<PAGE>
SUPPLEMENT EFFECTIVE DATE: JUNE 4, 1998
On average, Affiliated Fund shareholders have owned the Fund for over 18 years.
[PHOTO OMITTED]
Lord Abbett Affiliated Fund
For over 60 years, Lord Abbett Affiliated Fund has helped thousands of investors
meet their financial objectives. Today, with approximately $8 billion in assets,
the Fund is one of the largest in the industry. Whether you're investing for
your retirement, to buy a new home or to help fund a child's education, we
believe Lord Abbett Affiliated Fund can help you achieve your goals.
[GRAPHIC OMITTED]
The Fund: Something to Talk About
"Lord Abbett Affiliated Fund keeps its wits when others panic."
and
"Hudson and his predecessors have built a record of decent returns with
only modest volatility -- a strong recommendation for the fund."
Source: Morningstar Mutual Funds, August 15, 1997
--------------------------------------------------------------------------
"... Lord Abbett Affiliated Fund's long-term performance is quite good.
Historically the fund has offered a yield that is greater than its
peers..."
Source: Value Line Mutual Fund Survey, November 11, 1997
--------------------------------------------------------------------------
Past performance is no indication of future results.
Unless otherwise stated, all results shown: are as of 12/31/97 for Class A
shares; reflect the Class A share maximum sales charge of 5.75%; and assume the
reinvestment of all distributions. Illustrations involving a periodic investment
plan reflect applicable reduced sales charges under rights of accumulation.
Periodic investment plans do not always return a profit and do not protect
against losses in a declining market. Since periodic investment plans involve
continuous investments in securities regardless of fluctuating price levels,
investors should consider their financial ability to continue their purchases
through periods of low price levels.
It is important to remember that, unlike the Fund, a Certificate of Deposit's
(CD's) rate and principal are guaranteed if held to maturity, while the Fund's
share value will fluctuate. The FDIC insures CDs up to $100,000.
<PAGE>
A fiduciary holds assets in trust for a beneficiary, and is charged with
investing money wisely.
We're proud that over 55,000 fiduciaries have chosen
Lord Abbett Affiliated Fund to help fulfill their responsibilities.
Individuals, Institutions and Fiduciaries Invest in Lord Abbett Affiliated Fund
Number of Accounts
---------------------------------------------------------------------------
Fiduciaries
---------------------------------------------------------------------------
Pension, Profit-Sharing and 401(k) Retirement Plans .............. 19,418
Trusts ........................................................... 12,747
Custodians for minors ............................................ 20,241
457 Retirement and 403(b) Plans .................................. 4,533
Estates .......................................................... 1,043
---------------------------------------------------------------------------
Institutions
---------------------------------------------------------------------------
Broker-held accounts ............................................. 97,306
Corporations ..................................................... 531
Banks, credit unions and other financial organizations ........... 656
Non-profit &philanthropic organizations .......................... 516
Clubs & fraternal organizations .................................. 115
Cemeteries ....................................................... 67
Government agencies .............................................. 28
Colleges & universities .......................................... 63
Nursing homes & hospitals ........................................ 42
---------------------------------------------------------------------------
Individuals
---------------------------------------------------------------------------
Single & joint accounts .......................................... 96,587
IRAs ............................................................. 54,141
---------------------------------------------------------------------------
Total 308,034
---------------------------------------------------------------------------
The people you rely on to manage your money invest with us. A number of
brokerage firms include Affiliated Fund in their retirement plans. In fact,
a leading national brokerage firm has over $30 million of its retirement
plan invested in Affiliated Fund.
Current and former Lord Abbett partners and employees, along with their
families, have investments of over $75 million in Affiliated Fund. We'd
like to invite you to become part of our family.
SEC-required average annual compounded returns at the Class A share maximum
sales charge of 5.75% for periods ending 12/31/97:
[The following table was represented as a bar graph in the printed
material]
1 Year 17.90%
5 Years 17.04%
10 Years 14.82%
20 Years 15.49%
30 Years 12.23%
40 Years 12.59%
- --------------------------------------------------------------------------------
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.
