<PAGE>
Lord Abbett Affiliated Fund
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED APRIL 30, 1999
[GRAPHIC OMITTED]
Helping you prepare
for tomorrow, today
[LOGO](R)
<PAGE>
Lord Abbett Affiliated Fund Building Investor Confidence Since 1934
A Tradition of
Value
Investing
[GRAPHIC OMITTED]
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 returns competitive to the S&P 500 Index,
with relatively moderate fluctuations in price.(1)
- --------------------------------------------------------------------------------
Competitive Total Average Annual Rates of Total Return as of 4/30/99
Returns, Consistently
-----------------------------------------
For the past 40 years +12.2% per year
-----------------------------------------
------------------------------------------
For the past 30 years +12.7% per year
------------------------------------------
------------------------------------------------------
For the past 20 years +16.3% per year
------------------------------------------------------
---------------------------------------------------
For the past 10 years +15.9% per year
---------------------------------------------------
----------------------------------------------
For the past year +14.0%
----------------------------------------------
--------------------------------------------------------
0 5 10 15 20%
- --------------------------------------------------------------------------------
Consistency The Fund has increased in value 33 out of the last 40
fiscal years.
- --------------------------------------------------------------------------------
Large and Growing Shareholders taking dividends in cash saw an increase in
Dividends their dividend checks 34 out of the last 40 fiscal
years.(2)
- --------------------------------------------------------------------------------
Shareholder Lord Abbett Affiliated Fund's history demonstrates its
Satisfaction ability to help shareholders realize their financial
objectives. That's probably why, on average, Affiliated
Fund shareholders have owned the Fund for over 15
years.(3)
- --------------------------------------------------------------------------------
The Fund: Something "Lord Abbett Affiliated Fund has been a good citizen by
to Talk About staying out of trouble.... The fund's respectable
performance in 1998 is typical of its performance during
choppy markets. Its sell discipline keeps it out of the
category's trouble spots, so during challenging markets
like in 1994 and in 1998, returns have consistently been
above average."
Source: Morningstar Mutual Funds, December 1998
- --------------------------------------------------------------------------------
SEC Average Annual SEC average annual rates of total return, at the Class A
Total Returns share maximum sales charge of 5.75%, for the periods
ended 3/31/99 were:
---------
1 years 0.00%
---------
--------- ---------------------------
5 years +18.77%
--------- ---------------------------
--------- ----------------------
10 years +14.85%
--------- ----------------------
------------------------------------------------
-10 -5 0 5 10 15 20%
The Fund's SEC yield for the 30 days ended 4/30/99 for
Class A shares was 0.83%.
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.
The Fund's fiscal year-end is 10/31. Results quoted
above (unless stated otherwise) are for periods ending
4/30/99 and reflect Class A share performance at net
asset value with all distributions reinvested.
(1) The S&P 500 Index consists of 500 stocks chosen for
market size, liquidity and industry group representation
and is widely regarded as the standard for measuring
U.S. stock market performance. Indices are unmanaged and
not available for direct investment.
(2) Capital gains were reinvested. Period ends 10/31/98.
(3) Based on a survey of Lord Abbett Affiliated Fund
shareholders conducted by Lord, Abbett & Co. in 1998.
See Important Information on page 8.
<PAGE>
Report to Shareholders
For the Period Ended April 30, 1999
[PHOTO OMITTED]
/s/ Robert S. Dow
- -----------------
ROBERT S. DOW
CHAIRMAN
MAY 5, 1999
"... during the first half of the Fund's fiscal year, positions we established
or strengthened in telecommunications, technology and select financial services
companies performed well."
Lord Abbett Affiliated Fund completed the first half of its fiscal year on April
30, 1999. Below is an overview of some class-specific financial information for
the close of the period.
Six Months Ended April 30, 1999
-------------------------------
Class A Class B Class C Class P Class Y
------------------------------------------------------------
Net asset value $ 16.26 $ 16.27 $ 16.27 $ 16.23 $ 16.29
Dividends $ 0.12 $ 0.06 $ 0.06 $ 0.10 $ 0.14
Capital gains $ 0.95 $ 0.95 $ 0.95 $ 0.95 $ 0.95
Total return* 20.11%** 19.68%** 19.68%** 20.00%** 20.37%**
During the period under review, a favorable environment emerged for U.S. stocks
as investors' concerns regarding diminished corporate earnings eased somewhat
and low inflation and strong economic growth continued in the U.S. In the early
months of 1999, investor sentiment improved considerably as Asian countries,
which had been hit hard by currency problems and fallout from a faltering
Japanese economy, began to recover. Japan's efforts to clean up its flagging
banking system, and to stimulate spending in recent months, have generated hope
that the financial crises in that country may be nearing an end.
