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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number: 811-10371
LORD ABBETT BLEND TRUST
-----------------------
(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
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(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 201-6984
--------------
Date of fiscal year end: 7/31
Date of reporting period: 1/31/06
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ITEM 1: REPORT TO SHAREHOLDERS.
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[LORD ABBETT LOGO]
2006
SEMIANNUAL
REPORT
LORD ABBETT
SMALL-CAP BLEND FUND
FOR THE SIX-MONTH PERIOD ENDED JANUARY 31, 2006
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LORD ABBETT SMALL-CAP BLEND FUND
SEMIANNUAL REPORT
FOR THE SIX-MONTH PERIOD ENDED JANUARY 31, 2006
DEAR SHAREHOLDERS: We are pleased to provide you with this overview of Lord
Abbett Small-Cap Blend Fund's strategies and performance for the six-month
period ended January 31, 2006. On this and the following pages, we discuss the
major factors that influenced performance.
Thank you for investing in Lord Abbett mutual funds. We value the trust that
you place in us and look forward to serving your investment needs in the years
to come.
BEST REGARDS,
/s/ Robert S. Dow
ROBERT S. DOW
CHAIRMAN
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Q: WHAT WERE THE OVERALL MARKET CONDITIONS OF THE SIX-MONTH PERIOD ENDED JANUARY
31, 2006?
A: During the period, a few major trends dominated the equity markets. Perhaps
most influential was the building strength of equities, especially during the
latter half of the period, as the U.S. economy proved resilient.
Across the indexes tracked by Standard & Poor's, equities with a value bias
outperformed growth stocks. However, strip away the dominance of
large-capitalization stocks in market-weighted aggregate indexes - and the
picture changes. In style-box fashion, mid-capitalization growth stocks led
small growth equities, which in turn outperformed large value stocks. Although
large value equities outperformed their growth-oriented peers during the period,
large-cap growth gained substantial momentum in the broad rally experienced in
November 2005 and January 2006.
In the broad S&P Super Composite 1500(R) Index,(1) the top performing sectors
during the period included energy, materials, and financials, while the
underperforming sectors were consumer discretionary, telecommunications, and
consumer staples.
Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED JANUARY 31, 2006?
A: The fund returned 10.3 percent, reflecting performance at the net asset value
(NAV) of Class A shares, with all distributions reinvested, compared with its
benchmark, the Russell 2000(R) Index,(2) which returned 8.5 percent over the
same period. STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS, WHICH REFLECT
PERFORMANCE AT THE MAXIMUM 5.75 PERCENT SALES CHARGE APPLICABLE TO CLASS A SHARE
INVESTMENTS AND INCLUDE THE REINVESTMENT OF ALL DISTRIBUTIONS, AS OF JANUARY 31,
2006, ARE: 1 YEAR: 13.47 PERCENT AND SINCE INCEPTION (JUNE 26, 2001): 15.35
PERCENT. Class A shares purchased subject to a
1
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front-end sales charge have no contingent deferred sales charge (CDSC). However,
certain purchases of Class A shares made without a front-end sales charge may be
subject to a CDSC. Please see section "Your Investment-Purchases" in the
prospectus for more information on redemptions that may be subject to a CDSC.
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 OVER THE
SIX-MONTH PERIOD ENDED JANUARY 31, 2006?
CONTRIBUTING TO FUND PERFORMANCE
A: The materials and processing sector was the strongest contributor to
performance, relative to the fund's benchmark, followed by the financial
services sector and the fund's underweight position in the utilities sector.
Strong performing materials and processing holdings included Hughes Supply,
Inc., a wholesale distributor of construction, repair, and maintenance-related
products, and Commercial Metals Co., a provider of steel and metal products and
related materials. Other materials and processing companies, Cleveland-Cliffs
Inc., an iron ore pellets producer, and Watsco, Inc., a distributor of air
conditioning, heating, and refrigeration equipment, related parts and supplies,
also performed well during the period.
Although the financial services sector ranked second in terms of sector
contribution to performance, relative to the fund's benchmark, none of the
fund's financial services holdings were among the top 10 contributors to
performance. However, three of the fund's top 10 largest holdings were financial
services companies. In addition, the fund's lack of exposure to the utilities
sector, relative to its benchmark, proved to be a positive factor.
Select Comfort Corp., a consumer discretionary holding that provides a line
of airbed mattresses with adjustable firmness, as well as foundations and
accessories, was a solid contributor to performance and the fourth largest
holding for the period. Additional holdings
2
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that performed well included Pride International, Inc., a company listed in the
other energy sector. Pride International provides contract drilling and related
services on land and offshore. It was the fund's largest holding and the
strongest contributor to performance.
Two healthcare stocks were also among the top 10 contributors to performance:
LCA-Vision Inc., which develops and operates stand-alone laser vision correction
centers, and Par Pharmaceutical Cos. Inc., which manufactures and distributes
generic drugs. In addition, producer durables company, Actuant Corp., a maker of
a broad range of industrial products and systems, and technology holding
Websense, Inc., a provider of employee Internet management solutions, each
helped fund performance. Websense was the fund's tenth largest holding for the
period.
DETRACTING FROM FUND PERFORMANCE
The worst performing sector for the fund, relative to the fund's benchmark,
during the period was technology. Stratasys, Inc., a maker of rapid prototyping
systems, and Hutchinson Technology Inc., a supplier of suspension assemblies for
hard disk drives, took away from fund performance.
The consumer discretionary and the producer durables sectors detracted
equally from performance relative to the fund's benchmark. Tuesday Morning
Corp., a closeout retailer of upscale home furnishings, gifts, and related
items, was the weakest performing holding for the period. Other consumer
discretionary holdings that hurt fund performance included Entravision
Communications Corp., a diversified media company; Regent Communications, Inc.,
a radio broadcasting company; SM&A, a provider of competition management
services; and Dave & Buster's, Inc., an operator of restaurant entertainment
complexes. Producer durables holding, The Ryland Group, Inc., a homebuilder and
mortgage-related finance firm, was the fund's second largest holding for the
period, and a detractor from fund performance.
Other stocks that disappointed were healthcare company Kensey Nash Corp. and
Massey Energy Co., categorized in the other energy sector. Kensey makes a line
of absorbable medical devices. Massey produces, processes, and sells bituminous,
low sulphur coal of steam and metallurgical grades through its processing and
shipping centers. Massey was the fund's fifth largest holding.
THE FUND'S PORTFOLIO IS ACTIVELY MANAGED AND, THEREFORE, ITS HOLDINGS AND
WEIGHTINGS OF A PARTICULAR ISSUER OR PARTICULAR SECTOR AS A PERCENTAGE OF
PORTFOLIO ASSETS ARE SUBJECT TO CHANGE. SECTORS MAY INCLUDE MANY INDUSTRIES.