2
<PAGE>
What Affiliated Fund Shareholders Own
$10,000 invested in the Fund on December 31, 1997, bought a piece of the
following companies:
Aetna Inc. ............................................................. $133
Allegheny Energy ....................................................... 71
American General Corp. ................................................. 101
American Home Products ................................................. 142
AMOCO .................................................................. 85
Archer-Daniels-Midland ................................................. 62
Baltimore Gas & Electric Co. ........................................... 127
BankAmerica ............................................................ 91
BankBoston ............................................................. 117
Baxter International Inc. .............................................. 188
Bell Atlantic .......................................................... 141
Bowater Inc. ........................................................... 110
Carolina Power & Light ................................................. 158
Chase Manhattan Corp. .................................................. 109
Chevron Corp. .......................................................... 143
Chubb Corp. ............................................................ 258
Cigna .................................................................. 343
CINergy Corp. .......................................................... 95
Comerica Inc. .......................................................... 140
ConAgra Inc. ........................................................... 204
Consolidated Natural Gas ............................................... 131
Corning Inc. ........................................................... 138
Crown Cork & Seal Inc. ................................................. 31
Deere & Co. ............................................................ 290
Deluxe Corp. ........................................................... 64
Dow Chemical ........................................................... 76
Duke Power Co. ......................................................... 138
EMC Corp. .............................................................. 68
Emerson Electric Co. ................................................... 189
ENI ADS ................................................................ 71
Exxon Corp. ............................................................ 106
First Chicago NBD ...................................................... 135
First Union Corp. ...................................................... 127
Florida Progress Corp. ................................................. 97
Fort James Corp. ....................................................... 119
Fortune Brands Inc. .................................................... 161
FPL Group .............................................................. 154
Gallaher Group plc ADS ................................................. 53
General Motors ......................................................... 169
Georgia Pacific ........................................................ 75
Georgia Pacific Timber ................................................. 28
Heinz, H.J. Co. ........................................................ 202
Hewlett-Packard ........................................................ 252
IBM Corp. .............................................................. 195
Int'l Flavor & Fragrance ............................................... 64
Intel Corp. ............................................................ 26
International Paper Co. ................................................ 107
Kimberly Clark ......................................................... 199
Liz Claiborne Inc. ..................................................... 65
Lucent Technologies Inc. ............................................... 50
Lyondell Petrochemical Co. ............................................. 49
May Department Stores .................................................. 65
Mellon Bank Corp. ...................................................... 75
Minnesota Mng. & Mfg. Co. .............................................. 204
Mobil Corp. ............................................................ 202
Morgan Stanley, Dean Witter,
Discover & Co. ......................................................... 147
Motorola Inc. .......................................................... 163
Occidental Petroleum ................................................... 81
J.C. Penney ............................................................ 30
Pioneer Hi-Bred Int'l Inc. ............................................. 107
Providian Corp. ........................................................ 70
Raytheon ............................................................... 9
Rohm & Haas Co. ........................................................ 119
Sara Lee Corp. ......................................................... 175
SBC Communications Inc. ................................................ 159
Seagate Technology ..................................................... 96
SmithKline Beecham plc ADS ............................................. 128
Sonat Inc. ............................................................. 142
St. Paul Companies Inc. ................................................ 102
Textron ................................................................ 62
The Progressive Corporation ............................................ 60
Total S.A. ADS ......................................................... 69
Toys R Us Inc. ......................................................... 98
Transamerica Corp. ..................................................... 172
United Healthcare Corp. ................................................ 31
USX - U.S. Steel Group ................................................. 58
VF Corp. ............................................................... 114
Wal Mart Stores Inc. ................................................... 113
Warner-Lambert Co. ..................................................... 77
Washington Mutual ...................................................... 170
Westvaco Corp. ......................................................... 59
Whirlpool Corp. ........................................................ 68
- --------------------------------------------------------------------------------
Total Stocks: .......................................................... $9,669
Fixed-Income
Securities: ............................................................ $161
Net Cash &
Equivalents: ........................................................... $170
TOTAL: ................................................................. $10,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
There can be no assurances that the Fund will continue to hold these companies'
stock or, if it does, whether the holdings will increase, decrease or remain
constant in absolute or relative amount.
3
<PAGE>
Lord Abbett Affiliated Fund's
Management Style
The Sophisticated Shopper:
When it comes to stock selection, Tom Hudson, the portfolio manager for Lord
Abbett Affiliated Fund, is a savvy buyer. Mr. Hudson is part of an experienced
team of financial professionals whose approach includes elements similar to
those taken by smart shoppers.