The downturn in the market that occurred in October and November of 1998 created
an opportunity for the Fund to initiate and add to positions in stocks that, in
our opinion, became undervalued due to investor sentiment rather than
deteriorating company fundamentals. Indeed, during the first half of the Fund's
fiscal year, positions we established or strengthened in telecommunications,
technology and select financial services companies performed well. A slight
increase in long-term interest rates, brought on by a rise in commodity prices,
resulted in markdowns on our electric utility holdings. The Fund returned 20.1%
during the period.
We anticipate that the domestic economy will continue to grow in 1999, fueled in
part by strong consumer spending. If recovery in Asia also continues, a global
economic expansion seems likely for 2000. In any event, we expect to remain
watchful of global inflationary pressures (brought on by rising commodity prices
and a tightening U.S. labor market), interest rates and high valuations and
volatility in the U.S. equity market. Presently, we do not expect inflation to
exceed our earlier forecast of approximately 2-2 1/2% in 1999. We will continue
to seek out large-company stocks at attractive prices, and expect that some of
these values may be found in energy companies and in the cyclical commodities
sector, which includes aluminum and paper companies and selected manufacturing
companies.
Thank you for your continued confidence in Lord Abbett Affiliated Fund. We look
forward to helping you achieve your financial goals in the years ahead.
* Total return is the percent change in net asset value, assuming the
reinvestment of all distributions.
** Not annualized.
1
<PAGE>
The Income Perspective
By reinvesting
capital gains,
Affiliated share-
holders were
able to realize a
consistently
growing
dividend stream.
This contrasts
sharply with the
fluctuating
income from
guaranteed CDs.
Income Generated from $100,000 Investments: 10/31/72-4/30/99
Year
Ended Six-Month CD Affiliated Fund
Oct. 31 Interest(1) Dividends(2)
- ---------------------------------------------------------------
1972 $ 0 $ 0
1973 8,040 4,173
1974 10,420 4,560
1975 7,480 3,726
1976 6,060 4,793
1977 5,750 5,361
1978 8,180 5,935
1979 11,570 6,804
1980 13,280 8,175
1981 17,570 10,029
1982 14,020 10,711
1983 9,520 10,596
1984 11,270 11,184
1985 8,770 12,796
1986 7,040 13,801
1987 6,920 14,113
1988 7,910 15,159
1989 9,610 15,849
1990 8,560 15,059
1991 6,610 14,793
1992 4,000 15,046
1993 3,380 13,949 -----------
1994 4,520 13,523 If capital
1995 6,310 13,613 gains and
1996 5,630 14,970 dividends
1997 5,820 16,260 had been
1998 5,710 15,721 reinvested,
the Fund's
4/30/99 (6 months) $ 2,510 $ 7,558 total value
Interest/Dividend Total $ 216,460 $ 298,257 would have
- ---------------------------------========== ========== been
Over 26 Years Later < $3,447,183
Initial $100,000 -----------
Investment plus Growth $ 100,000 $1,057,226
- ---------------------------------========== ==========
Total Value $ 316,460 $1,355,483
- ---------------------------------========== ==========
The Real Cost of the
CD Guarantee $1,039,023
===============================================================
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: Lipper, Inc.
(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)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 4/30/99
(6 months only)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth of Capital(2) +12.8% -12.0% +23.1% + 6.3% +14.3% +3.7% +17.6% +20.5% +23.3% + 8.4% +19.2%
Dividend Return(3) + 5.2% + 4.4% + 4.9% + 4.1% + 3.5% +3.0% + 2.9% + 2.7% + 2.5% + 1.9% + 0.85%
- ---------------------------------------------------------------------------------------------------------------------
Total Return(4) +18.0 - 7.6 +28.0 +10.4 +17.8 +6.7 +20.5 +23.2 +25.8 +10.3 +20.1%
- ---------------------------------------------------------------------------------------------------------------------
</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 Helped Protect Your Purchasing Power
In our illustration, the prices noted for April 1989 and 1998 are actual
costs--then and now. "Affiliated 1999" is what the April 1989 amount would have
grown to had it been invested in the Fund.
Investments in Affiliated Fund (up 336.24%) surpassed increases in the cost of
living, which was up 35.01% in these 10 years. Protection against the erosion
caused by inflation is one important way to maintain--and enhance--your
lifestyle.
<TABLE>
<CAPTION>
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
One-Year Private One-Family House(6) First-Class Stamp Income per Capita(7)
College Tuition(5)
<S> <C> <C> <C> <C>
4/89 $11,189 $ 89,500 $.25 $18,175
1998 $18,745 $131,400 $.33 $26,365
- --------------------------------------------------------------------------------------------------------------
Affiliated 1999 $48,811 $390,345 $.78 $79,287
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Affiliated's results reflect Class A share total return at net asset
value, with all distributions reinvested for the 10 years ended 4/30/99.
See Important Information on page 8.
