<Page>
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.
-------------------------------
(Exact name of registrant as specified in charter)
90 Hudson Street, Jersey City, NJ 07302
---------------------------------------
(Address of principal executive offices) (zip code)
Christina T. Simmons, Vice President & Assistant Secretary
90 Hudson Street, Jersey City, NJ 07302
---------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 201-6984
--------------
Date of fiscal year end: 11/30
Date of reporting period: 5/31/04
-------
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ITEM 1: REPORT TO SHAREHOLDERS.
<Page>
[LORD ABBETT LOGO]
2004
SEMI-
ANNUAL
REPORT
LORD ABBETT
LARGE-CAP RESEARCH FUND
SMALL-CAP VALUE FUND
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 2004
<Page>
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LORD ABBETT RESEARCH FUND
SEMI-ANNUAL REPORT
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 2004
DEAR SHAREHOLDERS: We are pleased to provide you with this six-month overview of
the Lord Abbett Research Fund's strategies and performance for the six-month
period ended May 31, 2004. 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. Favorable economic news and strong U.S. equity returns during November and
December brought 2003 to a positive close. Manufacturing, inventory investment
and capital spending all showed signs of improvement. Unemployment reports were
also encouraging, as inflation and interest rates remained steady through
year-end. As a result of the tax bill and a positive macroeconomic environment,
capital spending increased, particularly in technology.
This economic growth continued into the beginning of 2004 largely due to
strong consumer and capital spending. Corporate profits rose, triggered by a
rise in industrial production. In January and February, inflation and short-term
interest rates continued to remain stable. However, somewhat disappointing
employment reports and higher energy prices weighed on consumer sentiment.
In March and April, the number of jobs increased and unemployment
stabilized. The U.S. housing market remained strong and there were improvements
in durable goods spending. But, retail sales dropped 0.5% in April after a 2%
gain in March. Meanwhile, producer prices moved higher, driven by the higher
costs of gasoline and food, suggesting an inflationary trend and the possibility
of an interest rate increase in the coming months.
Equity prices were roughly flat in April and May, as investors responded to
uncertainties surrounding future interest-rate hikes, the continued war in Iraq,
the upcoming presidential election and record-high energy prices.
LORD ABBETT LARGE-CAP RESEARCH FUND
Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED MAY 31, 2004?
A: For the six-month period ended May 31, 2004, the Fund returned 6.6%,
1
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reflecting performance at the Net Asset Value (NAV) of Class A shares with all
distributions reinvested, compared with its benchmark, the S&P 500/Barra Value
Index,(1) which returned 4.2% 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 05/31/04 are 1 Year: 12.99%, 5 Years: 2.22% and 10 years:
11.54%.
PERFORMANCE DATA QUOTED REFLECT PAST PERFORMANCE AND ARE NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
QUOTED. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE SO THAT SHARES, ON ANY GIVEN DAY OR WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. YOU CAN OBTAIN PERFORMANCE DATA CURRENT
TO THE MOST RECENT MONTH END BY CALLING LORD ABBETT AT 800-821-5129 OR REFERRING
TO OUR WEBSITE AT www.LordAbbett.com.
Q: WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
A: Stock selection within the information technology sector had a positive
impact on the Fund's performance relative to its benchmark. The portfolio best
performing technology holding, a communications technology and electronics
company, benefited from a management change and a restructuring. The portfolio's
largest holding within the sector, a personal computer company, reported strong
gains based on their placement of outstanding products in the right market
segment.
Adding to relative performance was the portfolio's underweight within the
financials sector. Stock selection within the consumer staples sector was also a
positive factor. Consumer staples companies are generally suppliers of food and
personal care products. The portfolio benefited from holdings in a number of
companies as new management teams, new products and strong cost controls added
value.
The most significant detractor to the Fund's performance relative to its
benchmark for the period was stock selection within the materials sector. Metal
stocks, including gold stocks, underperformed during the period as the sector
responded to fears of a slowdown in the Chinese economy which would reduce
demand. Although not as significant as stock selection, the portfolio's
overweight position in materials also took away from performance.
The portfolio's slight underweight position in energy stocks detracted from
portfolio performance, as that sector benefited from higher oil prices in the
period. Stock selection and the industrials and consumer discretionary sectors
also hurt performance. In the latter sector,
2
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media stocks disappointed due to slower-than-expected advertising and greater
competition.
THE FUND'S PORTFOLIO IS ACTIVELY MANAGED AND, THEREFORE, ITS HOLDINGS AND
THE WEIGHTINGS OF A PARTICULAR ISSUER OR PARTICULAR SECTOR AS A PERCENTAGE OF
PORTFOLIO ASSETS ARE SUBJECT TO CHANGE. SECTORS MAY INCLUDE MANY INDUSTRIES.
LORD ABBETT SMALL-CAP VALUE FUND
Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED MAY 31, 2004?
A: For the six-month period ended May 31, 2004, the Fund returned 6.5%,
reflecting performance at the Net Asset Value (NAV) of Class A shares with all
distributions reinvested, compared with its benchmark, the Russell 2000(R) Value
Index,(1) which returned 7.8% 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 05/31/04 are 1 Year: 23.46 Years: 13.99% and Since
Inception (12/13/95): 14.94%.
PERFORMANCE DATA QUOTED REFLECT PAST PERFORMANCE AND ARE NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
QUOTED. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE SO THAT SHARES, ON ANY GIVEN DAY OR WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. YOU CAN OBTAIN PERFORMANCE DATA CURRENT
TO THE MOST RECENT MONTH END BY CALLING LORD ABBETT AT 800-821-5129 OR REFERRING
TO OUR WEBSITE AT www.LordAbbett.com.
Q: WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
A: Detracting from performance relative to the Fund's benchmark was stock
selection within the consumer discretionary sector. The portfolio's largest
consumer discretionary holding, a home furnishings company, performed poorly
during the period. The consumer discretionary sector includes stocks in the
consumer durables, apparel, media, hotel and leisure industries. Also, while the
portfolio's benefited from its overweight position within the energy sector,
energy stock selection hurt performance. One of the portfolio's larger energy
holdings, a company that provides onshore servicing for oil and gas wells,
underperformed during the period due to a temporary financial setback.
Stock selection within the technology sector was the largest contributor to
performance for the Fund's six-month period. The portfolio's significant
overweight in technology relative to its benchmark hurt performance as that
sector did not perform as well in the period, but strong stock selection within
the sector more than made up for this in terms of positive performance.
3
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The portfolio's large underweight position in financial services was also
beneficial. Compared with the benchmark, the portfolio had less than half the
weight within this sector.
THE FUND'S PORTFOLIO IS ACTIVELY MANAGED AND, THEREFORE, ITS HOLDINGS AND
THE WEIGHTINGS OF A PARTICULAR ISSUER OR PARTICULAR SECTOR AS A PERCENTAGE OF
PORTFOLIO ASSETS ARE SUBJECT TO CHANGE. SECTORS MAY INCLUDE MANY INDUSTRIES.
THE PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT EACH FUND INCLUDING
THESE FUNDS' INVESTMENT OBJECTIVES, RISKS, CHARGES AND ONGOING EXPENSES THAT YOU
SHOULD CAREFULLY CONSIDER BEFORE INVESTING. TO OBTAIN A PROSPECTUS ON THESE
FUNDS OR ANY LORD ABBETT MUTUAL FUND PLEASE CONTACT YOUR INVESTMENT PROFESSIONAL
OR LORD ABBETT DISTRIBUTOR LLC AT 800-874-3733 OR VISIT www.LordAbbett.com. READ
THE PROSPECTUS CAREFULLY BEFORE INVESTING.
(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 May 31, 2004; these views and portfolio holdings may have
changed subsequent to this date and they do not guarantee the future performance
of the markets or each 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
each Fund, please see the Funds' Prospectuses.
PERFORMANCE: Because of ongoing market volatility, each Fund's performance may
be subject to substantial fluctuation. 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.
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.
4
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SCHEDULE OF INVESTMENTS (UNAUDITED)
LARGE-CAP RESEARCH FUND MAY 31, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS 98.87%
AEROSPACE & DEFENSE 2.31%
Lockheed Martin Corp. 167,500 $ 8,298
United Technologies
Corp. 17,500 1,481
--------------
TOTAL 9,779
--------------
AIRLINES 1.46%
AMR Corp.* 224,800 2,590
Continental Airlines,
Inc. Class B* 108,900 1,164
Southwest Airlines Co. 157,200 2,438
--------------
TOTAL 6,192
--------------
BEVERAGES 2.32%
Diageo plc ADR 49,500 2,668
PepsiCo, Inc. 134,100 7,157
--------------
TOTAL 9,825
--------------
CHEMICALS 4.45%
E.I. du Pont de
Nemours & Co. 124,800 5,391
Monsanto Co. 80,409 2,774
Potash Corp. of
Saskatchewan(a) 32,400 2,819
Praxair, Inc. 120,400 4,454
Rohm & Haas Co. 87,900 3,388
--------------
TOTAL 18,826
--------------
COMMERCIAL BANKS 8.57%
Bank of America Corp. 73,624 6,120
Bank of New York
Co., Inc. 162,500 4,887
Bank One Corp. 192,900 9,346
Mellon Financial Corp. 119,500 3,518
Wachovia Corp. 144,700 6,831
Wells Fargo & Co. 94,300 5,545
--------------
TOTAL 36,247
--------------
COMMERCIAL SERVICES & SUPPLIES 0.91%
Waste Management, Inc. 133,000 $ 3,825
--------------
COMMUNICATIONS EQUIPMENT 3.34%
Corning, Inc.* 189,300 2,345
Motorola, Inc. 596,800 11,799
--------------
TOTAL 14,144
--------------
COMPUTERS & PERIPHERALS 4.69%
Apple Computer, Inc.* 437,512 12,277
EMC Corp.* 671,500 7,548
--------------
TOTAL 19,825
--------------
DIVERSIFIED FINANCIALS 4.35%
Citigroup, Inc. 193,000 8,961
Goldman Sachs Group,
Inc. (The) 21,800 2,047
J.P. Morgan Chase & Co. 54,000 1,990
Merrill Lynch & Co., Inc. 94,900 5,390
--------------
TOTAL 18,388
--------------
DIVERSIFIED TELECOMMUNICATION
SERVICES 2.70%
BellSouth Corp. 75,900 1,894
Qwest Communications
Int'l, Inc.* 104,200 391
SBC Communications,
Inc. 158,000 3,745
Verizon Communications,
Inc. 155,200 5,367
--------------
TOTAL 11,397
--------------
ELECTRIC UTILITIES 2.63%
Constellation Energy
Group, Inc. 63,600 2,432
FPL Group, Inc. 22,400 1,428
PG&E Corp.* 75,500 2,152
Progress Energy, Inc. 81,000 3,451
Public Service Enterprise
Group, Inc. 39,300 1,657
--------------
TOTAL 11,120
--------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
LARGE-CAP RESEARCH FUND MAY 31, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 0.54%
Emerson Electric Co. 38,500 $ 2,298
--------------
ELECTRONIC EQUIPMENT &
INSTRUMENTS 0.92%
Agilent Technologies,
Inc.* 95,100 2,444
Solectron Corp.* 264,800 1,456
--------------
TOTAL 3,900
--------------
ENERGY EQUIPMENT & SERVICES 0.80%
Baker Hughes, Inc. 99,243 3,377
--------------
FOOD & STAPLES RETAILING 0.55%
CVS Corp. 55,800 2,326
--------------
FOOD PRODUCTS 4.17%
Archer-Daniels-
Midland Co. 124,200 2,065
General Mills, Inc. 126,700 5,835
H.J. Heinz Co. 57,400 2,143
Kellogg Co. 96,300 4,083
Kraft Foods, Inc. Class A 116,800 3,488
--------------
TOTAL 17,614
--------------
HEALTHCARE EQUIPMENT & SUPPLIES 1.84%
Baxter Int'l., Inc. 128,700 4,047
Guidant Corp. 68,500 3,722
--------------
TOTAL 7,769
--------------
HEALTHCARE PROVIDERS & SERVICES 1.79%
Cardinal Health, Inc. 49,900 3,379
CIGNA Corp. 61,800 4,190
--------------
TOTAL 7,569
--------------
HOUSEHOLD DURABLES 0.47%
Newell Rubbermaid, Inc. 85,100 2,006
--------------
HOUSEHOLD PRODUCTS 0.51%
Kimberly Clark Corp. 32,800 2,161
--------------
INDUSTRIAL CONGLOMERATES 3.36%
3M Co. 83,000 $ 7,018
Tyco Int'l. Ltd.(a) 233,800 7,199
--------------
TOTAL 14,217
--------------
INSURANCE 4.60%
Allstate Corp. 73,700 3,241
American Int'l. Group,
Inc. 121,992 8,942
Hartford Financial
Group, Inc. 65,300 4,318
St. Paul Travelers Cos,
Inc. (The) 74,718 2,965
--------------
TOTAL 19,466
--------------
MACHINERY 6.43%
Caterpillar, Inc. 32,400 2,441
Deere & Co. 165,300 10,860
Dover Corp. 105,300 4,102
Eaton Corp. 131,800 7,691
Illinois Tool Works, Inc. 12,300 1,106
Parker-Hannifin Corp. 18,100 1,006
--------------
TOTAL 27,206
--------------
MEDIA 8.45%
Clear Channel
Comm, Inc. 125,100 4,966
Comcast Corp. Class A* 246,907 7,000
Cox Communications,
Inc. Class A* 40,300 1,266
Gannett Co., Inc. 14,400 1,264
The Walt Disney Co. 403,000 9,458
Time Warner, Inc.* 12,600 215
Tribune Co. 100,900 4,873
Viacom, Inc. Class B 181,650 6,701
--------------
TOTAL 35,743
--------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONCLUDED)
LARGE-CAP RESEARCH FUND MAY 31, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
METALS & MINING 2.35%
Alcoa, Inc. 106,000 $ 3,318
Barrick Gold Corp.(a) 60,400 1,248
Newmont Mining Corp. 135,700 5,389
--------------
TOTAL 9,955
--------------
MULTI-LINE RETAIL 1.15%
Target Corp. 108,700 4,859
--------------
OFFICE ELECTRONICS 1.83%
Xerox Corp.* 570,300 7,722
--------------
OIL & GAS 9.89%
BP plc ADR 126,500 6,705
Exxon Mobil Corp. 416,080 17,995
Total S.A. ADR 182,200 17,141
--------------
TOTAL 41,841
--------------
PAPER & FOREST PRODUCTS 2.05%
International Paper Co. 159,200 6,675
Weyerhaeuser Co. 33,100 2,002
--------------
TOTAL 8,677
--------------
PERSONAL PRODUCTS 0.80%
Gillette Co. 78,600 3,387
--------------
PHARMACEUTICALS 4.34%
Abbott Laboratories 70,400 2,901
Merck & Co., Inc. 85,400 4,039
Novartis AG ADR 102,300 4,621
Schering-Plough Corp. 125,500 2,121
Wyeth 129,300 4,655
--------------
TOTAL 18,337
--------------
ROAD & RAIL 1.28%
Canadian National
Railway(a) 34,620 1,367
CSX Corp. 111,600 3,527
Union Pacific Corp. 9,200 536
--------------
TOTAL 5,430
--------------
SEMICONDUCTOR EQUIPMENT &
PRODUCTS 0.36%
Teradyne, Inc.* 67,390 $ 1,502
--------------
SPECIALTY RETAIL 1.34%
The Gap, Inc. 235,300 5,682
--------------
TEXTILES & APPAREL 1.32%
NIKE, Inc. Class B 78,500 5,585
--------------
TOTAL COMMON STOCKS
(Cost $352,133,899) 418,197
==============
<Caption>
PRINCIPAL
AMOUNT
(000)
--------------
SHORT-TERM INVESTMENT 1.02%
REPURCHASE AGREEMENT 1.02%
Repurchase Agreement
dated 5/28/2004,
0.98% due 6/1/2004
with State Street Bank &
Trust Co. collateralized
by $4,370,000 of
Federal Home Loan
Mortgage Corp. at 5.5%
due 10/4/2017;
value: $4,408,238;
proceeds: $4,322,159
(Cost $4,321,688) $ 4,322 4,322
==============
TOTAL INVESTMENTS 99.89%
(Cost $356,455,587) $ 422,519
==============
</Table>
* Non-income producing security.
(a) Foreign security traded in U.S. dollars.