3
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A PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT A FUND, INCLUDING ITS
INVESTMENT OBJECTIVES, RISKS, CHARGES, AND ONGOING EXPENSES, WHICH AN INVESTOR
SHOULD CAREFULLY CONSIDER BEFORE INVESTING. TO OBTAIN A PROSPECTUS ON ANY LORD
ABBETT MUTUAL FUND, PLEASE CONTACT YOUR INVESTMENT PROFESSIONAL OR LORD ABBETT
DISTRIBUTOR LLC AT 800-874-3733 OR VISIT OUR WEBSITE www.LordAbbett.com. READ
THE PROSPECTUS CAREFULLY BEFORE INVESTING.
(1) The S&P Super Composite 1500(R) Index combines the S&P 500(R), S&P MidCap
400(R), and S&P SmallCap 600(R) indexes and is an efficient way to create a
broad market portfolio representing 90 percent of U.S. equities.
(2) The Russell 2000(R) Index measures the performance of the 2,000 smallest
companies in the Russell 3000(R) Index, which represents approximately 8 percent
of the total market capitalization of the Russell 3000 Index.
The indexes 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 January 31, 2006; 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.
4
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EXPENSE EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges on purchase payments (these charges vary among
the share classes); and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees (these charges vary among the share
classes); and other Fund expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period (August 1, 2005 through January 31,
2006).
ACTUAL EXPENSES
For each class of the Fund, the first line of the table on the following page
provides information about actual account values and actual expenses. You may
use the information in this line, together with the amount you invested, to
estimate the expenses that you paid over the period. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number in the first line under the heading
entitled "Expenses Paid During the Period 8/1/05 - 1/31/06" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
For each class of the Fund, the second line of the table on the following
page provides information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio and an assumed rate of return
of 5% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
5
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Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE PERIOD+
----- ----- -------
8/1/05 -
8/1/05 1/31/06 1/31/06
------ ------- --------
CLASS A
Actual $ 1,000.00 $ 1,103.40 $ 7.21
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,018.35 $ 6.92
CLASS B
Actual $ 1,000.00 $ 1,099.60 $ 10.59
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,015.12 $ 10.16
CLASS C
Actual $ 1,000.00 $ 1,099.70 $ 10.59
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,015.12 $ 10.16
CLASS P
Actual $ 1,000.00 $ 1,103.00 $ 7.69
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,017.90 $ 7.38
CLASS Y
Actual $ 1,000.00 $ 1,105.40 $ 5.31
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.16 $ 5.09
</Table>
+ For each class of the Fund, expenses are equal to the annualized expense
ratio for such class (1.36% for Class A, 2.00% for Classes B and C, 1.45% for
Class P, and 1.00% for Class Y) multiplied by the average account value over
the period, multiplied by 184/365 (to reflect one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY SECTOR
JANUARY 31, 2006
<Table>
<Caption>
SECTOR* %**
Auto & Transportation 2.48%
Consumer Discretionary 17.80%
Consumer Staples 1.80%
Financial Services 13.68%
Healthcare 14.33%
Materials & Processing 13.27%
Other Energy 9.01%
Producer Durables 12.45%
Technology 8.10%
Short-Term Investment 7.08%
Total 100.00%
</Table>
* A sector may comprise several industries.
** Represents percent of total investments.
6
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)
JANUARY 31, 2006
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- ------------------------------------------------------------------------------
COMMON STOCKS 91.78%
AIR TRANSPORTATION 0.28%
Republic Airways Holdings Inc.* 286,801 $ 4,253
------------
AUTO COMPONENTS 1.25%
Wabash National Corp. 882,850 18,831
------------
BANKS: OUTSIDE NEW YORK CITY 1.40%
Hanmi Financial Corp. 353,358 6,710
Investors Financial Services Corp. 134,300 6,304
PrivateBancorp, Inc. 213,700 8,080
------------
TOTAL 21,094
------------
BIOTECHNOLOGY RESEARCH & PRODUCTION 1.21%
Digene Corp.* 305,629 10,147
Kensey Nash Corp.* 331,304 8,087
------------
TOTAL 18,234
------------
BUILDING: MATERIALS 2.02%
Hughes Supply, Inc. 659,700 30,412
------------
BUILDING: ROOFING & WALLBOARD 1.85%
Beacon Roofing
Supply, Inc.* 561,811 18,658
ElkCorp 263,300 9,260
------------
TOTAL 27,918
------------
CASINOS & GAMBLING 0.37%
Alliance Gaming Corp.* 370,500 5,635
------------
COAL 3.68%
Arch Coal, Inc. 131,100 11,369
Massey Energy Co. 1,067,100 44,018
------------
TOTAL 55,387
------------
COMMUNICATIONS & MEDIA 1.37%
Entravision
Communications Corp.* 2,912,800 20,681
------------
COMMUNICATIONS TECHNOLOGY 0.82%
WebEx Communications, Inc.* 508,537 $ 12,347
------------
COMPUTER SERVICES, SOFTWARE & SYSTEMS 4.10%
CACI Int'l. Inc. Class A* 302,400 17,267
Kanbay Int'l., Inc.* 483,120 8,145
Websense, Inc.* 550,700 36,308
------------
TOTAL 61,720
------------
COMPUTER TECHNOLOGY 1.98%
RadiSys Corp.* 519,300 9,337
Stratasys, Inc.*(b) 792,124 20,548
------------
TOTAL 29,885
------------
CONSUMER ELECTRONICS 0.94%
Universal
Electronics Inc.*(b) 785,318 14,097
------------
CONSUMER PRODUCTS 0.17%
USANA Health Sciences, Inc.* 64,300 2,579
------------
DIVERSIFIED FINANCIAL SERVICES 2.48%
Jones Lang LaSalle, Inc. 130,300 7,671
Texas United Bancshares Inc. 51,060 945
USI Holdings Corp.* 2,042,539 28,759
------------
TOTAL 37,375
------------
DIVERSIFIED MANUFACTURING 2.19%
Hexcel Corp.* 1,577,300 32,918
------------
DRUGS & PHARMACEUTICALS 1.49%
Par Pharmaceutical Cos., Inc.* 677,835 22,423
------------
EDUCATION SERVICES 2.86%
Education Management Corp.* 718,620 22,004
Strayer Education, Inc. 238,396 21,113
------------
TOTAL 43,117
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
JANUARY 31, 2006
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- ------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT & COMPONENTS 1.30%
Genlyte Group Inc. (The)* 338,090 $ 19,555
------------
ELECTRONICS 1.09%
Avid Technology, Inc.* 332,099 16,495
------------
ELECTRONICS: INSTRUMENTS, GAUGES & METERS 1.84%
Measurement Specialties, Inc.*(b) 1,074,158 27,713
------------
ELECTRONICS: MEDICAL SYSTEMS 0.70%
TriPath Imaging, Inc.* 1,332,813 10,543
------------
FOODS 1.78%
J & J Snack Foods Corp. 885,638 26,817
------------
