Lord Abbett
Affiliated
Fund
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED APRIL 30, 1997
[GRAPHIC]
Helping you prepare
for tomorrow, today
[LOGO](R)
<PAGE>
Lord Abbett Affiliated Fund Building Investor Confidence Since 1934
[GRAPHIC] A Tradition of
Value
Investing
Affiliated's history highlights the concept of value investing: buying quality
companies when they are "on sale" and selling them when they reach their
potential. Through the years, this discipline has helped Affiliated Fund achieve
competitive returns with relatively moderate fluctuations in price.
- -------------------------------------------------------------------------------
Competitive Total Average Annual Rates of Total Return as of 4/30/97
Returns Consistently
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
For the past 40 years +12.2% per year
For the past 30 years +12.1% per year
For the past 20 years +14.7% per year
For the past 10 years +12.3% per year
For the past year +21.3% for the year
- -------------------------------------------------------------------------------
Consistency
The Fund has increased in value 33 out of the last 40 fiscal years.(1)
- --------------------------------------------------------------------------------
Large and Growing
Dividends
Shareholders taking dividends in cash saw their dividend checks increase 32 out
of the last 40 fiscal years.(2)
- --------------------------------------------------------------------------------
Shareholder
Satisfication
Lord Abbett Affiliated Fund's history demonstrates its ability to help
shareholders realize their financial objectives. That's probably why, on
average, Affiliated Fund shareholders have owned the Fund for over 18 years.(3)
- --------------------------------------------------------------------------------
The Fund:Something
to Talk About
"This fund's consistency has been apparent in inhospitable markets. The fund has
outperformed the bulk of its rivals in market downturns. The fund's record of
generating excellent risk-adjusted returns makes it an appealing choice as a
core holding."
Source: Morningstar, April 1997
"...an outperformer over the long term, at only an average level of volatility.
Conservative investors should consider it."
Source: Value Line Mutual Fund Survey, February 1997
- --------------------------------------------------------------------------------
Average Annual
Total Returns
Average annual rates of total return at the Class A share maximum sales charge
of 5.75%, for the periods ended 3/31/97 were:
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
1 year +10.60%
5 years +15.36%
10 years +11.22%
The Fund's SEC yield for the 30 days ended 4/30/97 was 1.78%.
This past performance is no indication of future results. 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.
(1) Dividends and capital gains were reinvested at net asset value. Period ends
10/31/96.
(2) Capital gains were reinvested. Period ends 10/31/96.
(3) Based on a survey of Lord Abbett Affiliated Fund shareholders conducted by
Lord, Abbett & Co. in 1993.
The Fund's fiscal year-end is 10/31. Results quoted above (unless stated
otherwise) reflect Class A share performance and are shown at net asset
value with all distributions reinvested.
See Important Information on page 8.
<PAGE>
Report to Shareholders
For the Six Months Ended April 30, 1997
[PHOTO]
/s/ Robert S. Dow
-------------
ROBERT S. DOW
CHAIRMAN
MAY 12, 1997
"...your Fund performed well in a climate of modest economic growth, low
inflation and relatively high interest rates."
Lord Abbett Affiliated Fund completed the first half of its fiscal year on April
30, 1997. Below is an overview of class-specific data as of the end of the
period.
Six Months Ended April 30, 1997
-------------------------------
Class A Class B Class C
- --------------------------------------------------------------------------------
Net asset value $13.45 $13.46 $13.45
Dividends $ 0.15 $ 0.10 $ 0.10
Capital gains $ 1.03 $ 1.03 $ 1.03
Total return* +12.9%++ +12.4%++ +12.4%++
Over the period, your Fund performed well in a climate of modest economic
growth, low inflation and relatively high interest rates. The slowing economic
environment we have been anticipating has yet to materialize; as a result, we
have maintained a somewhat defensive position in the Fund's portfolio, as
reflected by our sector-neutral holdings (though we had a modest overweighting
in the financial sector). We continue to reap the benefits of careful stock
selection, utilizing in-depth research.
The Federal Reserve Board's decision to raise short-term interest rates to 5
1/2% (from 5 1/4%) this past March will probably be followed by another raise in
rates in the near future. If the economy then cools and interest rates decline
(as we anticipate), cyclical stocks (those stocks whose performance is tied to
economic strength) should offer good value. At that point, we will look for
opportunities to build up positions in these stocks. We plan to maintain our
overweighting in financial stocks, especially in those of the insurance
industry, which is benefiting from a grand-scale effort to consolidate and
reduce costs.
Our outlook through 1997 is for the economy to grow at a rate averaging less
than 2 1/2%, with faster growth occurring in the first six months of the year.
Inflation should average about 3% or less. Along with the anticipated economic
slowdown, we also foresee a period of time during which earnings will be
somewhat disappointing. Our disciplined investment process, however, is geared
toward seeking out company-specific investment values that provide opportunity
for price appreciation at less-than-market risk.
Thank you for your continued confidence in Lord Abbett Affiliated Fund. We look
forward to maintaining our relationship in the coming years and helping you
achieve your financial goals.
* Total return is the percent change in net asset value, assuming the
reinvestment of all distributions.
++ Not annualized.
1
<PAGE>
The Income Perspective
The Affiliated Advantage: A history of increasing dividends vs. fluctuating
income from guaranteed CDs
Income Generated from $100,000 Investments: 11/1/71-4/30/97
Year
Ended Six-Month CD Affiliated Fund
Oct. 31 Interest(1) Dividends(2)
- --------------------------------------------------------------------------------
1972 $ 4,900 $ 4,352
1973 7,504 4,628
1974 9,921 5,057
1975 7,417 4,132
1976 6,000 5,316
1977 5,540 5,946
1978 7,779 6,582
1979 10,816 7,546
1980 12,771 9,066
1981 16,038 11,123
1982 13,467 11,879
1983 9,204 11,751
1984 10,711 12,403
1985 8,591 14,191
1986 6,898 15,305
1987 6,644 15,651
1988 7,652 16,812
1989 9,258 17,576
1990 8,263 16,701
1991 6,593 16,406
1992 4,077 16,686
1993 3,337 15,470
1994 4,323 14,997
1995 6,161 15,097
1996 5,464 16,602
4/30/97 (6 months) 2,796 8,846
Interest/Dividend Total $ 202,125 $ 300,121
- ---------------------------------------========== ==========
25 1/2 Years Later
Initial $100,000
Investment plus Growth $ 100,000 $ 824,332
- ---------------------------------------========== ==========
Total Value $ 302,125 $1,124,453
- ---------------------------------------========== ==========
The Real Cost of the
CD Guarantee $ 822,328
================================================================================
If capital gains and dividends had been reinvested, the Fund's total value would
have been $2,698,438
Unlike the Fund, a CD is insured, and its rate and principal are guaranteed if
held until maturity. The FDIC insures CDs up to $100,000. The CD rate is subject
to change when the CD is renewed. Although CDs may offer safety on the downside,
they sacrifice capital growth on the upside.