ADR-American Depository Receipt.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)
SMALL-CAP VALUE FUND MAY 31, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.80%
AEROSPACE 3.69%
Curtiss-Wright Corp.^ 218,700 $ 10,290
Hexcel Corp.*^ 497,300 4,227
Moog, Inc. Class A* 396,025 12,316
Orbital Sciences
Corp.*^ 1,384,100 17,371
--------------
TOTAL 44,204
--------------
AGRICULTURE FISHING & RANCHING 0.80%
Delta & Pine Land Co. 415,800 9,638
--------------
AIR TRANSPORTATION 0.34%
Alaska Air Group, Inc.*^ 175,090 3,607
Frontier Airlines, Inc.*^ 51,100 475
--------------
TOTAL 4,082
--------------
AUTO COMPONENTS 0.83%
Modine
Manufacturing Co.^ 330,000 9,950
--------------
AUTO PARTS: AFTER MARKET 0.87%
Keystone Automotive
Industries , Inc.*^ 226,200 6,221
TBC Corp.* 165,500 4,202
--------------
TOTAL 10,423
--------------
BANKS 1.44%
KNBT Bancorp, Inc.^ 489,630 8,319
Signature Bank*^ 358,000 8,964
--------------
TOTAL 17,283
--------------
BANKS: OUTSIDE NEW YORK CITY 3.61%
Alabama National Ban
Corporation^ 53,600 2,752
Amcore Financial, Inc.^ 183,000 5,320
Corus Bankshares, Inc. 152,500 5,960
Cullen/Frost Bankers,
Inc.^ 385,000 16,870
Doral Financial Corp.(a) 380,000 $ 12,316
--------------
TOTAL 43,218
--------------
BUILDING: AIR CONDITIONING 0.58%
Lennox International,
Inc.^ 418,700 6,900
--------------
BUILDING: MATERIALS 2.11%
Hughes Supply, Inc. 185,000 9,990
NCI Building Systems,
Inc.* 276,240 8,030
Simpson Manufacturing
Co., Inc.^ 132,000 7,234
--------------
TOTAL 25,254
--------------
CHEMICALS 4.95%
Cytec Industries, Inc. 560,000 22,551
Georgia Gulf Corp.^ 490,000 16,572
OM Group, Inc.* 602,200 16,073
Quaker Chemical Corp.^ 159,000 4,075
--------------
TOTAL 59,271
--------------
COMPUTER SERVICES SOFTWARE &
SYSTEMS 4.66%
Aspen Technology, Inc.*^ 917,812 5,791
Electronics for Imaging,
Inc.* 790,000 21,931
Mercury Computer
Systems, Inc.*^ 458,300 10,280
MICROS Systems, Inc.*^ 410,000 17,806
--------------
TOTAL 55,808
--------------
CONSUMER PRODUCTS 1.29%
Tupperware Corp. 388,000 7,089
Yankee Candle Co.* 297,300 8,324
--------------
TOTAL 15,413
--------------
CONTAINERS & PACKAGING: PAPER &
PLASTIC 0.37%
Graphic Packaging Corp.*^ 691,600 4,468
--------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
SMALL-CAP VALUE FUND MAY 31, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
COPPER 1.68%
Mueller Industries, Inc. 615,040 $ 20,112
--------------
COSMETICS 0.47%
Revlon, Inc. Class A*^ 1,719,000 5,638
--------------
DIVERSIFIED FINANCIAL SERVICES 0.41%
Jones Lang LaSalle, Inc.* 196,200 4,948
--------------
DIVERSIFIED MANUFACTURING 0.24%
CLARCOR, Inc. 68,100 2,888
--------------
DRUG & GROCERY STORE CHAINS 1.03%
Casey's General Stores,
Inc.^ 755,000 12,329
--------------
ELECTRICAL EQUIPMENT &
COMPONENTS 0.92%
Ametek, Inc. 410,000 11,074
--------------
ELECTRICAL: HOUSEHOLD APPLIANCE 0.68%
Applica, Inc.* 823,900 8,091
--------------
ELECTRONICS 1.15%
BEI Technologies, Inc. 218,000 5,814
Vishay Intertechnology,
Inc.*^ 419,800 7,922
--------------
TOTAL 13,736
--------------
ELECTRONICS: INSTRUMENTS GAUGES &
METERS 0.45%
Dionex Corp.* 106,000 5,338
--------------
ELECTRONICS: MEDICAL SYSTEMS 2.26%
Analogic Corp.^ 265,000 12,224
Haemonetics Corp. of
Mass*^ 359,200 9,770
Zoll Medical Corp.*^ 165,000 5,099
--------------
TOTAL 27,093
--------------
ELECTRONICS: SEMI-CONDUCTORS/
COMPONENTS 2.25%
ATMI, Inc.*^ 425,000 $ 10,889
Vitesse Semiconductor
Corp.*^ 2,805,400 15,317
White Electronic
Designs Corp.*^ 110,860 708
--------------
TOTAL 26,914
--------------
ELECTRONICS: TECHNOLOGY 3.50%
Cubic Corp.^ 620,000 13,956
Intermagnetics General
Corp.*^ 440,071 12,969
Scansource, Inc.*^ 282,300 15,033
--------------
TOTAL 41,958
--------------
ENGINEERING & CONTRACTING
SERVICES 0.77%
URS Corp.*^ 365,000 9,191
--------------
FOREST PRODUCTS 0.92%
Universal Forest
Products, Inc.^ 382,100 11,066
--------------
FUNERAL PARLORS & CEMETERY 1.22%
Stewart Enterprises,
Inc.*^ 1,950,800 14,670
--------------
HEALTHCARE FACILITIES 1.53%
Capital Senior Living
Corp.* 820,000 4,223
Manor Care, Inc. 192,600 6,034
Pharmaceutical Prod.
Dev., Inc.*^ 267,500 8,100
--------------
TOTAL 18,357
--------------
HEALTHCARE MANAGEMENT SERVICES 0.80%
American Med. Security
Group, Inc.*^ 115,000 2,970
Sierra Health Services,
Inc.*^ 154,800 6,624
--------------
TOTAL 9,594
--------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
SMALL-CAP VALUE FUND MAY 31, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
HOTEL/MOTEL 0.92%
The Marcus Corp. 680,000 $ 11,016
--------------
IDENTIFICATION CONTROL &
FILTER DEVICES 0.41%
IDEX Corp.^ 103,700 4,947
--------------
INSURANCE: MULTI-LINE 0.50%
Markel Corp.* 21,000 6,038
--------------
INSURANCE: PROPERTY-CASUALTY 3.40%
Navigators Group,
Inc. (The)* 228,000 6,589
Odyssey Re Holdings
Corp.^ 711,500 17,965
Philadelphia Con.
Holding Corp.* 85,000 4,818
Selective Insurance Group,
Inc.^ 315,300 11,392
--------------
TOTAL 40,764
--------------
MACHINERY: ENGINES 1.58%
Briggs & Stratton Corp.^ 250,000 18,970
--------------
MACHINERY: INDUSTRIAL/SPECIALTY 2.90%
Enpro Industries, Inc.*^ 298,300 5,769
Tennant Co. 270,000 10,260
Woodward Governor
Co.^ 281,700 18,719
--------------
TOTAL 34,748
--------------
MACHINERY: OIL WELL EQUIPMENT &
SERVICES 4.58%
FMC Technologies, Inc.* 440,000 11,867
Grant Prideco, Inc.* 635,000 9,849
Grey Wolf, Inc.*^ 3,500,000 12,775
Helmerich & Payne, Inc. 330,000 8,233
Key Energy Services,
Inc.* 1,260,000 12,197
--------------
TOTAL 54,921
--------------
MACHINERY: SPECIALTY 0.83%
JLG Industries, Inc.^ 785,000 $ 9,907
--------------
MEDICAL & DENTAL INSTRUMENTS &
SUPPLIES 2.85%
Biosite Diagnostics,
Inc.*^ 218,900 8,706
ICU Medical, Inc.*^ 143,900 4,793
Molecular Devices
Corp.*^ 295,000 5,030
Varian, Inc.*^ 350,000 15,575
--------------
TOTAL 34,104
--------------
MEDICAL SERVICES 1.94%
Covance Inc.* 432,900 15,680
Hanger Orthopedic
Group, Inc.*^ 456,800 7,537
--------------
TOTAL 23,217
--------------
METAL FABRICATING 2.27%
Quanex Corp.^ 610,000 27,176
--------------
METALS & MINERALS MISCELLANEOUS 2.77%
Graftech Int'l., Ltd.* 1,260,000 11,970
Minerals Technologies,
Inc. 245,000 14,087
Stillwater Mining Co.*^ 472,400 7,157
--------------
TOTAL 33,214
--------------
MISC CONSUMER STAPLES 0.96%
Playtex Products, Inc.* 1,611,100 11,519
--------------
MISCELLANEOUS MATERIALS &
PROCESSING 2.86%
Rogers Corp.*^ 558,480 34,319
--------------
MULTI-SECTOR COMPANIES 1.78%
Trinity Industries, Inc.^ 745,000 21,314
--------------
OFFSHORE DRILLING 1.06%
Atwood Oceanics, Inc.*^ 320,000 12,742
--------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
SMALL-CAP VALUE FUND MAY 31, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
OIL: CRUDE PRODUCERS 0.35%
Range Resources Corp.^ 145,900 $ 1,732
Westport Resources
Corp.*^ 69,800 2,415
--------------
TOTAL 4,147
--------------
OIL: INTEGRATED DOMESTIC 0.34%
KCS Energy Services,
Inc.*^ 321,700 4,024
--------------
PUBLISHING: NEWSPAPERS 0.98%
Journal Register Co.* 605,200 11,741
--------------
RAILROAD EQUIPMENT 0.30%
Wabtec Corp. 216,900 3,577
--------------
RAILROADS 0.50%
Genesee & Wyoming,
Inc. Class A*^ 260,250 5,949
--------------
REAL ESTATE INVESTMENT TRUSTS 1.32%
Government Properties
Trust 295,000 3,068
Nationwide Health
Properties^ 659,000 12,738
--------------
TOTAL 15,806
--------------
RETAIL 4.53%
Barnes & Noble, Inc.* 324,800 9,725
Brookstone, Inc.*^ 195,000 3,765
Pier 1 Imports, Inc. 1,297,100 24,450
School Specialty, Inc.*^ 465,000 16,354
--------------
TOTAL 54,294
--------------
SAVINGS & LOAN 1.73%
Bank Mutual Corp.^ 337,529 3,519
W Holding Company,
Inc.^(a) 358,131 6,106
Webster Financial Corp. 235,900 $ 11,049
--------------
TOTAL 20,674
--------------
SERVICES: COMMERCIAL 1.80%
Casella Waste Systems,
Inc. Class A*^ 500,000 6,990
Heidrick & Struggles
Int'l., Inc.*^ 207,000 5,784
Hudson Highland
Group, Inc.*^ 187,000 5,189
SM&A* 55,400 449
Steiner Leisure Ltd.*(a) 160,000 3,134
--------------
TOTAL 21,546
--------------
SHIPPING 1.23%
Kirby Corp.* 415,000 14,691
--------------
SHOES 0.84%
Skechers USA, Inc.
Class A*^ 874,900 10,061
--------------
STEEL 0.77%
Steel Technologies, Inc. 431,400 9,210
--------------
TEXTILES APPAREL MANUFACTURERS 1.29%
Perry Ellis Int'l, Inc.*^ 171,100 4,103
Warnaco Group, Inc.* 570,000 11,360
--------------
TOTAL 15,463
--------------
TRUCKERS 0.83%
P.A.M. Transportation
Svcs*^ 245,000 4,533
USF Corp.^ 186,100 5,350
--------------
TOTAL 9,883
--------------
UTILITIES: WATER 0.56%
Aqua America, Inc.^ 340,000 6,752
--------------
TOTAL COMMON STOCKS
(Cost $948,854,153) 1,135,643
==============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONCLUDED)
SMALL-CAP VALUE FUND MAY 31, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 22.62%
COLLATERAL FOR SECURITIES ON LOAN 17.59%
State Street Navigator
Securities Lending
Prime Portfolio, 1.06%(b) 210,668,375 $ 210,668
--------------
<Caption>
PRINCIPAL
AMOUNT
(000)
--------------
REPURCHASE AGREEMENT 5.03%
Repurchase Agreement
dated 5/28/2004,
0.98% due 6/1/2004 with
State Street Bank &
Trust Co. collateralized by
$34,475,000 of United
States Treasury Bonds
at 8.125% due 8/15/2019
and $15,495,000 of Federal
Home Loan Mortgage Corp.
