ASSETS 707,402,090
- ----------------------------------------------------------------------------------------
LIABILITIES:
Payable upon return of securities on loan 88,171,266
Payables:
Investment securities purchased 6,618,538
Capital shares reacquired 326,264
Management fee 429,696
12b-1 distribution fees 258,556
Administration fee 19,186
Directors' fees 284
To Lord, Abbett & Co. LLC 11,699
Accrued expenses and other liabilities 287,806
- ----------------------------------------------------------------------------------------
TOTAL LIABILITIES 96,123,295
========================================================================================
NET ASSETS $ 611,278,795
========================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 616,172,827
Distributions in excess of net investment income (1,642,069)
Accumulated net realized loss on investments (111,982,874)
Net unrealized appreciation on investments 108,730,911
- ----------------------------------------------------------------------------------------
NET ASSETS $ 611,278,795
========================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 430,990,914
Class B Shares $ 94,561,193
Class C Shares $ 79,414,911
Class P Shares $ 6,309,737
Class Y Shares $ 2,040
OUTSTANDING SHARES BY CLASS:
Class A Shares 24,110,225
Class B Shares 5,451,161
Class C Shares 4,579,321
Class P Shares 352,086
Class Y Shares 112.77
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 17.88
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) $ 18.97
Class B Shares-Net asset value $ 17.35
Class C Shares-Net asset value $ 17.34
Class P Shares-Net asset value $ 17.92
Class Y Shares-Net asset value $ 18.09
========================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<Page>
STATEMENT OF OPERATIONS
For the Year Ended November 30, 2003
<Table>
INVESTMENT INCOME:
Dividends $ 1,220,132
Interest 78,107
Securities lending-net 84,363
Foreign withholding tax (8,896)
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,373,706
- ----------------------------------------------------------------------------------------
EXPENSES:
Management fees 3,921,950
12b-1 distribution plan-Class A 1,218,479
12b-1 distribution plan-Class B 749,309
12b-1 distribution plan-Class C 617,953
12b-1 distribution plan-Class P 15,050
Shareholder servicing 1,769,556
Market data 1,893
Professional 41,923
Reports to shareholders 134,505
Fund accounting 2,489
Fund administration 162,063
Custody 23,124
Directors' fees 9,052
Registration 71,098
Other 122,315
- ----------------------------------------------------------------------------------------
Gross expenses 8,860,759
Expense reductions (4,384)
- ----------------------------------------------------------------------------------------
NET EXPENSES 8,856,375
- ----------------------------------------------------------------------------------------
NET INVESTMENT LOSS (7,482,669)
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 15,583,052
Net change in unrealized appreciation/depreciation on investments 92,393,795
========================================================================================
NET REALIZED AND UNREALIZED GAIN 107,976,847
========================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 100,494,178
========================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
INCREASE IN NET ASSETS 2003 2002
OPERATIONS:
Net investment loss $ (7,482,669) $ (6,229,499)
Net realized gain on investments 15,583,052 (75,812,574)
Net change in unrealized appreciation/depreciation on investments 92,393,795 4,428,652
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 100,494,178 (77,613,421)
===================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 223,735,527 228,119,784
Cost of shares reacquired (86,690,765) (112,652,849)
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS 137,044,762 115,466,935
===================================================================================================================
NET INCREASE IN NET ASSETS 237,538,940 37,853,514
===================================================================================================================
NET ASSETS:
Beginning of year 373,739,855 335,886,341
- -------------------------------------------------------------------------------------------------------------------
END OF YEAR $ 611,278,795 $ 373,739,855
===================================================================================================================
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME $ (1,642,069) $ (1,123,709)
===================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
YEAR ENDED 11/30
----------------------------------------------------------------------
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 14.42 $ 17.47 $ 19.17 $ 18.89 $ 12.58
========== ========== ========== ========== ==========
Investment operations
Net investment income (loss)(a) (.24) (.23) (.28) (.25) .04
Net realized and unrealized gain (loss) 3.70 (2.82) (1.42) .73 6.27
---------- ---------- ---------- ---------- ----------
Total from investment operations 3.46 (3.05) (1.70) .48 6.31
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from:
Net investment income - - - (.01) -
Net realized gain - - - (.19) -
---------- ---------- ---------- ---------- ----------
Total distributions - - - (.20) -
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 17.88 $ 14.42 $ 17.47 $ 19.17 $ 18.89
========== ========== ========== ========== ==========
Total Return(b) 23.99% (17.46)% (8.87)% 2.55% 50.04%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.85% 1.80% 1.72% 1.49% .41%
Expenses, excluding waiver and
expense reductions 1.85% 1.80% 1.72% 1.61% 1.64%
Net investment income (loss) (1.53)% (1.48)% (1.48)% (1.18)% .25%
<Caption>
YEAR ENDED 11/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2003 2002 2001 2000 1999
===========================================================================================================================
Net assets, end of year (000) $ 430,991 $ 250,380 $ 213,580 $ 175,077 $ 40,252
Portfolio turnover rate 78.58% 97.63% 101.15% 112.57% 104.87%
===========================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
YEAR ENDED 11/30
----------------------------------------------------------------------
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 14.08 $ 17.16 $ 18.95 $ 18.78 $ 12.57
========== ========== ========== ========== ==========
Investment operations
Net investment loss(a) (.32) (.32) (.39) (.39) (.06)
Net realized and unrealized gain (loss) 3.59 (2.76) (1.40) .75 6.27
---------- ---------- ---------- ---------- ----------
Total from investment operations 3.27 (3.08) (1.79) .36 6.21
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net realized gain - - - (.19) -
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 17.35 $ 14.08 $ 17.16 $ 18.95 $ 18.78
========== ========== ========== ========== ==========
Total Return(b) 23.22% (17.95)% (9.45)% 1.96% 49.32%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 2.44% 2.43% 2.35% 2.11% 1.07%
Expenses, excluding waiver and
expense reductions 2.44% 2.43% 2.35% 2.23% 2.30%
Net investment loss (2.12)% (2.10)% (2.11)% (1.82)% (.40)%
<Caption>
YEAR ENDED 11/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2003 2002 2001 2000 1999
===========================================================================================================================
Net assets, end of year (000) $ 94,561 $ 66,623 $ 69,738 $ 65,510 $ 10,954
Portfolio turnover rate 78.58% 97.63% 101.15% 112.57% 104.87%
===========================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
YEAR ENDED 11/30
----------------------------------------------------------------------
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 14.08 $ 17.15 $ 18.94 $ 18.76 $ 12.59
========== ========== ========== ========== ==========
Investment operations
Net investment loss(a) (.32) (.32) (.39) (.38) (.06)
Net realized and unrealized gain (loss) 3.58 (2.75) (1.40) .75 6.23
---------- ---------- ---------- ---------- ----------
Total from investment operations 3.26 (3.07) (1.79) .37 6.17
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net realized gain - - - (.19) -
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 17.34 $ 14.08 $ 17.15 $ 18.94 $ 18.76
========== ========== ========== ========== ==========
Total Return(b) 23.15% (17.90)% (9.45)% 1.96% 49.01%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 2.44% 2.42% 2.37% 2.11% 1.07%
Expenses, excluding waiver and
expense reductions 2.44% 2.42% 2.37% 2.23% 2.30%
Net investment loss (2.12)% (2.09)% (2.14)% (1.81)% (.40)%
<Caption>
YEAR ENDED 11/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2003 2002 2001 2000 1999
===========================================================================================================================
Net assets, end of year (000) $ 79,415 $ 55,115 $ 52,272 $ 49,656 $ 8,438
Portfolio turnover rate 78.58% 97.63% 101.15% 112.57% 104.87%
===========================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
YEAR ENDED 11/30 8/15/2000(c)
---------------------------------------- TO
2003 2002 2001 11/30/2000
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.47 $ 17.53 $ 19.23 $ 21.48
========== ========== ========== ============
Investment operations
Net investment loss(a) (.25) (.24) (.28) (.09)
Net realized and unrealized gain (loss) 3.70 (2.82) (1.42) (2.16)
---------- ---------- ---------- ------------
Total from investment operations 3.45 (3.06) (1.70) (2.25)
---------- ---------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 17.92 $ 14.47 $ 17.53 $ 19.23
========== ========== ========== ============
Total Return(b) 23.84% (17.46)% (8.84)% (10.47)%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.89% 1.88% 1.80% .45%(d)
Expenses, excluding waiver and
expense reductions 1.89% 1.88% 1.80% .49%(d)
Net investment loss (1.57)% (1.55)% (1.52)% (.44)%(d)
<Caption>
YEAR ENDED 11/30 8/15/2000(c)
---------------------------------------- TO
SUPPLEMENTAL DATA: 2003 2002 2001 11/30/2000
==============================================================================================================
Net assets, end of period (000) $ 6,310 $ 1,620 $ 294 $ 44
Portfolio turnover rate 78.58% 97.63% 101.15% 112.57%
==============================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
<Table>
<Caption>
YEAR ENDED 11/30 12/9/1998(c)
-------------------------------------------------------- TO
2003 2002 2001 2000 11/30/1999
PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.56 $ 17.60 $ 19.26 $ 18.94 $ 12.76
========== ========== ========== ========== ============
Investment operations
Net investment income (loss)(a) (.20) (.19) (.23) (.14) .09
Net realized and unrealized gain (loss) 3.73 (2.85) (1.43) .69 6.09
---------- ---------- ---------- ---------- ------------
Total from investment operations 3.53 (3.04) (1.66) .55 6.18
---------- ---------- ---------- ---------- ------------
Distributions to shareholders from:
Net investment income - - - (.04) -
Net realized gain - - - (.19) -
---------- ---------- ---------- ---------- ------------
Total distributions - - - (.23) -
---------- ---------- ---------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 18.09 $ 14.56 $ 17.60 $ 19.26 $ 18.94
========== ========== ========== ========== ============
Total Return(b) 24.24% (17.27)% (8.62)% 2.89% 48.43%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.44%+ 1.43% 1.35% 1.11% .06%(d)
Expenses, excluding waiver and
expense reductions 1.44%+ 1.43% 1.35% 1.23% 1.27%(d)
Net investment income (1.12)%+ (1.10)% (1.10)% (.66)% .62%(d)
<Caption>
YEAR ENDED 11/30 12/9/1998(c)
---------------------------------------------------- TO
SUPPLEMENTAL DATA: 2003 2002 2001 2000 11/30/1999
=====================================================================================================================
Net assets, end of period (000) $ 2 $ 2 $ 2 $ 2 $ 3
Portfolio turnover rate 78.58% 97.63% 101.15% 112.57% 104.87%
=====================================================================================================================
</Table>
+ The ratios have been determined on a Fund basis.
(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) Commencement of offering of class shares.
(d) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
15
<Page>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Lord Abbett Research Fund, Inc. (the "Company") is registered under the
Investment Company Act of 1940 (the "Act") as a diversified open-end management
investment company incorporated under Maryland law on April 6, 1992. The Company
currently consists of four separate funds. This report covers one of the
funds-Lord Abbett Growth Opportunities Fund (the "Fund"). The Fund's investment
objective is capital appreciation.
The Fund offers five classes of shares: Classes A, B, C, P and Y, each with
different expenses and dividends. A front-end sales charge is normally added to
the NAV for Class A shares. There is no front-end sales charge in the case of
the Class B, C, P and Y shares, although there may be a contingent deferred
sales charge ("CDSC") as follows: certain redemptions of Class A shares made
within 24 months following any purchase made without a sales charge; 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 convert
to Class A shares on the eighth anniversary of the original purchase of 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
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 traded on any recognized U.S. or non-U.S.
exchange or on NASDAQ, Inc. are valued at the last sale price or official
closing price on the exchange or system on which they are principally
traded. Unlisted equity securities are valued at the last quoted sales
price or, if no sales 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 Directors.
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 from sales of portfolio securities are calculated using the
identified-cost method. Realized and unrealized gains or losses are
allocated to each class of shares based upon the relative proportion of net
assets at the beginning of the day.
(c) INVESTMENT INCOME--Dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. Discounts are accreted
and premiums are amortized using the effective interest method. Investment
income is allocated to each class of shares based upon the relative
proportion of net assets at the beginning of the day.
(d) FEDERAL 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 federal income tax
provision is required.
(e) EXPENSES--Expenses incurred by the Company that do not specifically relate
to an individual fund are allocated to the funds within the Company on a
pro rata basis. Expenses, excluding
16
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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,
Class B, Class C and Class P shares bear all expenses and fees relating to
their respective 12b-1 Distribution Plans.
(f) SECURITIES LENDING--The Fund may lend its securities to member banks of the
Federal Reserve System and to registered broker/dealers approved by the
Fund. The loans are collateralized at all times by cash and/or U.S.
Treasury securities in an amount at least equal to 102% of the market value
of domestic securities loaned (105% in the case of foreign securities
loaned) as determined at the close of business on the preceding business
day. The dividend and interest income earned on the securities loaned is
accounted for in the same manner as other dividend and interest income.
Lending portfolio securities could result in a loss or delay in recovering
the Fund's securities if the borrower defaults.
(g) REPURCHASE AGREEMENTS--The Fund may enter into repurchase agreements with
respect to securities. A repurchase agreement is a transaction in which the
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, U.S. government securities or
government sponsored enterprises securities having a value equal to, or in
excess of, the value of the repurchase agreement. If the seller of the
agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of those securities has declined, the
Fund may incur a loss upon disposition of the securities.
3. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE
The Company 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, pays the remuneration of
officers, 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 an annual rate of .90%.
In addition, effective January 1, 2003, Lord Abbett began providing 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. This
results in Lord Abbett paying fund accounting expenses that were previously
charged to the Fund.
12b-1 DISTRIBUTION PLANS
The Fund has adopted a distribution plan with respect to one or more classes of
shares pursuant to Rule 12b-1 of the Act, which provides for the payment of
ongoing distribution and service fees to Lord Abbett Distributor LLC
("Distributor"), an affiliate of Lord Abbett. The fees are accrued daily at
annual rates based upon average daily net assets as follows:
<Table>
<Caption>
FEE CLASS A CLASS B CLASS C CLASS P
- --------------------------------------------------------------------------------
Service .25% .25% .25% .20%
Distribution .10%(1)(2) .75% .75% .25%
</Table>
(1) In addition, the Fund pays a one-time distribution fee of up to 1% on
certain qualifying purchases, which is generally amortized over a two-year
period. The Fund collected $20,509 of CDSCs during the year.
(2) In addition, until January 1, 2003, the Fund paid an incremental marketing
expense of approximately .03% of the average daily net assets attributable
to Class A.
17
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Class Y does not have a distribution plan.
COMMISSIONS
Distributor received the following commissions on sales of Class A shares of the
Fund, after concessions were paid to authorized dealers, for the year ended
November 30, 2003:
<Table>
<Caption>
DISTRIBUTOR DEALERS'
COMMISSIONS CONCESSIONS
- ---------------------------
$ 547,679 $ 3,031,729
</Table>
One Director and certain of the Fund's officers have an interest in Lord Abbett.
4. DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARD
Dividends from net investment income, if any, are declared and paid at least
annually. Taxable net realized gains from securities transactions, reduced by
capital loss carryforwards, if any, are declared and distributed to shareholders
at least annually. The capital loss carryforward amount is available to offset
future net capital gains. Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount 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 net investment income and net realized capital gains
for tax purposes are reported as distributions of paid-in capital.
As of November 30, 2003, the components of accumulated losses on a tax basis are
as follows:
<Table>
Undistributed ordinary income - net $ -
- -----------------------------------------------------------
Total undistributed earnings -
Capital loss carryforwards* (112,904,485)
Temporary differences 156,408
Unrealized gains - net 107,854,045
- -----------------------------------------------------------
Total accumulated losses - net $ (4,894,032)
- -----------------------------------------------------------
</Table>
* As of September 30, 2003, for the Fund's tax year end, the capital loss
carryforwards along with the related expiration dates are as follows:
<Table>
<Caption>
2009 2010 2011 TOTAL
- --------------------------------------------------------------------------------
$ 15,192,999 $ 36,554,608 $ 61,156,878 $ 112,904,485
</Table>
As of November 30, 2003, the Fund's aggregate unrealized security gains and
losses based on cost for U.S. Federal income tax purposes are as follows:
<Table>
Tax cost $ 593,545,870
- ------------------------------------------------
Gross unrealized gain 111,361,844
Gross unrealized loss (3,507,799)
- ------------------------------------------------
Net unrealized security gain $ 107,854,045
- -----------------------------------------------
</Table>
The difference between book-basis and tax-basis unrealized gains (losses) is
primarily attributable to wash sales, and other temporary tax adjustments.
18
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Permanent items identified during the year ended November 30, 2003, have been
reclassified among the components of net assets based on their tax basis
treatment as follows:
<Table>
<Caption>
UNDISTRIBUTED
DISTRIBUTIONS)
IN EXCESS OF
NET INVESTMENT PAID-IN
INCOME CAPITAL
- ---------------------------------
$ 6,964,309 $ (6,964,309)
</Table>
5. PORTFOLIO SECURITIES TRANSACTIONS
As of November 30, 2003, the value of securities loaned is $86,536,476. These
loans are collateralized by cash of $88,171,266, which is invested in a
restricted money market account. In connection with the securities lending
program, State Street Bank and Trust Company ("SSB") received fees of $46,292
for the year ended November 30, 2003, which is netted against securities lending
income on the Statement of Operations.
Purchases and sales of investment securities (other than short-term investments)
for the year ended November 30, 2003 are as follows:
<Table>
<Caption>
PURCHASES SALES
- --------------------------------------
$ 470,129,698 $ 329,416,299
</Table>
There were no purchases or sales of U.S. Government securities for the year
ended November 30, 2003.
6. DIRECTORS' REMUNERATION
The Company's officers and the one Director who are associated with Lord Abbett
do not receive any compensation from the Company for serving in such capacities.
Outside Directors' fees are allocated among all Lord Abbett-sponsored funds
based on the net assets of each fund. There is an equity based plan available to
all outside Directors under which outside Directors must defer receipt of a
portion of, and may elect to defer receipt of an additional portion of
Directors' fees. The deferred amounts are treated as though equivalent dollar
amounts have been invested proportionately in the Fund. Such amounts and
earnings accrued thereon are included in Directors' fees on the Statement of
Operations and in Directors' fees payable on the Statement of Assets and
Liabilities and are not deductible for federal income tax purposes until such
amounts are paid.
7. EXPENSE REDUCTIONS
The Company has entered into arrangements with its transfer agent and custodian
whereby credits realized as a result of uninvested cash balances are used to
reduce a portion of the Fund's expenses.
8. LINE OF CREDIT
The Fund, along with certain other funds managed by Lord Abbett, has available a
$200,000,000 unsecured revolving credit facility ("Facility") from a consortium
of banks, to be used for temporary or emergency purposes as an additional source
of liquidity to fund redemptions of investor shares. Any borrowings under this
Facility will bear interest at current market rates as
19
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
defined in the agreement. The fee for this Facility is an annual rate of .09%.
At November 30, 2003, there were no loans outstanding pursuant to this Facility
nor was the Facility utilized at any time during the year ended November 30,
2003.
9. CUSTODIAN AND ACCOUNTING AGENT
SSB is the Company's custodian and accounting agent. SSB performs custodian,
accounting and recordkeeping functions relating to portfolio transactions and
calculating the Fund's net asset value.
10. INVESTMENT RISKS
The Fund is subject to the general risks and considerations associated with
equity investing. The value of an investment will fluctuate in response to
movements in the stock market in general, and to the changing prospects of
individual companies in which the Fund invests. The Fund has particular risks
associated with growth stocks. Growth companies may grow faster than other
companies, which may result in more volatility in their stock prices. In
addition, if the Fund's assessment of a company's potential for growth or market
condition is wrong, it could suffer losses or produce poor performance relative
to other funds, even in a rising market. The Fund invests largely in mid-sized
company stocks, which may be less able to weather economic shifts or other
adverse developments than larger, more established companies. These factors can
affect Fund performance.
11. SUMMARY OF CAPITAL TRANSACTIONS
The Fund has authorized 150 million shares of $0.001 par value capital stock
designated as follows: 50 million Class A shares; 30 million Class B shares, 20
million Class C shares, 20 million Class P shares and 30 million Class Y shares.
<Table>
<Caption>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 2003 NOVEMBER 30, 2002
- -----------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------
Shares sold 10,674,409 $ 170,500,182 10,439,961 $ 167,784,870
Shares reacquired (3,923,119) (58,912,982) (5,304,408) (79,930,274)
- -----------------------------------------------------------------------------------------------------------
Increase 6,751,290 $ 111,587,200 5,135,553 $ 87,854,596
- -----------------------------------------------------------------------------------------------------------
CLASS B SHARES
- -----------------------------------------------------------------------------------------------------------
Shares sold 1,660,415 $ 24,804,171 1,834,626 $ 29,079,354
Shares reacquired (941,409) (13,644,778) (1,166,535) (17,443,980)
- -----------------------------------------------------------------------------------------------------------
Increase 719,006 $ 11,159,393 668,091 $ 11,635,374
- -----------------------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 1,562,453 $ 23,537,109 1,835,174 $ 29,103,488
Shares reacquired (898,259) (13,063,207) (967,096) (14,620,853)
- -----------------------------------------------------------------------------------------------------------
Increase 664,194 $ 10,473,902 868,078 $ 14,482,635
- -----------------------------------------------------------------------------------------------------------
CLASS P SHARES
Shares sold 308,433 $ 4,894,065 136,303 $ 2,152,072
Shares reacquired (68,341) (1,069,798) (41,080) (657,742)
- -----------------------------------------------------------------------------------------------------------
Increase 240,092 $ 3,824,267 95,223 $ 1,494,330
- -----------------------------------------------------------------------------------------------------------
</Table>
20
<Page>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
12. SUBSEQUENT EVENT
At the January 22, 2004 meeting, the Board of Directors of the Fund approved a
proposal to replace the Fund's current management fee of .90 of 1% of average
daily net assets with the follwing schedule:
.80 of 1% of the first $1 billion of average daily net assets,
.75 of 1% of the next $1 billion, and
.70 of 1% of the next $1 billion, and
.65 of 1% of assets over $3 billion.
This change will be effective April 1, 2004.
21
<Page>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
LORD ABBETT RESEARCH FUND, INC. - LORD ABBETT GROWTH OPPORTUNITIES FUND:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments of Lord Abbett Research Fund, Inc. - Lord Abbett
Growth Opportunities Fund (the "Fund") as of November 30, 2003, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 as of November 30, 2003 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Lord
Abbett Research Fund, Inc. - Lord Abbett Growth Opportunities Fund as of
November 30, 2003, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods presented, in conformity
with accounting principles generally accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
New York, New York
January 23, 2004
22
<Page>
BASIC INFORMATION ABOUT MANAGEMENT
The Company's Board of Directors is responsible for the management of the
business and affairs of each Fund in accordance with the laws of the State of
Maryland. The Board appoints officers who are responsible for the day-to-day
operations of each Fund and who execute policies authorized by the Board. The
Board also approves an investment adviser to the Fund and continues to monitor
the cost and quality of the services provided by the investment adviser, and
annually considers whether to renew the contract with the adviser. Generally,
each Director holds office until his successor is elected and qualified or until
his earlier resignation or removal, as provided in the Fund's organizational
documents.
Lord, Abbett & Co. LLC ("Lord Abbett"), a Delaware limited liability company, is
the Fund's investment adviser.
INTERESTED DIRECTOR
The following Director is the Managing Partner of Lord Abbett and is an
"interested person" as defined in the Act. Mr. Dow is also an officer, director,
or trustee of each of the fourteen Lord Abbett-sponsored funds, which consist of
49 portfolios or series.
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH WITH COMPANY DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------
ROBERT S. DOW Director and Managing Partner and N/A
Lord, Abbett & Co. LLC Chairman since 1996 Chief Investment Officer
90 Hudson Street of Lord Abbett since 1996
Jersey City, NJ
Date of Birth: 3/8/1945
</Table>
INDEPENDENT DIRECTORS
The following independent or outside Directors are also directors or trustees of
each of the fourteen Lord Abbett-sponsored funds, which consist of 49 portfolios
or series.
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH WITH COMPANY DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------
E. THAYER BIGELOW Director since 1996 Managing General Partner, Currently serves as
Bigelow Media, LLC Bigelow Media, LLC (since director of Adelphia
41 Madison Ave., 2000); Senior Adviser, Time Communications, Inc.,
Suite 3810 Warner Inc. (1998 - 2000); Crane Co., and Huttig
New York, NY Acting Chief Executive Building Products Inc.
Date of Birth: 10/22/1941 Officer of Courtroom
Television Network (1997 -
1998); President and Chief
Executive Officer of Time
Warner Cable Programming,
Inc. (1991 - 1997).
</Table>
23
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH WITH COMPANY DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------
WILLIAM H.T. BUSH Director since 1998 Co-founder and Chairman of Currently serves as
Bush-O'Donnell & Co., the Board of the financial director of Wellpoint
Inc. advisory firm of Health Network, Inc., DT
101 South Hanley Road Bush-O'Donnell & Company Industries Inc., and
Suite 1250 (since 1986). Engineered Support
St. Louis, MO Systems, Inc.
Date of Birth: 7/14/1938
ROBERT B. CALHOUN, JR. Director since 1998 Managing Director of Currently serves as
Monitor Clipper Partners Monitor Clipper Partners director of Avondale,
650 Madison Ave., 9th Fl. (since 1997) and Inc. and Interstate
New York, NY President of Clipper Bakeries Corp.
Date of Birth: 10/25/1942 Asset Management Corp.
(since 1991), both
private equity investment
funds.
STEWART S. DIXON Director since 1996; Partner in the law firm N/A
Wildman, Harrold, retired 12/31/2002 of Wildman, Harrold,
Allen & Dixon Allen & Dixon (since
225 W. Wacker Drive, 1967).
Suite 2800
Chicago, IL
Date of Birth: 11/5/1930
FRANKLIN W. HOBBS Director since 2001 Senior Advisor (since Currently serves as
Houlihan Lokey April 2003) and Former director of Adolph Coors
Howard & Zukin Chief Executive Officer Company.
685 Third Ave. of Houlihan Lokey Howard
New York, NY & Zukin, an investment
Date of Birth: 7/30/1947 bank (January 2002 -
April 2003); Chairman of
Warburg Dillon Read (1999
- 2001); Global Head of
Corporate Finance of SBC
Warburg Dillon Read (1997
- 1999); Chief Executive
Officer of Dillon, Read &
Co. (1994 - 1997).
C. ALAN MACDONALD Director since 1996 Retired - General Currently serves as
415 Round Hill Road Business and Governance director of Fountainhead
Greenwich, CT Consulting (since 1992); Water Company, Lincoln
Date of Birth: 5/19/1933 formerly President and Snacks, H.J. Baker, and
CEO of Nestle Foods. Seix Fund, Inc.*
</Table>
24
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH WITH COMPANY DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------
THOMAS J. NEFF Director since 1992 Chairman of Spencer Currently serves as
Spencer Stuart Stuart, an executive director of Ace, Ltd.
277 Park Avenue search consulting firm and Exult, Inc.
New York, NY (since 1996); President
Date of Birth: 10/2/1937 of Spencer Stuart (1979 -
1996).
JAMES F. ORR, III Director since 2002 President and CEO of Currently serves as
80 Pinckney Street Resigned 3/3/2003 LandingPoint Capital Chairman of Rockefeller
Boston, MA (since 2002); Chairman Foundation, Director of
Date of Birth: 3/5/1943 and CEO of United Asset Nashua Corp. and
Management Corporation SteelPoint Technologies.
(2000 to 2001); Chairman
and CEO of UNUM Provident
Corporation (1999 -
merger); Chairman and CEO
of UNUM Corporation (1988
- 1999).
</Table>
- ----------
* Seix Fund, Inc. is a registered investment company that is advised by Seix
Investment Advisors Inc. Seix Investment Advisors Inc.'s Chairman, CEO, and
Chief Investment Officer is married to Robert Dow, the Company's Chairman, CEO,
and President and the Managing Partner of Lord Abbett.
----------------
None of the officers listed below have received compensation from the Company.
All the officers of the Company may also be officers of the other Lord
Abbett-sponsored funds and maintain offices at 90 Hudson Street, Jersey City, NJ
07302.
<Table>
<Caption>
NAME AND CURRENT POSITION LENGTH OF SERVICE PRINCIPAL OCCUPATION
(DATE OF BIRTH) WITH COMPANY OF CURRENT POSITION DURING PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------
ROBERT S. DOW Chief Executive Elected in 1996 Managing Partner and
(3/8/1945) Officer and Chief Investment
President Officer of Lord
Abbett since 1996.
SHOLOM DINSKY Executive Vice Elected in 2002 Partner and Large
(3/24/1944) President Cap Value Investment
Manager, joined Lord
Abbett in 2000,
formerly Managing
Director of
Prudential Asset
Management, prior
thereto Director of
Equity Research and
Senior Vice
President at
Mitchell Hutchins
Asset Management.
</Table>
25
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
<Table>
<Caption>
NAME AND CURRENT POSITION LENGTH OF SERVICE PRINCIPAL OCCUPATION
(DATE OF BIRTH) WITH COMPANY OF CURRENT POSITION DURING PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------
KEVIN P. FERGUSON Executive Vice Elected in 2001 Partner and Mid Cap
(10/3/1964) President Growth Investment
Manager, joined Lord
Abbett in 1999,
formerly Portfolio
Manager/Senior Vice
President at Lynch &
Mayer, Inc.
ROBERT P. FETCH Executive Vice Elected in 1997 Partner and
(2/18/1953) President Small-Cap Value
Senior Investment
Manager, joined Lord
Abbett in 1995.