(1) Average of six-month CD rates available each period. Source: Salomon
Brothers and The Federal Reserve Bank.
(2) Reflects the deduction of the 3.75% sales charge for Class A share
investments of $100,000. Dividends were taken in cash; capital gains were
reinvested.
See Important Information on page 8.
2
<PAGE>
Affiliated's Growth Record
<TABLE>
<CAPTION>
Results Based on Fiscal Year-End October 31(1)
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 4/30/97
(6 months
only)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth of Capital(2) - 2.1% + 6.9% + 12.8% - 12.0% + 23.1% + 6.3% + 14.3% + 3.7% + 17.6% + 20.5% + 11.7%
Dividend Return(3) + 4.9 + 5.3 + 5.2 + 4.4 + 4.9 + 4.1 + 3.5 + 3.0 + 2.9 + 2.7 + 1.2
Total Return(4) + 2.8 +12.2 + 18.0 - 7.6 + 28.0 + 10.4 + 17.8 + 6.7 + 20.5 + 23.2 + 12.9
</TABLE>
(1) Class A share performance.
(2) Growth of capital reflects the reinvestment of capital gains distributions.
(3) Dividend return reflects the reinvestment of dividends.
(4) Total return is the percent change in value with both dividends and capital
gains distributions reinvested. These results are at net asset value. Net
asset value purchases are available for Class A share investments of $1
million or more. For performance at the Class A share maximum sales charge,
as well as other information, please turn to the inside front cover and
pages 4 and 8.
Affiliated's Growth Exceeded Inflation
In our illustration, 1986 and 1997 are actual costs--then and now. "Affiliated
1997" is what the 1986 amount would have grown to had it been invested in the
Fund.
Investments in Affiliated Fund (up 274.3%) surpassed increases in the cost of
living (up 45.2%) in these 101/2 years. Protection against the erosion caused by
inflation is one important way to maintain--and enhance--your lifestyle.
<TABLE>
<CAPTION>
[PHOTO] [PHOTO] [PHOTO] [PHOTO] [PHOTO]
One-Year Private One-Family House(1) U.S. Passport First-Class Stamp Income per Capita(1)
College Tuition(1)
<S> <C> <C> <C> <C> <C>
1986 $ 6,581 $ 98,500 $ 55 $.22 $ 16,981
1997 $ 12,823 $144,800 $ 65 $.32 $ 19,261
1997 Affilated $ 24,633 $368,686 $ 206 $.82 $ 63,560
</TABLE>
Affiliated's results reflect Class A share total return at net asset value,
with all distributions reinvested for the 101/2 years ended 4/30/97.
See Important Information on page 8.
(1) National average.
Sources: U.S. Department of Education, Statistics Bureau Section, College
Board Annual Survey of Colleges; National Association of Realtors, Research
Division; U.S. State Department; U.S. Postal Service; Department of
Commerce, Bureau of Economic Analysis Statistics.
3
<PAGE>
The Total Return Perspective
The Fund is managed to anticipate change, to find good value and to maintain a
low level of risk in relation to expected returns. The Fund's average
shareholder ownership of over 18 1/2 years reflects the success of this
strategy.
A History of Consistent Performance
Growth of a $10,000 Fund Investment(1): 11/1/71-4/30/97
Value of Cumulative Value Cumulative How
Year Shares of Capital Gains Value of $10,000
Ended Initially Distributions Reinvested Grew
Oct. 31 Acquired Taken in Shares Dividends Total Value
- --------------------------------------------------------------------------------
1972 $ 10,071 $ 372 $ 434 $ 10,877
1973 10,212 686 939 11,837
1974 7,762 742 1,215 9,719
1975 9,618 985 2,025 12,628
1976 11,487 1,449 3,093 16,029
1977 10,368 1,711 3,478 15,557
1978 10,085 1,969 4,201 16,255
1979 11,303 3,025 5,808 20,136
1980 12,904 4,788 8,086 25,778
1981 11,487 6,069 8,795 26,351
1982 12,153 8,223 11,579 31,955
1983 14,249 11,138 15,857 41,244
1984 13,059 13,478 16,933 43,470
1985 13,895 16,884 20,954 51,733
1986 16,586 25,463 28,505 70,554
1987 14,788 29,366 28,405 72,559
1988 13,654 37,388 30,364 81,406
1989 14,773 43,927 37,387 96,087
1990 12,620 40,451 35,743 88,814
1991 14,575 53,045 46,063 113,683
1992 14,943 58,469 52,045 125,457
1993 15,949 71,518 60,277 147,744
1994 15,623 78,343 63,620 157,586
1995 16,969 98,608 74,254 189,831
1996 18,442 129,069 86,405 233,916
4/30/97 $ 19,065 $152,799 $ 92,247 $264,111
The dollar amounts of dividends and capital gains distributions reinvested
in shares were $66,816 and $114,205, respectively. The initial investment
plus all distributions reinvested amounted to $191,021.
If dividends and capital gains distributions had been withdrawn in cash,
the amounts of these payments would have been $15,042 and $19,603,
respectively.
(1) Reflects the deduction of the Class A share maximum 5.75% sales charge for
investments under $50,000. All distributions were reinvested.
See Important Information on page 8.
4
<PAGE>
The Total Return Perspective
The past 25 1/2 years have included several periods of economic, political and
stock market turmoil. By focusing on value investing, Affiliated Fund reduced
downside volatility in periods of stock market weakness and produced returns
that outpaced the S&P 500 (an unmanaged index), guaranteed CDs and inflation.
Using the Value Method of Investing, Affiliated Fund Reduced Volatility and
Produced Rewarding Gains
Average Annual Total Returns Over 25 1/2 Years(1)
Affiliated: 13.7%
S&P 500: 13.1%
CDs: 7.9%
Inflation: 5.5%
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
[PLOT POINTS TO FOLLOW]
An investor cannot invest directly in an index, such as the S&P 500. For
more information on CDs, see page 2.
(1) Average annual total return at the Class A share maximum offering price
from 11/1/71 through 4/30/97.
(2) Average of six-month CD rates available each period. Source: Salomon
Brothers and The Federal Reserve Bank. See Important Information on page 8.