at 2.25% due 11/24/2006;
value: $61,434,752;
proceeds: $60,234,944 $ 60,229 60,229
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $270,896,761) 270,897
==============
TOTAL INVESTMENTS 117.42%
(Cost $1,219,750,914) $ 1,406,540
==============
</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 seven day yield as of May 31, 2004.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
MAY 31, 2004
<Table>
<Caption>
LARGE-CAP SMALL-CAP
RESEARCH FUND VALUE FUND
ASSETS:
Investment in securities, at cost $ 356,455,587 $ 1,219,750,914
- ------------------------------------------------------------------------------------------------------------
Investment in securities, at value $ 422,519,068 $ 1,406,540,192
Receivables:
Interest and dividends 1,269,333 1,048,549
Investment securities sold - 4,835,168
Capital shares sold 578,591 1,159,663
Prepaid expenses and other assets 30,085 292,084
- ------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 424,397,077 1,413,875,656
- ------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable upon return of securities on loan - 210,668,375
Payables:
Investment securities purchased - 2,869,342
Capital shares reacquired 796,546 1,008,239
Management fee 264,440 745,591
12b-1 distribution fees 187,706 432,199
Fund administration 14,092 39,654
Directors' fees 11,175 35,791
To affiliate - 12,611
Accrued expenses and other liabilities 149,469 202,867
- ------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,423,428 216,014,669
============================================================================================================
NET ASSETS $ 422,973,649 $ 1,197,860,987
============================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 365,727,698 $ 900,563,154
Undistributed (distributions in excess of) net investment income 563,482 (3,732,165)
Accumulated net realized gain (loss) on investments (9,381,012) 114,240,720
Net unrealized appreciation on investments 66,063,481 186,789,278
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $ 422,973,649 $ 1,197,860,987
============================================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 301,292,400 $ 638,480,150
Class B Shares $ 83,246,655 $ 179,460,879
Class C Shares $ 38,160,001 $ 81,389,481
Class P Shares $ 193,575 $ 80,143,058
Class Y Shares $ 81,018 $ 218,387,419
OUTSTANDING SHARES BY CLASS:
Class A Shares (20 million and 50 million shares of common
stock authorized, respectively) 11,386,311 24,941,024
Class B Shares (30 million shares of common stock authorized per Fund) 3,255,976 7,408,827
Class C Shares (20 million shares of common stock authorized per Fund) 1,487,451 3,356,437
Class P Shares (20 million shares of common stock authorized per Fund) 7,292 3,138,033
Class Y Shares (30 million shares of common stock authorized per Fund) 3,059.350 8,318,098
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 26.46 $ 25.60
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) $ 28.07 $ 27.16
Class B Shares-Net asset value $ 25.57 $ 24.22
Class C Shares-Net asset value $ 25.65 $ 24.25
Class P Shares-Net asset value $ 26.55 $ 25.54
Class Y Shares-Net asset value $ 26.48 $ 26.25
============================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 2004
<Table>
<Caption>
LARGE-CAP SMALL-CAP
RESEARCH FUND VALUE FUND
INVESTMENT INCOME:
Dividends from unaffiliated issuers $ 4,042,881 $ 3,997,884
Dividends from affiliated issuer -- 78,859
Interest 74,915 282,930
Securities lending-net - 148,734
Foreign withholding tax (98,397) (14,945)
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 4,019,399 4,493,462
- ------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fee 1,561,265 4,192,507
12b-1 distribution plan-Class A 524,056 1,125,824
12b-1 distribution plan-Class B 423,553 928,896
12b-1 distribution plan-Class C 194,002 417,790
12b-1 distribution plan-Class P 385 146,188
Shareholder servicing 441,862 830,048
Professional 16,695 34,067
Reports to shareholders 27,662 76,718
Fund administration 83,268 223,600
Custody 9,990 38,144
Directors' fees 3,878 10,707
Registration 35,197 37,702
Subsidy (see Note 3) - 118,381
Other 4,368 8,981
- ------------------------------------------------------------------------------------------------------------
Gross expenses 3,326,181 8,189,553
Expense reductions (1,433) (4,222)
- ------------------------------------------------------------------------------------------------------------
NET EXPENSES 3,324,748 8,185,331
- ------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 694,651 (3,691,869)
============================================================================================================
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on investments in unaffiliated issuers 1,847,180 107,471,524
Net realized gain on investments in affiliated issuers -- 6,507,703
Net change in unrealized appreciation/depreciation on investments 22,108,984 (48,545,707)
============================================================================================================
NET REALIZED AND UNREALIZED GAIN 23,956,164 65,433,520
============================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 24,650,815 $ 61,741,651
============================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 2004
<Table>
<Caption>
LARGE-CAP SMALL-CAP
INCREASE IN NET ASSETS RESEARCH FUND VALUE FUND
OPERATIONS:
Net investment income (loss) $ 694,651 $ (3,691,869)
Net realized gain on investments 1,847,180 113,979,227
Net change in unrealized appreciation/depreciation on investments 22,108,984 (48,545,707)
- ------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 24,650,815 61,741,651
============================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (599,192) -
Class P (597) -
Class Y (378) -
Net realized gain
Class A - (33,409,245)
Class B - (12,214,930)
Class C - (5,477,258)
Class P - (3,229,201)
Class Y - (9,460,860)
- ------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (600,167) (63,791,494)
============================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 51,409,651 304,222,811
Reinvestment of distributions 569,508 48,589,494
Cost of shares reacquired (31,833,917) (124,821,845)
- ------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS 20,145,242 227,990,460
============================================================================================================
NET INCREASE IN NET ASSETS 44,195,890 225,940,617
============================================================================================================
NET ASSETS:
Beginning of period 378,777,759 971,920,370
- ------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 422,973,649 $ 1,197,860,987
============================================================================================================
UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT INCOME $ 563,482 $ (3,732,165)
============================================================================================================
</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>
FINANCIAL HIGHLIGHTS
LARGE-CAP RESEARCH FUND
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 24.88 $ 21.27 $ 24.75 $ 26.83 $ 25.32 $ 21.91
=========== =========== =========== =========== =========== ===========
Investment operations
Net investment income(a) .07 .08 .04 .06 .11 .08
Net realized and
unrealized gain (loss) 1.57 3.53 (3.37) (1.14) 2.74 3.60
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.64 3.61 (3.33) (1.08) 2.85 3.68
----------- ----------- ----------- ----------- ----------- -----------
Distributions to shareholders
from:
Net investment income (.06) - - (.09) (.03) (.10)
Net realized gain - - (.15) (.91) (1.31) (.17)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (.06) - (.15) (1.00) (1.34) (.27)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 26.46 $ 24.88 $ 21.27 $ 24.75 $ 26.83 $ 25.32
=========== =========== =========== =========== =========== ===========
Total Return(b) 6.59%(d) 16.97% (13.52)% (4.26)% 11.75% 16.99%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .70%(d) 1.46% 1.45% 1.45% 1.54% 1.43%
Expenses, excluding expense
reductions .70%(d) 1.46% 1.45% 1.45% 1.54% 1.43%
Net investment income .26%(d) .36% .16% .22% .46% .33%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 301,292 $ 261,231 $ 201,315 $ 234,533 $ 200,064 $ 169,844
Portfolio turnover rate 9.62% 34.98% 74.76% 81.79% 74.72% 60.59%
===========================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
LARGE-CAP RESEARCH FUND
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 24.07 $ 20.70 $ 24.25 $ 26.37 $ 25.03 $ 21.71
=========== =========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.02) (.06) (.10) (.10) (.04) (.09)
Net realized and
unrealized gain (loss) 1.52 3.43 (3.30) (1.11) 2.69 3.58
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.50 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 PERIOD $ 25.57 $ 24.07 $ 20.70 $ 24.25 $ 26.37 $ 25.03
=========== =========== =========== =========== =========== ===========
Total Return(b) 6.23%(d) 16.28% (14.10)% (4.81)% 11.04% 16.21%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.02%(d) 2.10% 2.06% 2.07% 2.15% 2.11%
Expenses, excluding expense
reductions 1.02%(d) 2.10% 2.06% 2.07% 2.15% 2.11%
Net investment loss (.06)%(d) (.28)% (.45)% (.39)% (.16)% (.35)%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 83,247 $ 80,542 $ 70,636 $ 85,011 $ 79,968 $ 68,590
Portfolio turnover rate 9.62% 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>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 24.15 $ 20.77 $ 24.27 $ 26.41 $ 25.05 $ 21.73
=========== =========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.02) (.06) (.06) (.11) (.03) (.09)
Net realized and
unrealized gain (loss) 1.52 3.44 (3.29) (1.12) 2.70 3.58
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.50 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 PERIOD $ 25.65 $ 24.15 $ 20.77 $ 24.27 $ 26.41 $ 25.05
=========== =========== =========== =========== =========== ===========
Total Return(b) 6.21%(d) 16.27% (13.88)% (4.88)% 11.12% 16.20%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.02%(d) 2.10% 1.87% 2.10% 2.15% 2.11%
Expenses, excluding expense
reductions 1.02%(d) 2.10% 1.87% 2.10% 2.15% 2.11%
Net investment loss (.06)%(d) (.28)% (.26)% (.43)% (.14)% (.35)%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 38,160 $ 36,778 $ 32,109 $ 37,149 $ 26,954 $ 17,567
Portfolio turnover rate 9.62% 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>
SIX MONTHS
ENDED YEAR ENDED 11/30 4/28/1999(c)
5/31/2004 ----------------------------------------------------- TO
(UNAUDITED) 2003 2002 2001 2000 11/30/1999
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 25.01 $ 21.37 $ 24.87 $ 26.92 $ 25.36 $ 25.09
=========== =========== =========== =========== =========== ===========
Investment operations
Net investment income(a) .06 .02 .02 .07 .10 .09
Net realized and
unrealized gain (loss) 1.58 3.62 (3.37) (1.13) 2.78 .21
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.64 3.64 (3.35) (1.06) 2.88 .30
----------- ----------- ----------- ----------- ----------- -----------
Distributions to shareholders
from:
Net investment income (.10) - - (.08) (.01) (.03)
Net realized gain - - (.15) (.91) (1.31) -
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (.10) - (.15) (.99) (1.32) (.03)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 26.55 $ 25.01 $ 21.37 $ 24.87 $ 26.92 $ 25.36
=========== =========== =========== =========== =========== ===========
Total Return(b) 6.56%(d) 17.03% (13.54)% (4.16)% 11.84% 1.20%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .74%(d) 1.55%+ 1.51% 1.52% 1.60% .92%(d)
Expenses, excluding expense
reductions .74%(d) 1.55%+ 1.51% 1.52% 1.60% .92%(d)
Net investment income .22%(d) .27%+ .10% .27% .40% .34%(d)
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 4/28/1999(c)
5/31/2004 ----------------------------------------------------- TO
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 11/30/1999
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 194 $ 152 $ 1 $ 1 $ 1 $ 1
Portfolio turnover rate 9.62% 34.98% 74.76% 81.79% 74.72% 60.59%
===========================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
LARGE-CAP RESEARCH FUND
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 5/4/1999(c)
5/31/2004 ----------------------------------------------------- TO
(UNAUDITED) 2003 2002 2001 2000 11/30/1999
PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 24.93 $ 21.23 $ 24.61 $ 26.74 $ 25.30 $ 25.21
=========== =========== =========== =========== =========== ===========
Investment operations
Net investment income(a) .12 .16 .13 .08 .22 .04
Net realized and
unrealized gain (loss) 1.56 3.54 (3.36) (1.12) 2.64 .09
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.68 3.70 (3.23) (1.04) 2.86 .13
----------- ----------- ----------- ----------- ----------- -----------
Distributions to shareholders
from:
Net investment income (.13) - - (.18) (.11) (.04)
Net realized gain - - (.15) (.91) (1.31) -
----------- ----------- ----------- ----------- ----------- -----------
Total distributions (.13) - (.15) (1.09) (1.42) (.04)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 26.48 $ 24.93 $ 21.23 $ 24.61 $ 26.74 $ 25.30
=========== =========== =========== =========== =========== ===========
Total Return(b) 6.75%(d) 17.43% (13.19)% (4.14)% 11.82% .52%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .52%(d) 1.10% 1.06% 1.07% 1.15% .63%(d)
Expenses, excluding expense
reductions .52%(d) 1.10% 1.06% 1.07% 1.15% .63%(d)
Net investment income .44%(d) .72% .55% .32% .85% .15%(d)
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 5/4/1999(c)
5/31/2004 ----------------------------------------------------- TO
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 11/30/1999
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 81 $ 75 $ 54 $ 1 $ 1 $ 1
Portfolio turnover rate 9.62% 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.
21
<Page>
FINANCIAL HIGHLIGHTS
SMALL-CAP VALUE FUND
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 25.66 $ 20.29 $ 22.02 $ 19.60 $ 15.63 $ 14.36
=========== =========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.07) (.10) (.07) (.13) (.19) (.12)
Net realized and
unrealized gain (loss) 1.65 6.81 (.48) 3.04 4.16 1.39
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.58 6.71 (.55) 2.91 3.97 1.27
----------- ----------- ----------- ----------- ----------- -----------
Distributions to shareholders
from net realized gain (1.64) (1.34) (1.18) (.49) - -
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 25.60 $ 25.66 $ 20.29 $ 22.02 $ 19.60 $ 15.63
=========== =========== =========== =========== =========== ===========
Total Return(b) 6.52%(d) 35.67% (2.72)% 15.12% 25.40% 8.84%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .67%(d) 1.45% 1.41% 1.43% 1.60% 1.52%
Expenses, excluding expense
reductions .67%(d) 1.45% 1.41% 1.44% 1.60% 1.52%
Net investment loss (.28)%(d) (.50)% (.34)% (.60)% (1.04)% (.80)%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 638,480 $ 510,582 $ 321,243 $ 394,443 $ 275,010 $ 209,516
Portfolio turnover rate 36.44% 66.11% 77.12% 64.76% 76.21% 83.93%
===========================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
SMALL-CAP VALUE FUND
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 24.44 $ 19.50 $ 21.33 $ 19.13 $ 15.34 $ 14.20
=========== =========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.15) (.22) (.20) (.26) (.29) (.22)
Net realized and
unrealized gain (loss) 1.57 6.50 (.45) 2.95 4.08 1.36
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.42 6.28 (.65) 2.69 3.79 1.14
----------- ----------- ----------- ----------- ----------- -----------
Distributions to shareholders
from net realized gain (1.64) (1.34) (1.18) (.49) - -
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 24.22 $ 24.44 $ 19.50 $ 21.33 $ 19.13 $ 15.34
=========== =========== =========== =========== =========== ===========
Total Return(b) 6.17%(d) 34.78% (3.25)% 14.33% 24.71% 8.03%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .99%(d) 2.07% 2.04% 2.05% 2.23% 2.19%
Expenses, excluding expense
reductions .99%(d) 2.07% 2.04% 2.06% 2.23% 2.19%
Net investment loss (.60)%(d) (1.12)% (.97)% (1.22)% (1.67)% (1.48)%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 179,461 $ 182,437 $ 153,101 $ 182,555 $ 153,894 $ 155,495
Portfolio turnover rate 36.44% 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>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 24.46 $ 19.52 $ 21.31 $ 19.13 $ 15.34 $ 14.20
=========== =========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.15) (.22) (.17) (.28) (.29) (.22)
Net realized and
unrealized gain (loss) 1.58 6.50 (.44) 2.95 4.08 1.36
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.43 6.28 (.61) 2.67 3.79 1.14
----------- ----------- ----------- ----------- ----------- -----------
Distributions to shareholders
from net realized gain (1.64) (1.34) (1.18) (.49) - -
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 24.25 $ 24.46 $ 19.52 $ 21.31 $ 19.13 $ 15.34
=========== =========== =========== =========== =========== ===========
Total Return(b) 6.21%(d) 34.74% (3.07)% 14.22% 24.71% 8.03%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .99%(d) 2.07% 1.90% 2.16% 2.23% 2.19%
Expenses, excluding expense
reductions .99%(d) 2.07% 1.90% 2.17% 2.23% 2.19%
Net investment loss (.60)%(d) (1.12)% (.83)% (1.32)% (1.67)% (1.48)%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 81,390 $ 81,967 $ 69,121 $ 81,396 $ 51,061 $ 45,929
Portfolio turnover rate 36.44% 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>
SIX MONTHS
ENDED YEAR ENDED 11/30 6/23/1999(c)
5/31/2004 ----------------------------------------------------- TO
(UNAUDITED) 2003 2002 2001 2000 11/30/1999
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 25.61 $ 20.27 $ 22.01 $ 19.61 $ 15.63 $ 16.41
=========== =========== =========== =========== =========== ===========
Investment operations
Net investment loss(a) (.08) (.12) (.08) (.14) (.20) (.06)
Net realized and
unrealized gain (loss) 1.65 6.80 (.48) 3.03 4.18 (.72)
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.57 6.68 (.56) 2.89 3.98 (.78)
----------- ----------- ----------- ----------- ----------- -----------
Distributions to shareholders
from net realized gain (1.64) (1.34) (1.18) (.49) - -
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 25.54 $ 25.61 $ 20.27 $ 22.01 $ 19.61 $ 15.63
=========== =========== =========== =========== =========== ===========
Total Return(b) 6.49%(d) 35.48% (2.72)% 15.01% 25.46% (4.75)%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .71%(d) 1.52% 1.49% 1.50% 1.68% .72%(d)
Expenses, excluding expense
reductions .71%(d) 1.52% 1.49% 1.51% 1.68% .72%(d)
Net investment loss (.32)%(d) (.57)% (.42)% (.66)% (1.00)% (.41)%(d)
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 6/23/1999(c)
5/31/2004 ----------------------------------------------------- TO
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 11/30/1999
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 80,143 $ 47,471 $ 14,005 $ 4,150 $ 1 $ 1
Portfolio turnover rate 36.44% 66.11% 77.12% 64.76% 76.21% 83.93%
============================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
SMALL-CAP VALUE FUND
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 26.23 $ 20.64 $ 22.30 $ 19.77 $ 15.71 $ 14.40
=========== =========== =========== =========== =========== ===========
Investment operations
Net investment income (loss)(a) (.02) (.02) .01 (.05) (.12) (.07)
Net realized and
unrealized gain (loss) 1.68 6.95 (.49) 3.07 4.18 1.38
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 1.66 6.93 (.48) 3.02 4.06 1.31
----------- ----------- ----------- ----------- ----------- -----------
Distributions to shareholders
from net realized gain (1.64) (1.34) (1.18) (.49) - -
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 26.25 $ 26.23 $ 20.64 $ 22.30 $ 19.77 $ 15.71
=========== =========== =========== =========== =========== ===========
Total Return(b) 6.70%(d) 36.10% (2.31)% 15.56% 25.84% 9.10%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .49%(d) 1.07% 1.04% 1.05% 1.23% 1.19%
Expenses, excluding expense
reductions .49%(d) 1.07% 1.04% 1.06% 1.23% 1.19%
Net investment income (loss) (.10)%(d) (.12)% .03% (.24)% (.67)% (.47)%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 218,387 $ 149,463 $ 87,570 $ 75,402 $ 70,122 $ 49,608
Portfolio turnover rate 36.44% 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.
26
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 Net Asset Value ("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 sales 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 sale price is available, at the mean between the most
recently quoted bid and asked prices. Securities for which market
quotations are not readily available are valued at fair value as determined
by management and approved in good faith by the Board of 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 on 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.
27
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(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, B, C and P bear all the expenses and
fees relating to their respective 12b-1 Distribution Plans.
(f) SECURITIES LENDING-Each Fund may lend 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 FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE
The Fund has a management agreement with Lord, Abbett & Co. LLC ("Lord Abbett")
pursuant to which Lord Abbett supplies the Fund with investment management
services and executive and other personnel, 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 portfolio.
The management fee is based on each Fund's average daily net assets at an annual
rate of .75%.
Lord Abbett provides certain administrative services to the Fund pursuant to an
Administrative Services Agreement at an annual rate of .04% of the Fund's
average daily net assets.
28
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(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) .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 $1,744
and $643, respectively, of CDSC's during the six months ended May 31, 2004.
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 six months
ended May 31, 2004:
<Table>
<Caption>
DISTRIBUTOR DEALERS'
COMMISSIONS CONCESSIONS
- ----------------------------------------------------------------
LARGE-CAP RESEARCH FUND $ 158,265 $ 831,469
SMALL-CAP VALUE FUND 16,257 93,076
</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 distributed 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.
29
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
The tax character of distributions paid during the six months ended May 31, 2004
and for the fiscal year ended November 30, 2003 are as follows:
<Table>
<Caption>
LARGE-CAP RESEARCH FUND SMALL-CAP VALUE FUND
- --------------------------------------------------------------------------------------
5/31/2004 11/30/2003 5/31/2004 11/30/2003
(UNAUDITED) (UNAUDITED)
- --------------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 600,167 $ - $ 10,190,962 $ -
Net long-term capital gains - - 53,600,532 43,168,801
- --------------------------------------------------------------------------------------
Total distributions $ 600,167 $ - $ 63,791,494 $ 43,168,801
======================================================================================
</Table>
As of November 30, 2003, the capital loss carryforwards along with the related
expiration dates were as follows:
<Table>
<Caption>
2010 2011 TOTAL
- --------------------------------------------------------------------
Large-Cap Research Fund $ 2,899,066 $ 4,414,926 $ 7,313,992
</Table>
As of May 31, 2004, the Funds' aggregate unrealized security gains and losses
based on cost for U.S. federal income tax purposes are as follows:
<Table>
<Caption>
LARGE-CAP SMALL-CAP
RESEARCH FUND VALUE FUND
- -------------------------------------------------------------------
Tax Cost $ 360,369,787 $ 1,219,514,887
- -------------------------------------------------------------------
Gross unrealized gain 68,557,482 205,636,929
Gross unrealized loss (6,408,201) (18,611,624)
- -------------------------------------------------------------------
Net unrealized security gain $ 62,149,281 $ 187,025,305
===================================================================
</Table>
The difference between book-basis and tax-basis unrealized gains (losses) is
primarily attributable to wash sales and other temporary tax adjustments.