ROBERT G. MORRIS Executive Vice Elected in 1996 Partner and Director
(11/6/1944) President of Equity
Investments, joined
Lord Abbett in 1991.
ELI M. SALZMANN Executive Vice Elected in 1999 Partner and Director
(3/24/1964) President of Institutional
Equity Investments,
joined Lord Abbett
in 1997.
CHRISTOPHER J. TOWLE Executive Vice Elected in 2001 Partner and
(10/12/1957) President Investment Manager,
joined Lord Abbett
in 1987.
EDWARD K. VON DER LINDE Executive Vice Elected in 2001 Partner and
(6/12/1960) President Investment Manager,
joined Lord Abbett
in 1988.
TRACIE E. AHERN Vice President and Elected in 1999 Partner and Director
(1/12/1968) Treasurer of Portfolio
Accounting and
Operations, joined
Lord Abbett in 1999,
prior thereto Vice
President - Head of
Fund Administration
of Morgan Grenfell.
JOAN A. BINSTOCK Chief Financial Elected in 1999 Partner and Chief
(3/4/1954) Officer and Operations Officer,
Vice President joined Lord Abbett
in 1999, prior
thereto Chief
Operating Officer of
Morgan Grenfell.
DANIEL E. CARPER Vice President Elected in 1993 Partner, joined
(1/22/1952) Lord Abbett in 1979.
</Table>
26
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONCLUDED)
<Table>
<Caption>
NAME AND CURRENT POSITION LENGTH OF SERVICE PRINCIPAL OCCUPATION
(DATE OF BIRTH) WITH COMPANY OF CURRENT POSITION DURING PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------
PAUL A. HILSTAD Vice President and Elected in 1995 Partner and General
(12/13/1942) Secretary Counsel, joined Lord
Abbett in 1995.
LAWRENCE H. KAPLAN Vice President and Elected in 1997 Partner and Deputy
(1/16/1957) Assistant Secretary General Counsel,
joined Lord Abbett
in 1997.
A. EDWARD OBERHAUS, III Vice President Elected in 1996 Partner and Manager
(12/21/1959) of Equity Trading,
joined Lord Abbett
in 1983.
CHRISTINA T. SIMMONS Vice President and Elected in 2000 Assistant General
(11/12/1957) Assistant Secretary Counsel, joined Lord
Abbett in 1999,
formerly Assistant
General Counsel of
Prudential
Investments from
1998 to 1999, prior
thereto Counsel of
Drinker, Biddle &
Reath LLP, a law
firm.
BERNARD J. GRZELAK Assistant Treasurer Elected in 2003 Director of Fund
(6/12/1971) Administration,
joined Lord Abbett
in 2003, formerly
Vice President,
Lazard Asset
Management from 2000
to 2003, prior
thereto Manager of
Deloitte & Touche
LLP.
</Table>
Please call 888-522-2388 for a copy of the Statement of Additional Information
(SAI), which contains further information about the Company's Directors. It is
available free upon request.
27
<Page>
HOUSEHOLDING
The Company has adopted a policy that allows it to send only one copy of the
Fund's Prospectus, proxy material, annual report and semi-annual 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 800-821-5129 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 AND PROCEDURES
A description of the policies and procedures that Lord Abbett uses to vote
proxies related to the Fund's portfolio securities is available without charge,
upon request, by calling 888-522-2388 or on Lord Abbett's web site at
www.LordAbbett.com.
28
<Page>
<Table>
[LORD ABBETT(R) LOGO]
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 Lord Abbett Research Fund, Inc.
Fund prospectus. Lord Abbett Growth Opportunities Fund
Lord Abbett Mutual Fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC LAGOF-2-1103
90 Hudson Street - Jersey City, New Jersey 07302-3973 (1/04)
</Table>
<Page>
[LORD ABBETT LOGO]
2003
ANNUAL
REPORT
LORD ABBETT
LARGE-CAP RESEARCH FUND
SMALL-CAP VALUE FUND
FOR THE YEAR ENDED NOVEMBER 30, 2003
<Page>
- --------------------------------------------------------------------------------
LORD ABBETT RESEARCH FUND ANNUAL REPORT
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2003
DEAR SHAREHOLDERS: We are pleased to provide you with this twelve-month overview
of the Lord Abbett Research Fund's strategies and performance for the fiscal
year ended November 30, 2003. On this and the following pages, we discuss the
major factors that influenced performance.
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,
/s/ Robert S. Dow
ROBERT S. DOW
CHAIRMAN
- --------------------------------------------------------------------------------
Q. WHAT WERE THE OVERALL MARKET CONDITIONS OF THE REPORTING PERIOD?
A. War and general geopolitical concerns had a negative effect on the psyche of
businesses and consumers during the first part of the period. Corporations
entered the first quarter of 2003 cautiously and remained wary, selling existing
inventories and implementing layoffs, as the economy continued to decelerate.
The unemployment rate rose during the period, reaching 6.4% by June 2003. But,
as the coalition's war effort made clear progress in the early spring, the fog
of global uncertainty lifted, and broad equity indices experienced meaningful
advances.
In June, the Federal Reserve Board (the "Fed") cut interest rates by 25
basis points to 1%, in a continued attempt to spark the economy. With interest
rates at levels not seen for over 40 years, the Fed is attempting a variety of
measures to promote and sustain economic growth. Over the past year, the U.S.
dollar weakened versus the euro. A weaker dollar can translate into more
competitive pricing for U.S. goods overseas. Additionally, imports can become
more expensive and less attractive to the U.S. consumer, resulting in higher
sales of American-made goods within the U.S.--providing further stimulus for
economic growth. During the second quarter of 2003, President Bush signed into
law a tax reform/economic stimulus package with accelerated tax cuts and
dividend exclusions.
The U.S. economy continued to show signs of improvement during the third
quarter of 2003, as domestic growth prospects and reported corporate profits
improved. Further evidence of an economic recovery sparked the equity markets,
adding to the market gains experienced in the second quarter. For the reporting
period, major indices advanced, but concerns over future growth grew as the
summer ended.
As the economy entered the final months of 2003, early gross domestic
product (GDP) numbers announced showed
1
<Page>
- --------------------------------------------------------------------------------
that the U.S. economy expanded by an 8.2% rate in the third quarter, well ahead
of expectations and up from the 3.3% growth rate reported for the second
quarter. In addition, productivity data, an important gauge for inflation,
remained strong in the fourth quarter and can be an important signal that
interest rates may remain low in the near term. As the period came to a close,
October's employment report showed an increase of 126,000 jobs and the
unemployment rate dropped to 5.9% in November--an encouraging sign as the
economy enters 2004.
LORD ABBETT LARGE-CAP RESEARCH FUND
Q. HOW DID THE FUND PERFORM OVER THE FISCAL YEAR ENDED NOVEMBER 30, 2003?
A. Lord Abbett Large-Cap Research Fund returned 17.0%. This reflects
performance at the Net Asset Value (NAV) of Class A shares, with all
distributions reinvested for the fiscal year ended November 30, 2003. The Fund
underperformed the S&P 500/Barra Value Index,(1) which returned 17.7% over the
same period. STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS, which reflect
performance at the maximum 5.75% sales charge applicable to Class A share
investments and include the reinvestment of all distributions, as of November
30, 2003 are: 1 Year: 10.23%, 5 Years: 3.60% and 10 Years: 11.41%.
Q. WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
A. The Fund's largest detractor from performance was stock selection in the
healthcare sector. Large pharmaceutical holdings in this sector hurt
performance, as their net income dropped due to the decline in sales of
top-selling drugs coming off patent protection. In addition, stock selection in
the energy sector affected performance for the period, as weakness in the
drilling market and higher expenses hurt Fund holdings.
The largest benefit to performance was the Fund's decision to underweight
the telecomm services sector. Although holdings offered negative returns during
the period, the Fund's selections declined less than the benchmark, and thereby
benefited performance. While this sector has shown signs of improvement, high
debt levels and fierce competition continues to burden telecommunications
companies. Stock selection in the industrials sector also added to Fund
performance. As the economy has improved over 2003, industrials companies have
benefited from renewed business activity and thus, higher sales. In addition,
stock selection in the technology sector added to the Fund's performance.
2
<Page>
- --------------------------------------------------------------------------------
LORD ABBETT SMALL-CAP VALUE FUND
Q. HOW DID THE FUND PERFORM OVER THE FISCAL YEAR ENDED NOVEMBER 30, 2003?
A. Lord Abbett Small-Cap Value Fund returned 35.7%. This reflects performance
at the Net Asset Value (NAV) of Class A shares, with all distributions
reinvested for the fiscal year ended November 30, 2003. The Russell 2000(R)
Value Index,(2) returned 34.9% over the same period. STANDARDIZED AVERAGE ANNUAL
TOTAL RETURNS, which reflect performance at the maximum 5.75% sales charge
applicable to Class A share investments and include the reinvestment of all
distributions, as of November 30, 2003 are: 1 Year: 27.85%, 5 Years: 14.34% and
Since Inception (12/13/95): 15.03%
Q. WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
A. The largest benefit to performance was the Fund's strong stock selection
within the materials and processing sector where healthy increases in net income
from improved efficiencies benefited certain holdings. Stock selection within
the healthcare sector also added to performance during the Fund's fiscal year.
Specifically, certain holdings benefited from strong net income, increased
military contracts and reduced debt balances. In addition, stock selection
within the financial services sector helped performance during the Fund's fiscal
year.
The Fund's largest detractor from performance was stock selection in the
consumer discretionary sector. Specifically, stocks of companies within the
footwear category declined from lower gross margins and higher-than-expected
expenses. In addition, stock selection within the energy sector hurt performance
for the period, as weakness in the drilling market, expiring drilling contracts,
and lower margins hurt stocks of companies in this sector.
3
<Page>
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(1) The S&P 500/Barra Growth and Value Indices are constructed by dividing the
stocks in an index according to a single attribute: price-to-book ratios. This
splits the index into two mutually exclusive groups designed to track two of the
predominant investment styles in the U.S. equity market. The Value Index
contains companies with lower price-to-book ratios; conversely, the Growth Index
contains firms with higher price-to-book ratios. Indices are unmanaged, do not
reflect the deduction of fees or expenses and are not available for direct
investment.
(2) The Russell 2000(R) Value Index measures the performance of those Russell
2000 companies with lower price-to-book ratios and lower forecasted growth
values. Indices are unmanaged, do not reflect the deduction of fees or expenses
and are not available for direct investment.
IMPORTANT PERFORMANCE AND OTHER INFORMATION
The views of each Fund's management and the portfolio holdings described in this
report are as of November 30, 2003; these views and portfolio holdings may have
changed subsequent to this date and they do not guarantee the future performance
of the markets or the Fund. Information provided in this report should not be
considered a recommendation to purchase or sell securities.
A NOTE ABOUT RISK: See Notes to Financial Statements for a discussion of
investment risks. For a more detailed discussion of the risks associated with
the Fund, please see the Fund's Prospectus.
PERFORMANCE: PERFORMANCE DATA QUOTED ABOVE IS HISTORICAL. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE
PERFORMANCE DATA QUOTED. BECAUSE OF ONGOING MARKET VOLATILITY, FUND PERFORMANCE
MAY BE SUBJECT TO SUBSTANTIAL FLUCTUATION. The investment return and principal
value of an investment in each Fund will fluctuate so that shares, on any given
day or when redeemed, may be worth more or less than their original cost. Except
where noted, comparative fund performance does not account for the deduction of
sales charges and would be different if sales charges were included. Each Fund
offers additional classes of shares with distinct pricing options. For a full
description of the differences in pricing alternatives, please see each Fund's
Prospectus. Each Fund is actively managed and, as a result, asset allocation may
change. Sectors may include many industries.
MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS
OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
YOU CAN OBTAIN PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END (AVAILABLE
WITHIN SEVEN BUSINESS DAYS OF THE MOST RECENT MONTH END) BY CALLING LORD ABBETT
AT 800-821-5129 OR REFER TO OUR WEBSITE AT www.LordAbbett.com.
FOR MORE COMPLETE INFORMATION ABOUT ANY LORD ABBETT MUTUAL FUND, INCLUDING
RISKS, INVESTMENT OBJECTIVES, CHARGES AND ONGOING EXPENSES, PLEASE CALL YOUR
INVESTMENT PROFESSIONAL OR LORD ABBETT DISTRIBUTOR LLC AT 888-522-2388 FOR A
PROSPECTUS. AN INVESTOR SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
4
<Page>
LARGE-CAP RESEARCH FUND
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares with the same
investment in both the S&P 500(R) Index and the S&P 500(R)/Barra Value Index,
assuming reinvestment of all dividends and distributions. The performance of
other classes will be greater than or less than the performance shown in the
graph below due to different sales loads and expenses applicable to such
classes. The graph and performance table below do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND (CLASS A SHARES) THE FUND (CLASS A SHARES) S&P 500(R)/BARRA
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(1) S&P 500(R) INDEX(2) VALUE INDEX(2)
Nov 30, 93 $ 10,000 $ 9,425 $ 10,000 $ 10,000
94 $ 10,822 $ 10,200 $ 10,104 $ 9,983
95 $ 14,374 $ 13,547 $ 13,835 $ 13,471
96 $ 18,147 $ 17,103 $ 17,689 $ 17,170
97 $ 21,753 $ 20,502 $ 22,730 $ 21,477
98 $ 24,678 $ 23,259 $ 28,112 $ 24,320
99 $ 28,871 $ 27,211 $ 33,985 $ 27,350
00 $ 32,267 $ 30,411 $ 32,547 $ 28,630
01 $ 30,892 $ 29,116 $ 28,573 $ 26,180
02 $ 26,715 $ 25,179 $ 23,856 $ 22,187
03 $ 31,249 $ 29,452 $ 27,453 $ 26,110
</Table>
FISCAL YEAR-END 11/30
AVERAGE ANNUAL TOTAL RETURN AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE YEAR ENDED NOVEMBER 30, 2003
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS LIFE OF CLASS
CLASS A(3) 10.23% 3.60% 11.41% --
CLASS B(4) 12.28% 4.01% -- 9.49%
CLASS C(5) 16.27% 4.22% -- 7.70%
CLASS P(6) 17.03% -- -- 2.05%
CLASS Y(7) 17.43% -- -- 2.07%
</Table>
(1) Reflects the deduction of the maximum initial sales charge of 5.75%
(2) Performance for each unmanaged index does not reflect transaction costs,
management fees or sales charges. The performance of the indices, particularly
that of the S&P 500(R) Index, is not necessarily representative of the Fund's
performance.
(3) Total return, which is the percentage change in net asset value, after
deduction of the maximum initial sales charge of 5.75% applicable to Class A
shares, with all dividends and distributions reinvested for the periods shown
ended November 30, 2003 using the SEC-required uniform method to compute such
return.
(4) Class B shares were first offered on August 1, 1996. Performance reflects
the deduction of a CDSC of 4% for 1 year, 1% for 5 years and 0% for the life of
the class.