HEALTH & PERSONAL CARE 2.03%
Amedisys, Inc.* 675,414 30,630
------------
HEALTHCARE FACILITIES 4.54%
ICON plc ADR* 602,943 26,517
LCA-vision Inc. 677,494 38,055
Psychiatric Solutions, Inc.* 117,600 3,880
------------
TOTAL 68,452
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HOMEBUILDING 4.64%
Centex Corp. 313,900 22,409
Ryland Group, Inc. (The) 655,500 47,432
------------
TOTAL 69,841
------------
HOUSEHOLD FURNISHINGS 2.98%
Select Comfort Corp.* 1,626,059 44,879
------------
IDENTIFICATION CONTROL & FILTER DEVICES 0.75%
X-Rite, Inc. 950,144 11,297
------------
INSURANCE: MULTI-LINE 2.62%
Hilb Rogal & Hobbs Co. 1,013,100 39,389
------------
INSURANCE: PROPERTY-CASUALTY 6.05%
First Acceptance Corp.* 397,100 4,448
HCC Insurance
Holdings, Inc. 1,500,750 $ 46,613
Ohio Casualty Corp. 1,326,977 39,995
------------
TOTAL 91,056
------------
MACHINERY: INDUSTRIAL/SPECIALTY 2.64%
Actuant Corp. Class A 581,600 33,297
Joy Global, Inc. 118,700 6,415
------------
TOTAL 39,711
------------
MACHINERY: OIL WELL EQUIPMENT & SERVICES 3.68%
Key Energy Services, Inc.* 495,800 7,834
Pride Int'l., Inc.* 1,346,900 47,559
------------
TOTAL 55,393
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MACHINERY: SPECIALTY 0.49%
Graco Inc. 183,600 7,377
------------
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES 2.81%
Kyphon Inc.* 545,121 22,660
Symmetry Medical Inc.* 921,700 19,614
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TOTAL 42,274
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MEDICAL SERVICES 1.36%
Option Care, Inc. 1,487,466 20,542
------------
METAL FABRICATING 1.83%
Commercial Metals Co. 581,000 27,499
------------
METALS & MINERALS MISCELLANEOUS 2.64%
Cleveland-Cliffs Iron Co. (The) 368,300 39,721
------------
OIL: CRUDE PRODUCERS 1.54%
Grey Wolf, Inc.* 169,400 1,491
Unit Corp.* 364,800 21,778
------------
TOTAL 23,269
------------
RADIO & TV BROADCASTERS 0.00%
Regent Communications, Inc.* 98 1
------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONCLUDED)
JANUARY 31, 2006
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- ------------------------------------------------------------------------------
RETAIL 4.46%
Global Imaging Systems, Inc.* 400,126 $ 14,148
Insight Enterprises, Inc.* 962,239 20,120
Lithia Motors, Inc. 67,500 2,054
Rush Enterprises, Inc.
Class A* 651,871 11,017
Tuesday Morning Corp. 934,433 19,885
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TOTAL 67,224
------------
SAVINGS & LOAN 0.97%
Brookline Bancorp, Inc. 970,218 14,544
------------
SERVICES: COMMERCIAL 2.63%
Chemed Corp. 149,800 7,964
Copart, Inc.* 286,790 7,224
Harris Interactive Inc.* 2,559,811 13,746
SM&A*(b) 1,472,691 10,618
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TOTAL 39,552
------------
SHIPPING 0.25%
Excel Maritimem Carriers Ltd.*(a) 327,400 3,729
------------
STEEL 2.59%
Carpenter Technology Corp. 279,300 25,294
Gibraltar Industries, Inc. 505,490 13,663
------------
TOTAL 38,957
------------
TELECOMMUNICATIONS EQUIPMENT 0.64%
Spectralink Corp. 778,260 9,612
------------
TEXTILES APPAREL MANUFACTURERS 1.80%
Warnaco Group, Inc. (The)* 1,090,170 27,058
------------
TRANSPORTATION MISCELLANEOUS 0.67%
Vitran Corp. Inc.*(a) 521,736 10,070
------------
TOTAL COMMON STOCKS
(cost $1,184,131,230) 1,382,106
============
SHORT-TERM INVESTMENT 6.99%
REPURCHASE AGREEMENT 6.99%
Repurchase Agreement
dated 1/31/2006, 3.65% due 2/1/2006
with State Street Bank & Trust Co.
collateralized by
$107,215,000 of Federal Home Loan Bank at
4.125% due 10/19/2007;
value: $107,350,091;
proceeds: $105,252,830
(cost $105,242,159) $ 105,242 $ 105,242
------------
TOTAL INVESTMENTS IN SECURITIES 98.77%
(cost $1,289,373,389) 1,487,348
============
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES 1.23% 18,546
------------
NET ASSETS 100.00% $ 1,505,894
============
</Table>
* Non-income producing security.
(a) Foreign security traded in U.S. dollars.
(b) Affiliated issuer (holding represents 5% or more of the underlying issuer's
outstanding voting shares). See Note 10.
ADR American Depositary Receipt.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JANUARY 31, 2006
<Table>
ASSETS:
Investments in unaffiliated issuers, at value (cost $1,217,803,105) $ 1,414,372,442
Investments in affiliated issuers, at value (cost $71,570,284) 72,975,533
Cash 1,773,047
Receivables:
Interest and dividends 326,269
Investment securities sold 14,942,807
Capital shares sold 29,430,965
Prepaid expenses and other assets 178,072
- --------------------------------------------------------------------------------------------------
TOTAL ASSETS 1,533,999,135
- --------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 24,702,350
Capital shares reacquired 1,515,090
Management fee 833,799
12b-1 distribution fees 738,350
Fund administration 56,273
Trustees' fees 52,820
Accrued expenses and other liabilities 206,498
- --------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 28,105,180
==================================================================================================
NET ASSETS $ 1,505,893,955
==================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 1,283,003,020
Accumulated net investment loss (5,148,175)
Accumulated net realized gain on investments 30,064,524
Net unrealized appreciation on investments 197,974,586
- --------------------------------------------------------------------------------------------------
NET ASSETS $ 1,505,893,955
==================================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 780,485,002
Class B Shares $ 106,301,582
Class C Shares $ 364,348,938
Class P Shares $ 48,692,824
Class Y Shares $ 206,065,609
OUTSTANDING SHARES BY CLASS
(UNLIMITED NUMBER OF AUTHORIZED SHARES OF BENEFICIAL INTEREST):
Class A Shares 43,556,469
Class B Shares 6,093,527
Class C Shares 20,907,547
Class P Shares 2,708,919
Class Y Shares 11,360,744
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 17.92
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) $ 19.01
Class B Shares-Net asset value $ 17.45
Class C Shares-Net asset value $ 17.43
Class P Shares-Net asset value $ 17.98
Class Y Shares-Net asset value $ 18.14
- --------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JANUARY 31, 2006
<Table>
INVESTMENT INCOME:
Dividends $ 2,302,933
Interest 955,655
- --------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 3,258,588
- --------------------------------------------------------------------------------------------------
EXPENSES:
Management fee 4,053,630
12b-1 distribution plan-Class A 1,014,931
12b-1 distribution plan-Class B 448,201