5. PORTFOLIO SECURITIES TRANSACTIONS
At May 31, 2004, the value of securities loaned for Small-Cap Value Fund is
$204,778,610. These loans are collateralized by cash of $210,668,375, 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
$63,743 for the six months ended May 31, 2004, which are netted against
securities lending income on the Statement of Operations.
As of May 31, 2004, there were no securities on loan and there was no securities
lending activity during the six months ended May 31, 2004 for Large-Cap Research
Fund.
Purchases and sales of investment securities (other than short-term investments)
for the six months ended May 31, 2004 are as follows:
<Table>
<Caption>
PURCHASES SALES
- -------------------------------------------------------------------
Large-Cap Research Fund $ 74,104,007 $ 38,313,819
Small-Cap Value Fund 525,449,320 385,239,206
</Table>
There were no purchases or sales of U.S. Government securities for the six
months ended May 31, 2004.
30
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
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 May 31, 2004, there were no loans outstanding pursuant to this Facility nor
was the Facility utilized at any time during the six month ended May 31, 2004.
9. TRANSACTIONS WITH AFFILIATED ISSUERS
An affiliated issuer is one in which a Fund had ownership of at least 5% of the
outstanding voting securities at any point during the period. Small-Cap Value
Fund had the following transactions with affiliated issuers during the six
months ended May 31, 2004:
<Table>
<Caption>
REALIZED DIVIDEND
BALANCE OF BALANCE OF VALUE GAIN INCOME
SHARES HELD GROSS GROSS SHARES HELD AT PERIOD ENDED PERIOD ENDED
AFFILIATES AT 11/30/2003 PURCHASES SALES AT 5/31/2004 5/31/2004 5/31/2004 5/31/2004
- ------------------------------------------------------------------------------------------------------------------------------
Scansource, Inc.* 534,000 - (251,700) 282,300 $ 15,032,475 $ 6,004,136 $ -
The Marcus Corp.* 753,800 - (73,800) 680,000 11,016,000 503,567 78,859
</Table>
* No longer an affiliated issuer at May 31,2004.
10. CUSTODIAN AND ACCOUNTING AGENT
SSB is the Company's custodian and accounting agent. SSB performs custodian,
accounting and record keeping functions relating to portfolio transactions and
calculating each Fund's NAV.
31
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONCLUDED)
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.
LARGE-CAP RESEARCH FUND
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2004 (UNAUDITED) NOVEMBER 30, 2003
- -----------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------
Shares sold 1,649,030 $ 43,490,052 2,880,499 $ 64,714,996
Reinvestment of distributions 22,480 568,533 - -
Shares reacquired (784,472) (20,698,327) (1,847,457) (38,966,116)
- -----------------------------------------------------------------------------------------------------------
Increase 887,038 $ 23,360,258 1,033,042 $ 25,748,880
- -----------------------------------------------------------------------------------------------------------
CLASS B SHARES
Shares sold 195,102 $ 4,981,778 528,568 $ 11,066,796
Shares reacquired (285,878) (7,309,220) (594,239) (12,172,653)
- -----------------------------------------------------------------------------------------------------------
Decrease (90,776) $ (2,327,442) (65,671) $ (1,105,857)
- -----------------------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 113,417 $ 2,904,579 342,487 $ 7,101,096
Shares reacquired (149,119) (3,825,151) (365,186) (7,563,710)
- -----------------------------------------------------------------------------------------------------------
Decrease (35,702) $ (920,572) (22,699) $ (462,614)
- -----------------------------------------------------------------------------------------------------------
CLASS P SHARES
Shares sold 1,219 $ 32,042 7,171 $ 165,560
Reinvestment of distributions 23 597 - -
Shares reacquired (46) (1,214) (1,125) (26,284)
- -----------------------------------------------------------------------------------------------------------
Increase 1,196 $ 31,425 6,046 $ 139,276
- -----------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Shares sold 45.361 $ 1,200 477 $ 10,629
Reinvestment of distributions 14.769 378 - -
Shares reacquired - (5) - -
- -----------------------------------------------------------------------------------------------------------
Increase 60.330 $ 1,573 477 $ 10,629
- -----------------------------------------------------------------------------------------------------------
</Table>
32
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONCLUDED)
SMALL-CAP VALUE FUND
- --------------------------------------------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2004 (UNAUDITED) NOVEMBER 30, 2003
- -----------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------
Shares sold 6,782,918 $ 173,819,292 7,180,621 $ 152,641,665
Reinvestment of distributions 1,059,500 25,672,623 789,137 14,654,269
Shares reacquired (2,802,291) (71,086,822) (3,903,123) (79,537,104)
- -----------------------------------------------------------------------------------------------------------
Increase 5,040,127 $ 128,405,093 4,066,635 $ 87,758,830
- -----------------------------------------------------------------------------------------------------------
CLASS B SHARES
Shares sold 226,494 $ 5,361,380 397,567 $ 7,476,943
Reinvestment of distributions 384,273 8,838,289 412,446 7,341,544
Shares reacquired (668,004) (16,142,570) (1,195,609) (22,966,181)
- -----------------------------------------------------------------------------------------------------------
Decrease (57,237) $ (1,942,901) (385,596) $ (8,147,694)
- -----------------------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 167,941 $ 3,948,233 283,691 $ 5,342,331
Reinvestment of distributions 121,312 2,792,590 128,207 2,284,644
Shares reacquired (283,875) (6,885,552) (602,174) (11,631,813)
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) 5,378 $ (144,729) (190,276) $ (4,004,838)
- -----------------------------------------------------------------------------------------------------------
CLASS P SHARES
Shares sold 1,753,800 $ 45,032,091 1,670,139 $ 35,690,335
Reinvestment of distributions 77,299 1,869,083 27,682 513,508
Shares reacquired (546,952) (13,894,442) (535,047) (11,354,120)
- -----------------------------------------------------------------------------------------------------------
Increase 1,284,147 $ 33,006,732 1,162,774 $ 24,849,723
- -----------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Shares sold 2,881,339 $ 76,061,815 1,532,487 $ 34,398,795
Reinvestment of distributions 379,561 9,416,909 294,510 5,572,136
Shares reacquired (641,891) (16,812,459) (371,626) (7,510,902)
- -----------------------------------------------------------------------------------------------------------
Increase 2,619,009 $ 68,666,265 1,455,371 $ 32,460,029
- -----------------------------------------------------------------------------------------------------------
</Table>
13. SUBSEQUENT EVENT
At the June 24, 2004 meeting, the Board of Directors of the Company (the
"Board") approved changes in the Large-Cap Series (the "Fund"), which will
effectively broaden the mandate of the Fund and lower the Fund's management fee
for investors. The Fund's name will change to the Large-Cap Core Fund to better
reflect the shift in investment style from a large-cap value focus to a blend of
value and growth. In addition, the Board also approved a proposal to replace the
Fund's current management fee of .75% of average daily net assets with the
following schedule:
..70% of the first $1 billion of average daily net assets
..65% of the next $1 billion
..60% of assets over $2 billion
In addition, Lord Abbett has agreed to reimburse the Fund to the extent
necessary to maintain total annual operating expenses for Class A at 1.30%,
Class B at 1.95%, Class C at 1.95%, Class P at 1.40% and Class Y at .95%. Lord
Abbett may stop reimbursing such expenses at any time.
These changes will be effective October 1, 2004.
33
<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, (i) by calling 888-522-2388; (ii) on Lord Abbett's web site at
www.LordAbbett.com, and (iii) on the Securities and Exchange Commission's
("SEC") website at www.sec.gov.
SHAREHOLDER REPORTS AND QUARTERLY PORTFOLIO DISCLOSURE
The Company will be required to file its complete schedule of portfolio holdings
with the SEC for its first and third fiscal quarters on Form N-Q for fiscal
quarters ending on or after July 9, 2004. Once filed, the Company's Forms N-Q
will be available without charge, upon request on the SEC's website at
www.sec.gov and may be available by calling Lord Abbett at 800-821-5129; or on
Lord Abbett's website at www.LordAbbett.com. You can also obtain copies of Form
N-Q by (i) visiting the SEC's Public Reference Room in Washington, DC
(information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330); (ii) sending your request and a duplicating fee to the
SEC's Public Reference Room, Washington, DC 20549-0102; or (iii) sending your
request electronically to publicinfo@sec.gov.
34
<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.
Lord Abbett Large-Cap Series
Lord Abbett Mutual Fund shares are distributed by: Lord Abbett Small-Cap Value Series LARF-3-504
LORD ABBETT DISTRIBUTOR LLC (7/04)
90 Hudson Street - Jersey City, New Jersey 07302-3973
</Table>
<Page>
[LORD ABBETT LOGO]
2004 SEMI-ANNUAL REPORT
LORD ABBETT AMERICA'S VALUE FUND
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 2004
<Page>
LORD ABBETT AMERICA'S VALUE FUND
SEMI-ANNUAL REPORT
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 2004
DEAR SHAREHOLDER: We are pleased to provide you with this six-month overview of
Lord Abbett America's Value Fund's strategies and performance for the six-month
period ended May 31, 2004. 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: Favorable economic news and strong U.S. equity returns during November and
December brought 2003 to a positive close. Manufacturing, inventory investment
and capital spending all showed signs of improvement. Unemployment reports were
also encouraging, as inflation and interest rates remained steady through
year-end. As a result of the tax bill and a positive macroeconomic environment,
capital spending increased, particularly in technology.
This economic growth continued into the beginning of 2004 largely due to
strong consumer and capital spending. Corporate profits rose, triggered by a
rise in industrial production. In January and February, inflation and short-term
interest rates continued to remain stable. However, somewhat disappointing
employment reports and higher energy prices weighed on consumer sentiment.
In March and April, the number of jobs increased and unemployment
stabilized. The U.S. housing market remained strong and there were improvements
in durable goods spending. But, retail sales dropped 0.5% in April after a 2%
gain in March. Meanwhile, producer prices moved higher, driven by the higher
costs of gasoline and food, suggesting an inflationary trend and the possibility
of an interest rate increase in the coming months.
Equity prices were roughly flat in the final two months of the period, as
investors responded to uncertainties surrounding future interest-rate hikes, the
continued war in Iraq, the upcoming presidential election and record-high energy
prices. In the bond market, Treasury yields rose in April and May, reflecting
investors' expectations the Federal Reserve Board (the Fed) would begin to raise
its key short-term rate, the fed funds rate, sooner rather than later.
Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED MAY 31, 2004?
A: For the six-month period ended May 31, 2004, the Fund returned 8.5%,
1
<Page>
reflecting performance at the Net Asset Value (NAV) of Class A shares with all
distributions reinvested, compared with its benchmark, the S&P 500,(1) which
returned 6.8% 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 are 1
Year: 12.74% and Life of Class A Shares (12/27/01): 3.47%.
PERFORMANCE DATA QUOTED REFLECT PAST PERFORMANCE AND ARE NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
QUOTED. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE SO THAT SHARES, ON ANY GIVEN DAY OR WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. YOU CAN OBTAIN PERFORMANCE DATA CURRENT
TO THE MOST RECENT MONTH END BY CALLING LORD ABBETT AT 800-821-5129 OR REFERRING
TO OUR WEBSITE AT www.LordAbbett.com.
NOTE: Lord Abbett America's Value Fund is not a balanced fund and has the
capability to adjust equity and fixed-income allocations, based on relative
value in the market and the investment team's proprietary fundamental research.
Q: WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
EQUITY PORTION
A: Strong stock selection within the materials and consumer discretionary
sectors contributed to the Fund's performance relative to its benchmark for the
six-month period. The consumer discretionary sector includes stocks in the
consumer durables, apparel, media, hotel and leisure industries. The portfolio's
holdings in the materials sector included positions in the chemicals, paper and
container industries. The Fund was overweight both sectors, particularly within
the materials sector, which contributed greatly to the Fund's relative
performance. Successful efforts to improve profitability by these companies'
management teams, as well as the impact of fundamental economic improvement,
were the primary reasons for strong performance within both sectors.
Stock selection within the utilities sector hurt performance, as the sector
reacted to expectations of increasing interest rates. Performance within the
healthcare sector also suffered, largely as a result of weak stock selection.
THE FUND'S PORTFOLIO IS ACTIVELY MANAGED AND, THEREFORE, ITS HOLDINGS AND
WEIGHTINGS OF A PARTICULAR ISSUER OR SECTOR AS A PERCENTAGE OF PORTFOLIO ASSETS
ARE SUBJECT TO CHANGE. SECTORS MAY INCLUDE MANY INDUSTRIES.
2
<Page>
FIXED-INCOME PORTION
Within the fixed-income component, lower-rated, high-yield bonds generally
outperformed their investment-grade counterparts. The strongest performance in
the period was derived from equity-related securities, including convertible
bonds and preferreds. The Fund had a small weighting in interest-sensitive,
investment-grade bonds.
High-yield convertible bonds benefited from improvements in the overall
economy as corporate profitability improved. Rising equity markets, in
particular, strengthened the equity component of convertible securities, adding
to performance. The Fund's best performers in the high-yield market were in the
health services and cable industries. Health services also added to performance
within the convertible securities sector, as did holdings in the
telecommunications wireless industry.
Detracting from performance were holdings in telecommunications and
transportation companies within the high-yield sector and select credits within
media, health services and electronics in the convertible(s) sector. The
investment-grade bond sector was the weakest performer in the period.
THE FUND'S PORTFOLIO IS ACTIVELY MANAGED AND, THEREFORE, ITS HOLDINGS AND
WEIGHTINGS OF A PARTICULAR ISSUER OR SECTOR AS A PERCENTAGE OF PORTFOLIO ASSETS
ARE SUBJECT TO CHANGE. SECTORS MAY INCLUDE MANY INDUSTRIES.
THE PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND, INCLUDING THE
FUND'S INVESTMENT OBJECTIVES, RISKS, CHARGES AND ONGOING EXPENSES, THAT YOU
SHOULD CAREFULLY CONSIDER BEFORE INVESTING. TO OBTAIN A PROSPECTUS ON THIS FUND
OR ANY LORD ABBETT MUTUAL FUND, PLEASE CONTACT YOUR INVESTMENT PROFESSIONAL OR
LORD ABBETT DISTRIBUTOR LLC AT 800-874-3733 OR VISIT www.LordAbbett.com. READ
THE PROSPECTUS CAREFULLY BEFORE INVESTING.
(1) The S&P 500 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 May 31, 2004; 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: Because of ongoing market volatility, Fund performance may be
subject to substantial fluctuation. 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.
MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS
OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
3
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)
MAY 31, 2004
<Table>
<Caption>
SHARES
INVESTMENTS (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 94.22%
COMMON STOCKS 66.12%
AUTO COMPONENTS 0.96%
Dana Corp. 140 $ 2,601,675
---------------
BIOTECHNOLOGY 0.30%
Amgen, Inc.* 15 820,500
---------------
CHEMICALS 7.97%
Crompton Corp. 469 2,796,945
Dow Chemical Co. 121 4,839,870
Eastman Chemical Co. 144 6,649,790
IMC Global, Inc. 278 3,459,855
Monsanto Co. 113 3,905,400
---------------
TOTAL 21,651,860
---------------
COMMERCIAL SERVICES & SUPPLIES 3.79%
R.R. Donnelley & Sons Co. 214 6,478,666
ServiceMaster Co. 315 3,824,320
---------------
TOTAL 10,302,986
---------------
CONTAINERS & PACKAGING 0.79%
Ball Corp. 31 2,144,934
---------------
DIVERSIFIED TELECOMMUNICATION SERVICES 1.97%
SBC Communications, Inc. 225 5,341,980
---------------
ELECTRIC UTILITIES 6.35%
Ameren Corp. 150 6,643,260
Northeast Utilities 213 4,068,300
Puget Energy, Inc. 304 6,532,068
---------------
TOTAL 17,243,628
---------------
ENERGY EQUIPMENT & SERVICES 1.45%
Halliburton Co. 136 3,934,920
---------------
FOOD & STAPLES RETAILING 1.04%
Albertson's, Inc. 121 2,823,315
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<Page>
<Table>
<Caption>
SHARES
INVESTMENTS (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS 3.96%
Archer-Daniels-Midland Co. 41 $ 673,515
H.J. Heinz Co. 158 5,881,050
Kellogg Co. 99 4,214,560
---------------
TOTAL 10,769,125
---------------
GAS UTILITIES 2.11%
NiSource, Inc. 283 5,727,502
---------------
HOUSEHOLD DURABLES 5.77%
Newell Rubbermaid, Inc. 161 3,785,342
Snap-on, Inc. 154 5,192,472
Tupperware Corp. 366 6,688,647
---------------
TOTAL 15,666,461
---------------
INDUSTRIAL CONGLOMERATES 1.71%
Hubbell, Inc. 104 4,647,834
---------------
INSURANCE 6.60%
Arthur J. Gallagher & Co. 69 2,188,095
Lincoln National Corp. 59 2,801,910
Max Re Capital Ltd.(a) 57 1,157,584
Partner Re Ltd.(a) 38 2,106,676
SAFECO Corp. 107 4,480,260
St. Paul Travelers Cos., Inc. (The) 52 2,043,639
XL Capital Ltd. Class A(a) 42 3,135,300
---------------
TOTAL 17,913,464
---------------
LEISURE EQUIPMENT & PRODUCTS 0.47%
Foot Locker, Inc. 55 1,288,560
---------------
MACHINERY 2.90%
CNH Global N.V.(a) 61 1,167,982
Cummins, Inc. 45 2,632,448
The Timken Co. 179 4,077,131
---------------
TOTAL 7,877,561
---------------
MEDIA 0.24%
Metro-Goldwyn-Mayer, Inc.* 55 657,517
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<Page>
<Table>
<Caption>
SHARES
INVESTMENTS (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------
MULTI-LINE RETAIL 2.15%
J.C. Penney Co., Inc. 89 $ 3,198,732
May Department Stores Co. 92 2,633,854
---------------
TOTAL 5,832,586
---------------
OIL & GAS 3.38%
ChevronTexaco Corp. 64 5,812,720
EOG Resources, Inc. 13 710,619
Kerr-McGee Corp. 54 2,649,650
---------------
TOTAL 9,172,989
---------------
PAPER & FOREST PRODUCTS 3.95%
Georgia-Pacific Corp. 147 5,251,212
Meadwestvaco Corp. 198 5,479,808
---------------
TOTAL 10,731,020
---------------
PHARMACEUTICALS 2.24%
Bristol-Myers Squibb Co. 219 5,541,711
Mylan Laboratories, Inc. 24 528,747
---------------
TOTAL 6,070,458
---------------
REAL ESTATE INVESTMENT TRUSTS 3.50%
Health Care Properties 233 5,594,184
Healthcare Realty Trust, Inc. 107 3,899,885
---------------
TOTAL 9,494,069
---------------
TRADING COMPANIES & DISTRIBUTORS 2.52%
Genuine Parts Co. 182 6,831,660
---------------
TOTAL COMMON STOCKS (COST $163,241,792) 179,546,604
===============
</Table>
CONVERTIBLE BONDS 6.30%
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
RATE DATE (000)
---------- ---------- ----------
AEROSPACE & DEFENSE 0.38%
Alliant Techsystems, Inc.+ 2.75% 2/15/2024 $ 1,000 1,028,750
---------------
BIOTECHNOLOGY 1.04%
Fisher Scientific Int'l., Inc. 2.50% 10/1/2023 2,000 2,820,000
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<Page>
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
INVESTMENTS RATE DATE (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES 0.49%
Kroll, Inc.+ 1.75% 1/15/2014 $ 1,250 $ 1,323,438
---------------
COMPUTERS & PERIPHERALS 0.50%
EMC Corp. 4.50% 4/1/2007 1,250 1,375,000
---------------
ELECTRICAL EQUIPMENT 0.38%
Artesyn Tech., Inc. 5.50% 8/15/2010 700 1,023,750
---------------
ELECTRONIC EQUIPMENT & INSTRUMENTS 0.73%
Flir Systems, Inc. 3.00% 6/1/2023 1,500 1,998,750
---------------
MACHINERY 0.40%
Agco Corp.+ 1.75% 12/31/2033 1,000 1,085,000
---------------
MEDIA 0.71%
Lamar Advertising Co. 2.875% 12/31/2010 1,000 1,055,000
Liberty Media Corp. Class A 3.25% 3/15/2031 750 678,750
Sinclair Broadcast Group, Inc. 4.875%# 7/15/2018 200 189,000
---------------
TOTAL 1,922,750
---------------
METALS & MINING 0.61%
Placer Dome, Inc.+(a) 2.75% 10/15/2023 1,500 1,670,625
---------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS 0.46%
RF Micro Devices, Inc. 1.50% 7/1/2010 1,000 1,253,750
---------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 0.29%
LSI Logic Corp. 4.00% 5/15/2010 750 781,875
---------------
SOFTWARE 0.31%
Mentor Graphics Corp. 6.875% 6/15/2007 750 832,500
---------------
TOTAL CONVERTIBLE BONDS (Cost $15,665,096) 17,116,188
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<Page>
<Table>
<Caption>
INTEREST SHARES
INVESTMENTS RATE (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 3.70%
AEROSPACE & DEFENSE 0.38%
Northrop Grumman Corp. 7.25% 10 $ 1,041,000
---------------
CONTAINERS & PACKAGING 0.10%
Temple-Inland, Inc. 7.50% 5 286,200
---------------
DIVERSIFIED FINANCIALS 0.06%
Doral Financial Corp. 4.75% 1 155,438
---------------
ELECTRIC UTILITIES 0.50%
FPL Group, Inc. 8.00% 25 1,366,000
---------------
ENERGY EQUIPMENT & SERVICES 1.16%
CMS Energy Corp.+ 4.50% 58 3,148,312
---------------
INSURANCE 1.08%
Chubb Corp. 7.00% 29 797,573
XL Capital Ltd.(a) 6.50% 85 2,128,400
---------------
TOTAL 2,925,973
---------------
MEDIA 0.42%
Interpublic Group of Cos., Inc. 5.375% 13 705,108
Sinclair Broadcast Group, Inc. 6.00% 10 430,000
---------------
TOTAL 1,135,108
---------------
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $9,716,149) 10,058,031
===============
</Table>
GOVERNMENT SPONSORED ENTERPRISES
PASS-THROUGHS 0.65%
<Table>
<Caption>
PRINCIPAL
MATURITY AMOUNT
DATE (000)
---------- ----------
Federal National Mortgage Assoc. 6.00% 5/1/2033 $ 1,644 1,673,195
Federal National Mortgage Assoc. 7.00% 1/1/2032 85 89,237
---------------
TOTAL GOVERNMENT SPONSORED ENTERPRISES
PASS-THROUGHS (Cost $1,787,558) 1,762,432
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<Page>
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
INVESTMENTS RATE DATE (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------
HIGH YIELD CORPORATE BONDS 17.45%
AEROSPACE & DEFENSE 0.18%
DRS Tech., Inc. 6.875% 11/1/2013 $ 500 $ 485,000
---------------
AUTO COMPONENTS 0.16%
Eagle-Picher, Inc. 9.75% 9/1/2013 400 429,000
---------------
BEVERAGES 0.15%
Le-Natures, Inc.+ 9.00% 6/15/2013 400 410,000
---------------
BUILDING PRODUCTS 0.09%
Jacuzzi Brands, Inc. 9.625% 7/1/2010 220 236,500
---------------
CHEMICALS 0.35%
Nalco Co.+ 8.875% 11/15/2013 500 525,000
Terra Capital, Inc. 11.50% 6/1/2010 400 434,000
---------------
TOTAL 959,000
---------------
COMMERCIAL SERVICES & SUPPLIES 0.42%
Iron Mountain, Inc. 6.625% 1/1/2016 1,250 1,143,750
---------------
CONSTRUCTION & ENGINEERING 0.11%
Shaw Group, Inc. 10.75% 3/15/2010 300 294,750
---------------
CONTAINERS & PACKAGING 1.81%
Anchor Glass Container Corp. 11.00% 2/15/2013 200 229,000
BWAY Corp. 10.00% 10/15/2010 200 211,000
Constar Int'l., Inc. 11.00% 12/1/2012 1,375 1,216,875
Crown Cork & Seal, Inc. 7.375% 12/15/2026 1,000 850,000
Graham Packaging Co., Inc. 10.75% 1/15/2009 500 515,000
Owens-Brockway Glass Co. 8.875% 2/15/2009 650 685,750
Rayovac Corp. 8.50% 10/1/2013 1,000 1,037,500
Solo Cup Co.+ 8.50% 2/15/2014 175 175,875
---------------
TOTAL 4,921,000
---------------
DIVERSIFIED TELECOMMUNICATION SERVICES 1.48%
Cincinnati Bell, Inc. 8.375% 1/15/2014 875 787,500
Qwest Capital Funding 7.90% 8/15/2010 2,000 1,730,000
Qwest Communications Int'l, Inc.+ 4.75%# 2/15/2009 115 106,950
Qwest Communications Int'l, Inc.+ 7.25% 2/15/2011 1,000 927,500
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
INVESTMENTS RATE DATE (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------
QWEST SERVICES CORP.+ 13.50% 12/15/2010 $ 400 $ 463,000
---------------
TOTAL 4,014,950
---------------
ELECTRIC UTILITIES 0.74%
Mission Energy 13.50% 7/15/2008 385 421,575
NRG Energy, Inc.+ 8.00% 12/15/2013 1,000 1,002,500
PSEG Energy Holdings, Inc. 8.625% 2/15/2008 250 268,750
TECO Energy, Inc. 7.50% 6/15/2010 300 306,000
---------------
TOTAL 1,998,825
---------------
FOOD & STAPLES RETAILING 0.13%
Rite Aid Corp. 8.125% 5/1/2010 350 364,000
---------------
FOOD PRODUCTS 0.94%
B&G Foods, Inc. 9.625% 8/1/2007 300 306,750
Dole Food Co. 8.875% 3/15/2011 750 765,000
Land O'Lakes, Inc.+ 9.00% 12/15/2010 430 451,500
Michael Foods, Inc.+ 8.00% 11/15/2013 1,000 1,027,500
---------------
TOTAL 2,550,750
---------------
GAS UTILITIES 0.53%
Semco Energy, Inc. 7.125% 5/15/2008 1,410 1,438,200
---------------
HEALTHCARE PROVIDERS & SERVICES 0.87%
Iasis Healthcare Corp. 8.50% 10/15/2009 250 284,375
Medex, Inc. 8.875% 5/15/2013 500 527,500
National Nephrology Assoc., Inc.+ 9.00% 11/1/2011 150 172,500
Tenet Healthcare Corp. 7.375% 2/1/2013 1,000 895,000
Triad Hospitals, Inc. 7.00% 11/15/2013 500 482,500
---------------
TOTAL 2,361,875
---------------
HOTELS, RESTAURANTS & LEISURE 1.13%
Friendly Ice Cream Corp.+ 8.375% 6/15/2012 500 497,500
Hard Rock Hotel 8.875% 6/1/2013 750 761,250
River Rock Entertainment+ 9.75% 11/1/2011 1,700 1,810,500
---------------
TOTAL 3,069,250
---------------
HOUSEHOLD DURABLES 0.26%
Fedders North America, Inc.+ 9.875% 3/1/2014 750 693,750
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
INVESTMENTS RATE DATE (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES 0.12%
Tyco Int'l. Group(a) 6.00% 11/15/2013 $ 325 $ 329,784
---------------
MACHINERY 1.09%
Blount, Inc. 13.00% 8/1/2009 275 291,500
Great Lakes Dredge & Dock Co.+ 7.75% 12/15/2013 1,000 865,000
Manitowoc Co., Inc. 7.125% 11/1/2013 500 502,500
Sensus Metering Systems, Inc.+ 8.625% 12/15/2013 1,000 950,000
Trinity Industries, Inc.+ 6.50% 3/15/2014 375 356,250
---------------
TOTAL 2,965,250
---------------
MEDIA 2.85%
Block Communications, Inc. 9.25% 4/15/2009 400 417,000
Dex Media West+ 9.875% 8/15/2013 1,500 1,659,375
Gaylord Entertainment Co.+ 8.00% 11/15/2013 1,875 1,875,000
General Motors Corp. 7.20% 1/15/2011 500 520,041
Houghton Mifflin Co. 8.25% 2/1/2011 450 459,000
Insight Communications Co., Inc.** 0.00%/12.25% 2/15/2006 & 2011 1,000 885,000
Mediacom Communications Corp. 8.50% 4/15/2008 900 911,250
Paxson Communications Co. 10.75% 7/15/2008 500 515,000
Primedia, Inc. 8.875% 5/15/2011 500 501,250
---------------
TOTAL 7,742,916
---------------
METALS & MINING 0.73%
International Steel Group+ 6.50% 4/15/2014 500 468,750
Neenah Corp.+ 13.00% 9/30/2013 750 746,250
Owens-Brockway Glass Co. 7.75% 5/15/2011 740 758,500
---------------
TOTAL 1,973,500
---------------
MULTI-UTILITIES & UNREGULATED POWER 0.58%
AES Corp. 7.75% 3/1/2014 1,000 955,000
Calpine Corp.+ 8.50% 7/15/2010 400 336,000
The Williams Co., Inc. 8.625% 6/1/2010 250 273,750
---------------
TOTAL 1,564,750
---------------
OIL & GAS 1.30%
Dynegy, Inc.+ 9.875% 7/15/2010 410 432,550
El Paso Production 7.75% 6/1/2013 500 475,000
EXCO Resources, Inc.+ 7.25% 1/15/2011 1,500 1,500,000
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT
INVESTMENTS RATE DATE (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------
Ferrellgas Partners, L.P.+ 6.75% 5/1/2014 $ 500 $ 481,250
Range Resources Corp. 7.375% 7/15/2013 245 241,325
Sonat, Inc. 7.625% 7/15/2011 475 413,250
---------------
TOTAL 3,543,375
---------------
PAPER & FOREST PRODUCTS 0.35%
Buckeye Technologies, Inc. 8.00% 10/15/2010 1,000 935,000
---------------
PERSONAL PRODUCTS 0.07%
Aearo Co.+ 8.25% 4/15/2012 200 203,000
---------------
SPECIALTY RETAIL 0.12%
J.C. Penney Co., Inc. 8.00% 3/1/2010 300 339,000
---------------
TEXTILES & APPAREL 0.19%
Invista+(a) 9.25% 5/1/2012 525 521,062
---------------
WIRELESS TELECOMMUNICATION SERVICES 0.70%
Centennial Cell Communications 10.125% 6/15/2013 750 768,750
Dobson Communications Corp. 8.875% 10/1/2013 800 624,000
Nextel Partners, Inc. 8.125% 7/1/2011 500 515,000
---------------
TOTAL 1,907,750
---------------
TOTAL HIGH YIELD CORPORATE BONDS (COST $48,516,714) 47,395,987
===============
TOTAL LONG-TERM INVESTMENTS (COST $238,927,309) 255,879,242
===============
SHORT-TERM INVESTMENT 4.61%
REPURCHASE AGREEMENT 4.61%
Repurchase Agreement dated 5/28/2004,
0.98% due 6/1/2004 with State Street
Bank & Trust Co. collateralized by
$12,815,000 of Federal Home Loan Mortgage
Corp. at zero coupon due 10/12/2004; value:
$12,751,604; proceeds: $12,502,331
(Cost $12,500,970) 12,501 12,500,970
===============
TOTAL INVESTMENTS 98.83% (Cost $251,428,279) $ 268,380,212
===============
</Table>
* Non-income producing security.
** Deferred-interest debentures. These do not pay interest for a stipulated
number of years, after which they pay a predetermined interest rate.
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration normally to qualified institutional buyers.
# Variable rate security. The interest rate represents the rate at May 31,
2004.