5
<PAGE>
The Impact of a Disciplined Investment Plan
Unless you have a crystal ball, perfectly timing the market is impossible. Often
times opportunity can only be identified after it has already passed.
For long-term investors in Lord Abbett Affiliated Fund, the key to one
successful strategy has focused on following a disciplined investment plan--not
timing the market. Let's compare two hypothetical investments made over the last
20 calendar years ending December 31, 1996, where $5,000 was invested in the
Fund every year. For Investment A, shares were purchased (with the benefit of
hindsight) when the Dow Jones Industrial Average was at the low for each given
year. Shares were purchased for Investment B on the first business day of every
year.
Your financial adviser can help you discipline your investing and set up a
systematic plan you are comfortable with
Here's What Happened...
<TABLE>
<CAPTION>
====================================================================================================================================
Investment A Timing Investment B Systematic Investing
Account Account
Date of Cumulative Value Date of Cumulative Value
Investments Investments at Year-End Investments Investments at Year-End
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11/2/77 $ 5,000 $ 5,000 1/3/77 $ 5,000 $ 4,412
2/28/78 10,000 10,452 1/2/78 10,000 9,489
11/7/79 15,000 18,733 1/2/79 15,000 18,331
4/21/80 20,000 29,695 1/2/80 20,000 28,810
9/25/81 25,000 34,898 1/2/81 25,000 33,600
8/12/82 30,000 49,659 1/4/82 30,000 47,477
1/3/83 35,000 68,402 1/3/83 35,000 65,665
7/24/84 40,000 78,741 1/2/84 40,000 75,254
1/4/85 45,000 106,056 1/2/85 45,000 101,581
1/22/86 50,000 136,441 1/2/86 50,000 130,833
10/19/87 55,000 146,122 1/2/87 55,000 139,899
1/20/88 60,000 170,359 1/4/88 60,000 163,075
1/3/89 65,000 216,434 1/2/89 65,000 207,436
10/11/90 70,000 210,482 1/2/90 70,000 201,068
1/9/91 75,000 262,910 1/2/91 75,000 251,221
10/9/92 80,000 300,771 1/2/92 80,000 287,823
1/20/93 85,000 346,042 1/4/93 85,000 331,362
4/4/94 90,000 365,392 1/3/94 90,000 349,897
1/30/95 95,000 487,601 1/2/95 95,000 467,231
1/10/96 100,000 591,384 1/2/96 100,000 566,748
Account Value on 12/31/96 $591,384 Account Value on 12/31/96 $566,748
- --------------------------------------------======== ----------------------------------------------------========
Average Annual Total Return 15.5% Average Annual Total Return 14.7%
==================================================== ============================================================
</TABLE>
The disciplined investment plan (B) provided an average annual total return
almost the same as the "perfect" investment scenario (A). Since determining the
"perfect" time to invest without the benefit of hindsight is impossible, why not
sit down with your financial adviser and set up a disciplined investment plan
today?
The above illustrations assume the reinvestment of all dividends and
distributions. All investments were made at the applicable Class A share maximum
sales charge of 5.75% for account values up to $50,000 and at the applicable
reduced sales charges thereafter under rights of accumulation. Periodic
investment plans do not always return a profit and do not protect against losses
in a declining market. In addition, since periodic investment plans involve
continuous investment in securities regardless of fluctuating price levels,
investors should consider their financial ability to continue their purchases
through periods of low price levels. If held until 3/31/97 (with no additional
investments made), Investment A and Investment B would have been worth $609,426
and $584,040, respectively.
For performance at the Class A share maximum sales charge, please turn to the
inside front cover.
6
<PAGE>
Who Owns the Fund?
Investor Profile of Lord Abbett Affiliated Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fiduciaries Custodians for minors 17,547
Trusts 10,404
Pension & profit-sharing plans 14,268
Estates 541
- ------------------------------------------------------------------------------------------------------------
Institutions Corporate organizations 807
Religious, charitable & welfare organizations 340
Clubs & fraternal organizations 102
Cemeteries 64
Nursing homes & hospitals 34
Colleges & universities 34
- ------------------------------------------------------------------------------------------------------------
Individuals Single & joint accounts 80,222
IRAs 42,423
- ------------------------------------------------------------------------------------------------------------
Other 70,216
Total Accounts in Affiliated on 4/30/97 237,002
What Are the Fund's Top Ten Holdings?
<CAPTION>
Percent of
Total
Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Corning Inc. Manufacturer of fiber optics cable and components
and specialty materials 2.82%
- ------------------------------------------------------------------------------------------------------------
Deere & Co. World's largest manufacturer of farm equipment 2.69%
- ------------------------------------------------------------------------------------------------------------
International Business World's largest technology company, providing
Machines Corp. computer hardware equipment, application and
system software and related services 2.58%
- ------------------------------------------------------------------------------------------------------------
ConAgra Inc. Largest independent U.S. food processor 2.52%
- ------------------------------------------------------------------------------------------------------------
Chubb Corp. Large, broadly based property/casualty insurance
company 2.32%
- ------------------------------------------------------------------------------------------------------------
Hewlett-Packard Co. Leading manufacturer of computer products 2.30%
- ------------------------------------------------------------------------------------------------------------
Emerson Electric Co. A leading factor in world markets for electrical
equipment and related components 2.22%
- ------------------------------------------------------------------------------------------------------------
General Motors Corp. Nation's largest automobile manufacturer 1.90%
- ------------------------------------------------------------------------------------------------------------
Mobil Corp. Worldwide integrated petroleum company and
leading chemical provider 1.90%
- ------------------------------------------------------------------------------------------------------------
American Brands Inc. Diversified holding company with interests primarily in
consumer business, including distilled spirits, tobacco,
office products, hardware and leisure products 1.77%
- ------------------------------------------------------------------------------------------------------------
Total 23.02%
</TABLE>
Data as of 4/30/97.
7
<PAGE>
Important Information
Bonds purchased by the Fund are subject to market fluctuations upward and
downward inversely to the rise and fall of interest rates. Common stocks are
also subject to market fluctuations, providing the potential for gains and the
risk of loss. Performance results quoted herein reflect past performance,
current sales charges (where applicable) and appropriate Rule 12b-1 Plan
expenses from commencement of the Plan. Past performance is no indication of
future results. Tax consequences are not reflected. The investment return and
principal value of an investment will fluctuate so that shares, on any given day
or when redeemed, may be worth more or less than their original cost. The Fund's
sales charge structure has changed in the past. The Fund issues additional
classes of shares, with distinct pricing options. For a full discussion of the
differences in pricing alternatives, please call 800-874-3733 and ask for the
Fund's current prospectus. If used as sales material after 6/30/97, this report
must be accompanied by Lord Abbett's Performance Quarterly for the most recently
completed calendar quarter.