Have you ever thought about how you shop? Most people like to find "bargains."
Savvy shoppers often check out the sales racks of high-end stores and seek items
with a low price tag. Of course, just because "the price is right" does not mean
that a product is worth buying. A smart shopper will carefully inspect the item,
checking for defects and overall quality. Another important test required by the
smart shopper: usability and function. If the item is not in style, or is
something the shopper would not be likely to use, there is probably no point in
buying it.
- --------------------------------------------------------------------------------
Is it on sale?
- --------------------------------------------------------------------------------
Quantitative Research:
Performed on a universe of the 1,000 largest U.S. and multinational companies to
identify those whose stocks represent the best bargains.
[GRAPHIC OMMITED]
- --------------------------------------------------------------------------------
Is it a high-quality item?
- --------------------------------------------------------------------------------
Fundamental Research:
Conducted to assess a company's operating environment, resources and strategic
plans and to determine its prospects for exceeding the earnings expectations
reflected in its stock price.
[GRAPHIC OMMITED]
- --------------------------------------------------------------------------------
Is this a timely decision?
- --------------------------------------------------------------------------------
Business Cycle Analysis:
Used to assess the economic and interest-rate sensitivity of the Fund's
portfolio. This analysis helps the portfolio manager assess how adding or
deleting stocks changes a portfolio's overall sensitivity to economic activity
and interest rates.
[GRAPHIC OMMITED]
- --------------------------------------------------------------------------
For decades, we have believed that investing with a disciplined, value
approach is the best way to achieve competitive returns and reduce
portfolio risk.
Our experienced team continually monitors the Fund's existing investments
while also "shopping" for good companies selling at reasonable prices.
4
<PAGE>
Affiliated Increased Investors' Purchasing Power
One of the few things in life we can count on is inflation. Although inflation
has been moderate in recent years, even low levels of inflation will decrease
your purchasing power over the long term. Wise investments can help you
counteract inflation. The better your investments perform relative to inflation,
the easier it is for you to keep ahead of the increasing cost of living.
Inflation: The Price You Pay
- -------------------------------------- --------------------------------------
One-Year Private College Tuition(1) Affiliated Fund
- -------------------------------------- --------------------------------------
1977 1997 1977 1997
$2,476 -> $12,823 $2,476 -> $44,133
[GRAPHIC OMMITED]
The cost of attending a private college has skyrocketed. One year's tuition has
increased by 418% since 1977. However, $2,476 invested in Affiliated Fund 20
years ago would have grown to pay for nearly four years' tuition in 1997.
- -------------------------------------- --------------------------------------
Single-Family House(2) Affiliated Fund
- -------------------------------------- --------------------------------------
1977 1997 1977 1997
$47,900 -> $153,200 $47,900 -> $853,809
[GRAPHIC OMMITED]
The average single-family home costs nearly four times as much today as it did
in 1977. That represents a 220% increase since 1977. Had you invested that same
$47,900 in Affiliated Fund in 1977, you would have been able to purchase several
houses today.
- --------------------------------------------------------------------------------
[The following table is represented by a bar graph in the printed material]
Growth of $100,000 Investment:
12/31/77-12/31/97
Affiliated Fund(3) $1,821,834
Certificate of Deposit(4) $ 477,494
Inflation (Consumer Price Index) $ 259,742
- --------------------------------------------------------------------------------
(1) National average. Source: College Board.
(2) National average. Source: National Association of Realtors, Research
Division.
(3) Reflects 3.75% reduced sales charge for investments of $100,000.
(4) Value as of 12/31/97 of $100,000 put into six-month CDs on 12/31/77,
assuming the average CD rate available during each year. Source: Salomon
Brothers and The Federal Reserve Bank.
See page 1 for important information about CDs.
5
<PAGE>
- --------------------------------------------------------------------------------
Lord Abbett Affiliated Fund
Through the Years
It seems there is never a "perfect time" to invest; Affiliated's long-term track
record has helped our investors look beyond all the short-term reasons not to
invest.
[The following table was depicted as a Mountain graph in the printed material.]
1950
Beginning of
Korean conflict
1953
U.S. unemployment
level falls to
lowest point since
close of WW II
1955
AFL-CIO forms
1957
Treaty of Rome
establishes the
European Economic
Community (the
Common Market)
[PHOTO OMITTED]
1958
First U.S. earth
satellite is
launched. U.S.
unemployment reaches
post-war high; economic
recession grips the U.S.