12b-1 distribution plan-Class C 1,374,012
12b-1 distribution plan-Class P 60,601
Shareholder servicing 990,840
Professional 24,796
Reports to shareholders 57,958
Fund administration 217,702
Custody 32,648
Trustees' fees 31,370
Registration 76,020
Other 8,835
- --------------------------------------------------------------------------------------------------
Gross expenses 8,391,544
Expense reductions (See Note 7) (12,634)
- --------------------------------------------------------------------------------------------------
NET EXPENSES 8,378,910
- --------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (5,120,322)
==================================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments in unaffiliated issuers 31,020,886
Net realized gain (loss) on investments in affiliated issuers 2,536,763
Net change in unrealized appreciation (depreciation) on investments 99,364,563
==================================================================================================
NET REALIZED AND UNREALIZED GAIN 132,922,212
==================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 127,801,890
==================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS ENDED
JANUARY 31, 2006 FOR THE YEAR ENDED
INCREASE IN NET ASSETS (UNAUDITED) JULY 31, 2005
OPERATIONS:
Net investment loss $ (5,120,322) $ (5,950,449)
Net realized gain (loss) on investments 33,557,649 38,787,742
Net change in unrealized appreciation (depreciation) on investments 99,364,563 88,832,217
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 127,801,890 121,669,510
===============================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain
Class A (16,715,893) (19,850,931)
Class B (2,674,308) (5,004,449)
Class C (8,323,037) (8,648,412)
Class P (788,460) (36,167)
Class Y (3,630,563) (862,999)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (32,132,261) (34,402,958)
===============================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 598,265,694 555,640,932
Reinvestment of distributions 27,056,375 27,702,802
Cost of shares reacquired (92,635,719) (71,067,406)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS 532,686,350 512,276,328
===============================================================================================================================
NET INCREASE IN NET ASSETS 628,355,979 599,542,880
===============================================================================================================================
NET ASSETS:
Beginning of period 877,537,976 277,995,096
- -------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 1,505,893,955 $ 877,537,976
===============================================================================================================================
ACCUMULATED NET INVESTMENT LOSS $ (5,148,175) $ (27,583)
===============================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 7/31 6/18/2001(d)
1/31/2006 --------------------------------------------------- TO
(UNAUDITED) 2005 2004 2003 2002 7/31/2001
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 16.71 $ 14.37 $ 11.71 $ 9.18 $ 10.45 $ 10.00
============ ========== ========== ========== ========== ============
Unrealized appreciation
on investments .06
------------
NET ASSET VALUE ON SEC
EFFECTIVE DATE $ 10.06
============
Investment operations:
Net investment loss(a) (.06) (.15) (.16) (.12) (.12) (.07)
Net realized and unrealized
gain (loss) 1.75 3.88 3.07 2.65 (1.15) .46
------------ ---------- ---------- ---------- ---------- ------------
Total from investment
operations 1.69 3.73 2.91 2.53 (1.27) .39
------------ ---------- ---------- ---------- ---------- ------------
Distributions to
shareholders from:
Net realized gain (.48) (1.39) (.25) - -(g) -
------------ ---------- ---------- ---------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 17.92 $ 16.71 $ 14.37 $ 11.71 $ 9.18 $ 10.45
============ ========== ========== ========== ========== ============
Total Return(b)(e) .60%(c)
Total Return(b) 10.34%(c) 27.38% 24.96% 27.56% (12.11)% 3.88%(c)(f)
RATIOS TO AVERAGE NET ASSETS:
Expenses, including
expense reductions .68%(c) 1.47% 1.55% 1.71% 1.66% .69%(c)
Expenses, excluding
expense reductions .69%(c) 1.47% 1.55% 1.89% 2.41% .81%(c)
Net investment loss (.38)%(c) (.96)% (1.12)% (1.30)% (1.09)% (.67)%(c)
<Caption>
SIX MONTHS
ENDED YEAR ENDED 7/31 6/18/2001(d)
1/31/2006 --------------------------------------------------- TO
SUPPLEMENTAL DATA (UNAUDITED) 2005 2004 2003 2002 7/31/2001
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 780,485 $ 465,124 $ 162,651 $ 59,717 $ 29,962 $ 2,214
Portfolio turnover rate 20.18% 58.65% 84.91% 68.48% 47.69% 5.86%
=======================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 7/31 6/18/2001(d)
1/31/2006 --------------------------------------------------- TO
(UNAUDITED) 2005 2004 2003 2002 7/31/2001
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 16.34 $ 14.15 $ 11.56 $ 9.12 $ 10.45 $ 10.00
============ ========== ========== ========== ========== ============
Unrealized appreciation
on investments .06
------------
NET ASSET VALUE ON SEC
EFFECTIVE DATE $ 10.06
============
Investment operations:
Net investment loss(a) (.12) (.24) (.24) (.18) (.18) (.07)
Net realized and unrealized
gain (loss) 1.71 3.82 3.02 2.62 (1.15) .46
------------ ---------- ---------- ---------- ---------- ------------
Total from investment
operations 1.59 3.58 2.78 2.44 (1.33) .39
------------ ---------- ---------- ---------- ---------- ------------
Distributions to
shareholders from:
Net realized gain (.48) (1.39) (.19) - -(g) -
------------ ---------- ---------- ---------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 17.45 $ 16.34 $ 14.15 $ 11.56 $ 9.12 $ 10.45
============ ========== ========== ========== ========== ============
Total Return(b)(e) .60%(c)
Total Return(b) 9.96%(c) 26.71% 24.19% 26.75% (12.68)% 3.88%(c)(f)
RATIOS TO AVERAGE NET ASSETS:
Expenses, including expense
reductions 1.01%(c) 2.10% 2.18% 2.33% 2.27% .75%(c)
Expenses, excluding expense
reductions 1.01%(c) 2.10% 2.18% 2.51% 3.02% .87%(c)
Net investment loss (.71)%(c) (1.61)% (1.75) (1.92)% (1.70)% (.76)%(c)
<Caption>
SIX MONTHS
ENDED YEAR ENDED 7/31 6/18/2001(d)
1/31/2006 --------------------------------------------------- TO
SUPPLEMENTAL DATA (UNAUDITED) 2005 2004 2003 2002 7/31/2001
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of $ 106,301 $ 81,117 $ 45,384 $ 21,518 $ 12,013 $ 283
period (000)
Portfolio turnover rate 20.18% 58.65% 84.91% 68.48% 47.69% 5.86%
=======================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 7/31 6/18/2001(d)