(5) Class C shares were first offered on April 1, 1997. The 1% CDSC for Class C
shares normally applies before the first anniversary of the purchase date.
Performance is at net asset value.
(6) Class P shares were first offered on April 28, 1999. Performance is at net
asset value.
(7) Class Y shares were first offered on May 4, 1999. Performance is at net
asset value.
5
<Page>
SMALL-CAP VALUE FUND
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares with the same
investment in the Russell 2000(R) Index and Russell 2000(R) Value Index,
assuming reinvestment of all dividends and distributions. The performance of
other classes will be greater than or less than the performance shown in the
graph below due to different sales loads and expenses applicable to such
classes. The graph and performance table below do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND (CLASS A SHARES) THE FUND (CLASS A SHARES) RUSSELL 2000(R) RUSSELL 2000(R)
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(1) INDEX(2) VALUE INDEX(2)
Dec 13, 95 $ 10,000 $ 9,425 $ 10,000 $ 10,000
Nov-1996 $ 12,824 $ 12,087 $ 11,352 $ 11,755
97 $ 17,683 $ 16,666 $ 14,010 $ 15,470
98 $ 15,612 $ 14,715 $ 13,082 $ 14,508
99 $ 16,992 $ 16,015 $ 15,132 $ 14,300
00 $ 21,309 $ 20,083 $ 15,044 $ 16,348
01 $ 24,530 $ 23,120 $ 15,769 $ 19,452
02 $ 23,863 $ 22,491 $ 14,098 $ 19,101
03 $ 32,375 $ 30,514 $ 19,214 $ 25,769
</Table>
FISCAL YEAR-END 11/30
AVERAGE ANNUAL TOTAL RETURN AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE YEAR ENDED NOVEMBER 30, 2003
<Table>
<Caption>
1 YEAR 5 YEARS LIFE OF CLASS
CLASS A(3) 27.85% 14.34% 15.03%
CLASS B(4) 30.78% 14.85% 13.78%
CLASS C(5) 34.74% 14.98% 13.03%
CLASS P(6) 35.48% -- 14.32%
CLASS Y(7) 36.10% 16.10% 11.05%
</Table>
(1) Reflects the deduction of the maximum initial sales charge of 5.75%
(2) Performance for each unmanaged index does not reflect transaction costs,
management fees or sales charges. The performance of the indices is not
necessarily representative of the Fund's performance.
(3) Total return, which is the percentage change in net asset value, after
deduction of the maximum initial sales charge of 5.75% applicable to Class A
shares, with all dividends and distributions reinvested for the periods shown
ended November 30, 2003 using the SEC-required uniform method to compute such
return. Class A shares were first offered on December 13, 1995.
(4) Class B shares were first offered on November 15, 1996. Performance reflects
the deduction of a CDSC of 4% for 1 year, 1% for 5 years and 0% for the life of
the class.
(5) Class C shares were first offered on April 1, 1997. The 1% CDSC for Class C
shares normally applies before the first anniversary of the purchase date.
Performance is at net asset value.
(6) Class P shares were first offered on June 23, 1999. Performance is at net
asset value.
(7) Class Y shares were first offered on December 30, 1997. Performance is at
net asset value.
6
<Page>
SCHEDULE OF INVESTMENTS
LARGE-CAP RESEARCH FUND NOVEMBER 30, 2003
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.64%
AEROSPACE & DEFENSE 0.79%
Lockheed Martin Corp. 32,200 $ 1,479
United Technologies Corp. 17,500 1,500
------------
TOTAL 2,979
------------
AIRLINES 1.03%
AMR Corp.* 82,400 1,057
Southwest Airlines Co. 157,200 2,827
------------
TOTAL 3,884
------------
BEVERAGES 2.36%
Diageo plc ADR 49,500 2,503
PepsiCo, Inc. 134,100 6,453
------------
TOTAL 8,956
------------
CHEMICALS 4.50%
E.I. du Pont de
Nemours & Co. 124,800 5,174
Monsanto Co. 80,409 2,181
Potash Corp. of
Saskatchewan(a) 22,500 1,826
Praxair, Inc. 60,200 4,321
Rohm & Haas Co. 87,900 3,529
------------
TOTAL 17,031
------------
COMMERCIAL BANKS 10.81%
Bank of America Corp. 33,300 2,512
Bank of New York Co., Inc. 110,900 3,402
Bank One Corp. 180,100 7,809
FleetBoston Financial Corp. 120,700 4,901
Mellon Financial Corp. 217,700 6,270
U.S. Bancorp 99,500 2,757
Wachovia Corp. 153,600 7,027
Wells Fargo & Co. 109,600 6,283
------------
TOTAL 40,961
------------
COMMERCIAL SERVICES & SUPPLIES 1.03%
Waste Management, Inc. 133,000 $ 3,912
------------
COMMUNICATIONS EQUIPMENT 2.66%
Corning, Inc.* 189,300 2,169
Motorola, Inc. 564,200 7,921
------------
TOTAL 10,090
------------
COMPUTERS & PERIPHERALS 4.49%
Apple Computer, Inc.* 435,620 9,113
EMC Corp.* 573,600 7,881
------------
TOTAL 16,994
------------
DIVERSIFIED FINANCIALS 6.09%
Citigroup, Inc. 219,100 10,306
J.P. Morgan Chase & Co. 98,300 3,476
MBNA Corp. 73,800 1,810
Merrill Lynch & Co., Inc. 94,900 5,386
The Goldman Sachs
Group, Inc. 21,800 2,095
------------
TOTAL 23,073
------------
DIVERSIFIED TELECOMMUNICATION SERVICES 2.35%
BellSouth Corp. 75,900 1,976
SBC Communications, Inc. 123,000 2,863
Verizon
Communications, Inc. 124,000 4,064
------------
TOTAL 8,903
------------
ELECTRIC UTILITIES 2.37%
Constellation Energy
Group, Inc. 63,600 2,394
FPL Group, Inc. 22,400 1,424
Progress Energy, Inc. 81,000 3,549
Public Service Enterprise
Group, Inc. 39,300 1,612
------------
TOTAL 8,979
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
LARGE-CAP RESEARCH FUND NOVEMBER 30, 2003
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 0.50%
Emerson Electric Co. 31,100 $ 1,898
------------
ELECTRONIC EQUIPMENT &
INSTRUMENTS 0.96%
Agilent Technologies, Inc.* 95,100 2,689
Solectron Corp.* 158,400 927
------------
TOTAL 3,616
------------
ENERGY EQUIPMENT & SERVICES 0.76%
Baker Hughes, Inc. 99,243 2,864
------------
FOOD PRODUCTS 3.29%
Archer-Daniels-Midland Co. 124,200 1,775
General Mills, Inc. 101,800 4,582
Kellogg Co. 67,000 2,397
Kraft Foods, Inc. Class A 116,800 3,699
------------
TOTAL 12,453
------------
HEALTHCARE EQUIPMENT &
SUPPLIES 0.37%
Baxter Int'l., Inc. 50,100 1,394
------------
HEALTHCARE PROVIDERS &
SERVICES 1.09%
Cardinal Health, Inc. 49,900 3,051
Tenet Healthcare Corp.* 74,900 1,094
------------
TOTAL 4,145
------------
HOTELS, RESTAURANTS & LEISURE 0.10%
McDonald's Corp. 14,600 374
------------
HOUSEHOLD DURABLES 0.51%
Newell Rubbermaid, Inc. 85,100 1,946
------------
INDUSTRIAL CONGLOMERATES 2.49%
3M Co. 51,600 4,078
Tyco Int'l., Ltd.(a) 233,800 5,366
------------
TOTAL 9,444
------------
INSURANCE 3.02%
American Int'l. Group, Inc. 135,592 $ 7,858
Hartford Financial
Group, Inc. 65,300 3,592
------------
TOTAL 11,450
------------
MACHINERY 5.91%
Caterpillar, Inc. 32,400 2,464
Deere & Co. 165,300 10,121
Dover Corp. 27,400 1,052
Eaton Corp. 65,900 6,787
Illinois Tool Works, Inc. 12,300 961
Parker - Hannifin Corp. 18,100 995
------------
TOTAL 22,380
------------
MEDIA 9.35%
Clear Channel Comm, Inc. 125,100 5,231
Comcast Corp.* 246,907 7,444
Gannett Co., Inc. 26,500 2,295
The Walt Disney Co. 403,000 9,305
Tribune Co. 69,600 3,400
Viacom, Inc. 196,850 7,740
------------
TOTAL 35,415
------------
METALS & MINING 3.87%
Alcoa, Inc. 247,500 8,120
Newmont Mining Corp. 135,700 6,533
------------
TOTAL 14,653
------------
MULTI-LINE RETAIL 1.61%
Target Corp. 157,500 6,098
------------
OFFICE ELECTRONICS 1.83%
Xerox Corp.* 570,300 6,946
------------
OIL & GAS 5.54%
Exxon Mobil Corp. 326,080 11,794
Total S.A. ADR 113,600 9,175
------------
TOTAL 20,969
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
LARGE-CAP RESEARCH FUND NOVEMBER 30, 2003
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS 2.48%
Bowater, Inc. 38,600 $ 1,579
International Paper Co. 159,200 5,924
Weyerhaeuser Co. 33,100 1,887
------------
TOTAL 9,390
------------
PERSONAL PRODUCTS 0.70%
Gillette Co. 78,600 2,651
------------
PHARMACEUTICALS 5.31%
Abbott Laboratories 43,400 1,918
Merck & Co., Inc. 85,400 3,467
Novartis AG ADR 102,300 4,317
Schering-Plough Corp. 330,100 5,298
Wyeth 129,300 5,094
------------
TOTAL 20,094
------------
ROAD & RAIL 1.52%
Canadian National Railway(a) 23,080 1,370
CSX Corp. 111,600 3,782
Union Pacific Corp. 9,200 586
------------
TOTAL 5,738
------------
SEMICONDUCTOR EQUIPMENT &
PRODUCTS 0.45%
Teradyne, Inc.* 67,390 1,696
------------
SPECIALTY RETAIL 3.11%
Limited Brands, Inc. 230,010 4,122
Staples, Inc.* 96,300 2,615
The Gap, Inc. 235,300 5,059
------------
TOTAL 11,796
------------
TEXTILES & APPAREL 1.39%
NIKE, Inc. Class B 78,500 5,279
------------
TOTAL COMMON STOCKS
(Cost $314,496,501) 358,451
============
<Caption>
PRINCIPAL
AMOUNT VALUE
INVESTMENTS (000) (000)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT 7.39%
REPURCHASE AGREEMENT 7.39%
Repurchase Agreement
dated 11/28/2003,
0.98% due 12/1/2003
with State Street Bank &
Trust Co. collateralized by
$28,430,000 of Federal
National Mortgage Assoc.
at 1.18% due 7/27/2004;
value $28,566,038;
proceeds: $28,006,545
(Cost $28,004,258) $ 28,004 $ 28,004
============
TOTAL INVESTMENTS
102.03% (Cost $342,500,759) $ 386,455
============
</Table>
* Non-income producing security.
(a) Foreign security traded in U.S. dollars.
ADR-American Depository Receipt.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
SCHEDULE OF INVESTMENTS
SMALL-CAP VALUE FUND NOVEMBER 30, 2003
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS 95.72%
AEROSPACE 1.54%
Curtiss-Wright Corp. 7,900 $ 647
Hexcel Corp.* 5,900 41
Moog, Inc. Class A* 205,050 8,920
Orbital Sciences Corp.*^ 584,200 5,357
------------
TOTAL 14,965
------------
AGRICULTURE FISHING & RANCHING 1.30%
Delta & Pine Land Co.^ 500,600 12,640
------------
AIR TRANSPORTATION 0.56%
Alaska Air Group, Inc.*^ 92,500 2,660
Offshore Logistics, Inc.*^ 110,600 2,793
------------
TOTAL 5,453
------------
AUTO PARTS: AFTER MARKET 1.11%
Keystone Automotive
Industries, Inc.*^ 192,100 4,682
TBC Corp.* 207,000 6,133
------------
TOTAL 10,815
------------
AUTO PARTS: ORIGINAL EQUIPMENT 2.05%
American Axle &
Mfg Holdings* 310,000 12,285
Borg Warner, Inc. 96,500 7,624
------------
TOTAL 19,909
------------
BANKS 0.52%
KNBT Bancorp, Inc.*^ 300,030 5,077
------------
BANKS: OUTSIDE NEW YORK CITY 4.20%
Corus Bankshares, Inc. 80,000 4,984
Cullen/Frost Bankers, Inc. 350,000 14,063
Doral Financial Corp.(a) 430,000 21,745
------------
TOTAL 40,792
------------
BUILDING: MATERIALS 2.20%
Hughes Supply, Inc.^ 208,900 9,547
NCI Building Systems, Inc.* 185,000 $ 4,309
Simpson Manufacturing
Co., Inc.* 153,000 7,527
------------
TOTAL 21,383
------------
CHEMICALS 1.73%
OM Group, Inc.*^ 540,000 13,073
Quaker Chemical Corp. 142,700 3,743
------------
TOTAL 16,816
------------
COMMUNICATIONS TECHNOLOGY 0.08%
Bel Fuse, Inc. Class B 26,200 760
------------
COMPUTER SERVICES SOFTWARE &
SYSTEMS 5.40%
Aspen Technology, Inc.*^ 281,412 2,164
Datastream Systems, Inc.* 432,040 3,219
Electronics for
Imaging, Inc.*^ 625,000 17,250
Mercury Computer
Systems, Inc.*^ 276,800 6,629
MICROS Systems, Inc.* 369,700 15,993
OpticNet, Inc.*~ 81,550 1
Reynolds & Reynolds 260,000 7,213
------------
TOTAL 52,469
------------
COMPUTER TECHNOLOGY 1.58%
Analogic Corp. 36,400 1,529
Concurrent
Computer Corp.* 622,600 2,509
Zebra Technologies
Corp. Class A* 178,000 11,315
------------
TOTAL 15,353
------------
CONSUMER ELECTRONICS 1.28%
Take-Two Interactive
Software, Inc.*^ 375,000 12,413
------------
CONSUMER PRODUCTS 1.55%
Yankee Candle, Co.* 510,000 15,055
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
SMALL-CAP VALUE FUND NOVEMBER 30, 2003
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
COPPER 1.19%
Mueller Industries, Inc.* 359,000 $ 11,603
------------
DIVERSIFIED MANUFACTURING 0.31%
CLARCOR, Inc. 68,700 3,008
------------
DRUG & GROCERY STORE CHAINS 1.23%
Casey's General Stores, Inc. 683,300 11,937
------------
DRUGS & PHARMACEUTICALS 0.05%
Parexel Int'l Corp.* 23,700 438
------------
ELECTRICAL EQUIPMENT &
COMPONENTS 1.27%
Ametek, Inc. 55,300 2,616
Technitrol, Inc.* 410,000 9,754
------------
TOTAL 12,370
------------
ELECTRONICS 2.38%
BEI Technologies, Inc.^ 693,600 12,256
Methode Electronics, Inc. 161,400 2,071
Vishay
Intertechnology, Inc.* 419,800 8,820
------------
TOTAL 23,147
------------
ELECTRONICS: INSTRUMENTS GAUGES &
METERS 1.15%
Dionex Corp.*^ 239,000 11,228
------------
ELECTRONICS: MEDICAL SYSTEMS 0.90%
Haemonetics
Corp. of Mass* 385,000 8,793
------------
ELECTRONICS: TECHNOLOGY 3.87%
Intermagnetics
General Corp.*^ 634,000 14,284
Scansource, Inc.*^ 534,000 23,357
------------
TOTAL 37,641
------------
ENGINEERING & CONTRACTING SERVICES 1.00%
Dycom Industries, Inc.* 42,500 1,078
Quanta Services, Inc.*^ 213,500 $ 1,633
URS Corp.*^ 309,300 7,052
------------
TOTAL 9,763
------------
FINANCE COMPANIES 0.34%
Quanta Capital Holdings 325,000 3,315
------------
FINANCIAL MISCELLANEOUS 0.04%
Financial Federal Corp.*^ 11,900 391
------------
FOODS 1.31%
Smithfield Foods, Inc.* 542,300 12,717
------------
FOREST PRODUCTS 0.50%
Universal Forest Products 158,500 4,825
------------
FUNERAL PARLORS & CEMETERY 0.72%
Stewart
Enterprises, Inc.*^ 1,500,000 7,005
------------
HEALTHCARE FACILITIES 2.43%
Manor Care, Inc. 385,000 13,598
Pharm Product
Development, Inc.* 337,000 10,002
------------
TOTAL 23,600
------------
HEALTHCARE MANAGEMENT
SERVICES 2.42%
Sierra Health
Services, Inc.*^ 858,500 23,523
------------
HOTEL/MOTEL 1.16%
The Marcus Corp. 753,800 11,269
------------
HOUSEHOLD FURNISHINGS 0.74%
Blyth, Inc. 170,000 5,108
Libbey, Inc.^ 73,000 2,140
------------
TOTAL 7,248
------------
IDENTIFICATION CONTROL & FILTER
DEVICES 0.49%
IDEX Corp.^ 119,700 4,726
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
SMALL-CAP VALUE FUND NOVEMBER 30, 2003
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
INSURANCE: MULTI-LINE 0.73%
Markel Corp.*^ 27,500 $ 7,074
-------------
INSURANCE: PROPERTY-CASUALTY 3.75%
Odyssey Re Holdings Corp.^ 766,200 17,538
Philadelphia Cons.