(5) Based on Consumer Price Index.
(6) National average.
(7) National average. 1999 figure is based on January-March figures.
Sources: U.S. Department of Education, Statistics Bureau Section, College
Board Annual Survey of Colleges; National Association of Realtors,
Research Division; U.S. Postal Service; Department of Commerce, Bureau of
Economic Analysis Statistics.
3
<PAGE>
The Total Return Perspective
The chart below illustrates the growth of a $10,000 investment made in
Affiliated Fund on 10/31/72. Even when investing right before a major stock
market downturn long-term investors in Affiliated Fund did well. (Please see the
chart on page 5.) The Fund's average shareholder ownership of over 15 years
reflects the appeal of long-term investing.
Past performance is no indication of future results.
Growth of a $10,000 Fund Investment: 10/31/72-4/30/99(1)
A History of
Consistent
Performance
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 $ 9,417 $ 0 $ 0 $ 9,417
1973 9,550 267 432 10,249
1974 7,258 394 762 8,414
1975 8,993 545 1,394 10,932
1976 10,742 886 2,249 13,877
1977 9,695 1,149 2,624 13,468
1978 9,430 1,382 3,261 14,073
1979 10,570 2,257 4,606 17,433
1980 12,066 3,732 6,519 22,317
1981 10,742 4,887 7,186 22,815
1982 11,364 6,730 9,571 27,665
1983 13,325 9,187 13,197 35,709
1984 12,212 11,251 14,173 37,636
1985 12,993 14,172 17,623 44,788
1986 15,510 21,514 24,060 61,084
1987 13,828 24,951 24,040 62,819
1988 12,768 31,932 25,778 70,478
1989 13,815 37,558 31,817 83,190
1990 11,801 34,617 30,474 76,892
1991 13,629 45,458 39,336 98,423
1992 13,974 50,142 44,501 108,617
1993 14,914 61,407 51,590 127,911
1994 14,609 67,326 54,497 136,432
1995 15,868 84,828 63,654 164,350
1996 17,245 111,153 74,118 202,516
1997 19,656 145,178 89,919 254,753
1998 19,285 168,327 93,307 $280,919
4/30/99 $ 21,536 $208,969 $106,907 $337,412
The dollar amounts of dividends and capital gains distributions reinvested
in shares were $67,353 and $140,769, respectively. The initial investment
plus all distributions reinvested amounted to $218,122. If dividends and
capital gains distributions had been withdrawn in cash, the amounts of
these payments would have been $14,393 and $21,114, 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
We've lived through several periods of economic, political and stock market
turmoil since 1972. 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), while outpacing guaranteed CDs
and inflation.
Using the Value Method of Investing, Affiliated Fund Reduced Volatility and
Produced Rewarding Gains
<TABLE>
<CAPTION>
- --------- --------- --------- ---------
1972-1974 1980-1982 1986-1991 1997-1998
- --------- --------- --------- ---------
<S> <C> <C> <C>
The last protracted Interest rates rose Two corrections jolted Difficulties in Russian
bear market; dramatically; the stock marekt; and Asian markets
S&P 500 declined Prime Rate hit 20%; war and recession spurred a bear-level
28.8%. Affiliated the economy suffered followed a year later. correction in world
Fund held the a recession. During Affilitated rose 61.1% markets. Affiliated
decline to 10.7%. these two years, over this period. rose 10.3% during
Affiliated rose 24.0%. this time of trial.
</TABLE>
Average Annual
Total Returns
Over 26 Years(1)
Affiliated: 14.2%
S&P 500: 14.0%
CDs: 8.1%
Inflation: 5.3%
[PLOT POINTS TO COME]
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 5.75% offering
price from 10/31/72 through 4/30/99.
(2) Average of six-month CD rates available each period. Source: Lipper, Inc.
See Important Information on page 8.
5
<PAGE>
The Impact of a Disciplined Investment Plan
Perfectly timing the market is impossible because, often, 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, 1998, 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.
Here's What Happened...