1961
Berlin Wall
is raised
1963
John F. Kennedy
is assassinated
1965
President Johnson's
"Great Society"
programs are
implemented
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1/1/50* 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961
CAPITAL VALUE
Dividends in Cash $536 746 570 583 625 658 692 721 748 744 850 851
Value at Year End(1) $10,966 12,227 13,304 12,966 16,371 17,722 17,949 17,212 23,851 26,196 26,787 32,778
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL VALUE
Dividends Reinvested $547 810 653 698 782 858 936 1,014 1,094 1,123 1,323 1,365
Value at Year End(2) $11,594 13,772 15,669 15,973 21,023 23,640 24,873 24,834 35,627 40,267 42,569 53,504
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS 15.94% 18.79% 13.77% 1.94% 31.62% 12.45% 5.22% -0.16% 43.46% 13.02% 5.72% 25.69%
</TABLE>
1962 1963 1964
CAPITAL VALUE
Dividends in Cash 924 966 1,131
Value at Year End(1) 29,212 33,761 38,210
- ------------------------------------------------
TOTAL VALUE
Dividends Reinvested 1,528 1,647 1,986
Value at Year End(2) 49,279 58,630 68,360
- ------------------------------------------------
TOTAL RETURNS -7.90% 18.98% 16.60%
All data above is as of calendar year end. *Initial investment of $10,000
occurred on 1/1/50, when Affiliated Fund adopted its current investment
philosophy. The Fund commenced operations on 5/14/34. (1)Capital Value figure
represents value of principal, with capital gains distributions of $252,848
reinvested. Figure does not reflect dividends paid totaling $154,108. (2)Total
Value figure represents total account value, assuming the reinvestment of
dividends and capital gains distributions totaling $2,186,412.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
1968
Robert F. Kennedy and
Martin Luther King, Jr.
are assassinated
1972
SALT arms treaty
is signed
1974
President Richard M. Nixon
resigns from office
1976
Gold bottoms
at $104
1978
Shah of Iran's
regime is toppled
and oil prices triple,
prompting a 13.3%
U.S. inflation rate
1979
Interest rates at highest
levels since the Civil War
1980
U.S. banks raise
the prime rate
to 20%
1981
PATCO strike
1982
IRS approves 401(k)
plan structure
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975
CAPITAL VALUE
Dividends in Cash 1,269 1,473 1,569 1,694 1,812 1,836 1,762 1,824 2,003 2,108 1,720
Value at Year End(1) 41,721 37,786 45,149 51,645 42,439 41,564 43,538 47,002 42,431 33,867 45,521
- --------------------------------------------------------------------------------------------------------------------------
TOTAL VALUE
Dividends Reinvested 2,298 2,756 3,046 3,407 3,777 3,997 4,006 4,316 4,946 5,463 4,687
Value at Year End(2) 77,009 72,407 89,577 106,095 90,728 93,140 101,491 114,064 107,808 91,016 127,100
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS 12.65% -5.98% 23.71% 18.44% -14.48% 2.66% 8.97% 12.39% -5.48% -15.58% 39.65%
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1976 1977 1978 1979 1980 1981 1982
CAPITAL VALUE
Dividends in Cash 2,290 2,561 2,754 3,320 3,981 4,716 5,021
Value at Year End(1) 58,763 52,322 51,426 62,843 73,936 69,482 80,090
- ----------------------------------------------------------------------------------------
TOTAL VALUE
Dividends Reinvested 6,496 7,590 8,579 10,923 13,876 17,440 19,907
Value at Year End(2) 171,163 159,759 165,466 214,103 266,825 267,703 331,873
- ----------------------------------------------------------------------------------------
TOTAL RETURNS 34.67% -6.66% 3.57% 29.39% 24.62% 0.33% 23.97%
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
1985
U.S. becomes debtor
nation for first time
since 1914
[PHOTO OMITTED]
1987
Biggest 1-day stock
market decline
1989
Berlin Wall
comes down
1990
Iraq invades
Kuwait
1991
Gulf War begins
1993
World Trade
Center bombing
kills six
1996
Bill Clinton becomes
first Democrat since
FDR to be elected to
second term as U.S.