Holding Corp.* 95,000 4,810
Selective Insurance
Group, Inc.^ 316,000 10,242
The Navigators
Group, Inc.* 120,000 3,817
-------------
TOTAL 36,407
-------------
MACHINERY: ENGINES 1.81%
Briggs & Stratton Corp. 260,000 17,550
-------------
MACHINERY: INDUSTRIAL/SPECIALTY 2.16%
Tennant Co. 270,000 11,642
Woodward Governor Co.^ 187,000 9,328
-------------
TOTAL 20,970
-------------
MACHINERY: OIL WELL EQUIPMENT &
SERVICES 3.29%
Grant Prideco, Inc.* 775,000 9,029
Grey Wolf, Inc.* 2,500,000 8,475
Helmerich & Payne, Inc. 300,000 7,230
Pride Int'l., Inc.* 455,000 7,257
-------------
TOTAL 31,991
-------------
MACHINERY: SPECIALTY 0.69%
JLG Industries, Inc.^ 445,000 6,693
-------------
MEDICAL & DENTAL INSTRUMENTS &
SUPPLIES 3.11%
ICU Medical, Inc.*^ 280,000 9,545
Molecular Devices Corp.*^ 349,300 6,927
Varian, Inc.* 340,000 13,790
-------------
TOTAL 30,262
-------------
MEDICAL SERVICES 1.39%
Covance, Inc.* 516,000 13,483
-------------
METAL FABRICATING 2.42%
Maverick Tube Corp.* 200,000 $ 3,696
Quanex Corp. 502,000 19,844
-------------
TOTAL 23,540
-------------
METALS & MINERALS MISCELLANEOUS 2.71%
Graftech
International Ltd.* 1,600,000 18,944
Minerals Technologies, Inc. 138,000 7,376
-------------
TOTAL 26,320
-------------
MISCELLANEOUS MATERIALS &
PROCESSING 2.38%
Rogers Corp.* 528,200 23,188
-------------
MULTI-SECTOR COMPANIES 0.79%
Trinity Industries, Inc.^ 295,000 7,655
-------------
OFFSHORE DRILLING 0.12%
Atwood Oceanics, Inc.*^ 45,000 1,156
-------------
OIL: CRUDE PRODUCERS 2.78%
Chesapeake Energy Corp.^ 406,000 4,953
Patina Oil & Gas Corp.^ 213,462 9,580
Westport Resources Corp.*^ 460,000 12,466
-------------
TOTAL 26,999
-------------
PUBLISHING: NEWSPAPERS 1.13%
Journal Register Co.* 550,000 10,973
-------------
REAL ESTATE INVESTMENT TRUSTS 3.50%
Brandywine Realty Trust 99,600 2,694
EastGroup Properties, Inc. 302,300 9,417
Glenborough
Realty Trust, Inc. 201,600 3,961
Nationwide
Health Properties^ 570,000 10,380
Prentiss Properties Trust 180,000 5,715
SL Green Realty Corp. 50,000 1,868
-------------
TOTAL 34,035
-------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
SMALL-CAP VALUE FUND NOVEMBER 30, 2003
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
RESTAURANTS 0.39%
CKE Restaurants*^ 535,600 $ 3,749
-------------
RETAIL 3.72%
Barnes & Noble, Inc.*^ 310,000 10,286
Brookstone, Inc.* 33,000 783
Marinemax, Inc.* 167,100 3,175
Pier 1 Imports, Inc. 860,000 21,930
-------------
TOTAL 36,174
-------------
SAVINGS & LOAN 1.94%
Bank Mutual Corp. 271,129 3,129
W Holding
Company, Inc.(a) 238,754 6,315
Webster Financial Corp. 205,000 9,399
-------------
TOTAL 18,843
-------------
SERVICES: COMMERCIAL 0.63%
Casella Waste Systems, Inc.* 455,000 6,097
-------------
SHIPPING 1.23%
Kirby Corp.* 400,000 12,000
-------------
SHOES 0.34%
Skechers USA,
Inc.-Class A*^ 447,300 3,323
-------------
TELECOMMUNICATIONS
EQUIPMENT 1.38%
Arris Group, Inc.*^ 503,500 3,248
C-Cor.Net Corp.* 864,955 10,206
-------------
TOTAL 13,454
-------------
TEXTILES APPAREL MANUFACTURERS 1.19%
Genesco, Inc.*^ 50,100 812
Perry Ellis Int'l, Inc.*^ 215,000 5,216
Warnaco Group, Inc.* 360,000 5,555
-------------
TOTAL 11,583
-------------
TOYS 1.25%
Hasbro, Inc. 547,900 12,114
-------------
TRUCKERS 0.34%
P.A.M. Transportation Svcs.* 170,000 $ 3,324
-------------
UTILITIES: WATER 1.95%
Philadelphia
Suburban Corp. 700,000 18,956
-------------
TOTAL COMMON STOCKS
(Cost $695,025,713) 930,360
=============
SHORT-TERM INVESTMENTS 17.25%
COLLATERAL FOR SECURITIES ON LOAN 12.19%
State Street Navigator
Securities Lending
Prime Portfolio, 1.06%(b) 118,428,282 118,428
-------------
<Caption>
PRINCIPAL
AMOUNT
(000)
-----
REPURCHASE AGREEMENT 5.06%
Repurchase Agreement
dated 11/28/2003,
0.98% due 12/1/2003 with
State Street Bank &
Trust Co. collateralized by
$2,285,000 of Federal
Home Loan Mortgage
Corp. at zero coupon
due 11/12/2004, and
$47,060,000 of Federal
National Mortgage Assoc.
at 4.875% due 4/16/2004;
value $50,195,956;
proceeds: $49,210,458 $ 49,207 49,207
-------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $167,634,722) 167,635
-------------
TOTAL INVESTMENTS
112.97% (Cost $862,660,435) $ 1,097,995
-------------
</Table>
* Non-income producing security.
^ Security (or a portion of security) on loan. See Note 5.
~ Fair Valued Security . See Note 2a.
(a) Foreign security traded in U.S. dollars.
(b) Rate shown reflects seven day yield as of November 30, 2003.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
STATEMENTS OF ASSETS AND LIABILITIES
November 30, 2003
<Table>
<Caption>
LARGE-CAP SMALL-CAP
RESEARCH FUND VALUE FUND
ASSETS:
Investment in securities, at cost $ 342,500,759 $ 862,660,435
- -----------------------------------------------------------------------------------------------------------
Investment in securities, at value $ 386,455,256 $ 1,097,995,420
Receivables:
Interest and dividends 586,232 786,081
Investment securities sold - 4,091,647
Capital shares sold 2,194,848 1,258,386
Prepaid expenses and other assets 18,905 210,212
- -----------------------------------------------------------------------------------------------------------
TOTAL ASSETS 389,255,241 1,104,341,746
- -----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable upon return of securities on loan - 118,428,282
Payables:
Investment securities purchased 9,505,149 11,993,062
Capital shares reacquired 383,018 704,286
Management fees 225,809 578,586
12b-1 distribution fees 167,263 376,655
Administration fees 12,031 30,747
Directors' fees 13,221 40,296
To affiliate - 1,707
Accrued expenses and other liabilities 170,991 267,755
- -----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 10,477,482 132,421,376
===========================================================================================================
NET ASSETS $ 378,777,759 $ 971,920,370
===========================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 345,582,456 $ 672,572,694
Undistributed (distributions in excess of) net investment income 468,998 (40,296)
Accumulated net realized gain (loss) on investments (11,228,192) 64,052,987
Net unrealized appreciation on investments 43,954,497 235,334,985
- -----------------------------------------------------------------------------------------------------------
NET ASSETS $ 378,777,759 $ 971,920,370
===========================================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 261,230,711 $ 510,582,345
Class B Shares $ 80,541,536 $ 182,436,635
Class C Shares $ 36,778,283 $ 81,967,191
Class P Shares $ 152,469 $ 47,470,833
Class Y Shares $ 74,760 $ 149,463,366
OUTSTANDING SHARES BY CLASS:
Class A Shares 10,499,273 19,900,897
Class B Shares 3,346,752 7,466,064
Class C Shares 1,523,153 3,351,059
Class P Shares 6,096 1,853,886
Class Y Shares 2,999 5,699,089
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 24.88 $ 25.66
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) $ 26.40 $ 27.23
Class B Shares-Net asset value $ 24.07 $ 24.44
Class C Shares-Net asset value $ 24.15 $ 24.46
Class P Shares-Net asset value $ 25.01 $ 25.61
Class Y Shares-Net asset value $ 24.93 $ 26.23
===========================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
STATEMENTS OF OPERATIONS
For the Year Ended November 30, 2003
<Table>
<Caption>
LARGE-CAP SMALL-CAP
RESEARCH FUND VALUE FUND
INVESTMENT INCOME:
Dividends $ 5,608,480 $ 6,370,440
Interest 115,791 330,714
Securities lending-net - 131,750
Foreign withholding tax (27,252) (34,682)
- -----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 5,697,019 6,798,222
- -----------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees 2,336,781 5,367,791
12b-1 distribution plan-Class A 745,182 1,384,236
12b-1 distribution plan-Class B 709,392 1,542,484
12b-1 distribution plan-Class C 325,909 693,262
12b-1 distribution plan-Class P 177 111,353
Shareholder servicing 775,882 1,339,564
Market data 1,787 2,083
Professional 31,790 67,679
Reports to shareholders 71,263 145,056
Fund accounting 2,144 3,778
Fund administration 114,727 261,342
Custody 25,165 52,885
Directors' fees 8,567 17,518
Registration 70,342 73,543
Subsidy (see Note 3) - 184,837
Other - 113,310
- -----------------------------------------------------------------------------------------------------------
Gross expenses 5,219,108 11,360,721
Expense reductions (3,189) (7,138)
- -----------------------------------------------------------------------------------------------------------
NET EXPENSES 5,215,919 11,353,583
- -----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 481,100 (4,555,361)
- -----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments (4,393,899) 69,175,832
Net change in unrealized appreciation/depreciation on investments 54,245,352 172,512,238
===========================================================================================================
NET REALIZED AND UNREALIZED GAIN 49,851,453 241,688,070
===========================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 50,332,553 $ 237,132,709
===========================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended November 30, 2003
<Table>
<Caption>
LARGE-CAP SMALL-CAP
INCREASE IN NET ASSETS RESEARCH FUND VALUE FUND
OPERATIONS:
Net investment income (loss) $ 481,100 $ (4,555,361)
Net realized gain (loss) on investments (4,393,899) 69,175,832
Net change in unrealized appreciation/depreciation on investments 54,245,352 172,512,238
- -----------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 50,332,553 237,132,709
===========================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain
Class A - (21,303,825)
Class B - (10,485,449)
Class C - (4,705,031)
Class P - (978,096)
Class Y - (5,696,400)
- -----------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS - (43,168,801)
===========================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 83,059,077 235,550,069
Reinvestment of distributions - 30,366,101
Cost of shares reacquired (58,728,763) (133,000,120)
- -----------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 24,330,314 132,916,050
===========================================================================================================
NET INCREASE IN NET ASSETS 74,662,867 326,879,958
===========================================================================================================
NET ASSETS:
Beginning of year 304,114,892 645,040,412
- -----------------------------------------------------------------------------------------------------------
END OF YEAR $ 378,777,759 $ 971,920,370
===========================================================================================================
UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF)
NET INVESTMENT INCOME $ 468,998 $ (40,296)
===========================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended November 30, 2002
<Table>
<Caption>
LARGE-CAP SMALL-CAP
DECREASE IN NET ASSETS RESEARCH FUND VALUE FUND
OPERATIONS:
Net investment loss $ (105,790) $ (3,681,589)
Net realized gain (loss) on investments (5,506,288) 42,693,430
Net change in unrealized appreciation/depreciation on investments (45,768,769) (59,636,095)
- -----------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (51,380,847) (20,624,254)
===========================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain
Class A (1,436,317) (21,061,000)
Class B (530,284) (10,043,006)
Class C (232,677) (4,478,515)
Class P (7) (223,801)
Class Y (7) (3,995,570)
- -----------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,199,292) (39,801,892)
===========================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 73,825,156 158,646,643
Reinvestment of distributions 1,875,757 25,567,955
Cost of shares reacquired (74,700,741) (216,693,621)
- -----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 1,000,172 (32,479,023)
===========================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (52,579,967) (92,905,169)
===========================================================================================================
NET ASSETS:
Beginning of year 356,694,859 737,945,581
- -----------------------------------------------------------------------------------------------------------
END OF YEAR $ 304,114,892 $ 645,040,412
===========================================================================================================
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME $ (12,102) $ (38,022)
===========================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<Page>
FINANCIAL HIGHLIGHTS
LARGE-CAP RESEARCH FUND
<Table>
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 21.27 $ 24.75 $ 26.83 $ 25.32 $ 21.91
=========== =========== =========== =========== ===========
Investment operations
Net investment income(a) .08 .04 .06 .11 .08
Net realized and unrealized gain (loss) 3.53 (3.37) (1.14) 2.74 3.60
----------- ----------- ----------- ----------- -----------
Total from investment operations 3.61 (3.33) (1.08) 2.85 3.68
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from:
Net investment income - - (.09) (.03) (.10)
Net realized gain - (.15) (.91) (1.31) (.17)
----------- ----------- ----------- ----------- -----------
Total distributions - (.15) (1.00) (1.34) (.27)
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF YEAR $ 24.88 $ 21.27 $ 24.75 $ 26.83 $ 25.32
=========== =========== =========== =========== ===========
Total Return(b) 16.97% (13.52)% (4.26)% 11.75% 16.99%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.46% 1.45% 1.45% 1.54% 1.43%
Expenses, excluding expense
reductions 1.46% 1.45% 1.45% 1.54% 1.43%
Net investment income .36% .16% .22% .46% .33%
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 261,231 $ 201,315 $ 234,533 $ 200,064 $ 169,844
Portfolio turnover rate 34.98% 74.76% 81.79% 74.72% 60.59%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
LARGE-CAP RESEARCH FUND
<Table>
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 20.70 $ 24.25 $ 26.37 $ 25.03 $ 21.71
=========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.06) (.10) (.10) (.04) (.09)