Your financial
adviser can help
you discipline
your investing
and set up a
systematic plan
you are comfort-
able with
- ------------
Investment A Timing
- ------------
Account
Date of Cumulative Value
Investments Investments at Year-End
- ------------------------------------------------------------------------------
11/7/79 5,000 11,302
4/21/80 10,000 20,433
9/25/81 15,000 25,607
8/12/82 20,000 38,140
1/3/83 25,000 53,875
7/24/84 30,000 63,163
1/4/85 35,000 86,226
1/22/86 40,000 111,938
10/19/87 45,000 120,725
1/20/88 50,000 141,591
1/3/89 55,000 180,773
10/11/90 60,000 176,573
1/9/91 65,000 221,415
10/9/92 70,000 253,973
1/20/93 75,000 292,892
4/4/94 80,000 309,923
1/30/95 85,000 414,350
1/10/96 90,000 503,215
4/11/97 95,000 635,689
8/31/98 100,000 733,142
Account Value on 12/31/98 $733,142
- ----------------------------------------------------------------------========
Average Annual Total Return 17.2%
==============================================================================
- ------------
Investment B Systematic Investing
- ------------
Account
Date of Cumulative Value
Investments Investments at Year-End
- ------------------------------------------------------------------------------
1/2/79 5,000 10,984
1/2/80 10,000 18,365
1/2/81 15,000 23,049
1/4/82 20,000 33,373
1/3/83 25,000 46,576
1/2/84 30,000 54,655
1/2/85 35,000 74,285
1/2/86 40,000 95,915
1/2/87 45,000 103,971
1/4/88 50,000 122,109
1/2/89 55,000 155,643
1/2/90 60,000 152,326
1/2/91 65,000 190,889
1/2/92 70,000 219,364
1/4/93 75,000 253,158
1/3/94 80,000 268,295
1/2/95 85,000 358,126
1/2/96 90,000 434,563
1/2/97 95,000 548,574
1/2/98 100,000 632,511
Account Value on 12/31/98 $632,511
- ----------------------------------------------------------------------========
Average Annual Total Return 15.6%
==============================================================================
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 4/30/99 (with no additional
investments made), Investment A and Investment B would have been worth $810,410
and $699,174, 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
- --------------------------------------------------------------------------------
Fiduciaries Custodians for Minors 19,436
Pension, Profit-Sharing and 401(k) Retirement Plans 21,441
Trusts 11,009
457 Retirement and 403(b) Plans 4,660
Estates 460
- --------------------------------------------------------------------------------
Institutions Broker-held Accounts 49,077
Banks, Credit Unions and Other Financial Institutions 395
Corporations 483
Religious, Charitable and welfare organizations 381
Clubs and Fraternal Organizations 103
Cemeteries 66
Nursing homes and hospitals 32
Colleges and universities 36
Government Agencies 29
- --------------------------------------------------------------------------------
Individuals Single and Joint accounts 76,645
IRAs 58,688
Total Accounts in Affiliated Fund 242,941
================================================================================
A Note About Year 2000 Matters
As you may know, there has been extensive media coverage about possible problems
that may arise as a result of uncertainties about the ability of computers to
"understand" dates using the year 2000. Potentially, these problems could
disrupt the services and systems that the Fund relies on in its daily
operations.
As a general matter, we believe the financial industry has taken a leadership
role addressing year 2000 (Y2K) issues and this should help to inspire
confidence among concerned investors. More specifically, Lord Abbett, Lord
Abbett Distributor llc and the Fund's transfer agent, custodian and other
providers of services critical to the Fund have been actively working on
reviewing and replacing or updating computer systems and computer-to-computer
interfaces, as needed. Each has completed or is in the process of testing new or
revised systems and interfaces and generally expects that their systems, as well
as those of their key external service providers, will be ready to handle Y2K
without significant problems. Furthermore, the Fund has been routinely taking
companies' Y2K preparations into account when considering or reviewing
investments.
In summary, while the Y2K problem is unprecedented and we cannot eliminate
altogether the possibility that the Fund could be affected in some way, we are
confident that all parties involved are taking appropriate steps to resolve Y2K
concerns.
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 refer to the Fund's current
prospectus. If used as sales material after 6/30/99, this report must be
accompanied by Lord Abbett's Performance Quarterly for the most recently
completed calendar quarter.
Statement of Net Assets
April 30, 1999
<TABLE>
<CAPTION>
Shares or
Principal
Investments Amount Value
======================================================================================================
Investments in Securities 96.37%
======================================================================================================
Common Stocks and Convertible Securities 96.37%
======================================================================================================
<S> <C> <C> <C>
Aerospace 1.03% Rockwell International
Corp. 2,000,000 $ 103,250,000
- ---------------------------------------------------------------------------------------===============
Aluminum 1.55% Alcoa Inc. 2,500,000 155,625,000
- ---------------------------------------------------------------------------------------===============
Apparel 1.03% VF Corp. 2,003,300 103,169,950
- ---------------------------------------------------------------------------------------===============
Automobiles 2.45% Ford Motor Co. 1,750,000 111,890,625
General Motors Corp. 1,500,000 133,406,250
Total 245,296,875
- ---------------------------------------------------------------------------------------===============
Banks: Money
Center 1.90% Chase Manhattan Corp. 2,300,000 190,325,000
- ---------------------------------------------------------------------------------------===============
Banks: Regional BankAmerica Corp. 1,400,000 100,800,000
6.92%
Bank One Corp. 3,200,000 188,800,000
First Union Corp. 3,600,000 199,350,000
Fleet Financial
Group, Inc. 2,250,000 96,890,625
Wells Fargo Co. 2,500,000 107,968,750
Total 693,809,375
- ---------------------------------------------------------------------------------------===============
Broadcasting 1.59% CBS Corp.+ 3,500,000 159,468,750
- ---------------------------------------------------------------------------------------===============
Brokers 1.29% Morgan Stanley,
Dean Witter,
Discover & Co. 1,300,000 128,943,750
- ---------------------------------------------------------------------------------------===============
Chemicals 1.12% Rohm & Haas Co.+ 2,500,000 112,031,250
- ---------------------------------------------------------------------------------------===============
Communication Comcast Corp.