(a) Foreign security traded in U.S. dollars.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
May 31, 2004
<Table>
ASSETS:
Investment in securities, at value (cost $251,428,279) $ 268,380,212
Receivables:
Interest and dividends 1,749,317
Capital shares sold 3,362,322
Prepaid expenses and other assets 49,916
- ------------------------------------------------------------------------------------------------
TOTAL ASSETS 273,541,767
- ------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 1,567,258
Capital shares reacquired 98,835
Management fee 161,584
12b-1 distribution fees 87,694
Fund administration fees 8,652
Accrued expenses and other liabilities 50,092
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,974,115
================================================================================================
NET ASSETS $ 271,567,652
================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 252,121,030
Undistributed net investment income 2,500,421
Accumulated net realized loss on investments (5,732)
Net unrealized appreciation on investments 16,951,933
- ------------------------------------------------------------------------------------------------
NET ASSETS $ 271,567,652
================================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 243,086,631
Class B Shares $ 15,516,254
Class C Shares $ 12,763,491
Class P Shares $ 199,989
Class Y Shares $ 1,287
OUTSTANDING SHARES BY CLASS:
Class A Shares (50 million shares of common stock authorized) 21,997,488
Class B Shares (30 million shares of common stock authorized) 1,413,039
Class C Shares (20 million shares of common stock authorized) 1,160,416
Class P Shares (20 million shares of common stock authorized) 18,055
Class Y Shares (30 million shares of common stock authorized) 115.956
Net asset value, offering and redemption price per share
(net assets divided by outstanding shares):
Class A Shares-Net asset value $ 11.05
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) $ 11.72
Class B Shares-Net asset value $ 10.98
Class C Shares-Net asset value $ 11.00
Class P Shares-Net asset value $ 11.08
Class Y Shares-Net asset value $ 11.10
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
STATEMENT OF OPERATIONS (UNAUDITED)
For the Six Months Ended May 31, 2004
<Table>
INVESTMENT INCOME:
Dividends $ 2,524,833
Interest 1,856,736
Foreign withholding tax (2,382)
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 4,379,187
- ------------------------------------------------------------------------------------------------
EXPENSES:
Management fee 794,430
12b-1 distribution plan-Class A 342,690
12b-1 distribution plan-Class B 62,652
12b-1 distribution plan-Class C 47,227
12b-1 distribution plan-Class P 333
Shareholder servicing 166,024
Professional 8,617
Reports to shareholders 17,612
Fund administration 42,370
Custody 11,028
Directors' fees 1,423
Registration 25,038
Other 928
- ------------------------------------------------------------------------------------------------
Gross expenses 1,520,372
Expense reductions (1,561)
- ------------------------------------------------------------------------------------------------
NET EXPENSES 1,518,811
- ------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,860,376
================================================================================================
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 1,140,066
Net change in unrealized appreciation on investments 9,234,668
================================================================================================
NET REALIZED AND UNREALIZED GAIN 10,374,734
================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 13,235,110
================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE
SIX MONTHS ENDED
MAY 31, 2004 FOR THE YEAR ENDED
INCREASE IN NET ASSETS (UNAUDITED) NOVEMBER 30, 2003
OPERATIONS:
Net investment income $ 2,860,376 $ 1,758,995
Net realized gain (loss) on investments 1,140,066 (995,194)
Net change in unrealized appreciation on investments 9,234,668 9,363,448
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 13,235,110 10,127,249
=====================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (1,376,594) (860,700)
Class B (74,665) (73,731)
Class C (48,891) (62,644)
Class P (11) (28)
Class Y (13) (32)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (1,500,174) (997,135)
=====================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 124,159,084 117,230,186
Reinvestment of distributions 1,434,391 901,903
Cost of shares reacquired (9,093,156) (10,219,641)
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS 116,500,319 107,912,448
=====================================================================================================================
NET INCREASE IN NET ASSETS 128,235,255 117,042,562
=====================================================================================================================
NET ASSETS:
Beginning of period 143,332,397 26,289,835
- ---------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 271,567,652 $ 143,332,397
=====================================================================================================================
UNDISTRIBUTED NET INVESTMENT INCOME $ 2,500,421 $ 1,140,219
=====================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SIX MONTHS
ENDED 12/19/2001(a)
5/31/2004 YEAR ENDED TO
(UNAUDITED) 11/30/2003 11/30/2002
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.29 $ 9.45 $ 10.00
============ ============ =============
Unrealized appreciation on investments - - .01
------------ ------------ -------------
NET ASSET VALUE ON SEC EFFECTIVE DATE - - $ 10.01
============ ============ =============
Investment operations
Net investment income(b) .15 .31 .29
Net realized and unrealized gain (loss) .71 .79 (.80)
------------ ------------ -------------
Total from investment operations .86 1.10 (.51)
------------ ------------ -------------
Distributions to shareholders from:
Net investment income (.10) (.26) (.05)
------------ ------------ -------------
NET ASSET VALUE, END OF PERIOD $ 11.05 $ 10.29 $ 9.45
============ ============ =============
Total Return(c) .10%(d)(e)
Total Return(c) 8.46%(d) 11.97% (5.10)%(d)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions .68%(d) 1.35% 1.29%(d)
Expenses, excluding waiver and expense reductions .68%(d) 1.46% 2.25%(d)
Net investment income 1.38%(d) 3.24% 2.99%(d)
<Caption>
SIX MONTHS
ENDED 12/19/2001(a)
5/31/2004 YEAR ENDED TO
SUPPLEMENTAL DATA: (UNAUDITED) 11/30/2003 11/30/2002
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 243,087 $ 128,030 $ 21,467
Portfolio turnover rate 8.79% 28.71% 33.71%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED 12/19/2001(a)
5/31/2004 YEAR ENDED TO
(UNAUDITED) 11/30/2003 11/30/2002
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.23 $ 9.40 $ 10.00
============ ============ =============
Unrealized appreciation on investments - - .01
------------ ------------ -------------
NET ASSET VALUE ON SEC EFFECTIVE DATE - - $ 10.01
============ ============ =============
Investment operations
Net investment income(b) .12 .25 .24
Net realized and unrealized gain (loss) .71 .79 (.81)
------------ ------------ -------------
Total from investment operations .83 1.04 (.57)
------------ ------------ -------------
Distributions to shareholders from:
Net investment income (.08) (.21) (.04)
------------ ------------ -------------
NET ASSET VALUE, END OF PERIOD $ 10.98 $ 10.23 $ 9.40
============ ============ =============
Total Return(c) .10%(d)(e)
Total Return(c) 8.13%(d) 11.35% (5.69)%(d)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions 1.00%(d) 1.99% 1.85%(d)
Expenses, excluding waiver and expense reductions 1.00%(d) 2.10% 2.81%(d)
Net investment income 1.06%(d) 2.60% 2.43%(d)
<Caption>
SIX MONTHS
ENDED 12/19/2001(a)
5/31/2004 YEAR ENDED TO
SUPPLEMENTAL DATA: (UNAUDITED) 11/30/2003 11/30/2002
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 15,516 $ 9,398 $ 2,283
Portfolio turnover rate 8.79% 28.71% 33.71%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED 12/19/2001(a)
5/31/2004 YEAR ENDED TO
(UNAUDITED) 11/30/2003 11/30/2002
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.25 $ 9.41 $ 10.00
============ ============ =============
Unrealized appreciation on investments - - .01
------------ ------------ -------------
NET ASSET VALUE ON SEC EFFECTIVE DATE - - $ 10.01
============ ============ =============
Investment operations
Net investment income(b) .12 .24 .24
Net realized and unrealized gain (loss) .71 .80 (.79)
------------ ------------ -------------
Total from investment operations .83 1.04 (.55)
------------ ------------ -------------
Distributions to shareholders from:
Net investment income (.08) (.20) (.05)
------------ ------------ -------------
NET ASSET VALUE, END OF PERIOD $ 11.00 $ 10.25 $ 9.41
============ ============ =============
Total Return(c) .10%(d)(e)
Total Return(c) 8.12%(d) 11.27% (5.54)%(d)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions 1.00%(d) 1.99% 1.85%(d)
Expenses, excluding waiver and expense reductions 1.00%(d) 2.10% 2.81%(d)
Net investment income 1.06%(d) 2.60% 2.43%(d)
<Caption>
SIX MONTHS
ENDED 12/19/2001(a)
5/31/2004 YEAR ENDED TO
SUPPLEMENTAL DATA: (UNAUDITED) 11/30/2003 11/30/2002
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 12,764 $ 5,902 $ 2,538
Portfolio turnover rate 8.79% 28.71% 33.71%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED 12/19/2001(a)
5/31/2004 YEAR ENDED TO
(UNAUDITED) 11/30/2003 11/30/2002
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.31 $ 9.45 $ 10.00
============ ============ =============
Unrealized appreciation on investments - - .01
------------ ------------ -------------
NET ASSET VALUE ON SEC EFFECTIVE DATE - - $ 10.01
============ ============ =============
Investment operations
Net investment income(b) .15 .31 .28
Net realized and unrealized gain (loss) .72 .80 (.80)
------------ ------------ -------------
Total from investment operations .87 1.11 (.52)
------------ ------------ -------------
Distributions to shareholders from:
Net investment income (.10) (.25) (.04)
------------ ------------ -------------
NET ASSET VALUE, END OF PERIOD $ 11.08 $ 10.31 $ 9.45
============ ============ =============
Total Return(c) .10%(d)(e)
Total Return(c) 8.47%(d) 12.03% (5.20)%(d)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions .73%(d) 1.44% 1.35%(d)
Expenses, excluding waiver and expense reductions .73%(d) 1.55% 2.31%(d)
Net investment income 1.33%(d) 3.15% 2.93%(d)
<Caption>
SIX MONTHS
ENDED 12/19/2001(a)
5/31/2004 YEAR ENDED TO
SUPPLEMENTAL DATA: (UNAUDITED) 11/30/2003 11/30/2002
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 200 $ 1 $ 1
Portfolio turnover rate 8.79% 28.71% 33.71%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED 12/19/2001(a)
5/31/2004 YEAR ENDED TO
(UNAUDITED) 11/30/2003 11/30/2002
PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 9.47 $ 10.00
============ ============ =============
Unrealized appreciation on investments - - .01
------------ ------------ -------------
NET ASSET VALUE ON SEC EFFECTIVE DATE - - $ 10.01
============ ============ =============
Investment operations
Net investment income(b) .17 .34 .32
Net realized and unrealized gain (loss) .72 .80 (.80)
------------ ------------ -------------
Total from investment operations .89 1.14 (.48)
------------ ------------ -------------
Distributions to shareholders from:
Net investment income (.12) (.28) (.06)
------------ ------------ -------------
NET ASSET VALUE, END OF PERIOD $ 11.10 $ 10.33 $ 9.47
============ ============ =============
Total Return(c) .10%(d)(e)
Total Return(c) 8.64%(d) 12.47% (4.83)%(d)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions .50%(d)+ .99%+ .93%(d)
Expenses, excluding waiver and expense reductions .50%(d)+ 1.10%+ 1.89%(d)
Net investment income 1.56%(d)+ 3.60%+ 3.35%(d)
<Caption>
SIX MONTHS
ENDED 12/19/2001(a)
5/31/2004 YEAR ENDED TO
SUPPLEMENTAL DATA: (UNAUDITED) 11/30/2003 11/30/2002
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 1 $ 1 $ 1
Portfolio turnover rate 8.79% 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.
20
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 Net Asset Value
("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 purchases 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 sales 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.
16
<Page>
(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, B, C and 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 enterprise 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 the following annual rates:
<Table>
First $1 billion .80%*
Next $1 billion .75%
Next $1 billion .70%
Over $3 billion .65%
</Table>
* Prior to April 1, 2004, the management fee was based on the Fund's average
daily net assets at an annual rate of .90%.
Lord Abbett provides certain administrative services to the Fund pursuant to an
Administrative Services Agreement at an annual rate of .04% of the Fund's
average daily net assets.
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
17
<Page>
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) .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 $3,424 of CDSCs during the six months ended May
31, 2004.
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 six months
ended May 31, 2004:
<Table>
<Caption>
DISTRIBUTOR DEALERS'
COMMISSIONS CONCESSIONS
- --------------------------------
$ 517,968 $ 2,805,155
</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 investment 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 September 30, 2003, for the Fund's tax year end, the capital loss
carryforwards along with the related expiration dates were as follows:
<Table>
<Caption>
2009 2010 2011 TOTAL
- -----------------------------------------------------------------------
$ 15,192,999 $ 36,554,608 $ 61,156,878 $ 112,904,485
</Table>
As of May 31, 2004, 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 $ 747,884,634
- ------------------------------------------------
Gross Unrealized Gain 104,850,586
Gross Unrealized Loss (18,639,522)
- ------------------------------------------------
Net unrealized security gain $ 86,211,064
================================================
</Table>
18
<Page>
The difference between book-basis and tax-basis unrealized gains (losses) is
primarily attributable to wash sales and other temporary tax adjustments.
5. PORTFOLIO SECURITIES TRANSACTIONS
As of May 31, 2004, the value of securities loaned is $96,350,686. These loans
were collateralized by cash of $99,035,514, 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 $29,239 for the six
months ended May 31, 2004, which are netted against securities lending income on
the Statement of Operations.
Purchases and sales of investment securities (other than short-term investments)
for the six months ended May 31, 2004 are as follows:
<Table>
<Caption>
PURCHASES SALES
- ------------------------------------
$ 359,693,607 $ 264,142,883
</Table>
There were no purchases or sales of U.S. Government securities for the six
months ended May 31, 2004.
6. DIRECTORS' REMUNERATION
The Company's officers and the one Director who are associated with Lord Abbett
do not receive any compensation from the Fund 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 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 0.09%. At May 31, 2004, there
were no loans outstanding pursuant to this Facility nor was the Facility
utilized at any time during the six months ended May 31, 2004.
19
<Page>
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 NAV.
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>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2004 (UNAUDITED) NOVEMBER 30, 2003
- ---------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------
CLASS A SHARES
Shares sold 7,192,851 $ 132,943,221 10,674,409 $ 170,500,182
Reinvesment of distributions 255 4,823 - -
Shares reacquired (2,388,809) (43,951,428) (3,923,119) (58,912,982)
- ---------------------------------------------------------------------------------------------
Increase 4,804,297 $ 88,996,616 6,751,290 $ 111,587,200
- ---------------------------------------------------------------------------------------------
CLASS B SHARES
Shares sold 795,460 $ 14,266,408 1,660,415 $ 24,804,171
Reinvesment of distributions - 1 - -
Shares reaquired (545,442) (9,776,351) (941,409) (13,644,778)
- ---------------------------------------------------------------------------------------------
Increase 250,018 $ 4,490,058 719,006 $ 11,159,393
- ---------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 837,063 $ 14,997,084 1,562,453 $ 23,537,109
Shares reaquired (435,032) (7,810,711) (898,259) (13,063,207)
- ---------------------------------------------------------------------------------------------
Increase 402,031 $ 7,186,373 664,194 $ 10,473,902
- ---------------------------------------------------------------------------------------------
CLASS P SHARES
Shares sold 180,564 $ 3,357,005 308,433 $ 4,894,065
Shares reaquired (107,883) (1,976,200) (68,341) (1,069,798)
- ---------------------------------------------------------------------------------------------
Increase 72,681 $ 1,380,805 240,092 $ 3,824,267
- ---------------------------------------------------------------------------------------------
CLASS Y SHARES
Shares sold 29,326 $ 554,874 - $ -
Shares reaquired (75) (1,378) - -
- ---------------------------------------------------------------------------------------------
Increase 29,251 $ 553,496 - $ -
- ---------------------------------------------------------------------------------------------
</Table>
20
<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, (i) by calling 888-522-2388; (ii) or on Lord Abbett's web site at
www.LordAbbett.com, and (iii) on the Securities and Exchange Commission's
("SEC") website at www.sec.gov.
SHAREHOLDER REPORTS AND QUARTERLY PORTFOLIO DISCLOSURE
The Company will be required to file its complete schedule of portfolio holdings
with the SEC for its first and third fiscal quarters on Form N-Q for fiscal
quarters ending on or after July 9, 2004. Once filed, the Fund's Forms N-Q will
be available without charge, upon request on the SEC's website at www.sec.gov
and may be available by calling Lord Abbett at 800-821-5129; or on Lord Abbett's
website at www.LordAbbett.com. You can also obtain copies of Form N-Q by (i)
visiting the SEC's Public Reference Room in Washington, DC (information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330); (ii) sending your request and a duplicating fee to the SEC's
Public Reference Room, Washington, DC 20549-0102; or (iii) sending your request
electronically to publicinfo@sec.gov.
21
<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 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-3-504
90 Hudson Street - Jersey City, New Jersey 07302-3973 (7/04)
</Table>
<Page>
[LORD ABBETT LOGO]
2004
SEMI-ANNUAL REPORT
LORD ABBETT GROWTH OPPORTUNITIES FUND
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 2004
<Page>
LORD ABBETT GROWTH OPPORTUNITIES FUND
SEMI-ANNUAL REPORT
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 2004
DEAR SHAREHOLDERS: We are pleased to provide you with this six-month overview of
the Lord Abbett Growth Opportunities Fund's strategies and performance for the
six-month period ended May 31, 2004. 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. Favorable economic news and strong U.S. equity returns during November and
December brought 2003 to a positive close. Manufacturing, inventory investment
and capital spending all showed signs of improvement. Unemployment reports were
also encouraging, as inflation and interest rates remained steady through
year-end. As a result of the tax bill and a positive macroeconomic environment,
capital spending increased, particularly in technology.
This economic growth continued into the beginning of 2004 largely due to
strong consumer and capital spending. Corporate profits rose, triggered by a
rise in industrial production. In January and February, inflation and short-term
interest rates continued to remain stable. However, somewhat disappointing
employment reports and higher energy prices weighed on consumer sentiment.
In March and April, the number of jobs increased and unemployment
stabilized. The U.S. housing market remained strong and there were improvements
in durable goods spending. But, retail sales dropped 0.5% in April after a 2%
gain in March. Meanwhile, producer prices moved higher, driven by the higher
costs of gasoline and food, suggesting an inflationary trend and the possibility
of an interest rate increase in the coming months.
Equity prices were roughly flat in April and May, as investors responded to
uncertainties surrounding future interest-rate hikes, the continued war in Iraq,
the upcoming presidential election and record-high energy prices.
Q. HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED MAY 31, 2004?
A. For the six-month period ended May 31, 2004, the Fund returned 2.5%,
reflecting performance at the Net Asset
1
<Page>
Value (NAV) of Class A shares with all distributions reinvested, compared with
its benchmark, the Russell Midcap(R) Growth Index,(1) which returned 5.9% 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 05/31/04
are 1 Year: 11.09%, 5 Years: 3.45% and Since Inception (08/01/95): 10.72%.