president
1997
Dow Jones Industrial
Average surpasses
8,000 points
This chart and the charts on pages 9 and 15 are plotted on a logarithmic scale,
which emphasizes percentage changes and gives the same visual weight to
comparable percentage changes, regardless of dollar values. Thus, the 23.71%
increase ($17,170) from 1966 to 1967 appears relatively equal to the 23.53%
increase ($190,175) from 1988 to 1989.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992
CAPITAL VALUE
Dividends in Cash 4,848 5,369 5,985 6,383 7,563 7,141 7,265 6,902 6,797 6,889
Value at Year End(1) 95,323 95,970 115,016 134,774 132,196 141,567 167,170 151,429 177,398 192,091
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL VALUE
Dividends Reinvested 20,511 24,006 28,372 31,931 39,718 39,501 42,234 41,932 43,161 45,499
Value at Year End(2) 416,609 445,072 564,663 694,229 716,392 808,170 998,345 946,129 1,154,289 1,297,340
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS 25.53% 6.83% 26.87% 22.95% 3.19% 12.81% 23.53% -5.23% 22.00% 12.39%
<CAPTION>
<S> <C> <C> <C> <C> <C>
1993 1994 1995 1996 1997
CAPITAL VALUE
Dividends in Cash 6,215 6,292 6,492 7,156 7,753
Value at Year End(1) 210,999 213,154 273,544 320,690 393,010
- --------------------------------------------------------------------------------
TOTAL VALUE
Dividends Reinvested 42,483 44,309 47,045 53,170 58,921
Value at Year End(2) 1,468,750 1,528,374 2,012,864 2,416,445 3,024,450
- --------------------------------------------------------------------------------
TOTAL RETURNS 13.21% 4.06% 31.70% 20.05% 25.16%
</TABLE>
---------------
Average Annual
Total Return
Over This
Period: 12.64%
---------------
- --------------------------------------------------------------------------------
8
<PAGE>
[PHOTO OMITTED]
Outperforming the Market
Affiliated Fund has outperformed the stock market for decades. As shown below,
even shareholders who invested in the Fund right before the major market
downturn of 1973 - 1974 did well if they remained invested. While the Fund did
not always outperform the market over shorter periods, it generally provided
better returns than the stock market during "flat" and "down" markets. Below, we
highlight several three-year periods when the stock market produced
below-average returns.
We believe Affiliated's better performance during such difficult periods is one
of the key reasons that our average shareholder has remained invested for over
18 years.
- --------------------------------------------------------------------------------
Affiliated Fund vs. the Market:
$50,000 Invested 12/31/71-12/31/97
- --------------- --------------- ---------------
1973-1975 1977-1979 1992-1994
- --------------- --------------- ---------------
Affiliated 3.7% Affiliated 7.7% Affiliated 9.8%
S&P -4.9% S&P 5.5% S&P 6.3%
AFFILIATED FUND S&P 500
1971 47,609 50,000
1972 53,521 59,498
1973 50,584 50,757
1974 42,705 37,324
1975 59,637 51,219
1976 80,311 63,474
1977 74,961 58,931
1978 77,638 62,802
1979 100,459 74,489
1980 125,197 98,662
1981 125,608 93,806
1982 155,718 114,017
1983 195,477 139,734
1984 208,833 148,500
1985 264,944 195,657
1986 325,739 232,889
1987 336,138 245,117
1988 379,202 285,684
1989 468,433 376,062
1990 443,933 364,424
1991 541,603 475,242
1992 608,724 511,399
1993 689,152 562,842
1994 717,128 570,242
1995 944,456 784,274
1996 1,133,821 963,620
1997 1,419,103 1,284,996
Affiliated Fund(1)
S&P 500(2)
- --------------------------------------------------------------------------------
------------------------
Outperforming the market
during difficult periods has been an
Affiliated Fund trademark.
- ----------
(1) Reflects a reduced sales charge of 4.75%
(2) Market performance as mea- sured by the Standard & Poor's 500 Index.
9
<PAGE>
Three Retirees Invest Their Retirement Nest Eggs...
To examine the enormous difference between an investment in stocks or
bonds and an investment in the professionally managed Affiliated Fund,
let's look at three fictional couples. Twenty-five years ago, the Millers,
the Smiths and the Jordans each retired with a nest egg of $200,000, but
the couples chose to invest their money in different ways.