Statement of Net Assets
April 30, 1997
<TABLE>
<CAPTION>
Shares or
Principal
Investments Amount Market Value
============================================================================================
Investments in Securities 94.83%
============================================================================================
Common Stocks and Convertible Securities 91.54%
============================================================================================
<S> <C> <C> <C>
Aerospace .72% Boeing Co. 500,000 $ 49,312,500
- --------------------------------------------------------------------------------============
Agricultural Products Pioneer Hi-Bred
1.03% International, Inc. 1,000,000 70,625,000
- --------------------------------------------------------------------------------============
Apparel 1.58% VF Corp. 1,500,000 108,187,500
- --------------------------------------------------------------------------------------------
Auto Parts .35% Genuine Parts Company 750,000 24,281,250
- --------------------------------------------------------------------------------============
Automobiles 2.32% General Motors Corp. 2,250,000 130,218,750
Johnson Controls, Inc. 750,000 28,781,250
Total 159,000,000
- --------------------------------------------------------------------------------============
Banks: Money Chase Manhattan Corp. 800,000 74,100,000
Center 2.31% First Chicago NBD 1,500,000 84,375,000
Total 158,475,000
- --------------------------------------------------------------------------------============
Banks: Regional Bank of Boston Corp.+ 1,500,000 109,125,000
5.04% BankAmerica Corp. 600,000 70,125,000
Comerica Inc. 1,250,000 73,125,000
First Union Corp. 1,100,000 92,400,000
Total 344,775,000
- --------------------------------------------------------------------------------============
Brokers .98% Dean Witter,
Discover & Co. 1,750,000 66,937,500
- --------------------------------------------------------------------------------============
Chemicals 3.78% Atlantic Richfield Co.
(Exch. Lyondell
Petrochemical)
$2.23 Conv. Pfd. 1,500,000 30,750,000
Dow Chemical Co. 1,000,000 84,875,000
Rohm & Haas Co. 1,000,000 83,250,000
Union Carbide Corp. 1,200,000 59,850,000
Total 258,725,000
- --------------------------------------------------------------------------------============
Communications Corning Inc.+ 4,000,000 193,000,000
Equipment 3.60% Lucent Technologies Inc.+ 900,000 53,212,500
Total 246,212,500
- --------------------------------------------------------------------------------============
Data Processing EMC Corp. 1,500,000 54,562,500
Equipment 6.78% EMC Corp.
Conv. Sub. Notes
3 1/4% due 3/15/2002* 15,000M 15,595,313
Hewlett-Packard Co.+ 3,000,000 157,500,000
<CAPTION>
Investments Shares Market Value
============================================================================================
<S> <C> <C> <C>
International Business
Machines Corp. 1,100,000 $176,825,000
Seagate Technology Inc.+ 1,300,000 59,637,500
Total 464,120,313
- --------------------------------------------------------------------------------============
Drugs/Health Care American Home
Products 6.55% Products Corp. 500,000 33,125,000
Baxter International Inc. 1,750,000 83,781,250
Mallinckrodt Group Inc.+ 2,000,000 72,750,000
Pharmacia & Upjohn Inc. 1,012,300 29,989,388
SmithKline Beecham
plc ADR+ 1,250,000 100,781,250
United Healthcare Corp. 1,230,800 59,847,650
Warner-Lambert Co. 700,000 68,600,000
Total 448,874,538
- --------------------------------------------------------------------------------============
Electric Power Allegheny Power
4.67% System, Inc. 1,750,000 45,937,500
American Electric
Power Co., Inc. 650,000 26,325,000
Baltimore Gas &
Electric Co. 1,654,600 42,192,300
Carolina Power &
Light Co.+ 2,500,000 85,000,000
Duke Power Co.+ 1,600,000 70,200,000
Florida Progress Corp. 1,400,000 43,050,000
FPL Group 161,300 7,177,850
Total 319,882,650
- --------------------------------------------------------------------------------============
Electrical Equipment
2.22% Emerson Electric Co. 3,000,000 152,250,000
- --------------------------------------------------------------------------------============
Electronics:
Semiconductors
.67% Intel Corp. 300,000 45,937,500
- --------------------------------------------------------------------------------============
Food 7.47% ConAgra Inc. 3,000,000 172,875,000
CPC International Inc. 1,000,000 82,625,000
Heinz H.J. Co. 2,000,000 83,000,000
Hershey Foods Corp. 1,250,000 67,812,500
Sara Lee Corp. 2,500,000 105,000,000
Total 511,312,500
--------------------------------------------------============
</TABLE>
8
<PAGE>
Statement of Net Assets
April 30, 1997
<TABLE>
<CAPTION>
Investments Shares Market Value
============================================================================================
<S> <C> <C> <C>
Furniture and
Appliances .48% Whirlpool Corp. 700,000 $ 32,725,000
- --------------------------------------------------------------------------------============
Household Products James River Corp.+ 2,000,000 59,750,000
2.07% Kimberly Clark Corp. 1,600,000 82,000,000
Total 141,750,000
- --------------------------------------------------------------------------------============
Insurance 8.56% Aetna Inc.
$4.758 Conv. Pfd. 1,000,000 85,000,000
American General
Corporation 1,500,000 65,437,500
Chubb Corp. 2,750,000 158,812,500
CIGNA Corp. 500,000 75,187,500
Providian Corp. 750,000 43,312,500
The Progressive
Corporation 600,000 45,675,000
Transamerica Corp. 1,325,900 112,370,025
Total 585,795,025
- --------------------------------------------------------------------------------============
Machinery:
Diversified 2.69% Deere & Co. 4,000,000 184,000,000
- --------------------------------------------------------------------------------============
Miscellaneous Minnesota Mining &
2.34% Mfg. Co. 1,200,000 104,400,000
Textron, Inc. 500,000 55,687,500
Total 160,087,500
- --------------------------------------------------------------------------------============
Natural Gas Consolidated Natural
Distribution 1.29% Gas Co. 1,750,000 88,156,250
- --------------------------------------------------------------------------------============
Natural Gas
Diversified .42% Sonat Inc.+ 500,000 28,562,500
- --------------------------------------------------------------------------------============
Oil: Domestic 2.03% Amoco Corp. 1,000,000 83,625,000
Occidental Petroleum
$3.875 Conv. Pfd.* 1,000,000 55,531,250
Total 139,156,250
- --------------------------------------------------------------------------------============
Oil: International Chevron Corp. 1,500,000 102,750,000
5.66% Exxon Corp. 2,000,000 113,250,000
Mobil Corp. 1,000,000 130,000,000
Total S.A.