PERFORMANCE DATA QUOTED REFLECT PAST PERFORMANCE AND ARE NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
QUOTED. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE SO THAT SHARES, ON ANY GIVEN DAY OR WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. YOU CAN OBTAIN PERFORMANCE DATA CURRENT
TO THE MOST RECENT MONTH END BY CALLING LORD ABBETT AT 800-821-5129 OR REFERRING
TO OUR WEBSITE AT www.LordAbbett.com.
Q. WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
A. Stock selection within the health care sector was the main detractor from the
Fund's performance relative to its benchmark for the six-month period ended May
31, 2004. Select generic pharmaceutical holdings suffered as pricing pressure
came to the generic pharmaceutical industry for the first time in a few years.
Also, a drug manufacturing company held in the portfolio saw its shares decline
because initial sales from its new product launch were slightly below
expectations.
Stock selection within the materials and processing sector also hurt
relative performance. This was the result of poor performance by one holding. A
company that supplies graphite electrodes used in the production of steel
products disappointed when it reported first quarter 2004 earnings. The
company's profit margins were less than expected due to its inability to offset
cost pressures.
The largest positive contributor to the Fund's performance relative to its
benchmark for the six-month period was stock selection within the autos and
transportation sector. Two trucking holdings performed well because of an
overall improving economy and increased market share. An overweight position in
energy stocks added to relative performance, as that sector benefited from
higher oil prices in the period. Also contributing to performance relative to
the benchmark was stock selection within the consumer discretionary sector. The
consumer discretionary sector includes stocks within the consumer durables,
apparel, media, hotel and leisure industries. In this area, changing fashion
trends among teens and young adults boosted the sales and profit margins of a
retail clothing holding. Another holding, a supplier of video game software
cartridges, also had strong performance due to sales of two popular video game
titles.
2
<Page>
THE FUND'S PORTFOLIO IS ACTIVELY MANAGED AND, THEREFORE, ITS HOLDINGS AND
THE WEIGHTINGS OF A PARTICULAR ISSUER OR PARTICULAR SECTOR AS A PERCENTAGE OF
PORTFOLIO ASSETS ARE SUBJECT TO CHANGE. SECTORS MAY INCLUDE MANY INDUSTRIES.
THE PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND INCLUDING THE
FUND'S INVESTMENT OBJECTIVE, RISKS, CHARGES AND ONGOING EXPENSES THAT YOU SHOULD
CAREFULLY CONSIDER BEFORE INVESTING. TO OBTAIN A PROSPECTUS ON THIS FUND OR ANY
LORD ABBETT MUTUAL FUND PLEASE CONTACT YOUR INVESTMENT PROFESSIONAL OR LORD
ABBETT DISTRIBUTOR LLC AT 800-874-3733 OR VISIT www.LordAbbett.com. READ THE
PROSPECTUS CAREFULLY BEFORE INVESTING.
(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.
IMPORTANT PERFORMANCE AND OTHER INFORMATION
The views of the Fund's management and the portfolio holdings described in this
report are as of May 31, 2004; 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 Funds' Prospectus.
PERFORMANCE: Because of ongoing market volatility, the Fund's performance may be
subject to substantial fluctuation. 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.
MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS
OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
3
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)
MAY 31, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS 98.72%
AUTO COMPONENTS 1.12%
Paccar, Inc. 146,400 $ 8,169
----------------
BANKS: OUTSIDE NEW YORK CITY 1.84%
City National Corp. 119,300 7,703
Cullen/Frost
Bankers, Inc. 129,900 5,692
----------------
TOTAL 13,395
----------------
BIOTECHNOLOGY RESEARCH & PRODUCTION 2.48%
Biogen Idec, Inc.* 60,800 3,779
Genzyme Corp.* 93,100 4,057
Invitrogen Corp.* 147,300 10,230
----------------
TOTAL 18,066
----------------
CABLE TELEVISION SERVICES 0.59%
EchoStar Communications
Corp. Class A* 132,900 4,274
----------------
CHEMICALS 2.28%
Ecolab, Inc. 236,000 7,200
Rohm & Haas Co. 243,700 9,392
----------------
TOTAL 16,592
----------------
COMMUNICATIONS TECHNOLOGY 1.60%
Avaya, Inc.* 733,700 11,614
----------------
COMPUTER SERVICES SOFTWARE & SYSTEMS 7.31%
Affiliated Computers
Services, Inc.* 214,900 10,706
Amdocs Ltd.*(a) 414,200 10,223
Cognos, Inc.*(a) 264,000 8,889
Electronics for
Imaging, Inc.* 427,100 11,856
Informatica Corp.* 661,100 5,130
Intuit, Inc.* 163,800 6,418
----------------
TOTAL 53,222
----------------
COMPUTER TECHNOLOGY 1.11%
Ingram Micro, Inc.* 557,500 $ 8,056
----------------
CONSUMER ELECTRONICS 1.77%
Activision, Inc.* 816,300 12,914
----------------
COPPER 0.63%
Phelps Dodge Corp.* 67,100 4,556
----------------
DIVERSIFIED FINANCIAL SERVICES 1.00%
CIT Group, Inc. 193,400 7,247
----------------
DIVERSIFIED PRODUCTION 0.59%
Danaher Corp. 91,000 4,280
----------------
DRUGS & PHARMACEUTICALS 9.76%
Barr
Pharmaceuticals, Inc.* 98,400 4,292
Cephalon, Inc.*^ 202,500 10,909
Endo Pharm
Holdings., Inc.* 225,900 5,114
Gilead Sciences, Inc.* 54,300 3,555
ICOS Corp.*^ 207,400 5,832
IVAX Corp.* 500,500 12,187
Ligand
Pharmaceuticals, Inc.
Class B* 163,626 3,345
McKesson Corp. 153,500 5,280
QLT, Inc.*^(a) 343,500 7,935
Teva Pharmaceutical
Industries Ltd. ADR 93,000 6,154
Watson
Pharmaceutical, Inc.* 172,700 6,450
----------------
TOTAL 71,053
----------------
ELECTRICAL EQUIPMENT & COMPONENTS 0.92%
Molex, Inc.^ 228,500 6,709
----------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<Page>
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
ELECTRONICS: SEMI-CONDUCTORS /
COMPONENTS 4.96%
Fairchild Semiconductor
Corp. Class A* 285,500 $ 5,630
Integrated Circuit
Systems, Inc.* 243,700 6,692
Jabil Circuit, Inc.* 373,900 10,585
Microchip
Technology, Inc. 260,500 8,260
Vitesse
Semiconductor Corp.* 899,400 4,911
----------------
TOTAL 36,078
----------------
ELECTRONICS: TECHNOLOGY 1.69%
Symbol
Technologies, Inc. 834,400 12,291
----------------
ENGINEERING & CONTRACTING SERVICES 0.60%
Jacobs Engineering
Group, Inc.* 97,100 4,331
----------------
FINANCIAL DATA PROCESSING SERVICES & SYSTEMS
2.81%
Alliance Data Systems
Corp.* 275,700 10,204
Fiserv, Inc.* 270,600 10,234
----------------
TOTAL 20,438
----------------
FINANCIAL MISCELLANEOUS 3.31%
MGIC Investment Corp. 141,700 10,344
Providian Financial
Corp.* 742,300 10,095
Radian Group, Inc. 79,800 3,671
----------------
TOTAL 24,110
----------------
FOODS 1.03%
Ralcorp Holdings, Inc.* 225,640 7,525
----------------
HEALTH & PERSONAL CARE 3.21%
Lincare Holdings, Inc.* 60,200 2,023
Omnicare, Inc. 250,700 10,780
Province
Healthcare Co.*^ 657,449 $ 10,533
----------------
TOTAL 23,336
----------------
HEALTHCARE MANAGEMENT SERVICES 4.08%
Caremark Rx, Inc.* 485,800 15,157
Cerner Corp.*^ 166,400 7,115
PacifiCare Health
System, Inc.*^ 200,600 7,408
----------------
TOTAL 29,680
----------------
INSURANCE: PROPERTY-CASUALTY 1.24%
Everest Re
Group Ltd.(a) 110,000 9,004
----------------
INVESTMENT MANAGEMENT COMPANIES 1.48%
Affiliated Managers
Group, Inc.*^ 221,250 10,786
----------------
LEISURE TIME 1.93%
Royal Caribbean Cruises^ 254,000 9,936
Six Flags, Inc.* 584,800 4,094
----------------
TOTAL 14,030
----------------
MACHINERY: OIL WELL EQUIPMENT & SERVICES 2 40%
Halliburton Co. 143,100 4,156
Patterson-UTI
Energy, Inc. 106,900 3,277
Weatherford Int'l., Ltd.* 240,900 10,000
----------------
TOTAL 17,433
----------------
MANUFACTURING 1.51%
Ingersoll-Rand Co.
Class A(a) 168,200 10,983
----------------
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES 1.24%
Boston Scientific Corp.* 203,100 8,997
----------------
METALS & MINERALS MISCELLANEOUS 0.88%
Graftech Int'l., Ltd.*^ 675,600 6,418
----------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<Page>
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
MULTI-SECTOR COMPANIES 1.07%
ITT Industries, Inc. 96,800 $ 7,797
----------------
OFFICE FURNITURE & BUSINESS EQUIPMENT 0.73%
Lexmark Int'l, Inc.
Class A* 56,500 5,329
----------------
OIL: CRUDE PRODUCERS 2.25%
Westport Resources
Corp.*^ 212,000 7,335
XTO Energy, Inc. 357,250 9,021
----------------
TOTAL 16,356
----------------
RADIO & TV BROADCASTERS 3.85%
Entercom
Communications
Corp.* 442,200 18,020
Univision
Communications,
Inc. Class A* 308,300 10,035
----------------
TOTAL 28,055
----------------
RENTAL & LEASING SERVICES: COMMERCIAL 0.91%
United Rentals, Inc.*^ 387,300 6,623
----------------
RETAIL 10.83%
Advance Auto Parts* 279,000 11,961
American Eagle
Outfitters, Inc.*^ 399,900 11,581
Dollar Tree Stores, Inc.* 139,600 3,895
Fisher Scientific
Int'l., Inc.*^ 195,900 11,247
Linens 'N Things, Inc.*^ 244,400 7,422
Michaels Stores, Inc. 183,700 9,598
MSC Industrial
Direct Co., Inc. Class A 375,500 10,852
PETCO Animal
Supplies, Inc.*^ 388,400 12,281
----------------
TOTAL 78,837
----------------
SAVINGS & LOAN 1.12%
New York Community
Bancorp, Inc.^ 348,399 $ 8,160
----------------
SERVICES: COMMERCIAL 5.56%
ASE Test Ltd.*^(a) 549,300 4,345
Hewitt Associates Inc
Class A* 50,000 1,575
InterActive Corp.*^ 275,523 8,613
Iron Mountain, Inc.* 155,900 6,902
Kelly Services, Inc.
Class A 238,900 6,627
Robert Half Int'l., Inc. 252,800 7,073
Tetra Tech, Inc.* 315,600 5,353
----------------
Total 40,488
----------------
SOAPS & HOUSEHOLD CHEMICALS 1.81%
Clorox Co. 251,000 13,142
----------------
STEEL 0.45%
United States Steel
Corp. 107,700 3,270
----------------
TRUCKERS 2.62%
CNF
Transportation, Inc. 136,622 5,326
Heartland Express, Inc. 295,900 7,167
Landstar System, Inc.*^ 135,900 6,607
----------------
TOTAL 19,100
----------------
UTILITIES: TELECOMMUNICATIONS 2.15%
Nextel Partners, Inc.
Class A*^ 961,500 15,682
----------------
TOTAL COMMON STOCKS
(Cost $631,337,566) 718,426
================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<Page>
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 15.89%
COLLATERAL FOR SECURITIES ON LOAN 13.61%
State Street Navigator
Securities Lending
Prime Portfolio,
1.06%(b) 99,035,514 $ 99,035
================
<Caption>
PRINCIPAL
AMOUNT
(000)
---------
REPURCHASE AGREEMENT 2.28%
Repurchase Agreement
dated 5/28/2004, 0.98%
due 6/1/2004 with State
Street Bank & Trust Co.
collateralized by
$16,865,000 of Federal
Home Loan Bank at 5%
due 2/7/2013; value:
$16,970,406; proceeds:
$16,636,499 $ 16,635 16,635
================
TOTAL SHORT-TERM INVESTMENTS
(Cost $115,670,202) 115,670
================
TOTAL INVESTMENTS 114.61%
(Cost $747,007,768) $ 834,096
================
</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 May 31, 2004.