Net realized and unrealized gain (loss) 3.43 (3.30) (1.11) 2.69 3.58
----------- ----------- ----------- ----------- -----------
Total from investment operations 3.37 (3.40) (1.21) 2.65 3.49
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
net realized gain - (.15) (.91) (1.31) (.17)
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF YEAR $ 24.07 $ 20.70 $ 24.25 $ 26.37 $ 25.03
=========== =========== =========== =========== ===========
Total Return(b) 16.28% (14.10)% (4.81)% 11.04% 16.21%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 2.10% 2.06% 2.07% 2.15% 2.11%
Expenses, excluding expense
reductions 2.10% 2.06% 2.07% 2.15% 2.11%
Net investment loss (.28)% (.45)% (.39)% (.16)% (.35)%
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 80,542 $ 70,636 $ 85,011 $ 79,968 $ 68,590
Portfolio turnover rate 34.98% 74.76% 81.79% 74.72% 60.59%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
LARGE-CAP RESEARCH FUND
<Table>
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 20.77 $ 24.27 $ 26.41 $ 25.05 $ 21.73
=========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.06) (.06) (.11) (.03) (.09)
Net realized and unrealized gain (loss) 3.44 (3.29) (1.12) 2.70 3.58
----------- ----------- ----------- ----------- -----------
Total from investment operations 3.38 (3.35) (1.23) 2.67 3.49
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
net realized gain - (.15) (.91) (1.31) (.17)
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF YEAR $ 24.15 $ 20.77 $ 24.27 $ 26.41 $ 25.05
=========== =========== =========== =========== ===========
Total Return(b) 16.27% (13.88)% (4.88)% 11.12% 16.20%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 2.10% 1.87% 2.10% 2.15% 2.11%
Expenses, excluding expense
reductions 2.10% 1.87% 2.10% 2.15% 2.11%
Net investment loss (.28)% (.26)% (.43)% (.14)% (.35)%
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 36,778 $ 32,109 $ 37,149 $ 26,954 $ 17,567
Portfolio turnover rate 34.98% 74.76% 81.79% 74.72% 60.59%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
LARGE-CAP RESEARCH FUND
<Table>
<Caption>
YEAR ENDED 11/30 4/28/1999(c)
-------------------------------------------------------- TO
2003 2002 2001 2000 11/30/1999
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 21.37 $ 24.87 $ 26.92 $ 25.36 $ 25.09
=========== =========== =========== =========== ===========
Investment operations
Net investment income(a) .02 .02 .07 .10 .09
Net realized and unrealized gain (loss) 3.62 (3.37) (1.13) 2.78 .21
----------- ----------- ----------- ----------- -----------
Total from investment operations 3.64 (3.35) (1.06) 2.88 .30
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from:
Net investment income - - (.08) (.01) (.03)
Net realized gain - (.15) (.91) (1.31) -
----------- ----------- ----------- ----------- -----------
Total distributions - (.15) (.99) (1.32) (.03)
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 25.01 $ 21.37 $ 24.87 $ 26.92 $ 25.36
=========== =========== =========== =========== ===========
Total Return(b) 17.03% (13.54)% (4.16)% 11.84% 1.20%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.55%+ 1.51% 1.52% 1.60% .92%(d)
Expenses, excluding expense
reductions 1.55%+ 1.51% 1.52% 1.60% .92%(d)
Net investment income .27%+ .10% .27% .40% .34%(d)
<Caption>
YEAR ENDED 11/30 4/28/1999(c)
-------------------------------------------------------- TO
SUPPLEMENTAL DATA: 2003 2002 2001 2000 11/30/1999
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 152 $ 1 $ 1 $ 1 $ 1
Portfolio turnover rate 34.98% 74.76% 81.79% 74.72% 60.59%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
LARGE-CAP RESEARCH FUND
<Table>
<Caption>
YEAR ENDED 11/30 5/4/1999(c)
-------------------------------------------------------- TO
2003 2002 2001 2000 11/30/1999
PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 21.23 $ 24.61 $ 26.74 $ 25.30 $ 25.21
=========== =========== =========== =========== ===========
Investment operations
Net investment income(a) .16 .13 .08 .22 .04
Net realized and unrealized gain (loss) 3.54 (3.36) (1.12) 2.64 .09
----------- ----------- ----------- ----------- -----------
Total from investment operations 3.70 (3.23) (1.04) 2.86 .13
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from:
Net investment income - - (.18) (.11) (.04)
Net realized gain - (.15) (.91) (1.31) -
----------- ----------- ----------- ----------- -----------
Total distributions - (.15) (1.09) (1.42) (.04)
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 24.93 $ 21.23 $ 24.61 $ 26.74 $ 25.30
=========== =========== =========== =========== ===========
Total Return(b) 17.43% (13.19)% (4.14)% 11.82% .52%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.10% 1.06% 1.07% 1.15% .63%(d)
Expenses, excluding expense
reductions 1.10% 1.06% 1.07% 1.15% .63%(d)
Net investment income .72% .55% .32% .85% .15%(d)
<Caption>
YEAR ENDED 11/30 5/4/1999(c)
-------------------------------------------------------- TO
SUPPLEMENTAL DATA: 2003 2002 2001 2000 11/30/1999
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 75 $ 54 $ 1 $ 1 $ 1
Portfolio turnover rate 34.98% 74.76% 81.79% 74.72% 60.59%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
+ The ratios have been determined on a Fund basis.
(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) Commencement of offering of class shares.
(d) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
22
<Page>
FINANCIAL HIGHLIGHTS
SMALL-CAP VALUE FUND
<Table>
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 20.29 $ 22.02 $ 19.60 $ 15.63 $ 14.36
=========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.10) (.07) (.13) (.19) (.12)
Net realized and unrealized gain (loss) 6.81 (.48) 3.04 4.16 1.39
----------- ----------- ----------- ----------- -----------
Total from investment operations 6.71 (.55) 2.91 3.97 1.27
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
net realized gain (1.34) (1.18) (.49) - -
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF YEAR $ 25.66 $ 20.29 $ 22.02 $ 19.60 $ 15.63
=========== =========== =========== =========== ===========
Total Return(b) 35.67% (2.72)% 15.12% 25.40% 8.84%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.45% 1.41% 1.43% 1.60% 1.52%
Expenses, excluding expense
reductions 1.45% 1.41% 1.44% 1.60% 1.52%
Net investment loss (.50)% (.34)% (.60)% (1.04)% (.80)%
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 510,582 $ 321,243 $ 394,443 $ 275,010 $ 209,516
Portfolio turnover rate 66.11% 77.12% 64.76% 76.21% 83.93%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
SMALL-CAP VALUE FUND
<Table>
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 19.50 $ 21.33 $ 19.13 $ 15.34 $ 14.20
=========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.22) (.20) (.26) (.29) (.22)
Net realized and unrealized gain (loss) 6.50 (.45) 2.95 4.08 1.36
----------- ----------- ----------- ----------- -----------
Total from investment operations 6.28 (.65) 2.69 3.79 1.14
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
net realized gain (1.34) (1.18) (.49) - -
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF YEAR $ 24.44 $ 19.50 $ 21.33 $ 19.13 $ 15.34
=========== =========== =========== =========== ===========
Total Return(b) 34.78% (3.25)% 14.33% 24.71% 8.03%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 2.07% 2.04% 2.05% 2.23% 2.19%
Expenses, excluding expense
reductions 2.07% 2.04% 2.06% 2.23% 2.19%
Net investment loss (1.12)% (.97)% (1.22)% (1.67)% (1.48)%
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 182,437 $ 153,101 $ 182,555 $ 153,894 $ 155,495
Portfolio turnover rate 66.11% 77.12% 64.76% 76.21% 83.93%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
SMALL-CAP VALUE FUND
<Table>
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 19.52 $ 21.31 $ 19.13 $ 15.34 $ 14.20
=========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.22) (.17) (.28) (.29) (.22)
Net realized and unrealized gain (loss) 6.50 (.44) 2.95 4.08 1.36
----------- ----------- ----------- ----------- -----------
Total from investment operations 6.28 (.61) 2.67 3.79 1.14
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
net realized gain (1.34) (1.18) (.49) - -
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF YEAR $ 24.46 $ 19.52 $ 21.31 $ 19.13 $ 15.34
=========== =========== =========== =========== ===========
Total Return(b) 34.74% (3.07)% 14.22% 24.71% 8.03%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 2.07% 1.90% 2.16% 2.23% 2.19%
Expenses, excluding expense
reductions 2.07% 1.90% 2.17% 2.23% 2.19%
Net investment loss (1.12)% (.83)% (1.32)% (1.67)% (1.48)%
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 81,967 $ 69,121 $ 81,396 $ 51,061 $ 45,929
Portfolio turnover rate 66.11% 77.12% 64.76% 76.21% 83.93%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
SMALL-CAP VALUE FUND
<Table>
<Caption>
YEAR ENDED 11/30 6/23/1999(c)
-------------------------------------------------------- TO
2003 2002 2001 2000 11/30/1999
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 20.27 $ 22.01 $ 19.61 $ 15.63 $ 16.41
=========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.12) (.08) (.14) (.20) (.06)
Net realized and unrealized gain (loss) 6.80 (.48) 3.03 4.18 (.72)
----------- ----------- ----------- ----------- -----------
Total from investment operations 6.68 (.56) 2.89 3.98 (.78)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
net realized gain (1.34) (1.18) (.49) - -
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 25.61 $ 20.27 $ 22.01 $ 19.61 $ 15.63
=========== =========== =========== =========== ===========
Total Return(b) 35.48% (2.72)% 15.01% 25.46% (4.75)%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.52% 1.49% 1.50% 1.68% .72%(d)
Expenses, excluding expense
reductions 1.52% 1.49% 1.51% 1.68% .72%(d)
Net investment loss (.57)% (.42)% (.66)% (1.00)% (.41)%(d)
<Caption>
YEAR ENDED 11/30 6/23/1999(c)
-------------------------------------------------------- TO
SUPPLEMENTAL DATA: 2003 2002 2001 2000 11/30/1999
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 47,471 $ 14,005 $ 4,150 $ 1 $ 1
Portfolio turnover rate 66.11% 77.12% 64.76% 76.21% 83.93%
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
26
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
SMALL-CAP VALUE FUND
<Table>
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 20.64 $ 22.30 $ 19.77 $ 15.71 $ 14.40
=========== =========== =========== =========== ===========
Investment operations
Net investment income (loss)(a) (.02) .01 (.05) (.12) (.07)
Net realized and unrealized gain (loss) 6.95 (.49) 3.07 4.18 1.38
----------- ----------- ----------- ----------- -----------
Total from investment operations 6.93 (.48) 3.02 4.06 1.31
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
net realized gain (1.34) (1.18) (.49) - -
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF YEAR $ 26.23 $ 20.64 $ 22.30 $ 19.77 $ 15.71
=========== =========== =========== =========== ===========
Total Return(b) 36.10% (2.31)% 15.56% 25.84% 9.10%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.07% 1.04% 1.05% 1.23% 1.19%
Expenses, excluding expense
reductions 1.07% 1.04% 1.06% 1.23% 1.19%
Net investment income (loss) (.12)% .03% (.24)% (.67)% (.47)%
<Caption>
YEAR ENDED 11/30
-----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 149,463 $ 87,570 $ 75,402 $ 70,122 $ 49,608
Portfolio turnover rate 66.11% 77.12% 64.76% 76.21% 83.93%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
(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) Commencement of offering of class shares.
(d) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
27
<Page>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Lord Abbett Research Fund, Inc. (the "Company") is registered under the
Investment Company Act of 1940 (the "Act") as a diversified open-end management
investment company incorporated under Maryland law on April 6, 1992. The Company
currently consists of four separate funds. This report covers the following two
funds: Large-Cap Series ("Large-Cap Research Fund") and Small-Cap Value Series
("Small-Cap Value Fund") (collectively, the "Funds").
Large-Cap Research Fund's investment objective is growth of capital and growth
of income consistent with reasonable risk. Small-Cap Value Fund's investment
objective is long-term capital appreciation. Each Fund offers five classes of
shares: Classes A, B, C, P, and Y, each with different expenses and dividends. A
front-end sales charge is normally added to the NAV for Class A shares. There is
no front-end sales charge in the case of Class B, C, P, and Y shares, although
there may be a contingent deferred sales charge ("CDSC") as follows: certain
redemptions of Class A shares made within 24 months following any purchase made
without a sales charge; 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 convert to Class A shares on the eighth anniversary of the
original purchase of Class B shares. Small-Cap Value Fund is open to certain new
investors on a limited basis.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
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 traded on any recognized U.S. or non-U.S.
exchange or on NASDAQ, Inc. are valued at the last sale price or official
closing price on the exchange or system on which they are principally
traded. Unlisted equity securities are valued at the last quoted sales
price or, if no sales 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 Directors.
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 from sales of portfolio securities are calculated using the
identified-cost method. Realized and unrealized gains or losses are
allocated to each class of shares based upon the relative proportion of net
assets at the beginning of the day.
(c) INVESTMENT INCOME-Dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. Discounts are accreted
and premiums are amortized using the effective interest method. Investment
income is allocated to each class of shares based upon the relative
proportion of net assets at the beginning of the day.