The Millers took their $200,000 and purchased a high-grade bond yielding 6.5%
a year
1. The Millers considered this to be a "safe" investment for their future
because, in 1972, they could live comfortably on the $13,000 annual income
generated by their bond. But in 1997, it takes $49,664 in order to buy
what cost $13,000 in 1972. The Millers discovered their "safe" investment
could not keep up with the cost of living. In addition, as bonds mature,
their owners may find interest rates have dropped and that they have no
choice but to accept a lower rate. They still have their original $200,000
investment, but that would buy less than it used to as well.
The Smiths took their $200,000 and invested in an S&P 500-based Index Fund, with
all distributions to be reinvested.*
2. The Smiths thought their Index Fund was a wise investment. They withdrew
6% of their portfolio each year, based on their account balance at the
close of the previous year, to cover their expenses. When the market
performed well, they were pleased with their decision. However, in years
where the market did poorly, the Smiths' account balance reflected that
performance, because their investment relied heavily on the market index.
The Smiths did much better than the Millers, but perhaps not as
consistently as they would have liked.
The Jordans invested their $200,000 nest egg in the Lord Abbett Affiliated
Fund, with all distributions to be reinvested.
3. Like the Smiths, the Jordans invested their nest egg with future growth in
mind. They withdrew 6% of their balance annually, based on their account
balance at the end of the previous year, and allowed the rest of their
money to remain invested. Because their investment has gone up and down
through the years, their income has varied. However, unlike the Millers,
their income grew substantially over time -- as did their original nest
egg. The Jordans also did considerably better than the Smiths because,
unlike an index fund that mimics the performance of the market, Affiliated
Fund is managed to reduce risk during downturns in the market. By
investing their nest egg in the Lord Abbett Affiliated Fund, the Jordans
enjoyed more consistent returns and higher income throughout their
retirement.
- --------------------------------------------------------------------------------
*The Standard & Poor's 500 Index is an unmanaged index consisting of the stocks
of 500 companies commonly followed by the investment community. An investor
cannot invest directly in an index, such as the S&P 500, but can invest in an
S&P 500 Index Fund.
10
<PAGE>
Joan and Robert Miller:
Bond Buyers
[PHOTO OMITTED}
[The following table was depicted as a bar graph in the printed materials.]
- --------------------------------------------------------------------------------
25-year High-Grade Bond: Annual Income Interest:
Original investment: $200,000
Total interest received: $325,000
1997 13,000
1992 13,000
1987 13,000
1982 13,000
1977 13,000
1973 13,000
- --------------------------------------------------------------------------------
Value of investment on December 31, 1997: $200,000
Helen and Jason Smith:
Index Fund Investors
[PHOTO OMMITED]
[The following table was depicted as a bar graph in the printed materials.]
- --------------------------------------------------------------------------------
S&P Index-Based Fund: Annual Income from Distributions
Original investment: $200,000
Total income received: $493,790
1997 $48,284
1992 $31,771
1987 $20,534
1982 $10,982
1977 $10,046
1973 $12,000
- --------------------------------------------------------------------------------
Value of investment on December 31, 1997: $1,018,776
Kate and David Jordan:
Affiliated Fund Investors
[PHOTO OMMITED]
[The following table was depicted as a bar graph in the printed materials.]
- --------------------------------------------------------------------------------
Lord Abbett Affiliated Fund: Annual Income from Distributions
Original investment: $200,000
Total income received: $664,120
1997 $61,240
1992 $38,992
1987 $31,200
1982 $15,984
1977 $13,736
1973 $11,551
- --------------------------------------------------------------------------------
Value of investment on December 31, 1997: $1,210,862
11
<PAGE>
[PHOTO OMITTED]
It's About Time...Not Timing
Because it is impossible to perfectly time the market, your investment success
depends on:
o choosing an investment that is appropriate for your needs, and
o staying invested over long periods of time.