Services 1.92% Conv. 3.35% 5/15/29 700,000 52,937,500
Qualcomm Inc.+* 700,000 140,000,000
Total 192,937,500
- ---------------------------------------------------------------------------------------===============
Computer: EMC Corp.
Hardware 5.28% Conv. 31/4% 3/15/02** $ 14,000,000 65,452,184
International Business
Machines Corp. 1,300,000 271,943,750
Sun Microsystems Inc.+* 3,200,000 191,400,000
Total 528,795,934
-------------------------------------------------------===============
<CAPTION>
Investments Shares Value
======================================================================================================
<S> <C> <C> <C>
Computer: First Data Corp. 2,500,000 $ 106,093,750
Services 1.60% Unisys Corp.
$3.75 Conv. Pfd. 1,000,000 54,687,500
Total 160,781,250
- ---------------------------------------------------------------------------------------===============
Containers .81% Owens-Illinois Inc.
Conv. Pfd. 4.750% 2,000,000 81,500,000
- ---------------------------------------------------------------------------------------===============
Drugs/Health-Care American Home
Products 3.97% Products Corp. 3,400,000 207,400,000
Pharmacia & Upjohn Inc. 3,400,000 190,400,000
Total 397,800,000
- ---------------------------------------------------------------------------------------===============
Electric Power Allegheny Energy Inc. 3,000,000 102,187,500
6.90%
Carolina Power &
Light Co. 3,500,000 141,093,750
Duke Energy Corp. 3,500,000 196,000,000
Florida Progress Corp. 3,500,000 134,750,000
Houston Industries Inc.
$3.22 Conv. Pfd. into
Time Warner, Inc. 1,000,000 118,000,000
Total 692,031,250
- ---------------------------------------------------------------------------------------===============
Electrical Equipment
1.61% Emerson Electric Co.+ 2,500,000 161,250,000
- ---------------------------------------------------------------------------------------===============
Electronics:
Semiconductors
1.73% Texas Instruments, Inc. 1,700,000 173,612,500
- ---------------------------------------------------------------------------------------===============
Food 3.40% ConAgra Inc.+ 2,500,000 62,187,500
Heinz H.J. Co. 4,000,000 186,750,000
Ralston Purina Co. 3,000,000 91,500,000
Total 340,437,500
- ---------------------------------------------------------------------------------------===============
Health-Care
Products 1.63% Baxter International Inc. 2,600,000 163,800,000
- ---------------------------------------------------------------------------------------===============
Health-Care Aetna Inc. 1,250,000 109,609,375
Services 3.11%
Aetna Inc.
$4.758 Conv. Pfd.+ 1,500,000 115,968,750
Columbia/HCA
Healthcare Corp. 3,500,000 86,406,250
Total 311,984,375
-------------------------------------------------------===============
</TABLE>
8
<PAGE>
Statement of Net Assets
April 30, 1999
<TABLE>
<CAPTION>
Investments Shares Value
======================================================================================================
<S> <C> <C> <C>
Insurance: American General Corp. 3,100,000 $ 229,400,000
Life 4.59%
Jefferson-Pilot Corp. 1,300,000 87,587,500
Transamerica Corp. 2,003,100 142,720,875
Total 459,708,375
- ---------------------------------------------------------------------------------------===============
Insurance: Chubb Corp.+ 2,000,000 118,500,000
Property and Casualty
3.35% CIGNA Corp. 1,500,000 130,781,250
St. Paul Companies Inc.+ 3,000,000 86,062,500
Total 335,343,750
- ---------------------------------------------------------------------------------------===============
Machinery:
Diversified 1.72% Deere & Co.+ 4,000,000 172,000,000
- ---------------------------------------------------------------------------------------===============
Miscellaneous .74% Textron, Inc. 800,000 73,700,000
- ---------------------------------------------------------------------------------------===============
Natural Gas: Consolidated
Pipelines 1.65% Natural Gas Co. 1,500,000 89,250,000
The Coastal Corp. 2,000,000 76,500,000
Total 165,750,000
- ---------------------------------------------------------------------------------------===============
Oil Well Equipment/
Service .76% Schlumberger Ltd. 1,200,000 76,650,000
- ---------------------------------------------------------------------------------------===============
Oil: International
Integrated 10.73% BP Amoco plc ADR+ 2,000,000 226,375,000
Chevron Corp. 1,000,000 99,750,000
Exxon Corp. 1,300,000 107,981,250
Mobil Corp. 3,000,000 314,250,000
Texaco Inc. 2,500,000 156,875,000
Total S.A. ADR+ 2,500,000 170,000,000
Total 1,075,231,250