ADR American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
7
<Page>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MAY 31, 2004
<Table>
ASSETS:
Investment in securities, at value (cost $747,007,768) $ 834,095,698
Receivables:
Interest and dividends 312,649
Investment securities sold 2,298,868
Capital shares sold 2,840,322
Prepaid expenses and other assets 331,204
- --------------------------------------------------------------------------------
TOTAL ASSETS 839,878,741
- --------------------------------------------------------------------------------
LIABILITIES:
Payable upon return of securities on loan 99,035,514
Payables:
Investment securities purchased 11,355,997
Capital shares reacquired 687,931
Management fee 472,973
12b-1 distribution fees 305,358
Fund administration 23,764
Accrued expenses and other liabilities 253,317
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 112,134,854
================================================================================
NET ASSETS $ 727,743,887
================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 718,780,175
Distributions in excess of net investment income (6,724,863)
Accumulated net realized loss on investments (71,399,355)
Net unrealized appreciation on investments 87,087,930
- --------------------------------------------------------------------------------
NET ASSETS $ 727,743,887
================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 529,989,689
Class B Shares $ 101,092,185
Class C Shares $ 88,312,850
Class P Shares $ 7,803,377
Class Y Shares $ 545,786
OUTSTANDING SHARES BY CLASS:
Class A Shares (50 million shares of common stock authorized) 28,914,522
Class B Shares (30 million shares of common stock authorized) 5,701,179
Class C Shares (20 million shares of common stock authorized) 4,981,352
Class P Shares (20 million shares of common stock authorized) 424,767
Class Y Shares (30 million shares of common stock authorized) 29,364
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 18.33
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) $ 19.45
Class B Shares-Net asset value $ 17.73
Class C Shares-Net asset value $ 17.73
Class P Shares-Net asset value $ 18.37
Class Y Shares-Net asset value $ 18.59
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<Page>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 2004
<Table>
INVESTMENT INCOME:
Dividends $ 1,237,291
Interest 31,594
Securities lending-net 68,225
Foreign withholding tax (5,283)
- --------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,331,827
- --------------------------------------------------------------------------------
EXPENSES:
Management fee 2,981,990
12b-1 distribution plan-Class A 979,703
12b-1 distribution plan-Class B 501,897
12b-1 distribution plan-Class C 433,869
12b-1 distribution plan-Class P 17,462
Shareholder servicing 1,206,812
Professional 23,449
Reports to shareholders 67,248
Fund administration 137,873
Custody 15,161
Directors' fees 6,030
Registration 38,970
Other 6,534
- --------------------------------------------------------------------------------
Gross expenses 6,416,998
Expense reductions (2,377)
- --------------------------------------------------------------------------------
NET EXPENSES 6,414,621
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (5,082,794)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 40,583,519
Net change in unrealized depreciation on investments (21,642,981)
================================================================================
NET REALIZED AND UNREALIZED GAIN 18,940,538
================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 13,857,744
================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED MAY 31, 2004 FOR THE YEAR ENDED
INCREASE IN NET ASSETS (UNAUDITED) NOVEMBER 30, 2003
OPERATIONS:
Net investment loss $ (5,082,794) $ (7,482,669)
Net realized gain on investments 40,583,519 15,583,052
Net change in unrealized appreciation/depreciation on investments (21,642,981) 92,393,795
- ------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 13,857,744 100,494,178
============================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 166,123,416 223,735,527
Cost of shares reacquired (63,516,068) (86,690,765)
- ------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 102,607,348 137,044,762
============================================================================================================
NET INCREASE IN NET ASSETS 116,465,092 237,538,940
============================================================================================================
NET ASSETS:
Beginning of period 611,278,795 373,739,855
- ------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 727,743,887 $ 611,278,795
============================================================================================================
DISTRIBUTIONS IN EXCESS OF
NET INVESTMENT INCOME $ (6,724,863) $ (1,642,069)
============================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE
(CLASS A SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 17.88 $ 14.42 $ 17.47 $ 19.17 $ 18.89 $ 12.58
=========== ========= ========= ========= ========= =========
Investment operations
Net investment income (loss)(a) (.12) (.24) (.23) (.28) (.25) .04
Net realized and
unrealized gain (loss) .57 3.70 (2.82) (1.42) .73 6.27
----------- --------- --------- --------- --------- ---------
Total from investment
operations .45 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 PERIOD $ 18.33 $ 17.88 $ 14.42 $ 17.47 $ 19.17 $ 18.89
=========== ========= ========= ========= ========= =========
Total Return(b) 2.52%(d) 23.99% (17.46)% (8.87)% 2.55% 50.04%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions .85%(d) 1.85% 1.80% 1.72% 1.49% .41%
Expenses, excluding waiver and
expense reductions .85%(d) 1.85% 1.80% 1.72% 1.61% 1.64%
Net investment income (loss) (.66)%(d) (1.53)% (1.48)% (1.48)% (1.18)% .25%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 529,990 $ 430,991 $ 250,380 $ 213,580 $ 175,077 $ 40,252
Portfolio turnover rate 38.91% 78.58% 97.63% 101.15% 112.57% 104.87%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE
(CLASS B SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 17.35 $ 14.08 $ 17.16 $ 18.95 $ 18.78 $ 12.57
=========== ========= ========= ========= ========= =========
Investment operations
Net investment loss(a) (.17) (.32) (.32) (.39) (.39) (.06)
Net realized and
unrealized gain (loss) .55 3.59 (2.76) (1.40) .75 6.27
----------- --------- --------- --------- --------- ---------
Total from investment
operations .38 3.27 (3.08) (1.79) .36 6.21
----------- --------- --------- --------- --------- ---------
Distributions to shareholders from
Net realized gain - - - - (.19) -
----------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 17.73 $ 17.35 $ 14.08 $ 17.16 $ 18.95 $ 18.78
=========== ========= ========= ========= ========= =========
Total Return(b) 2.19%(d) 23.22% (17.95)% (9.45)% 1.96% 49.32%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.15%(d) 2.44% 2.43% 2.35% 2.11% 1.07%
Expenses, excluding waiver and
expense reductions 1.15%(d) 2.44% 2.43% 2.35% 2.23% 2.30%
Net investment loss (.96)%(d) (2.12)% (2.10)% (2.11)% (1.82)% (.40)%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 101,092 $ 94,561 $ 66,623 $ 69,738 $ 65,510 $ 10,954
Portfolio turnover rate 38.91% 78.58% 97.63% 101.15% 112.57% 104.87%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE
(CLASS C SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 17.34 $ 14.08 $ 17.15 $ 18.94 $ 18.76 $ 12.59
=========== ========= ========= ========= ========= =========
Investment operations
Net investment loss(a) (.17) (.32) (.32) (.39) (.38) (.06)
Net realized and
unrealized gain (loss) .56 3.58 (2.75) (1.40) .75 6.23
----------- --------- --------- --------- --------- ---------
Total from investment
operations .39 3.26 (3.07) (1.79) .37 6.17
----------- --------- --------- --------- --------- ---------
Distributions to shareholders from
Net realized gain - - - - (.19) -
----------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 17.73 $ 17.34 $ 14.08 $ 17.15 $ 18.94 $ 18.76
=========== ========= ========= ========= ========= =========
Total Return(b) 2.25%(d) 23.15% (17.90)% (9.45)% 1.96% 49.01%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.15%(d) 2.44% 2.42% 2.37% 2.11% 1.07%
Expenses, excluding waiver and
expense reductions 1.15%(d) 2.44% 2.42% 2.37% 2.23% 2.30%
Net investment loss (.96)%(d) (2.12)% (2.09)% (2.14)% (1.81)% (.40)%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 88,313 $ 79,415 $ 55,115 $ 52,272 $ 49,656 $ 8,438
Portfolio turnover rate 38.91% 78.58% 97.63% 101.15% 112.57% 104.87%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 8/15/2000(c)
5/31/2004 ------------------------------------- TO
(UNAUDITED) 2003 2002 2001 11/30/2000
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.92 $ 14.47 $ 17.53 $ 19.23 $ 21.48
=========== ========= ========= ========= ============
Investment operations
Net investment loss(a) (.13) (.25) (.24) (.28) (.09)
Net realized and unrealized gain (loss) .58 3.70 (2.82) (1.42) (2.16)
----------- --------- --------- --------- ------------
Total from investment operations .45 3.45 (3.06) (1.70) (2.25)
----------- --------- --------- --------- ------------
NET ASSET VALUE, END OF PERIOD $ 18.37 $ 17.92 $ 14.47 $ 17.53 $ 19.23
=========== ========= ========= ========= ============
Total Return(b) 2.51%(d) 23.84% (17.46)% (8.84)% (10.47)%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions .87%(d) 1.89% 1.88% 1.80% .45%(d)
Expenses, excluding expense reductions .87%(d) 1.89% 1.88% 1.80% .49%(d)
Net investment loss (.68)%(d) (1.57)% (1.55)% (1.52)% (.44)%(d)
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 8/15/2000(c)
5/31/2004 ------------------------------------- TO
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 11/30/2000
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 7,803 $ 6,310 $ 1,620 $ 294 $ 44
Portfolio turnover rate 38.91% 78.58% 97.63% 101.15% 112.57%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 12/9/1998(c)
5/31/2004 ---------------------------------------------------- TO
(UNAUDITED) 2003 2002 2001 2000 11/30/1999
PER SHARE OPERATING PERFORMANCE
(CLASS Y SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 18.09 $ 14.56 $ 17.60 $ 19.26 $ 18.94 $ 12.76
=========== ========= ========= ========= ========= ============
Investment operations
Net investment income (loss)(a) (.09) (.20) (.19) (.23) (.14) .09
Net realized and
unrealized gain (loss) .59 3.73 (2.85) (1.43) .69 6.09
----------- --------- --------- --------- --------- ------------
Total from investment
operations .50 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 $ 18.59 $ 18.09 $ 14.56 $ 17.60 $ 19.26 $ 18.94
=========== ========= ========= ========= ========= ============
Total Return(b) 2.76%(d) 24.24% (17.27)% (8.62)% 2.89% 48.43%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .65%(d)+ 1.44%+ 1.43% 1.35% 1.11% .06%(d)
Expenses, excluding expense
reductions .65%(d)+ 1.44%+ 1.43% 1.35% 1.23% 1.27%(d)
Net investment income (loss) (.46)%(d)+ (1.12)%+ (1.10)% (1.10)% (.66)% .62%(d)
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 12/9/1998(c)
5/31/2004 ---------------------------------------------------- TO
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 11/30/1999
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 546 $ 2 $ 2 $ 2 $ 2 $ 3
Portfolio turnover rate 38.91% 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>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MAY 31, 2004
<Table>
ASSETS:
Investment in securities, at value (cost $747,007,768) $ 834,095,698
Receivables:
Interest and dividends 312,649
Investment securities sold 2,298,868
Capital shares sold 2,840,322
Prepaid expenses and other assets 331,204
- --------------------------------------------------------------------------------
TOTAL ASSETS 839,878,741
- --------------------------------------------------------------------------------
LIABILITIES:
Payable upon return of securities on loan 99,035,514
Payables:
Investment securities purchased 11,355,997
Capital shares reacquired 687,931
Management fee 472,973
12b-1 distribution fees 305,358
Fund administration 23,764
Accrued expenses and other liabilities 253,317
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 112,134,854
================================================================================
NET ASSETS $ 727,743,887
================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 718,780,175
Distributions in excess of net investment income (6,724,863)
Accumulated net realized loss on investments (71,399,355)
Net unrealized appreciation on investments 87,087,930
- --------------------------------------------------------------------------------
NET ASSETS $ 727,743,887
================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 529,989,689
Class B Shares $ 101,092,185
Class C Shares $ 88,312,850
Class P Shares $ 7,803,377
Class Y Shares $ 545,786
OUTSTANDING SHARES BY CLASS:
Class A Shares (50 million shares of common stock authorized) 28,914,522
Class B Shares (30 million shares of common stock authorized) 5,701,179
Class C Shares (20 million shares of common stock authorized) 4,981,352
Class P Shares (20 million shares of common stock authorized) 424,767
Class Y Shares (30 million shares of common stock authorized) 29,364
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 18.33
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) $ 19.45
Class B Shares-Net asset value $ 17.73
Class C Shares-Net asset value $ 17.73
Class P Shares-Net asset value $ 18.37
Class Y Shares-Net asset value $ 18.59
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<Page>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 2004
<Table>
INVESTMENT INCOME:
Dividends $ 1,237,291
Interest 31,594
Securities lending-net 68,225
Foreign withholding tax (5,283)
- --------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,331,827
- --------------------------------------------------------------------------------
EXPENSES:
Management fee 2,981,990
12b-1 distribution plan-Class A 979,703
12b-1 distribution plan-Class B 501,897
12b-1 distribution plan-Class C 433,869
12b-1 distribution plan-Class P 17,462
Shareholder servicing 1,206,812
Professional 23,449
Reports to shareholders 67,248
Fund administration 137,873
Custody 15,161
Directors' fees 6,030
Registration 38,970
Other 6,534
- --------------------------------------------------------------------------------
Gross expenses 6,416,998
Expense reductions (2,377)
- --------------------------------------------------------------------------------
NET EXPENSES 6,414,621
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (5,082,794)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investments 40,583,519
Net change in unrealized depreciation on investments (21,642,981)
================================================================================
NET REALIZED AND UNREALIZED GAIN 18,940,538
================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 13,857,744
================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED MAY 31, 2004 FOR THE YEAR ENDED
INCREASE IN NET ASSETS (UNAUDITED) NOVEMBER 30, 2003
OPERATIONS:
Net investment loss $ (5,082,794) $ (7,482,669)
Net realized gain on investments 40,583,519 15,583,052
Net change in unrealized appreciation/depreciation on investments (21,642,981) 92,393,795
- ------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 13,857,744 100,494,178
============================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 166,123,416 223,735,527
Cost of shares reacquired (63,516,068) (86,690,765)
- ------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 102,607,348 137,044,762
============================================================================================================
NET INCREASE IN NET ASSETS 116,465,092 237,538,940
============================================================================================================
NET ASSETS:
Beginning of period 611,278,795 373,739,855
- ------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 727,743,887 $ 611,278,795
============================================================================================================
DISTRIBUTIONS IN EXCESS OF
NET INVESTMENT INCOME $ (6,724,863) $ (1,642,069)
============================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE
(CLASS A SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 17.88 $ 14.42 $ 17.47 $ 19.17 $ 18.89 $ 12.58
=========== ========= ========= ========= ========= =========
Investment operations
Net investment income (loss)(a) (.12) (.24) (.23) (.28) (.25) .04
Net realized and
unrealized gain (loss) .57 3.70 (2.82) (1.42) .73 6.27
----------- --------- --------- --------- --------- ---------
Total from investment
operations .45 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 PERIOD $ 18.33 $ 17.88 $ 14.42 $ 17.47 $ 19.17 $ 18.89
=========== ========= ========= ========= ========= =========
Total Return(b) 2.52%(d) 23.99% (17.46)% (8.87)% 2.55% 50.04%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions .85%(d) 1.85% 1.80% 1.72% 1.49% .41%
Expenses, excluding waiver and
expense reductions .85%(d) 1.85% 1.80% 1.72% 1.61% 1.64%
Net investment income (loss) (.66)%(d) (1.53)% (1.48)% (1.48)% (1.18)% .25%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 529,990 $ 430,991 $ 250,380 $ 213,580 $ 175,077 $ 40,252
Portfolio turnover rate 38.91% 78.58% 97.63% 101.15% 112.57% 104.87%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE
(CLASS B SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 17.35 $ 14.08 $ 17.16 $ 18.95 $ 18.78 $ 12.57
=========== ========= ========= ========= ========= =========
Investment operations
Net investment loss(a) (.17) (.32) (.32) (.39) (.39) (.06)
Net realized and
unrealized gain (loss) .55 3.59 (2.76) (1.40) .75 6.27
----------- --------- --------- --------- --------- ---------
Total from investment
operations .38 3.27 (3.08) (1.79) .36 6.21
----------- --------- --------- --------- --------- ---------
Distributions to shareholders from
Net realized gain - - - - (.19) -
----------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 17.73 $ 17.35 $ 14.08 $ 17.16 $ 18.95 $ 18.78
=========== ========= ========= ========= ========= =========
Total Return(b) 2.19%(d) 23.22% (17.95)% (9.45)% 1.96% 49.32%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.15%(d) 2.44% 2.43% 2.35% 2.11% 1.07%
Expenses, excluding waiver and
expense reductions 1.15%(d) 2.44% 2.43% 2.35% 2.23% 2.30%
Net investment loss (.96)%(d) (2.12)% (2.10)% (2.11)% (1.82)% (.40)%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 101,092 $ 94,561 $ 66,623 $ 69,738 $ 65,510 $ 10,954
Portfolio turnover rate 38.91% 78.58% 97.63% 101.15% 112.57% 104.87%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE
(CLASS C SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 17.34 $ 14.08 $ 17.15 $ 18.94 $ 18.76 $ 12.59
=========== ========= ========= ========= ========= =========
Investment operations
Net investment loss(a) (.17) (.32) (.32) (.39) (.38) (.06)
Net realized and
unrealized gain (loss) .56 3.58 (2.75) (1.40) .75 6.23
----------- --------- --------- --------- --------- ---------
Total from investment
operations .39 3.26 (3.07) (1.79) .37 6.17
----------- --------- --------- --------- --------- ---------
Distributions to shareholders from
Net realized gain - - - - (.19) -
----------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 17.73 $ 17.34 $ 14.08 $ 17.15 $ 18.94 $ 18.76
=========== ========= ========= ========= ========= =========
Total Return(b) 2.25%(d) 23.15% (17.90)% (9.45)% 1.96% 49.01%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.15%(d) 2.44% 2.42% 2.37% 2.11% 1.07%
Expenses, excluding waiver and
expense reductions 1.15%(d) 2.44% 2.42% 2.37% 2.23% 2.30%
Net investment loss (.96)%(d) (2.12)% (2.09)% (2.14)% (1.81)% (.40)%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30
5/31/2004 -----------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 88,313 $ 79,415 $ 55,115 $ 52,272 $ 49,656 $ 8,438
Portfolio turnover rate 38.91% 78.58% 97.63% 101.15% 112.57% 104.87%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 8/15/2000(c)
5/31/2004 ------------------------------------- TO
(UNAUDITED) 2003 2002 2001 11/30/2000
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.92 $ 14.47 $ 17.53 $ 19.23 $ 21.48
=========== ========= ========= ========= ============
Investment operations
Net investment loss(a) (.13) (.25) (.24) (.28) (.09)
Net realized and unrealized gain (loss) .58 3.70 (2.82) (1.42) (2.16)
----------- --------- --------- --------- ------------
Total from investment operations .45 3.45 (3.06) (1.70) (2.25)
----------- --------- --------- --------- ------------
NET ASSET VALUE, END OF PERIOD $ 18.37 $ 17.92 $ 14.47 $ 17.53 $ 19.23
=========== ========= ========= ========= ============
Total Return(b) 2.51%(d) 23.84% (17.46)% (8.84)% (10.47)%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions .87%(d) 1.89% 1.88% 1.80% .45%(d)
Expenses, excluding expense reductions .87%(d) 1.89% 1.88% 1.80% .49%(d)
Net investment loss (.68)%(d) (1.57)% (1.55)% (1.52)% (.44)%(d)
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 8/15/2000(c)
5/31/2004 ------------------------------------- TO
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 11/30/2000
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 7,803 $ 6,310 $ 1,620 $ 294 $ 44
Portfolio turnover rate 38.91% 78.58% 97.63% 101.15% 112.57%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 12/9/1998(c)
5/31/2004 ---------------------------------------------------- TO
(UNAUDITED) 2003 2002 2001 2000 11/30/1999
PER SHARE OPERATING PERFORMANCE
(CLASS Y SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 18.09 $ 14.56 $ 17.60 $ 19.26 $ 18.94 $ 12.76
=========== ========= ========= ========= ========= ============
Investment operations
Net investment income (loss)(a) (.09) (.20) (.19) (.23) (.14) .09
Net realized and
unrealized gain (loss) .59 3.73 (2.85) (1.43) .69 6.09
----------- --------- --------- --------- --------- ------------
Total from investment
operations .50 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 $ 18.59 $ 18.09 $ 14.56 $ 17.60 $ 19.26 $ 18.94
=========== ========= ========= ========= ========= ============
Total Return(b) 2.76%(d) 24.24% (17.27)% (8.62)% 2.89% 48.43%(d)
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .65%(d)+ 1.44%+ 1.43% 1.35% 1.11% .06%(d)
Expenses, excluding expense
reductions .65%(d)+ 1.44%+ 1.43% 1.35% 1.23% 1.27%(d)
Net investment income (loss) (.46)%(d)+ (1.12)%+ (1.10)% (1.10)% (.66)% .62%(d)
<Caption>
SIX MONTHS
ENDED YEAR ENDED 11/30 12/9/1998(c)
5/31/2004 ---------------------------------------------------- TO
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 11/30/1999
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 546 $ 2 $ 2 $ 2 $ 2 $ 3
Portfolio turnover rate 38.91% 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>
ITEM 2: CODE OF ETHICS.
Not applicable
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4-8: [RESERVED]
ITEM 9: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 10: 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 July 21, 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 significant changes in the Registrant's internal
controls 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 11: EXHIBITS.
ITEM 11(a): NOT APPLICABLE.
<Page>
ITEM 11(b):
(i) Certification of each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 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: July 21, 2004
<Page>
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
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: July 21, 2004