1/31/2006 --------------------------------------------------- TO
(UNAUDITED) 2005 2004 2003 2002 7/31/2001
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 16.32 $ 14.14 $ 11.56 $ 9.12 $ 10.45 $ 10.00
============ ========== ========== ========== ========== ============
Unrealized appreciation
on investments .06
------------
NET ASSET VALUE ON SEC
EFFECTIVE DATE $ 10.06
============
Investment operations:
Net investment loss(a) (.12) (.24) (.24) (.18) (.18) (.07)
Net realized and unrealized
gain (loss) 1.71 3.81 3.02 2.62 (1.15) .46
------------ ---------- ---------- ---------- ---------- ------------
Total from investment
operations 1.59 3.57 2.78 2.44 (1.33) .39
------------ ---------- ---------- ---------- ---------- ------------
Distributions to shareholders
from:
Net realized gain (.48) (1.39) (.20) - -(g) -
------------ ---------- ---------- ---------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 17.43 $ 16.32 $ 14.14 $ 11.56 $ 9.12 $ 10.45
============ ========== ========== ========== ========== ============
Total Return(b)(e) .60%(c)
Total Return(b) 9.97%(c) 26.65% 24.18% 26.75% (12.68)% 3.88%(c)(f)
RATIOS TO AVERAGE NET ASSETS:
Expenses, including expense
reductions 1.01%(c) 2.10% 2.18% 2.33% 2.27% .75%(c)
Expenses, excluding expense
reductions 1.01%(c) 2.10% 2.18% 2.51% 3.02% .87%(c)
Net investment loss (.71)%(c) (1.60)% (1.75)% (1.92)% (1.70)% (.76)%(c)
</Table>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 7/31 6/18/2001(d)
1/31/2006 --------------------------------------------------- TO
SUPPLEMENTAL DATA: (UNAUDITED) 2005 2004 2003 2002 7/31/2001
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of $ 364,349 $ 221,554 $ 64,447 $ 23,039 $ 10,432 $ 468
period (000)
Portfolio turnover rate 20.18% 58.65% 84.91% 68.48% 47.69% 5.86%
=======================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 7/31 6/18/2001(d)
1/31/2006 --------------------------------------------------- TO
(UNAUDITED) 2005 2004 2003 2002 7/31/2001
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 16.77 $ 14.42 $ 1.73 $ 9.19 $ 10.45 $ 10.00
============ ========== ========== ========== ========== ============
Unrealized appreciation
on investments .06
------------
NET ASSET VALUE ON SEC
EFFECTIVE DATE $ 10.06
============
Investment operations:
Net investment loss(a) (.07) (.17) (.37) (.10) (.12) (.07)
Net realized and unrealized
gain (loss) 1.76 3.91 3.28 2.64 (1.14) .46
------------ ---------- ---------- ---------- ---------- ------------
Total from investment
operations 1.69 3.74 2.91 2.54 (1.26) .39
------------ ---------- ---------- ---------- ---------- ------------
Distributions to shareholders
from:
Net realized gain (.48) (1.39) (.22) - -(g) -
------------ ---------- ---------- ---------- ---------- ------------
NET ASSET VALUE, END
OF PERIOD $ 17.98 $ 16.77 $ 14.42 $ 11.73 $ 9.19 $ 10.45
============ ========== ========== ========== ========== ============
Total Return(b)(c) .60%
Total Return(b) 10.30%(c) 27.35% 24.97% 27.64% (12.01)% 3.88%(c)(f)
RATIOS TO AVERAGE NET ASSETS:
Expenses, including expense
reductions .73%(c) 1.69% 1.63%+ 1.78%+ 1.72% .70%(c)
Expenses, excluding expense
reductions .73%(c) 1.70%+ 1.63%+ 1.96%+ 2.47% .82%(c)
Net investment loss (.42)%(c) (1.06)% (1.20)%+ (1.37)%+ (1.15)% (.68)%(c)
</Table>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 7/31 6/18/2001(d)
1/31/2006 --------------------------------------------------- TO
SUPPLEMENTAL DATA: (UNAUDITED) 2005 2004 2003 2002 7/31/2001
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of $ 48,693 $ 13,954 $ 218 $ 1 $ 1 $ 1
period (000)
Portfolio turnover rate 20.18% 58.65% 84.91% 68.48% 47.69% 5.86%
=======================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 7/31 6/18/2001(d)
1/31/2006 --------------------------------------------------- TO
(UNAUDITED) 2005 2004 2003 2002 7/31/2001
PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 16.88 $ 14.45 $ 11.75 $ 9.20 $ 10.45 $ 10.00
============ ========== ========== ========== ========== ============
Unrealized appreciation
on investments .06
------------
NET ASSET VALUE ON SEC
EFFECTIVE DATE $ 10.06
============
Investment operations:
Net investment loss(a) (.03) (.09) (.10) (.11) (.10) (.07)
Net realized and unrealized
gain (loss) 1.77 3.91 3.07 2.66 (1.15) .46
------------ ---------- ---------- ---------- ---------- ------------
Total from investment
operations 1.74 3.82 2.97 2.55 (1.25) .39
------------ ---------- ---------- ---------- ---------- ------------
Distributions to shareholders from:
Net realized gain (.48) (1.39) (.27) - -(g) -
------------ ---------- ---------- ---------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 18.14 $ 16.88 $ 14.45 $ 11.75 $ 9.20 $ 10.45
============ ========== ========== ========== ========== ============
Total Return(b)(e) .60%(c)
Total Return(b) 10.54%(c) 27.88% 24.45% 27.72% (11.92)% 3.88%(c)(f)
RATIOS TO AVERAGE NET ASSETS:
Expenses, including expense
reductions .51%(c) 1.17% 1.18%+ 1.33%+ 1.27% .66%(c)
Expenses, excluding expense
reductions .51%(c) 1.17%+ 1.18%+ 1.51%+ 2.02% .78%(c)
Net investment loss (.20)%(c) (.57)% (.75)%+ (.92)%+ (.70)% (.63)%(c)
</Table>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 7/31 6/18/2001(d)
1/31/2006 --------------------------------------------------- TO
SUPPLEMENTAL DATA: (UNAUDITED) 2005 2004 2003 2002 7/31/2001
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 206,066 $ 95,788 $ 5,295 $ 1 $ 1 $ 1
Portfolio turnover rate 20.18% 58.65% 84.91% 68.48% 47.69% 5.86%
=======================================================================================================================
</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) Not annualized.
(d) Commencement of investment operations; SEC effective date on June 26, 2001;
Fund shares became available to the public on July 2, 2001.
(e) Total return is for the period 6/18/01 through 6/26/01.
(f) Total return is for the period 6/26/01 through 7/31/01.
(g) Amount represents less than $.01.
SEE NOTES TO FINANCIAL STATEMENTS.
17
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
Lord Abbett Blend Trust (the "Trust") is registered under the Investment Company
Act of 1940 (the "Act") as an open-end management company, organized as a
Delaware Business Trust on May 1, 2001. The Trust has one series, Lord Abbett
Small-Cap Blend Fund (the "Fund"). The Securities and Exchange Commission
declared the registration of the Fund and its shares effective on June 26, 2001
and each class of shares became available to the public on July 2, 2001. The
Fund is diversified under the Act.