- ---------------------------------------------------------------------------------------===============
Paper and Forest Bowater Inc.+ 2,000,000 107,250,000
Products 3.10%
Champion
International Corp. 2,300,000 125,781,250
Georgia Pacific
Timber Group 3,000,000 77,250,000
Total 310,281,250
- ---------------------------------------------------------------------------------------===============
Photographic/ Eastman Kodak Co. 1,500,000 111,937,500
Imaging 2.14%
Xerox Corp. 1,750,000 102,812,500
Total 214,750,000
- ---------------------------------------------------------------------------------------===============
Pollution Control
2.48% Waste Management Inc. 4,400,000 248,600,000
- ---------------------------------------------------------------------------------------===============
Printing and
Publishing 1.36% Dow Jones & Co. Inc. 2,500,000 136,250,000
- ---------------------------------------------------------------------------------------===============
Retail: Department May Department
and Merchandise Stores Co. 2,250,000 89,578,125
1.81%
Wal-Mart Stores Inc.+ 2,000,000 92,000,000
Total 181,578,125
- ---------------------------------------------------------------------------------------===============
Telecom and Data AT&T Corp. 6,000,000 303,000,000
Services 4.66%
MCI WorldCom Inc.* 2,000,000 164,375,000
Total 467,375,000
- ---------------------------------------------------------------------------------------===============
Telephone: Regional Alltel Corp.+ 2,500,000 168,593,750
5.65%
Bell Atlantic Corp. 3,500,000 201,687,500
SBC Communications Inc. 3,500,000 196,000,000
Total 566,281,250
-------------------------------------------------------===============
<CAPTION>
Shares or
Principal
Investments Amount Value
======================================================================================================
<S> <C> <C> <C>
Tobacco .79% Gallaher Group
plc ADR 3,500,000 $ 79,187,500
-------------------------------------------------------===============
Total Investments in
Common Stocks and
Convertible Securities
(Cost $6,836,711,469) 9,659,536,759
======================================================================================================
Other Assets, Less Liabilities 3.63%
======================================================================================================
Short-term American General
Investments Finance Corp.
4.92% due 5/3/1999 $ 6,500,000 6,500,000
Dow Chemical Co.
4.90% due 5/3/1999 126,252,000 126,217,627
Koch Industries, Inc.
4.91% due 5/3/1999 74,576,000 74,555,655
Federal Home
Loan Bank
4.80% due 5/3/1999 9,970,000 9,967,341
Freddie Mac
4.82% due 5/3/1999 77,302,000 77,281,297
Total 294,521,920
-------------------------------------------------------===============
Other (See Note 5) 385,651,020
-------------------------------------------------------===============
Total Short-term Investments
(Cost $680,172,940) 680,172,940
- ---------------------------------------------------------------------------------------===============
Cash and Receivables, Net of Liabilities (316,342,510)
- ------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 363,830,430
======================================================================================================
Net Assets 100.00% $10,023,367,189
======================================================================================================
Class A Shares-Net asset value
($9,374,005,843 / 576,369,055
shares outstanding) $16.26
Maximum offering price
(net asset value plus sales charge
of 5.75% of the offering price) $17.25
Class B Shares-Net asset value
($441,612,749 / 27,137,897
shares outstanding) $16.27
Class C Shares-Net asset value
($160,277,268 / 9,850,606
shares outstanding) $16.27
Class P Shares-Net asset value
($2,186,537 / 134,731
shares outstanding) $16.23
Class Y Shares-Net asset value
($45,284,792 / 2,779,063
shares outstanding) $16.29
</TABLE>
+ Securities (or a portion of securities) on loan. See Note 5.
* Non-income producing security.
** Restricted security under Rule 144A.
ADR American Depositary Receipt.
See Notes to Financial Statements.
9
<PAGE>
Portfolio Changes (unaudited)
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,
1999.
Additions
Aetna Inc.
Alcoa Inc.
Cadence Design Systems
The Coastal Corp.
Columbia/HCA Healthcare CP
Comcast Corp. Conv. Pfd. 3.35%
First Data Corp.
Fleet Financial Group, Inc.
Qualcomm Inc.
Rockwell International Corp.
Rohm & Haas Co.
St. Paul Companies, Inc.
Schlumberger Ltd.
Texaco, Inc.
Unisys Corp. $3.75 Conv. Pfd.
Wells Fargo Co.
Xerox Corp.