Sponsored ADR+ 1,000,000 41,625,000
Total 387,625,000
- --------------------------------------------------------------------------------============
Oil Well Equipment/
Service .49% Schlumberger Ltd.+ 300,000 33,225,000
- --------------------------------------------------------------------------------============
Paper and Forest Bowater Inc. 1,500,000 64,875,000
Products 2.88% Georgia-Pacific Corp. 75,500 5,889,000
International Paper Co. 2,000,000 84,500,000
Westvaco Corporation 1,500,000 42,000,000
Total 197,264,000
- --------------------------------------------------------------------------------============
Printing: Specialty
.67% Deluxe Corp. 1,500,000 45,937,500
- --------------------------------------------------------------------------------============
Retail 2.21% May Department Stores
Company 1,000,000 46,250,000
Sears, Roebuck & Co. 500,000 24,000,000
Toys R Us Inc. 2,850,000 81,225,000
Total 151,475,000
--------------------------------------------------============
<CAPTION>
Shares or
Principal
Investments Amount Market Value
============================================================================================
<S> <C> <C> <C>
Savings and Loan Great Western
1.53% Financial Corp. 2,500,000 $ 105,000,000
- -------------------------------------------------------------------------------=============
Telecommunications MCI Communications
1.67% Corp. 3,000,000 114,375,000
- -------------------------------------------------------------------------------=============
Telephone 2.45% Bell Atlantic Corp. 1,250,000 84,687,500
SBC Communication Inc. 1,500,000 83,250,000
Total 167,937,500
- -------------------------------------------------------------------------------=============
Textiles: Apparel
.66% Liz Claiborne, Inc. 1,000,000 45,250,000
- -------------------------------------------------------------------------------=============
Tobacco 1.77% American Brands Inc. 2,250,000 120,937,500
- -------------------------------------------------------------------------------=============
Transportation:
Miscellaneous .31% Ryder Systems Inc. 671,400 20,897,325
- -------------------------------------------------------------------------------=============
Waste Management
1.29% WMX Technologies Inc. 3,000,000 88,125,000
- -------------------------------------------------------------------------------=============
Total Investments in
Common Stocks and
Convertible Securities
(Cost $4,548,261,828) 6,267,190,101
============================================================================================
U.S. Government Obligations 3.29%
============================================================================================
U.S. Treasury Notes
7% due 7/15/2006+ 98,000M 99,684,375
U.S. Treasury Notes
6 7/8% due 8/15/2025+ 40,000M 39,306,250
U.S. Treasury Notes
6% due 2/15/2026+ 8,000M 7,000,000
U.S. Treasury Notes
6 3/4% due 8/15/2026+ 82,000M 79,373,438
Total Investments in
U.S. Government
Obligations
(Cost $229,248,609) 225,364,063
- --------------------------------------------------------------------------------============
Total Investments in
Securities (Cost $4,777,510,437) 6,492,554,164
============================================================================================
Other Assets, Less Liabilities 5.17%
============================================================================================
Short-term Investments, at Market
- --------------------------------------------------------------------------------------------
U.S. Government Federal Home Loan Banks
Obligations 12 1/2% due 9/10/1997 25,000M 25,597,656
Federal Home Loan
Mortgage Corporation
13% due 5/27/1997 50,000M 50,265,625
Student Loan Marketing
Association 12 1/2% due
9/26/1997 59,000M 60,548,750
Total (Cost $140,355,130) 136,412,031
- --------------------------------------------------------------------------------============
Short-term Investments, at Cost
- --------------------------------------------------------------------------------------------
Corporate Ford Motor Credit Co.
Obligations 5.40% due 5/2/1997 25,000M 25,000,000
5.48% due 5/6/1997 36,000M 36,000,000
5.51% due 5/7/1997 16,000M 16,000,000
General Electric
Capital Corp.
5.41% due 5/1/1997 36,000M 36,000,000
5.47% due 5/5/1997 18,000M 18,000,000
Total 131,000,000
- --------------------------------------------------------------------------------============
</TABLE>
9
<PAGE>
Statement of Net Assets
April 30, 1997
<TABLE>
<CAPTION>
Principal
Investments Amount Market Value
============================================================================================
<S> <C> <C> <C>
U.S. Government Federal Farm
Obligations Credit Banks
5.37% due 5/22/1997 $10,000M $ 9,965,690
Federal Home
Loan Banks
5.37% due 5/19/1997 10,000M 9,970,167
Federal National
Mortgage Association
5.35% due 5/23/1997 25,000M 24,895,972
Total 44,831,829
- -------------------------------------------------------------------------------=============
Total Short-term Investments 312,243,860
-------------------------------------------------=============
<CAPTION>
Market Value
============================================================================================
<S> <C> <C>
Cash and Receivables, Net of Liabilities $ 41,923,909
- -------------------------------------------------------------------------------=============
Total Other Assets,
Less Liabilities 354,167,769
============================================================================================
Net Assets 100.00% $6,846,721,933
============================================================================================
Class A Shares-Net asset value
($6,751,441,188 / 501,792,453
shares outstanding) $13.45
Class B Shares-Net asset value
($67,468,754 / 5,012,329 shares
outstanding) $13.46
Class C Shares-Net asset value
($27,811,991 / 2,067,316 shares
outstanding) $13.45
*Rule 144A security.
+Securities (or a portion of securities) on loan. See Note 5.
See Notes to Financial Statements.
</TABLE>
Issues added to or eliminated from the portfolio (exclusive of U.S. Government
obligations and short-term investments) during the six months ended April 30,
1997
Portfolio Changes
<TABLE>
<CAPTION>
<S> <C> <C>
Additions
American General Corporation EMC Corp. Liz Claiborne, Inc.
American Home Products Corp. Conv. Sub. Notes 31/4% due NCR Corp.
Bell Atlantic Corp. 3/15/2002 Pharmacia & Upjohn Inc.
Bowater Inc. FPL Group Providian Corp.
Dean Witter, Discover & Co. Georgia-Pacific Corp. SBCCommunication Inc.
Duke Power Co. International Paper Co.
- --------------------------------------------------------------------------------------------------------
Eliminations
AT&T Corp. Digital Equipment Corp. Merck & Co., Inc.
Aetna Inc. Dillard Department Stores Inc. NCR Corp.
Allegiance Corp. Echelon International Quest Diagnostics Inc.
AMP Inc. Electronic Data Systems Corp. Sonoco Products Co.
Browning Ferris Industries Inc. Goodyear Tire & Rubber Co. Supervalu Inc.