28
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(d) FEDERAL TAXES-It is the policy of each 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 federal income tax
provision is required.
(e) EXPENSES-Expenses incurred by the Company that do not specifically relate
to an individual Fund are allocated to the Funds within the Company on a
pro rata basis. 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, Class B, Class C and Class P shares bear
all the expenses and fees relating to their respective 12b-1 Distribution
Plans.
(f) SECURITIES LENDING-Each Fund may lend its securities to member banks of the
Federal Reserve System and to registered broker/dealers approved by the
Fund. The loans are collateralized at all times by cash and/or U.S.
Treasury securities in an amount at least equal to 102% of the market value
of domestic securities loaned (105% in the case of foreign securities
loaned) as determined at the close of business on the preceding business
day. The dividend and interest income earned on the securities loaned is
accounted for in the same manner as other dividend and interest income.
Lending portfolio securities could result in a loss or delay in recovering
the Fund's securities if the borrower defaults.
(g) REPURCHASE AGREEMENTS--Each Fund may enter into repurchase agreements with
respect to securities. A repurchase agreement is a transaction in which the
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. Each Fund requires at all times that the repurchase
agreement be collateralized by cash, U.S. Government securities or U.S.
government sponsored enterprises securities having a value equal to, or in
excess of, the value of the repurchase agreement. If the seller of the
agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of those securities has declined, the
Fund may incur a loss upon disposition of the securities.
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES
The Company has a management agreement with Lord, Abbett & Co. LLC ("Lord
Abbett") pursuant to which Lord Abbett supplies each Fund with investment
management services and executive and other personnel, pays the remuneration of
officers, provides office space and pays for ordinary and necessary office and
clerical expenses relating to research and statistical work and supervision of
each Fund's investment portfolios. The management fee is based on each Fund's
average daily net assets at an annual rate of .75%.
In addition, effective January 1, 2003, Lord Abbett began providing certain
administrative services to each Fund pursuant to an Administrative Services
Agreement at an annual rate of .04% of each Fund's average daily net assets.
This results in Lord Abbett paying fund accounting expenses that were previously
charged to the Funds.
29
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12b-1 DISTRIBUTION PLANS
Each Fund has adopted a distribution plan with respect to one or more classes of
shares pursuant to Rule 12b-1 of the Act, which provides for the payment of
ongoing distribution and service fees to Lord Abbett Distributor LLC
("Distributor"), an affiliate of Lord Abbett. The fees are accrued daily at
annual rates based upon average daily net assets as follows:
<Table>
<Caption>
FEE CLASS A CLASS B CLASS C CLASS P
- -------------------------------------------------------------------------
Service .25% .25% .25% .20%
Distribution .10%(1)(2) .75% .75% .25%
</Table>
(1) In addition, each Fund pays a one-time distribution fee of up to 1% on
certain qualifying purchases which is generally amortized over a two-year
period. Large-Cap Research Fund and Small-Cap Value Fund collected $558 and
$23,327 respectively of CDSCs during the year.
(2) In addition, until January 1, 2003, each Fund paid an incremental marketing
expense of approximately .03% of the average daily net assets attributable
to Class A.
Class Y does not have a distribution plan.
COMMISSIONS
Distributor received the following commissions on sales of Class A shares of the
Funds, after concessions were paid to authorized dealers, for the year ended
November 30, 2003:
<Table>
<Caption>
DISTRIBUTOR DEALERS'
COMMISSIONS CONCESSIONS
- ----------------------------------------------------------------------------
Large-Cap Research Fund $ 174,885 $ 936,509
Small-Cap Value Fund 22,274 125,903
</Table>
One Director and certain of the Funds' officers have an interest in Lord Abbett.
Small-Cap Value Fund, along with certain other funds managed by Lord Abbett (the
"Underlying Funds"), has entered into a Servicing Arrangement with Alpha Series
of Lord Abbett Securities Trust ("Alpha Series") pursuant to which each
Underlying Fund pays a portion of the expenses of Alpha Series in proportion to
the average daily value of the Underlying Fund shares owned by Alpha Series.
4. DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARDS
Dividends from net investment income, if any, are declared and paid at least
semi-annually for Large-Cap Research Fund and at least annually for Small-Cap
Value Fund. Taxable net realized gains from securities transactions, reduced by
capital loss carryforwards, if any, are declared and distributed to shareholders
at least annually. The capital loss carryforward amount is available to offset
future net capital gains. Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount 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 net investment income and net realized capital gains
for tax purposes are reported as distributions of paid-in capital.
30
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On December 11, 2003, a net investment income distribution of $600,000 was
declared for Large-Cap Research Fund, and short-term capital gain and long-term
capital gain distributions of $10,345,065 and $53,471,895, respectively, were
declared for Small-Cap Value Fund. The distributions were paid on December 12,
2003 to shareholders of record on December 11, 2003.
The tax character of distributions paid during the fiscal years ended November
30, 2003 and November 30, 2002 are as follows:
<Table>
<Caption>
LARGE-CAP RESEARCH FUND SMALL-CAP VALUE FUND
- -----------------------------------------------------------------------------------------------------
11/30/2003 11/30/2002 11/30/2003 11/30/2002
- -----------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ - - - -
Net long-term capital gains - $ 2,199,292 $ 43,168,801 $ 39,801,892
- -----------------------------------------------------------------------------------------------------
Total distributions paid $ - $ 2,199,292 $ 43,168,801 $ 39,801,892
- -----------------------------------------------------------------------------------------------------
</Table>
As of November 30, 2003, the components of accumulated earnings (losses) on a
tax basis are as follows:
<Table>
<Caption>
LARGE-CAP RESEARCH FUND SMALL-CAP VALUE FUND
- -----------------------------------------------------------------------------------------------------
Undistributed ordinary income - net $ 482,219 $ 10,345,065
Undistributed long-term capital gains - 53,471,895
- -----------------------------------------------------------------------------------------------------
Total undistributed earnings $ 482,219 $ 63,816,960
Capital loss carryforwards* (7,313,992) -
Temporary differences (13,221) (40,296)
Unrealized gains - net 40,040,297 235,571,012
- -----------------------------------------------------------------------------------------------------
Total accumulated gains - net $ 33,195,303 $ 299,347,676
- -----------------------------------------------------------------------------------------------------
</Table>
* As of November 30, 2003, the capital loss carryforwards along with the related
expiration dates are as follows:
<Table>
<Caption>
2010 2011 TOTAL
- ---------------------------------------------------------------------------
Large-Cap Research Fund $ 2,899,066 $ 4,414,926 $ 7,313,992
</Table>
At November 30, 2003, the aggregate unrealized security gains and losses based
on cost for U.S. Federal income tax purposes are as follows:
<Table>
<Caption>
LARGE-CAP RESEARCH FUND SMALL-CAP VALUE FUND
- -----------------------------------------------------------------------------------------------------
Tax cost $ 346,414,959 $ 862,424,408
- -----------------------------------------------------------------------------------------------------
Gross unrealized gain 53,014,099 238,702,994
Gross unrealized loss (12,973,802) (3,131,982)
- -----------------------------------------------------------------------------------------------------
Net unrealized security gain $ 40,040,297 $ 235,571,012
- -----------------------------------------------------------------------------------------------------
</Table>
The difference between book-basis and tax-basis unrealized gains (losses) is
primarily attributable to wash sales, and other temporary tax adjustments.
Permanent items identified during the year ended November 30, 2003 have been
reclassified among the components of net assets based on their tax basis as
follows:
<Table>
<Caption>
UNDISTRIBUTED
(DISTRIBUTIONS
IN EXCESS OF) ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN
INCOME GAIN (LOSS) CAPITAL
- --------------------------------------------------------------------------------------------
Small-Cap Value Fund $ 4,553,087 $ (4,468,006) $ (85,081)
</Table>
31
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. PORTFOLIO SECURITIES TRANSACTIONS
At November 30, 2003, the value of securities loaned for Small-Cap Value Fund is
$115,523,597. These loans are collateralized by cash of $118,428,282, which is
invested in a restricted money market account. In connection with the securities
lending program, State Street Bank and Trust Company ("SSB") received fees of
$68,516 for the year ended November 30, 2003, which is netted against securities
lending income on the Statement of Operations.
As of November 30, 2003, there were no securities on loan and there was no
securities lending activity during the year for Large-Cap Research Fund.
Purchases and sales of investment securities (other than short-term investments)
for the year ended November 30, 2003 are as follows:
<Table>
<Caption>
PURCHASES SALES
- -----------------------------------------------------------------
Large-Cap Research Fund $ 116,684,249 $ 105,650,137
Small-Cap Value Fund 523,601,418 457,014,556
</Table>
There were no purchases or sales of U.S. Government securities for the year
ended November 30, 2003.
6. DIRECTORS' REMUNERATION
The Company's officers and the one Director who are associated with Lord Abbett
do not receive any compensation from the Company for serving in such capacities.
Outside Directors' fees are allocated among all Lord Abbett-sponsored funds
based on the net assets of each fund. There is an equity based plan available to
all outside Directors under which outside Directors must defer receipt of a
portion of, and may elect to defer receipt of an additional portion of
Directors' fees. The deferred amounts are treated as though equivalent dollar
amounts have been invested proportionately in the Funds. Such amounts and
earnings accrued thereon are included in Directors' fees on the Statements of
Operations and in Directors' fees payable on the Statements of Assets and
Liabilities and are not deductible for federal income tax purposes until such
amounts are paid.
7. EXPENSE REDUCTIONS
The Company has entered into arrangements with its transfer agent and custodian
whereby credits realized as a result of uninvested cash balances are used to
reduce a portion of the Funds' expenses.
8. LINE OF CREDIT
Each Fund, along with certain other funds managed by Lord Abbett, has available
a $200,000,000 unsecured revolving credit facility ("Facility") from a
consortium of banks, to be used for temporary or emergency purposes as an
additional source of liquidity to fund redemptions of investor shares. Any
borrowings under this Facility will bear interest at current market rates as
defined in the agreement. The fee for this Facility is an annual rate of .09%.
At November 30, 2003, there were no loans outstanding pursuant to this Facility
nor was the Facility utilized at any time during the year ended November 30,
2003.
32
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. TRANSACTIONS WITH AFFILIATED COMPANIES
An affiliated company is a company in which a Fund had ownership of at least 5%
of the outstanding voting securities of the underlying issuer at any point
during the fiscal year. Small-Cap Value Fund had the following transactions
during the year with affiliated companies:
<Table>
<Caption>
REALIZED DIVIDEND
BALANCE OF BALANCE OF GAIN INCOME
SHARES HELD GROSS GROSS SHARES HELD VALUE AT 12/1/2002 TO 12/1/2002 TO
AFFILIATES AT 11/30/2002 ADDITIONS SALES AT 11/30/2003 11/30/2003 11/30/2003 11/30/2003
- --------------------------------------------------------------------------------------------------------------------------
Scansource, Inc.+ 151,400 488,600* 106,000 534,000 $ 23,357,160 $ 1,383,228 $ -
The Marcus Corp.+ 1,216,400 - 462,600 753,800 11,269,310 1,993,658 223,047
</Table>
* The Fund received 233,000 shares from a 2 for 1 stock split that took place
on 1/29/2003.
+ Not an affiliated company as of November 30, 2003.
10. CUSTODIAN AND ACCOUNTING AGENT
SSB is the Company's custodian and accounting agent. SSB performs custodian,
accounting and recordkeeping functions relating to portfolio transactions and
calculating each Fund's net asset value.
11. INVESTMENT RISKS
Each Fund is subject to the general risks and considerations associated with
equity investing as well as the particular risks associated with value stocks.
The value of an investment will fluctuate in response to movements in the stock
market in general and to the changing prospects of individual companies in which
the Funds invest. Large company value stocks and small company value stocks may
perform differently than the market as a whole and other types of stocks such as
growth stocks. The market may fail to recognize the intrinsic value of
particular value stocks for a long time. In addition, small-cap company stocks
may be more volatile and less liquid than large-cap company stocks. Also, if a
Fund's assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is wrong, the Fund could suffer losses or
produce poor performance relative to other funds, even in a rising market. These
factors can affect Fund performance.
12. SUMMARY OF CAPITAL TRANSACTIONS
The Company has authorized 120 million shares and 150 million shares of $0.001
par value capital stock for Large-Cap Research Fund and Small-Cap Value Fund,
respectively, designated as follows: 20 million Class A shares, 30 million Class
B shares, 20 million Class C shares, 20 million Class P shares and 30 million
Class Y shares for Large-Cap Research Fund; and 50 million Class A shares, 30
million Class B shares, 20 million Class C shares, 20 million Class P shares and
30 million Class Y shares for Small-Cap Value Fund.
33
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
LARGE-CAP RESEARCH FUND
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 2003 NOVEMBER 30, 2002
- ---------------------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 2,880,499 $ 64,714,996 2,244,342 $ 50,112,859
Reinvestment of distributions - - 55,216 1,340,097
Shares reacquired (1,847,457) (38,966,116) (2,308,203) (49,856,258)
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) 1,033,042 $ 25,748,880 (8,645) $ 1,596,698
- ---------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 528,568 $ 11,066,796 582,045 $ 12,957,559
Reinvestment of distributions - - 16,877 400,997
Shares reacquired (594,239) (12,172,653) (692,808) (14,950,722)
- ---------------------------------------------------------------------------------------------------------------------
Decrease (65,671) $ (1,105,857) (93,886) $ (1,592,166)
- ---------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 342,487 $ 7,101,096 471,625 $ 10,694,857
Reinvestment of distributions - - 5,660 134,649
Shares reacquired (365,186) (7,563,710) (461,758) (9,893,761)
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) (22,699) $ (462,614) 15,527 $ 935,745
- ---------------------------------------------------------------------------------------------------------------------
CLASS P SHARES
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 7,171 $ 165,560 0.040 $ 1
Reinvestment of distributions - - 0.294 7
Shares reacquired (1,125) (26,284) - -
- ---------------------------------------------------------------------------------------------------------------------
Increase 6,046 $ 139,276 0.334 $ 8
- ---------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 477 $ 10,629 2,473 $ 59,880
Reinvestment of distributions - - -(a) 7
- ---------------------------------------------------------------------------------------------------------------------
Increase 477 $ 10,629 2,473 $ 59,887
- ---------------------------------------------------------------------------------------------------------------------
</Table>
(a) Amount represents less than 1 share.