The Fund's investment objective is to seek long-term growth of capital by
investing primarily in stocks of small companies. 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 Classes 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
(12 months if shares were purchased on or after November 1, 2004) following
certain 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
certain estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) INVESTMENT VALUATION-Securities traded on any recognized U.S. or non-U.S.
exchange or on NASDAQ, Inc. are valued at the last sale price or official
closing price on the exchange or system on which they are principally
traded. Unlisted equity securities are valued at the last quoted sale price
or, if no sale price is available, at the mean between the most recently
quoted bid and asked prices. Securities for which market quotations are not
readily available are valued at fair value as determined by management and
approved in good faith by the Board of Trustees. Short-term securities with
60 days or less remaining to maturity are valued using the amortized cost
method, which approximates current market value.
(b) SECURITY TRANSACTIONS-Security transactions are recorded as of the date
that the securities are purchased or sold (trade date). Realized gains and
losses on sales of portfolio securities are calculated using the
identified-cost method. Realized and unrealized gains (losses) are
allocated to each class of shares based upon the relative proportion of net
assets at the beginning of the day.
(c) INVESTMENT INCOME-Dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. 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.
18
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(d) FEDERAL TAXES-It is the policy of the Fund to meet the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all taxable income and
capital gains to its shareholders. Therefore, no Federal income tax
provision is required.
(e) EXPENSES-Expenses, 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. Classes A, B, C, and P shares bear all expenses and
fees relating to their respective 12b-1 Distribution Plans.
(f) 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, or by securities of the U.S.
Government, its agencies, its instrumentalities, or U.S. Government
sponsored enterprises having a value equal to, or in excess of, the value
of the repurchase agreement (including accrued interest). If the seller of
the agreement defaults on its obligation to repurchase the underlying
securities at a time when the value of 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 Trust 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 following annual rates:
.75% of the first $1 billion of average daily net assets;
.70% over $1 billion.
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 fees to Lord Abbett Distributor LLC
("Distributor"), an affiliate of Lord Abbett. The fees are accrued daily at
annual rates based upon average daily net assets as follows:
<Table>
<Caption>
FEE CLASS A CLASS B CLASS C CLASS P
- ---------------------------------------------------------------------------------
Service .25% .25% .25% .20%
Distribution .10%(1)(2) .75% .75% .25%
</Table>
(1) Until October 1, 2004, the Fund paid a one-time distribution fee of up to
1.00% on certain qualifying purchases of Class A shares. Effective October
1, 2004, the Distributor commenced payment of such one-time distribution
fee. The unamortized balance of the prepaid distribution fees as of January
31, 2006 was $19,851. This amount will continue to be amortized by the
Fund, generally over a two-year period.
(2) The amount of CDSC collected during the six months ended January 31, 2006
was $872.
19
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Class Y does not have a distribution plan.
COMMISSIONS
Distributor received the following commissions on sales of shares of the Fund,
after concessions were paid to authorized dealers, for the six months ended
January 31, 2006:
<Table>
<Caption>
DISTRIBUTOR DEALERS'
COMMISSIONS CONCESSIONS
- -----------------------------
$ 584,426 $ 3,342,616
</Table>
Distributor received CDSCs of $1,262 and $15,076 for Class A and Class C shares,
respectively, for the six months ended January 31, 2006.
One Trustee and certain of the Trust'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, if any, 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 earnings and profits for tax purposes, are reported
as a tax return of capital.
The tax character of distributions paid during the six months ended January 31,
2006 and the fiscal year ended July 31, 2005 are as follows:
<Table>
<Caption>
SIX MONTHS ENDED
1/31/2006 YEAR ENDED
(UNAUDITED) 7/31/2005
- ----------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 16,605,582 $ 17,492,584
Net long-term capital gains 15,526,679 16,910,374
- ----------------------------------------------------------------------
Total distributions paid $ 32,132,261 $ 34,402,958
======================================================================
</Table>
As of January 31, 2006, the Fund's aggregate unrealized security gains (losses)
based on cost for U.S. Federal income tax purposes are as follows:
<Table>
Tax cost $ 1,289,785,780
- ------------------------------------------------
Gross unrealized gain 214,547,547
Gross unrealized loss (16,985,352)
- ------------------------------------------------
Net unrealized security gain $ 197,562,195
================================================
</Table>
The difference between book-basis and tax-basis unrealized gains (losses) is
attributable to wash sales.
20
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
for the six months ended January 31, 2006 are as follows:
<Table>
<Caption>
PURCHASES SALES
- ----------------------------------
$ 637,306,999 $ 210,868,433
</Table>
There were no purchases or sales of U.S. Government securities for the six
months ended January 31, 2006.
6. TRUSTEES' REMUNERATION
The Trust's officers and the one Trustee who are associated with Lord Abbett do
not receive any compensation from the Trust for serving in such capacities.
Outside Trustees' fees are allocated among all Lord Abbett-sponsored funds based
on the net assets of each fund. There is an equity based plan available to all
outside Trustees under which outside Trustees must defer receipt of a portion
of, and may elect to defer receipt of an additional portion of Trustees' fees.
The deferred amounts are treated as though equivalent dollar amounts have been
invested proportionately in the funds. Such amounts and earnings accrued thereon
are included in Trustees' Fees on the Statement of Operations and in Trustees'
Fees Payable on the Statement of Assets and Liabilities and are not deductible
for U.S. Federal income tax purposes until such amounts are paid.
7. EXPENSE REDUCTIONS
The Fund has entered into arrangements with 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
$250,000,000 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. Effective December 9, 2005,
the amount available to the funds under the Facility was increased from
$200,000,000 to 250,000,000. Any borrowings under this Facility will bear
interest at current market rates as defined in the agreement. The fee for this
Facility is at an annual rate of .08%. At January 31, 2006, there were no loans
outstanding pursuant to this Facility nor was the Facility utilized at any time
during the six months ended January 31, 2006.
9. CUSTODIAN AND ACCOUNTING AGENT
State Street Bank & Trust Company ("SSB") is the Fund's custodian and accounting
agent. SSB performs custodial, accounting and recordkeeping functions relating
to portfolio transactions and calculating the Fund's NAV.
21
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
10. TRANSACTIONS WITH AFFILIATED ISSUERS
An affiliated issuer is one in which the Fund has ownership of at least 5% of
the outstanding voting securities of the underlying issuer at any point during
the fiscal year. The Fund had the following transactions with affiliated issuers
during the six months ended January 31, 2006:
<Table>
<Caption>
REALIZED
BALANCE OF BALANCE OF VALUE GAIN (LOSS)
SHARES HELD GROSS GROSS SHARES HELD AT 8/1/2005
AFFILIATED ISSUER AT 7/31/2005 ADDITIONS SALES AT 1/31/2006 1/31/2006 TO 1/31/2006
- -----------------------------------------------------------------------------------------------------------------------------
Measurement Specialties, Inc. 721,400 352,758 - 1,074,158 $ 27,713,276 $ -
Select Comfort Corp.(a) 1,453,445 426,514 (253,900) 1,626,059 44,879,228 2,617,213
SM&A 1,539,691 - (67,000) 1,472,691 10,618,102 (80,450)
Stratasys, Inc. 461,009 331,115 - 792,124 20,547,697 -
Universal Electronics, Inc. 568,905 216,413 - 785,318 14,096,458 -
- -----------------------------------------------------------------------------------------------------------------------------
Total $ 117,854,761 $ 2,536,763
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
(a) No longer affiliated as of January 31, 2006.