Central & South West Corp. Lilly, Eli & Co.
Covance Inc. Lincoln National Corp.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Investment Income Six Months Ended April 30, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Dividends $ 73,165,892
Interest 23,386,809
Total income $ 96,552,701
----------------------------------------------------------------------------------------------------------------------
Expenses Management fee 10,222,442
12b-1 distribution plan-Class A 7,199,490
12b-1 distribution plan-Class B 191,063
12b-1 distribution plan-Class C 80,969
Shareholder servicing 2,640,187
Reports to shareholders 247,087
Registration 74,352
Legal and audit 77,427
Directors 53,069
Other 71,824
Total expenses 20,857,910
----------------------------------------------------------------------------------------------------------------------
Net investment income 75,694,791
----------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain on Investments
====================================================================================================================================
Realized gain from investment transactions
Proceeds from sales 1,863,230,351
Cost of investments sold 1,473,341,587
----------------------------------------------------------------------------------------------------------------------
Net realized gain 389,888,764
----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investments 314,920,788
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 704,809,552
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $ 780,504,343
====================================================================================================================================
See Notes to Financial Statements.
Statements of Changes in Net Assets
<CAPTION>
Six Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets 1997 1996
====================================================================================================================================
<S> <C> <C> <C>
Operations Net investment income $ 75,694,791 $ 137,994,396
Net realized gain from investment transactions 389,888,764 483,949,235
Net unrealized appreciation of investments 314,920,788 525,111,985
Net increase in net assets resulting from operations 780,504,343 1,147,055,616
----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions 15,344 233,353
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (72,533,316) (135,003,440)
Class B (206,344) (11,185)
Class C (88,055) (4,435)
Total (72,827,715) (135,019,060)
----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain from investment transactions:
Class A (480,477,971) (493,958,520)
Class B (1,534,145) --
Class C (638,747) --
Total (482,650,863) (493,958,520)
----------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares 341,394,670 555,712,816
Net asset value of shares issued in reinvestment of net investment income
and realized gain from investment transactions 449,527,640 497,740,138
Total 790,922,310 1,053,452,954
----------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (269,906,622) (435,624,271)
----------------------------------------------------------------------------------------------------------------------
Increase in net assets derived from capital share transactions 521,015,688 617,828,683
----------------------------------------------------------------------------------------------------------------------
Increase in net assets 746,056,797 1,136,140,072
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 6,100,665,136 4,964,525,064
----------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income of
$28,255,501 and $25,373,081, respectively) $6,846,721,933 $6,100,665,136
======================================================================================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Shares
-----------------------------------------------------------------------------
Six Months
Ended April 30, Year Ended October 31,
Per Share Operating Performance: 1997 1996 1995 1994 1993 1992
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.02 $ 11.98 $ 11.03 $ 11.26 $ 10.55 $ 10.29
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .15 .30 .32 .31 .31 .38
Net realized and unrealized gain on investments 1.46 2.23 1.70 .38 1.43 .61
Total from investment operations 1.61 2.53 2.02 .69 1.74 .99
------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.15) (.30) (.30) (.32) (.35) (.40)
Distributions from net realized gain (1.03) (1.19) (.77) (.60) (.68) (.33)
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.45 $ 13.02 $ 11.98 $ 11.03 $ 11.26 $ 10.55
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 12.91%(b) 23.23% 20.46% 6.66% 17.76% 10.36%
====================================================================================================================================
Ratios to Average Net Assets:
Expenses 0.32%(b) 0.66% 0.63% 0.63% 0.63% 0.60%
Net investment income 1.16%(b) 2.61% 2.90% 2.91% 2.95% 3.73%
------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Class B Shares Class C Shares
------------------------------ ------------------------------------
Six Months 8/1/96(c) Six Months 8/1/96(c)
Ended April 30, to Ended April 30, to
Per Share Operating Performance: 1997 10/31/96 1997 10/31/96
============================================================================================ ====================================
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.03 $ 11.88 $ 13.02 $ 11.88
- -------------------------------------------------------------------------------------------- ------------------------------------
Income from investment operations
Net investment income .11 .060 .11 .062
Net realized and unrealized gain on investments 1.45 1.142 1.45
1.130
Total from investment operations 1.56 1.202 1.56 1.192
-------------------------------------------------------------------------------------- ------------------------------------
Distributions
Dividends from net investment income (.10) (.052) (.10) (.052)
Distributions from net realized gain (1.03) -- (1.03) --
-------------------------------------------------------------------------------------- ------------------------------------
Net asset value, end of period $ 13.46 $ 13.03 $ 13.45 $ 13.02
- -------------------------------------------------------------------------------------------- ------------------------------------
Total Return(a)(b) 12.39% 10.15% 12.40% 10.07%
====================================================================================================================================
Ratios to Average Net Assets(b):
Expenses 0.71% 0.34% 0.71% 0.33%
Net investment income 0.69% 0.27% 0.69% 0.25%
==============================================================================================================================
<CAPTION>
Six Months
Ended April 30, Year Ended October 31,
Supplemental Data for AllClasses: 1997 1996 1995 1994 1993 1992
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $6,846,722 $6,100,665 $4,964,525 $4,229,586 $4,174,033 $3,680,332
Portfolio turnover rate 27.96% 47.06% 53.84% 51.48% 45.15% 42.00%
Average commissions per share paid
on equity transactions $ .062 $ .064 $ .063 n/a n/a n/a
===================================================================================================================================
</TABLE>
(a)Total return does not consider the effects of sales loads.
(b)Not annualized.
(c)Commencement of offering Class B and Class C shares.
See Notes to Financial Statements.
12
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Lord Abbett Affiliated Fund, Inc. (the "Company") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial statements. The
following is a summary of significant accounting policies consistently followed
by the Company. (a) Market value is determined as follows: Securities listed or
admitted to trading privileges on any national securities exchange are valued at
the last sales price on the principal securities exchange on which such
securities are traded, or, if there is no sale, at the mean between the last bid
and asked prices on such exchange, or, in the case of bonds, in the
over-the-counter market if, in the judgment of the Company's officers, that
market more accurately reflects the market value of the bonds. Securities traded
only in the over-the-counter market are valued at the mean between the bid and
asked prices, except that securities admitted to trading on the NASDAQ National
Market System are valued at the last sales price if it is determined that such
price more accurately reflects the value of such securities. Securities for
which market quotations are not available are valued at fair value under
procedures approved by the Board of Directors. (b) It is the policy of the
Company to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its taxable income.