Even if you could predetermine the best days to invest, your performance might
not be dramatically different than if you had made periodic investments. Even
more surprising is the relatively small difference an investor would have
experienced over the course of 25 years when making an investment in Affiliated
Fund on the "best" day each year, versus the "worst" day.(1)
"Best" Day to Invest "Worst" Day to Invest
(Stock Market at its Lowest) (Stock Market at its Highest)
- --------------------------------------------------------------------------------
Date of Cumulative Account Value Date of Cumulative Account Value
Investments Investments at Year End Investments Investments at Year End
- --------------------------------------------------------------------------------
12/5/73 $ 5,000 $ 5,150 1/11/73 $ 5,000 $ 4,357
12/6/74 10,000 9,281 3/13/74 10,000 7,418
1/2/75 15,000 19,385 7/15/75 15,000 14,857
1/2/76 20,000 32,401 9/21/76 20,000 24,887
11/2/77 25,000 35,242 1/3/77 25,000 27,640
2/28/78 30,000 41,776 9/11/78 30,000 32,862
11/7/79 35,000 59,319 10/5/79 35,000 47,256
4/21/80 40,000 80,342 11/20/80 40,000 63,527
9/25/81 45,000 85,762 4/27/81 45,000 68,235
8/12/82 50,000 112,787 12/27/82 50,000 89,301
1/3/83 55,000 147,711 11/29/83 55,000 116,860
7/24/84 60,000 163,528 1/6/84 60,000 129,849
1/4/85 65,000 213,693 12/16/85 65,000 169,547
1/22/86 70,000 268,776 12/2/86 70,000 213,101
10/19/87 75,000 282,737 8/25/87 75,000 223,626
1/20/88 80,000 324,531 10/21/88 80,000 257,135
1/3/89 85,000 406,949 10/9/89 85,000 322,538
10/11/90 90,000 391,085 7/17/90 90,000 310,163
1/9/91 95,000 483,312 12/31/91 95,000 383,262
10/9/92 100,000 548,527 6/1/92 100,000 435,954
1/20/93 105,000 626,575 12/29/93 105,000 498,432
4/4/94 110,000 657,354 1/31/94 110,000 523,627
1/30/95 115,000 872,164 12/13/95 115,000 694,510
1/10/96 120,000 1,053,053 12/27/96 120,000 838,582
4/11/97 125,000 1,324,229 8/6/97 125,000 1,054,536
- --------------------------------------------------------------------------------
Account Value on Account Value on
12/31/97 $1,324,229 12/31/97 $1,054,536
- --------------------------------------------------------------------------------
Average Annual Average Annual
Total Return 15.89% Total Return 14.49%
- --------------------------------------------------------------------------------
- ----------
(1) The "best" day is defined as the day that the Dow Jones Industrial Average
was at the low for the given year. The "worst" day is defined as the day
that the Dow was at the high for that year.
See page 1 for important information about periodic investments.
12
<PAGE>
[PHOTO OMMITED]
Strong Performance in a Flat Market
The value of our management discipline can be illustrated by measuring
Affiliated Fund's performance during a "flat" market. The Dow Jones Industrial
Average (which does not take dividends or capital gains into account) opened at
1003.16 on November 14, 1972 and closed at 1003.68 on October 12, 1982.
Affiliated Fund shareholders who reinvested dividends and capital gains during
this 10-year period were able to obtain results that were far from "flat."
- --------------------------------------------------------------------------------
Average Annual Total Returns:(1)
Affiliated Fund: 10.8%
Dow Jones Industrial Average: 5.5%
Affiliated Fund
Outperformed During the "Tough" Periods:
$10,000 Invested 11/14/72-10/12/82
[The following table was depicted as a line chart in the printed materials.]
Affiliated Fund, dividends and capital
gains reinvested(2) $27,617
Dow Jones Industrial Average, with dividends
reinvested $16,945
Dow Jones Industrial Average $10,005
- --------------------------------------------------------------------------------
Make Time Your Partner
Successful financial planning requires discipline and a long-term strategy. No
equity mutual fund will "go up all the time." However, the longer an investor
owned Affiliated Fund, the better their chances of realizing positive results.
Since 1950, Affiliated Fund's account value increased...
[The following information was depicted as a pie chart in the
printed materials.]
...67% of the time during
the last 48 1-year periods.
[The following information was depicted as a pie chart in the
printed materials.]
...93% of the time during
the last 46 3-year periods.
[The following information was depicted as a pie chart in the
printed materials.]
...95% of the time during
the last 44 5-year periods.
[The following information was depicted as a pie chart in the
printed materials.]
...during all periods of 8
years or more.
Periods refer to calendar years.
- --------------------------------------------------------------------------------
(1) Average annual total returns include reinvestment of dividends and capital
gains for Affiliated Fund, and reinvestment of dividends for Dow Jones
Industrial Average.