- --------------------------------------------------------------------------------
Eliminations
Baltimore Gas & Electric Co.
Best Foods
Browning-Ferris Industries Inc.
Cadence Design Systems
Citigroup
Comerica Inc.
Dow Chemical Co.
DuPont (E.I.) DeNemours Co.
EMC Corp.
Fort James Corp.
Fortune Brands Inc.
FPL Group
Hewlett-Packard Co.
Lucent Technologies Inc.
Mellon Bank Corp.
Occidental Petroleum Corp.
Phillip Morris Companies Inc.
Pioneer Hi-Bred International, Inc.
Progressive Corp.
Providian Financial Corp.
Sara Lee Corp.
Seagate Technology Inc.
SmithKline Beecham plc ADR
Time Warner Inc.
Warner Lambert Co.
Washington Mutual Inc.
10
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
Investment Income Six Months Ended April 30, 1999
===========================================================================================
<S> <C> <C> <C>
Income Dividends $84,662,125
Interest 10,028,001
Total income $ 94,690,126
-----------------------------------------------------------------------------
Expenses Management fee 14,303,355
12b-1 distribution plan-Class A 11,495,559
12b-1 distribution plan-Class B 1,847,517
12b-1 distribution plan-Class C 683,036
12b-1 distribution plan-Class P 4,355
Shareholder servicing 4,438,566
Reports to shareholders 287,988
Registration 177,690
Professional 169,291
Directors' fees 118,289
Other 60,112
-----------
Total expenses before reductions 33,585,758
Expense reductions (496,196)
----------------------------
Total expenses after reductions 33,089,562
-----------------------------------------------------------------------------
Net investment income 61,600,564
-----------------------------------------------------------------------------
Realized and Unrealized Gain on Investments
===========================================================================================
Net realized gain from investment transactions 966,182,036
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 665,433,176
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1,631,615,212
- -------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $1,693,215,776
===========================================================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets 1999 1998
=================================================================================================================================
<S> <C> <C> <C>
Operations Net investment income $ 61,600,564 $ 135,559,651
Net realized gain from investment transactions 966,182,036 556,373,895
Net change in unrealized appreciation of investments 665,433,176 78,452,439
-------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,693,215,776 770,385,985
-------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in price of share transactions -- 40,491
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (68,019,568) (143,194,800)
Class B (1,400,131) (2,266,183)
Class C (525,610) (863,613)
Class P (12,947) (19,753)
Class Y (317,601) (172,653)
-------------------------------------------------------------------------------------------------------------------
Total (70,275,857) (146,517,002)
-------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain from investment transactions:
Class A (524,633,949) (701,757,786)
Class B (20,854,111) (14,611,561)
Class C (7,962,532) (5,544,532)
Class P (117,804) --
Class Y (2,155,299) --
-------------------------------------------------------------------------------------------------------------------
Total (555,723,695) (721,913,879)
-------------------------------------------------------------------------------------------------------------------
Total distributions (625,999,552) (868,430,881)
-------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares 427,850,406 930,460,852
Net asset value of shares issued in reinvestment of dividends and distributions 522,156,164 704,773,197
-------------------------------------------------------------------------------------------------------------------
Total 950,006,570 1,635,234,049
-------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (514,458,819) (714,380,526)
-------------------------------------------------------------------------------------------------------------------
Increase in net assets derived from capital share transactions 435,547,751 920,853,523
-------------------------------------------------------------------------------------------------------------------
Increase in net assets 1,502,763,975 822,849,118
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 8,520,603,214 7,697,754,096
-------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income of $19,354,164
and $28,029,457, respectively) $10,023,367,189 $8,520,603,214
===================================================================================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------------------
Six Months Ended
April 30, Year Ended October 31,
Per Share Operating Performance: 1999 1998 1997 1996 1995 1994
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $14.56 $14.84 $13.02 $11.98 $11.03 $11.26
- ----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .10(e) .24 .30 .30 .32 .31
Net realized and unrealized gain on investments 2.67 1.14 2.85 2.23 1.70 .38
Total from investment operations 2.77 1.38 3.15 2.53 2.02 .69
----------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.12) (.27) (.30) (.30) (.30) (.32)
Distributions from net realized gain (.95) (1.39) (1.03) (1.19) (.77) (.60)
Total distributions (1.07) (1.66) (1.33) (1.49) (1.07) (.92)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.26 $14.56 $14.84 $13.02 $11.98 $11.03
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 20.11%(d) 10.27%(d) 25.80% 23.23% 20.46% 6.66%
==================================================================================================================================
Ratios to Average Net Assets:
Expenses(b) 0.34%(d) 0.63%(d) 0.65%(b) 0.66% 0.63% 0.63%
Net investment income 0.69%(d) 1.64% 2.15%(b) 2.61% 2.90% 2.91%
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares(c)
----------------------------------------------------------------
Six Months Ended Year Ended 8/1/1996(c)