Therefore, no federal income tax provision is required. (c) Security
transactions are accounted for on the date that the securities are purchased or
sold (trade date). Realized gains and losses from security transactions are
calculated on the identified cost basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Net investment income (other
than distribution and service fees) and 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. (d) A portion of the proceeds from sales and
costs of repurchases of capital shares, equivalent to the amount of
distributable net investment income on the date of the transaction, is credited
or charged to undistributed income. Undistributed net investment income per
share thus is unaffected by sales or repurchases of shares.
2. Management Fee and Other Transactions with Affiliates
The Company has a management agreement with Lord, Abbett & Co. ("Lord Abbett")
pursuant to which Lord Abbett supplies the Company 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, statistical work and the supervision of the
Company's investment portfolio. The management fee is based on average daily net
assets at the following annual rates: 1/2 of 1% on the first $200 million; 2/5
of 1% on the next $300 million; 3/8 of 1% on the next $200 million; 7/20 of 1%
on the next $200 million and 3/10 of 1% on the excess over $900 million. The
Company has Rule 12b-1 plans and agreements (the "Class A, Class B and Class C
Plans") with Lord Abbett Distributor LLC ("Distributor"), an affiliate of Lord
Abbett. The Company makes payments to Distributor which uses or passes on such
payments to authorized institutions. Pursuant to the Class A Plan, the Company
pays Distributor (1) an annual service fee of 0.15% of the average daily net
asset value of shares sold prior to June 1, 1990 and 0.25% of the average daily
net asset value of shares sold on or after that date and (2) a one-time
distribution fee of up to 1% on certain qualifying purchases and a supplemental
annual distribution fee of 0.10% of the average daily net assets of Class A
shares serviced by certain qualifying institutions. Pursuant to the Class B
Plan, the Company pays Distributor an annual service and distribution fee of
0.25% and 0.75%, respectively, of the average daily net asset value of the Class
B shares. Pursuant to the Class C Plan, the Company pays Distributor (1) a
service fee and a distribution fee, at the time such shares are sold, not to
exceed 0.25% and 0.75%, respectively, of the net asset value of such shares sold
and (2) at each quarter-end after the first anniversary of the sale of such
shares, a service fee and a distribution fee at an annual rate not to exceed
0.25% and 0.75%, respectively, of the average annual net asset value of such
shares outstanding. Distributor received $1,003,780 representing payment of
commissions on sales of Class A shares after deducting $6,431,306 allowed to
authorized distributors as concessions. Certain of the Company's officers and
directors have an interest in Lord Abbett.
3. Distributions
Dividends from net investment income are declared quarterly. Net realized gain
from investment transactions is distributed to shareholders annually.
Accumulated undistributed net realized gain at April 30, 1997 for financial
reporting purposes aggregated $432,906,340. Income and capital gains
distributions are determined in accordance with income tax regulations which may
differ from methods used to determine the corresponding income and capital gains
amounts in accordance with generally accepted accounting principles.
Distributions declared on May 7, 1997 were as follows:
Rate Per Aggregate
Net Investment Income Share Amount
- --------------------------------------------------------------------------------
Class A $.075 $37,645,922
Class B $.050 $ 259,550
Class C $.050 $ 108,040
- -------------------------------------------------------------------------------
4. Capital
The Company has authorized 800 million shares of $.001 par value capital stock
designated Class A, 100 million shares of $.001 par value capital stock
designated Class B and 100 million shares of $.001 par value capital stock
designated Class C. Paid in capital amounted to $4,674,459,464 at April 30,
1997. Transactions in shares of capital stock were as follows:
Six Months Ended Year Ended
April 30, 1997 October 31, 1996
- --------------------------------------------------------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 20,811,862 $ 271,201,545 44,568,823 $ 534,216,135
Shares issued to
shareholders in
reinvestment of net
investment income
and realized gain
from investment
transactions 34,745,275 447,211,488 43,968,874 497,726,351
Total 55,557,137 718,413,033 88,537,697 1,031,942,486
- --------------------------------------------------------------------------------
Shares reacquired (20,541,268) (267,748,349) (36,145,893) (435,401,023)
Increase in shares 35,015,869 $ 450,664,684 52,391,804 $ 596,541,463
- --------------------------------------------------------------------------------
13
<PAGE>
Notes to Financial Statements
August 1, 1996
(Commencement of
Six Months Ended offering Class B shares)
April 30, 1997 to October 31, 1996
------------------------------------------------------
Class B Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 3,804,934 $49,874,954 1,179,425 $14,724,105
Shares issued to
shareholders in
reinvestment of net
investment income
and realized gain
from investment
transactions 126,484 1,631,346 783 9,557
Total 3,931,418 51,506,300 1,180,208 14,733,662
- --------------------------------------------------------------------------------
Shares reacquired (92,283) (1,212,617) (7,014) (89,042)
Increase in shares 3,839,135 $50,293,683 1,173,194 $14,644,620
- --------------------------------------------------------------------------------
August 1, 1996
(Commencement of
Six Months Ended offering Class C shares)
April 30, 1997 to October 31, 1996
- --------------------------------------------------------------------------------
Class C Shares Amount Shares Amount
- -------------------------------------------------------------------------------
Sales of shares 1,553,288 $20,318,171 543,059 $6,772,576
Shares issued to
shareholders in
reinvestment of net
investment income
and realized gain
from investment
transactions 53,125 684,806 347 4,230
Total 1,606,413 21,002,977 543,406 6,776,806
================================================================================
Shares reacquired (71,832) (945,656) (10,671) (134,206)
Increase in shares 1,534,581 $20,057,321 532,735 $6,642,600
- --------------------------------------------------------------------------------
5. Portfolio Securities
The Company loans its portfolio securities to brokers. As of April 30, 1997, the
market value of securities on loan to brokers was $456,425,306, for which the
Company has obtained collateral aggregating $468,761,114, consisting of cash and
U.S. Treasury securities.
Purchases and sales of investment securities (other than U.S. Government
obligations and short-term securities) aggregated $1,632,419,380 and
$1,673,871,136, respectively.
As of April 30, 1997, unrealized appreciation based on cost for federal income
tax purposes aggregated $1,711,100,628 of which $1,748,932,657 related to
appreciated securities and $37,832,029 related to depreciated securities. The
cost of investments for federal income tax purposes is substantially the same as
that used for financial reporting purposes.
6. Directors' Remuneration
The Directors of theCompany associated with Lord Abbett and all officers of the
Company receive no compensation from the Company for acting as such. Outside
Directors' fees and retirement costs are allocated among all funds in the Lord
Abbett group based on the net assets of each fund. Directors' fees payable at
April 30, 1997 were $1,817,497.