34
<Page>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
SMALL-CAP VALUE FUND
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 2003 NOVEMBER 30, 2002
- ---------------------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 7,180,621 $ 152,641,665 4,178,232 $ 90,463,695
Reinvestment of distributions 789,137 14,654,269 593,266 12,446,715
Shares reacquired (3,903,123) (79,537,104) (6,852,969) (146,149,999)
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) 4,066,635 $ 87,758,830 (2,081,471) $ (43,239,589)
- ---------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 397,567 $ 7,476,943 427,732 $ 8,897,160
Reinvestment of distributions 412,446 7,341,544 337,152 6,840,817
Shares reacquired (1,195,609) (22,966,181) (1,470,051) (30,065,878)
- ---------------------------------------------------------------------------------------------------------------------
Decrease (385,596) $ (8,147,694) (705,167) $ (14,327,901)
- ---------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 283,691 $ 5,342,331 323,507 $ 6,798,716
Reinvestment of distributions 128,207 2,284,644 103,069 2,089,200
Shares reacquired (602,174) (11,631,813) (703,993) (14,344,924)
- ---------------------------------------------------------------------------------------------------------------------
Decrease (190,276) $ (4,004,838) (277,417) $ (5,457,008)
- ---------------------------------------------------------------------------------------------------------------------
CLASS P SHARES
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 1,670,139 $ 35,690,335 920,938 $ 19,522,942
Reinvestment of distributions 27,682 513,508 10,672 223,798
Shares reacquired (535,047) (11,354,120) (429,033) (8,881,644)
- ---------------------------------------------------------------------------------------------------------------------
Increase 1,162,774 $ 24,849,723 502,577 $ 10,865,096
- ---------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 1,532,487 $ 34,398,795 1,473,780 $ 32,964,130
Reinvestment of distributions 294,510 5,572,136 186,615 3,967,425
Shares reacquired (371,626) (7,510,902) (798,447) (17,251,176)
- ---------------------------------------------------------------------------------------------------------------------
Increase 1,455,371 $ 32,460,029 861,948 $ 19,680,379
- ---------------------------------------------------------------------------------------------------------------------
</Table>
35
<Page>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
LORD ABBETT RESEARCH FUND, INC. - LARGE-CAP SERIES AND SMALL-CAP VALUE SERIES:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of Lord Abbett Research Fund, Inc. - Large-Cap
Series and Small-Cap Value Series (the "Funds") as of November 30, 2003, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 as of November 30, 2003 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Lord
Abbett Research Fund, Inc. - Large-Cap Series and Small-Cap Value Series as of
November 30, 2003, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods presented, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
New York, New York
January 23, 2004
36
<Page>
BASIC INFORMATION ABOUT MANAGEMENT
The Company's Board of Directors is responsible for the management of the
business and affairs of each Fund in accordance with the laws of the State of
Maryland. The Board appoints officers who are responsible for the day-to-day
operations of each Fund and who execute policies authorized by the Board. The
Board also approves an investment adviser to each Fund and continues to monitor
the cost and quality of the services provided by the investment adviser, and
annually considers whether to renew the contract with the adviser. Generally,
each Director holds office until his successor is elected and qualified or until
his earlier resignation or removal, as provided in the Fund's organizational
documents.
Lord, Abbett & Co. LLC ("Lord Abbett"), a Delaware limited liability company, is
the Funds' investment adviser.
INTERESTED DIRECTOR
The following Director is the Managing Partner of Lord Abbett and is an
"interested person" as defined in the Act. Mr. Dow is also an officer, director,
or trustee of each of the fourteen Lord Abbett-sponsored funds, which consist of
49 portfolios or series.
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH WITH COMPANY DURING PAST FIVE YEARS DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------------------------------------
ROBERT S. DOW Director and Managing Partner and Chief N/A
Lord, Abbett & Co. LLC Chairman since 1996 Investment Officer of Lord
90 Hudson Street Abbett since 1996.
Jersey City, NJ
Date of Birth: 3/8/1945
</Table>
INDEPENDENT DIRECTORS
The following independent or outside Directors are also directors or trustees of
each of the fourteen Lord Abbett-sponsored funds, which consist of 49 portfolios
or series.
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH WITH COMPANY DURING PAST FIVE YEARS DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------------------------------------
E. THAYER BIGELOW Director since 1996 Managing General Partner, Currently serves as director
Bigelow Media, LLC Bigelow Media, LLC (since of Adelphia Communications,
41 Madison Ave., 2000); Senior Adviser, Time Inc., Crane Co., and Huttig
Suite 3810 Warner Inc. (1998 - 2000); Building Products Inc.
New York, NY Acting Chief Executive Officer
Date of Birth: 10/22/1941 of Courtroom Television
Network (1997 - 1998);
President and Chief Executive
Officer of Time Warner Cable
Programming, Inc. (1991 -
1997).
WILLIAM H.T. BUSH Director since 1998 Co-founder and Chairman of the Currently serves as director
Bush-O'Donnell & Co., Inc. Board of the financial of Wellpoint Health Network,
101 South Hanley Road advisory firm of Bush- Inc., DT Industries Inc., and
Suite 1250 O'Donnell & Company (since Engineered Support Systems,
St. Louis, MO 1986). Inc.
Date of Birth: 7/14/1938
</Table>
37
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH WITH COMPANY DURING PAST FIVE YEARS DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------------------------------------
ROBERT B. CALHOUN, Jr. Director since 1998 Managing Director of Monitor Currently serves as director
Monitor Clipper Partners Clipper Partners (since 1997) of Avondale, Inc. and
650 Madison Ave., 9th Fl. and President of Clipper Asset Interstate Bakeries Corp.
New York, NY Management Corp. (since 1991),
Date of Birth: 10/25/1942 both private equity investment
funds.
STEWART S. DIXON Director since 1996; Partner in the law firm of N/A
Wildman, Harrold, retired 12/31/2002 Wildman, Harrold, Allen &
Allen & Dixon Dixon (since 1967).
225 W. Wacker Drive,
Suite 2800
Chicago, IL
Date of Birth: 11/5/1930
FRANKLIN W. HOBBS Director since 2001 Senior Advisor (since April Currently serves as director
Houlihan Lokey 2003) and Former Chief of Adolph Coors Company.
Howard & Zukin Executive Officer of Houlihan
685 Third Ave. Lokey Howard & Zukin, an
New York, NY investment bank (January 2002
Date of Birth: 7/30/1947 - April 2003); Chairman of
Warburg Dillon Read (1999 -
2001); Global Head of
Corporate Finance of SBC
Warburg Dillon Read (1997 -
1999); Chief Executive Officer
of Dillon, Read & Co. (1994 -
1997).
C. ALAN MACDONALD Director since 1996 Retired - General Business and Currently serves as director
415 Round Hill Road Governance Consulting (since of Fountainhead Water Company,
Greenwich, CT 1992); formerly President and Lincoln Snacks, H.J. Baker,
Date of Birth: 5/19/1933 CEO of Nestle Foods. and Seix Fund, Inc.*
THOMAS J. NEFF Director since 1992 Chairman of Spencer Stuart, an Currently serves as director
Spencer Stuart executive search consulting of Ace, Ltd. and Exult, Inc.
277 Park Avenue firm (since 1996); President
New York, NY of Spencer Stuart (1979-1996).
Date of Birth: 10/2/1937
JAMES F. ORR, III Director since 2002 President and CEO of Currently serves as Chairman
80 Pinckney Street Resigned 3/3/2003 LandingPoint Capital (since of Rockefeller Foundation,
Boston, MA 2002); Chairman and CEO of Director of Nashua Corp. and
Date of Birth: 3/5/1943 United Asset Management SteelPoint Technologies.
Corporation (2000 to 2001);
Chairman and CEO of UNUM
Provident Corporation (1999 -
merger); Chairman and CEO of
UNUM Corporation (1988 -
1999).
</Table>
- ----------
* Seix Fund, Inc. is a registered investment company that is advised by Seix
Investment Advisors Inc. Seix Investment Advisors Inc.'s Chairman, CEO, and
Chief Investment Officer is married to Robert Dow, the Company's Chairman, CEO,
and President and the Managing Partner of Lord Abbett.
38
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
None of the officers listed below have received compensation from the Company.
All the officers of the Company may also be officers of the other
Lord Abbett-sponsored funds and maintain offices at 90 Hudson Street, Jersey
City, NJ 07302.
<Table>
<Caption>
NAME AND CURRENT POSITION LENGTH OF SERVICE PRINCIPAL OCCUPATION
(DATE OF BIRTH) WITH COMPANY OF CURRENT POSITION DURING PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------------------
ROBERT S. DOW Chief Executive Elected in 1996 Managing Partner and Chief
(3/8/1945) Officer and President Investment Officer of Lord Abbett
since 1996.
SHOLOM DINSKY Executive Vice Elected in 2002 Partner and Large Cap Value
(3/24/1944) President Investment Manager, joined
Lord Abbett in 2000, formerly
Managing Director of
Prudential Asset Management,
prior thereto Director of
Equity Research and Senior
Vice President at Mitchell
Hutchins Asset Management.
KEVIN P. FERGUSON Executive Vice Elected in 2001 Partner and Mid Cap Growth
(10/3/1964) President Investment Manager, joined
Lord Abbett in 1999, formerly
Portfolio Manager/Senior Vice
President at Lynch & Mayer,
Inc.
ROBERT P. FETCH Executive Vice Elected in 1997 Partner and Small-Cap Value
(2/18/1953) President Senior Investment Manager,
joined Lord Abbett in 1995.
ROBERT G. MORRIS Executive Vice Elected in 1996 Partner and Director of Equity
(11/6/1944) President Investments, joined Lord Abbett
in 1991.
ELI M. SALZMANN Executive Vice Elected in 1999 Partner and Director of
(3/24/1964) President Institutional Equity
Investments, joined Lord
Abbett in 1997.
CHRISTOPHER J. TOWLE Executive Vice Elected in 2001 Partner and Investment
(10/12/1957) President Manager, joined Lord Abbett in
1987.
EDWARD K. VON DER LINDE Executive Vice Elected in 2001 Partner and Investment
(6/12/1960) President Manager, joined Lord Abbett in
1988.
</Table>
39
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
<Table>
<Caption>
NAME AND CURRENT POSITION LENGTH OF SERVICE PRINCIPAL OCCUPATION
(DATE OF BIRTH) WITH COMPANY OF CURRENT POSITION DURING PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------------------
TRACIE E. AHERN Vice President and Elected in 1999 Partner and Director of
(1/12/1968) Treasurer Portfolio Accounting and
Operations, joined Lord Abbett
in 1999, prior thereto Vice
President - Head of Fund
Administration of Morgan
Grenfell.
JOAN A. BINSTOCK Chief Financial Elected in 1999 Partner and Chief Operations
(3/4/1954) Officer and Vice Officer, joined Lord Abbett in
President 1999, prior thereto Chief
Operating Officer of Morgan
Grenfell.
DANIEL E. CARPER Vice President Elected in 1993 Partner, joined Lord Abbett in
(1/22/1952) 1979.
PAUL A. HILSTAD Vice President and Elected in 1995 Partner and General Counsel,
(12/13/1942) Secretary joined Lord Abbett in 1995.
LAWRENCE H. KAPLAN Vice President and Elected in 1997 Partner and Deputy General
(1/16/1957) Assistant Secretary Counsel, joined Lord Abbett in
1997.
A. EDWARD OBERHAUS, III Vice President Elected in 1996 Partner and Manager of Equity
(12/21/1959) Trading, joined Lord Abbett in
1983.
CHRISTINA T. SIMMONS Vice President and Elected in 2000 Assistant General Counsel,
(11/12/1957) Assistant Secretary joined Lord Abbett in 1999,
formerly Assistant General
Counsel of Prudential
Investments from 1998 to 1999,
prior thereto Counsel of
Drinker, Biddle & Reath LLP, a
law firm.
BERNARD J. GRZELAK Assistant Treasurer Elected in 2003 Director of Fund
(6/12/1971) Administration, joined Lord
Abbett in 2003, formerly Vice
President, Lazard Asset
Management from 2000 to 2003,
prior thereto Manager of
Deloitte & Touche LLP.
</Table>
Please call 888-522-2388 for a copy of the Statement of Additional Information
(SAI), which contains further information about the Company's Directors. It is
available free upon request.
40
<Page>
HOUSEHOLDING
The Company has adopted a policy that allows it to send only one copy of the
Funds' Prospectus, proxy material, annual report and semi-annual 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 800-821-5129 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 AND PROCEDURES
A description of the policies and procedures that Lord Abbett uses to vote
proxies related to the Funds' portfolio securities is available without charge,
upon request, by calling 888-522-2388 or on Lord Abbett's web site at
www.LordAbbett.com.
TAX INFORMATION
All of the distributions paid to shareholders during the fiscal year ended
November 30, 2003 for Small-Cap Value Fund represent long-term capital gains.
41
<Page>
[LORD ABBETT(R) LOGO]
<Table>
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 Research Fund, Inc.
Large-Cap Series
Lord Abbett Mutual Fund shares are distributed by: Small-Cap Value Series
LORD ABBETT DISTRIBUTOR LLC LARF-2-1103
90 Hudson Street - Jersey City, New Jersey 07302-3973 (1/04)
</Table>
<Page>
ITEM 2: Code of Ethics.
(a) In accordance with applicable requirements, the Registrant adopted a
Sarbanes-Oxley Code of Ethics on June 19, 2003 that applies to the
principal executive officer and senior financial officers of the
Registrant ("Code of Ethics"). The Code of Ethics was in effect from
June 19, 2003 through the end of the reporting period on November
30, 2003 (the "Period").
(b) Not applicable.
(c) The Registrant has not amended the Code of Ethics as described in
Form N-CSR during the Period.
(d) The Registrant has not granted any waiver, including an implicit
waiver, from a provision of the Code of Ethics as described in Form
N-CSR during the Period.
(e) Not applicable.
(f) See Item 10(a) concerning the filing of the Code of Ethics.
ITEM 3: Audit Committee Financial Expert.
The Registrant's Board of Directors has determined that each of the
independent Directors who comprise the audit committee are audit
committee financial experts. The members of the audit committee are
E. Thayer Bigelow, Robert B. Calhoun, and Franklin W. Hobbs. Each
audit committee member is independent within the meaning of the Form
N-CSR.
ITEM 4: Principal Accountant Fees and Services.
Not applicable.
ITEM 5: Audit Committee of Listed Registrants
Not applicable.
ITEM 6: [Reserved]
ITEM 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
<Page>
ITEM 8: [Reserved]
ITEM 9: 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 January 23, 2004, 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
Registrant's last fiscal half-year that have materially affected, or
are reasonably likely to materially affect, the Registrant's
internal control over financial reporting.
ITEM 10: Exhibits.
ITEM 10(a): Code of Ethics, as required by Item 2, is attached hereto as part of
EX-99.CODEETH.
ITEM 10(b):
(i) Certification of each principal executive officer and principal
financial officer of the Registrant as required by Rule 30a-2(a)
under the Act (17 CFR 270.30a-2) is attached hereto as a part of
EX-99.CERT.
(ii) 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 attached hereto as a part of
EX-99.906CERT.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities and 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 Research Fund, Inc.
/s/Robert S. Dow
----------------------------
Robert S. Dow
Chief Executive Officer,
Chairman and President
/s/ Joan A. Binstock
----------------------------
Joan A. Binstock
Chief Financial Officer and Vice President
Date: January 23, 2004