(2) $10,000 Fund investment is at net asset value.
- --------------------------------------------------------------------------------
See page 1 for important information about periodic investments.
13
<PAGE>
[PHOTO OMMITED]
This family set up a disciplined plan using Lord Abbett's Invest-A-Matic
service and made a $250 initial investment in Affiliated Fund on 12/31/77, plus
$100 per month from 1/31/78 through 12/31/97.
Goal: College
Because families and individuals have unique financial situations, a good
investment vehicle should offer the flexibility to help investors reach their
goals.
Below are two hypothetical investment strategies for investors with different
situations. While both families had the same goal, they took different routes.
These investors used time--an investor's best ally--along with Affiliated's
disciplined approach, to build their nest egg. The end result in both cases is
the same--the ability to fund a child's education.
- --------------------------------------------------------------------------------
Could You Put Your
Child Through
College on $100
per Month?
1977 235
1978 1388
1979 3082
1980 5140
1981 6276
1982 9166
1983 12752
1984 14863
1985 20154
1986 25993
1987 27839
1988 32600
1989 41524
1990 40474
1991 50623
1992 58119
1993 67001
1994 70888
1995 94672
1996 114918
1997 145080
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Could You Put Your
Child Through
College with
$10,000?
1977 9416
1978 9752
1979 12619
1980 15725
1981 15778
1982 19559
1983 24554
1984 26230
1985 33279
1986 40915
1987 42221
1988 47630
1989 58838
1990 55761
1991 68029
1992 76460
1993 86562
1994 90076
1995 118629
1996 142415
1997 178248
- --------------------------------------------------------------------------------
[PHOTO OMITTED]
This family made a $10,000 investment on 12/31/77.
- --------------------------------------------------------------------------------
See page 1 for important information about periodic investments.
14
<PAGE>
Affiliated Fund For Your IRA
Over 54,000 investors currently use Affiliated Fund in their IRAs as part of
their retirement planning. Affiliated's history of strong returns has been
generated through investing in large, financially sound companies that we
believe offer good value for our shareholders. If IRAs had been available 40
years ago, an annual $2,000 IRA investment in Affiliated Fund, an $80,000 total
investment, would have provided a sizable sum for retirement today.
- --------------------------------------------------------------------------------
Affiliated Fund IRAs
Investments of $2,000 per year
All periods end 12/31/97
[The following table is represented by a bar graph in the printed material.]
Total Invested: $20,000 over 10 Yrs. $48,908
$40,000 over 20 Yrs. $250,944
$60,000 over 30 Yrs. $794,199
$80,000 over 40 Yrs. $2,022,490
o Amount Invested
o Account Value
on 12/31/97
- --------------------------------------------------------------------------------
Even a ten-year IRA investment with Affiliated Fund grew to more than
twice the original investment. An IRA invested in Lord Abbett Affiliated Fund
can be an important component of your retirement portfolio.
15
<PAGE>
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.
The Fund issues additional classes of shares with distinct pricing options. For
a full discussion of the differences in pricing alternatives, please call Lord
Abbett Distributor LLC at 800-874-3733 and ask for the Fund's current
prospectus. A prospectus contains more complete information about the Fund,
including charges and expenses, and should be read carefully before investing.
If used after 3/31/98, this literature must be accompanied by Lord Abbett's
Performance Quarterly for the most recently completed calendar quarter.
The Standard & Poor's 500 Index is an unmanaged index consisting of the stocks
of 500 companies. The Dow Jones Industrial Average is an unmanaged index
consisting of 30 stocks. Both indices are commonly followed by the investment
community. An investor cannot invest directly in an index, such as the S&P 500
or Dow Jones Industrial Average.
Survey results referenced throughout are based on a Lord Abbett Affiliated Fund
shareholder survey conducted by Lord, Abbett & Co. in 1993.
LORD, ABBETT & CO.
Investment Management
[LOGO](R)
A Tradition of Performance
Through Disciplined Investing
LORD ABBETT DISTRIBUTOR LLC
------------------------------------------------------------
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203
800-426-1130
Numbers to Keep Handy
For More Information: 800-426-1130
For Literature: 800-874-3733
For Shareholder Account
or Statement Inquiries: 800-821-5129
Visit Our Web Site: http://www.lordabbett.com
LAA-6-1297