14
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders,
Lord Abbett Affiliated Fund, Inc.:
We have audited the accompanying statement of net assets of Lord Abbett
Affiliated Fund, Inc. as of April 30, 1997, the related statements of operations
for the six months then ended and of changes in net assets for the six months
then ended and the year ended October 31, 1996, and the financial highlights for
each of the periods presented. These financial statements and the financial
highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits. We conducted our audits in accordance
with generally accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned at April 30, 1997 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. In our opinion, such financial statements and
financial highlights present fairly, in all material respects, the financial
position of Lord Abbett Affiliated Fund, Inc. at April 30, 1997, the results of
its operations, the changes in its net assets and the financial highlights for
the above-stated periods, in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
New York, New York
May 28, 1997
15
<PAGE>
Our Management
Board of Directors Investment Manager and
Robert S. Dow Underwriter
E. Wayne Nordberg Lord, Abbett & Co. and
E. Thayer Bigelow*+ Lord Abbett Distributor LLC
Stewart S. Dixon*
John C. Jansing* The General Motors Building
C. Alan MacDonald*+ 767 Fifth Avenue
Hansel B. Millican, Jr.* New York, NY 10153-0203
Thomas J. Neff*+ 212-848-1800
* Outside Director
+ Audit Committee Custodian
The Bank of New York
Officers New York, NY
Robert S. Dow, Chairman and President
W. Thomas Hudson, Jr., Executive Vice Transfer Agent
President and Portfolio Manager United Missouri Bank of
Kenneth B. Cutler, Vice President Kansas City, N.A.
and Secretary
Stephen I. Allen, Vice President Shareholder Servicing Agent
Zane E. Brown, Vice President DST Systems, Inc.
Daniel E. Carper, Vice President P.O. Box 419100
Daria L. Foster, Vice President Kansas City, MO 64141
Robert G. Morris, Vice President 800-821-5129
Robert J. Noelke, Vice President
E. Wayne Nordberg, Vice President Auditors
John J. Walsh, Vice President Deloitte & Touche LLP
Paul A. Hilstad, Vice President New York, NY
and Assistant Secretary
Thomas F. Konop, Vice President Counsel
and Assistant Secretary Debevoise & Plimpton
Keith F. O'Connor, Vice President New York, NY
and Treasurer
A. Edward Oberhaus III, Vice President
Victor W. Pizzolato, Vice President
Donna McManus, Assistant Treasurer
Joseph Van Dyke, Assistant Treasurer
Lydia Guzman, Assistant Secretary
Robert M. Hickey, Assistant Secretary
Copyright (C) 1997 by Lord Abbett Affiliated Fund, Inc.
767 Fifth Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Affiliated Fund, Inc., is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning the
Fund's investment objective and policies, sales charges and other matters. There
is no guarantee that the forecasts contained within this publication will come
to pass. All rights reserved. Printed in the U.S.A.
16
<PAGE>
Lord, Abbett & Co.
A Tradition of Performance Through
Disciplined
Investing
[PHOTO]
(from left to right)
Edward K. von der Linde
portfolio manager
W. Thomas Hudson, Jr.
portfolio manager--
Lord Abbett Affiliated Fund
(seated)
John J. Walsh, partner
A successful long-term track record is evidence of a successful investment
strategy. For decades we, at Lord, Abbett & Co., have believed that investing
with a disciplined, value approach is the best way to achieve competitive
returns and reduce portfolio risk. This commitment and the dedication of our
team of 51 investment professionals have helped us earn the trust of financial
professionals and investors for over 65 years.
About Your Fund's Board of Directors
The Securities and Exchange Commission (SEC) views the role of the independent
Board of Directors as one of the most important components in overseeing a
mutual fund. The Board of Directors watches over your Fund's general operations
and represents your interests. Board members review and approve every contract
between your Fund and Lord, Abbett & Co. (the Fund's investment manager) and
Lord Abbett Distributor LLC (the Fund's underwriter). They meet regularly to
review a wide variety of information and issues regarding your Fund. Every
member of the Board possesses extensive business experience. Lord Abbett
Affiliated Fund's shareholders are indeed fortunate to have a group of
independent directors with diverse backgrounds to provide a variety of
viewpoints in the oversight of their Fund. Below, we feature one of our
independent directors, Hansel B. Millican, Jr.
[PHOTO]
Hansel B. Millican, Jr.
Director--Lord Abbett
Affiliated Fund
An alumnus of North Carolina State University (Raleigh), Mr. Millican has over
45 years of corporate management experience. He is currently the President and
CEO of Rochester Button Company.
Mr. Millican serves as Chairman of the Board of the Central Florida Autism
Institute, Inc. He has been an independent director for all of Lord Abbett's
funds since 1982.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
====================================================================================================================================
GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Growth Funds Growth & Balanced Fund Income Funds Tax-Free Money
Income Funds Income Funds Market Fund
Bond-Debenture
Developing Global Fund- Affiliated Fund Balanced Series Fund o National U.S. Government
Growth Fund Equity Series o California Securities
Growth & Global Fund- o Connecticut
International Mid-Cap Income Series Income Series o Florida Money Market
Series Value Fund o Georgia Fund*+
Research Fund- Limited Duration o Hawaii
Research Fund- Large-Cap U.S. Government o Michigan
Small-Cap Series Securities Series* o Minnesota
Series o Missouri
U.S. Government o New Jersey
Securities Series* o New York
o Pennsylvania
o Texas
o Washington
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your financial adviser provides value in helping you identify and
understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only if
preceded or accompanied by a current prospectus for Lord Abbett Affiliated Fund.
For more complete information about any other Lord Abbett fund, including
charges and expenses, call your financial adviser or Lord Abbett Distributor LLC
at 800-874-3733 for a prospectus. Read it carefully before investing.
When you invest in a family of funds, you benefit from:
Diversification. You and your financial adviser can diversify your investments
between equity and income funds.
Flexibility. As your investment goals change, your financial adviser can help
you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 28
portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking with
your financial adviser to help you customize your investment plan.
Numbers to Keep Handy
For Shareholder Account or
Statement Inquiries:
800-821-5129
For Literature:
800-874-3733
For More Information:
800-426-1130
Visit our Web site:
http://www.lordabbett.com
* An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ There can be no assurance that this Fund will be able to maintain a stable
net asset value of $1.00 per share. This Fund is managed to maintain, and
has maintained, its stable $1.00 per share price.
[LOGO](R) Lord, Abbett & Co.
Investment Management
A Tradition of Performance Through Disciplined Investing
LORD ABBETT DISTRIBUTOR LLC
- ------------------------------------------------------------ LAA-3-497
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (6/97)