11. INVESTMENT RISKS
The Fund is subject to the general risks and considerations associated with
equity investing as well as the particular risks associated with growth and
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 Fund invests. Different types of stocks shift in and out
of favor depending on market and economic conditions. Growth stocks tend to be
more volatile than other stocks. The market may fail to recognize the intrinsic
value of particular value stocks for a long time. In addition, if the Fund's
assessment of a company's potential for growth or market conditions is wrong, it
could suffer losses or produce poor performance relative to other funds, even in
a rising market. The Fund invests primarily in small company stocks, which tend
to be more volatile and can be less liquid than large company stocks. Small
companies may also have more limited product lines, markets or financial
resources, and typically experience a higher risk of failure than large
companies.
These factors can affect the Fund's performance.
12. SUMMARY OF CAPITAL TRANSACTIONS
Transactions in shares of beneficial interest are as follows:
<Table>
<Caption>
SIX MONTHS ENDED
JANUARY 31, 2006 YEAR ENDED
(UNAUDITED) JULY 31, 2005
- --------------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------
Shares sold 17,694,450 $ 298,601,704 18,253,096 $ 281,039,330
Reinvestment of distributions 888,233 14,860,252 1,200,214 17,475,539
Shares reacquired (2,855,421) (47,619,299) (2,942,691) (44,852,942)
- --------------------------------------------------------------------------------------------------------------
Increase 15,727,262 $ 265,842,657 16,510,619 $ 253,661,927
- --------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------------------------------------
Shares sold 1,325,967 $ 21,661,803 1,975,663 $ 29,598,985
Reinvestment of distributions 137,499 2,242,596 285,365 4,077,898
Shares reacquired (335,713) (5,468,671) (501,708) (7,467,921)
- --------------------------------------------------------------------------------------------------------------
Increase 1,127,753 $ 18,435,728 1,759,320 $ 26,208,962
- --------------------------------------------------------------------------------------------------------------
</Table>
22
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONCLUDED)
<Table>
<Caption>
SIX MONTHS ENDED
JANUARY 31, 2006 YEAR ENDED
(UNAUDITED) JULY 31, 2005
- --------------------------------------------------------------------------------------------------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------
Shares sold 7,860,055 $ 128,467,332 9,636,857 $ 145,030,429
Reinvestment of distributions 346,401 5,642,955 386,657 5,521,470
Shares reacquired (875,008) (14,270,238) (1,004,023) (15,079,178)
- --------------------------------------------------------------------------------------------------------------
Increase 7,331,448 $ 119,840,049 9,019,491 $ 135,472,721
- --------------------------------------------------------------------------------------------------------------
CLASS P SHARES
- --------------------------------------------------------------------------------------------------------------
Shares sold 2,196,865 $ 37,001,564 863,783 $ 13,771,499
Reinvestment of distributions 44,887 753,643 2,473 36,160
Shares reacquired (364,889) (6,053,595) (49,324) (794,363)
- --------------------------------------------------------------------------------------------------------------
Increase 1,876,863 $ 31,701,612 816,932 $ 13,013,296
- --------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
- --------------------------------------------------------------------------------------------------------------
Shares sold 6,608,998 $ 112,533,291 5,447,857 $ 86,200,689
Reinvestment of distributions 210,220 3,556,929 40,337 591,735
Shares reacquired (1,132,226) (19,223,916) (180,841) (2,873,002)
- --------------------------------------------------------------------------------------------------------------
Increase 5,686,992 $ 96,866,304 5,307,353 $ 83,919,422
- --------------------------------------------------------------------------------------------------------------
</Table>
13. SUBSEQUENT EVENT
As of the close of business on January 31, 2006, Class A, B, C, P, and Y shares
of the Fund are not available for purchase by new investors other than through
certain retirement and benefit plans, and financial intermediaries that provide
recordkeeping or advisory services and have entered into special arrangements
with the Fund or the Distributor. In addition, Directors/Trustees of the Lord
Abbett Family of Funds, partners and employees of Lord Abbett, and the family
members of such persons may purchase shares of the Fund. Investors should note,
however, that the Fund reserves the right to refuse any order that might disrupt
the efficient management of the Fund.
23
<Page>
APPROVAL OF ADVISORY CONTRACTS
At meetings on December 7 and 8, 2005, the Board, including all Trustees who are
not interested persons, considered whether to approve the continuation of the
existing management agreement between the Fund and Lord Abbett. In addition to
the materials the Board had reviewed throughout the course of the year, the
Board received materials relating to the management agreement before the meeting
and had the opportunity to ask questions and request further information in
connection with its consideration. The Board also took into account its
familiarity with Lord Abbett gained through its previous meetings and
discussions, and the examination of the portfolio management team conducted by
members of the Contract Committee during the year.
The materials received by the Board included, but were not limited to, (1)
information provided by Lipper Analytical Services, Inc. regarding the
investment performance of the Fund compared to the investment performance of a
group of funds with substantially similar investment objectives (the
"performance universe") and to the investment performance of an appropriate
securities index (if such an index existed), for various time periods each
ending September 30, 2005, (2) information on the effective management fee rates
and expense ratios for funds with similar objectives and similar size (the "peer
group"), (3) sales and redemption information for the Fund, (4) information
regarding Lord Abbett's financial condition, (5) an analysis of the relative
profitability of the management agreement to Lord Abbett, (6) information
regarding the distribution arrangements of the Fund, (7) information regarding
the personnel and other resources devoted by Lord Abbett to managing the Fund.
INVESTMENT MANAGEMENT SERVICES GENERALLY. The Board considered the investment
management services provided by Lord Abbett to the Fund, including investment
research, portfolio management, and trading, and Lord Abbett's commitment to
compliance with all relevant legal requirements. The Board also observed that
Lord Abbett was solely engaged in the investment management business and
accordingly did not experience the conflicts of interest resulting from being
engaged in other lines of business. The Board noted that Lord Abbett did not use
brokerage commissions to purchase third-party research. The Board also
considered the investment advisory services provided by Lord Abbett to other
clients, the fees charged for the services, and the differences in the nature of
the services provided to the Fund and other Lord Abbett Funds, on the one hand,
and the services provided to other clients, on the other.
INVESTMENT PERFORMANCE AND COMPLIANCE. The Board reviewed the Fund's investment
performance as well as the performance of the performance universe of funds,
both in terms of total return and in terms of other statistical measures. The
Board observed that the Fund's performance of the Class A shares of the Fund was
in the first quintile of its performance universe for the nine-month and
three-year periods and in the second quintile in the one-year period. The Board
also observed that the performance was above that of the Lipper Small-Cap Core
Index for each period.
LORD ABBETT'S PERSONNEL AND METHODS. The Board considered the qualifications of
the personnel providing investment management services to the Fund, in light of
its investment objective and discipline. Among other things, they considered the
size, experience, and turnover rates of Lord Abbett's investment management
staff, Lord Abbett's investment methodology and philosophy, and Lord Abbett's
approach to recruiting, training, and retaining investment management personnel.
The Board determined that Lord Abbett had the expertise and resources to manage
the Fund effectively.
24
<Page>
NATURE AND QUALITY OF OTHER SERVICES. The Board considered the nature, quality,
costs, and extent of administrative and other services performed by Lord Abbett
and Lord Abbett Distributor and the nature and extent of Lord Abbett supervision
of third party service providers, including the Fund's transfer agent and
custodian.
EXPENSES. The Board considered the expense ratio of the Fund and the expense
ratios of peer groups. It also considered the amount and nature of the fees paid
by shareholders. The Board observed that the contractual and actual management
and administrative services fees were approximately the same as the median of
the peer group. The Board also observed that the total expense ratio of Class A
was approximately nine basis points above the median of the peer group, the
total expense ratios of Classes B and C were approximately five basis points
below the median of the peer group, the total expense ratio of Class P was
approximately thirteen basis points above the median of the peer group, and the
total expense ratio of Class Y was approximately seven basis points above the
median of the peer group.
PROFITABILITY. The Board considered the level of Lord Abbett's profits in
managing the Fund, including a review of Lord Abbett's methodology for
allocating its costs to its management of the Fund. The Board concluded that the
allocation methodology had a reasonable basis and was appropriate. It considered
the profits realized by Lord Abbett in connection with the operation of the Fund
and whether the amount of profit was fair for the management of the Fund. The
Board also considered the profits realized from other businesses of Lord Abbett,
which may benefit from or be related to the Fund's business. The Board
considered Lord Abbett's profit margins in comparison with available industry
data, both accounting for and ignoring marketing and distribution expenses, and
how those profit margins could affect Lord Abbett's ability to recruit and
retain investment personnel. The Board recognized that Lord Abbett's
profitability was a factor in enabling it to attract and retain qualified
investment management personnel to provide services to the Fund. The Board noted
that Lord Abbett's profitability had increased, in part due to an increase in
assets under management, but concluded that Lord Abbett's profitability overall
and with respect to the Fund was not excessive.
ECONOMIES OF SCALE. The Board considered whether there had been any economies of
scale in managing the Fund, whether the Fund had appropriately benefited from
any such economies of scale, and whether there was potential for realization of
any further economies of scale. The Board concluded that the existing advisory
fee schedule adequately addressed any economies of scale in managing the Fund.
OTHER BENEFITS TO LORD ABBETT. The Board considered the character and amount of
fees paid by the Fund and the Fund's shareholders to Lord Abbett and Lord Abbett
Distributor for services other than investment advisory services. The Board also
considered the revenues and profitability of Lord Abbett's investment advisory
business apart from its mutual fund business, and the intangible benefits
enjoyed by Lord Abbett by virtue of its relationship with the Fund. The Board
observed that Lord Abbett Distributor receives 12b-1 fees from the Fund as to
shares held in accounts for which there is no other broker of record, may retain
a portion of the 12b-1 fees from the Fund, and receives a portion of the sales
charges on sales and redemptions of some classes of shares. In addition, Lord
Abbett accrues certain benefits for its business of providing investment advice
to clients other than the Fund, but that that business also benefits the Fund.
The Board also noted that Lord Abbett, as disclosed in the prospectus of the
Fund, has entered into revenue sharing arrangements with certain entities that
distribute shares of the Fund.
25
<Page>
ALTERNATIVE ARRANGEMENTS. The Board considered whether, instead of approving
continuation of the management agreement, employing one or more alternative
arrangements might be in the best interests of the Fund, such as continuing to
employ Lord Abbett, but on different terms.
In considering whether to approve the continuation of the management agreement,
the Board did not identify any single factor as paramount or controlling. This
summary does not discuss in detail all matters considered. After considering all
of the relevant factors, the Board unanimously found that continuation of the
existing management agreement was in the best interests of the Fund and its
shareholders and voted unanimously to approve the continuation of the management
agreement.
26
<Page>
HOUSEHOLDING
The Trust has adopted a policy that allows it to send only one copy of the
Fund's Prospectus, proxy material, annual report and semiannual report to
certain shareholders residing at the same "household." This reduces Fund
expenses, which benefits you and other shareholders. If you need additional
copies or do not want your mailings to be "householded," please call Lord Abbett
at 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, PROCEDURES, AND RECORD
A description of the policies and procedures that Lord Abbett uses to vote
proxies related to the Fund's portfolio securities, and information on how Lord
Abbett voted the Fund's proxies during the 12-month period ended June 30, 2005,
are available without charge, upon request, (i) by calling 888-522-2388; (ii) on
Lord Abbett's website at www.LordAbbett.com; and (iii) on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
SHAREHOLDER REPORTS AND QUARTERLY PORTFOLIO DISCLOSURE
The Trust is required to file its complete schedule of portfolio holdings with
the SEC for its first and third fiscal quarters on Form N-Q. Copies of the
filings are available without charge, upon request on the SEC's website at
www.sec.gov and may be available by calling Lord Abbett at 800-821-5129. You can
also obtain copies of Form N-Q by (i) visiting the SEC's Public Reference Room
in Washington, DC (information on the operation of the Public Reference Room may
be obtained by calling 800-SEC-0330); (ii) sending your request and a
duplicating fee to the SEC's Public Reference Room, Washington, DC 20549-0102;
or (iii) sending your request electronically to publicinfo@sec.gov.
27
<Page>
[LORD ABBETT 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 Lord Abbett Blend Trust
by a current fund prospectus. Lord Abbett Small-Cap Blend Fund
LASCB-3-106
Lord Abbett mutual fund shares are distributed by (3/06)
LORD ABBETT DISTRIBUTOR LLC.
</Table>
<Page>
ITEM 2: CODE OF ETHICS.
Not applicable.
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4: PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5: AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6: SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7: DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8: PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
NOT APPLICABLE.
ITEM 9: PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 11: CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the Registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940) as of a date within 90 days prior to the filing date of
this report, the Chief Executive Officer and Chief Financial Officer
of the Registrant have concluded that such disclosure controls and
procedures are reasonably designed and effective to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to them by others within
those entities.
(b) There were no significant changes in the Registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under the
Investment Company
<Page>
Act of 1940) that occurred during the second fiscal quarter of the
period covered by this report that have materially affected, or are
reasonably likely to materially affect, the Registrant's internal
control over financial reporting.
ITEM 12: EXHIBITS.
(a)(1) Amendments to Code of Ethics - Not applicable.
(a)(2) Certification of each principal executive officer and
principal financial officer of the Registrant as required by
Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached hereto
as a part of EX-99.CERT.
(a)(3) Not applicable.
(b) Certification of each principal executive officer and
principal financial officer of the Registrant as required by
Section 906 of the Sarbanes-Oxley Act of 2002 is attached
hereto as a part of EX-99.906CERT.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LORD ABBETT BLEND TRUST
/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: March 27, 2006
<Page>
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
LORD ABBETT BLEND TRUST
/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: March 27, 2006