April 30, October 31, to
Per Share Operating Performance: 1999 1998 1997 10/31/96
==============================================================================================================
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.56 $14.84 $13.03 $11.88
- --------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .05(e) .14 .20 .060
Net realized and unrealized gain
on investments 2.67 1.12 2.84 1.142
Total from investment operations 2.72 1.26 3.04 1.202
--------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.06) (.15) (.20) (.052)
Distributions from net realized gain (.95) (1.39) (1.03) --
Total distributions (1.01) (1.54) (1.23) (.052)
--------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.27 $14.56 $14.84 $13.03
- --------------------------------------------------------------------------------------------------------------
Total Return(a) 19.68%(d) 9.41%(d) 24.78% 10.15%(d)
==============================================================================================================
Ratios to Average Net Assets:
Expenses(b) 0.70%(d) 1.38% 1.42% 0.34%(d)
Net investment income 0.32%(d) 0.87% 1.19% 0.27%(d)
========================================================================================================
<CAPTION>
Class C Shares
----------------------------------------------------------------
Six Months Ended Year Ended 8/1/96(c)
April 30, October 31, to
Per Share Operating Performance: 1999 1998 1997 10/31/96
==============================================================================================================
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.56 $14.84 $13.02 $11.88
- --------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .05(e) .14 .22 .062
Net realized and unrealized gain
on investments 2.67 1.12 2.83 1.130
Total from investment operations 2.72 1.26 3.05 1.192
--------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.06) (.15) (.20) (.052)
Distributions from net realized gain (.95) (1.39) (1.03) --
Total distributions (1.01) (1.54) (1.23) (.052)
--------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.27 $14.56 $14.84 $13.02
- --------------------------------------------------------------------------------------------------------------
Total Return(a) 19.68%(d) 9.41%(d) 24.88% 10.07%(d)
==============================================================================================================
Ratios to Average Net Assets:
Expenses(b) 0.70%(d) 1.40% 1.34% 0.33%(d)
Net investment income 0.32%(d) 0.85% 1.28% 0.25%(d)
========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class P Shares(c) Class Y Shares
------------------------------------- -------------------------------------
Six Months Ended 12/8/97(c) Six Months Ended 3/27/98(c)
Per Share Operating Performance: 4/30/99 to 10/31/98 4/30/99 to 10/31/98
================================================================================================================================
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.53 $14.24 $14.57 $15.44
- --------------------------------------------------------------------------------------- -------------------------------------
Income from investment operations
Net investment income .09(e) .18 .13(e) .15
Net realized and unrealized gain (loss)
on investments 2.66 .27 2.68 (.89)
Total from investment operations 2.75 .45 2.81 (.74)
--------------------------------------------------------------------------------- -------------------------------------
Distributions
Dividends from net investment income (.10) (.16) (.14) (.13)
Distributions from net realized gain (.95) -- (.95) --
Total distributions (1.05) (.16) (1.09) (.13)
--------------------------------------------------------------------------------- -------------------------------------
Net asset value, end of period $16.23 $14.53 $16.29 $14.57
- --------------------------------------------------------------------------------------------------------------------------------
Total Return(a)(d) 20.00% 3.21% 20.37% (4.77)%
================================================================================================================================
Ratios to Average Net Assets:
Expenses(b) (d) 0.43% 0.76%(d) 0.21% 0.24%
Net investment income(d) 0.60% 1.21%(d) 0.82% 1.03%
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
April 30, Year Ended October 31,
Supplemental Data for All Classes: 1999 1998 1997 1996 1995 1994
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $10,023,367 $8,520,603 $7,697,754 $6,100,665 $4,964,525 $4,229,586
Portfolio turnover rate 38.38% 56.49% 46.41% 47.06% 53.84% 51.48%
=====================================================================================================================
</TABLE>
(a) Total return does not consider the effects of sales loads and
assumes the reinvestment of all distributions.
(b) The ratios for 1997, 1998 and 1999 include expenses paid through an
expense offset arrangement.
(c) Commencement of offering respective class shares.
(d) Not annualized.
(e) Calculated using average shares outstanding during the period.
See Notes to Financial Statements.
13
<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) Security valuation is determined as follows: Portfolio 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 last 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.
Short-term securities are valued at amortized cost (which approximates market
value) if the maturity is 60 days or less at the time of purchase, or market
value if the maturity is greater than 60 days. 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 investment
transactions are calculated on the identified cost basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income is recorded on the accrual basis. 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) Prior to November 1, 1998, the Fund followed the accounting practice of
equalization whereby a portion of the proceeds from the sales and costs of
repurchases of capital shares was allocated to undistributed net investment
income. Effective November 1, 1998, the Fund discontinued the use of
equalization. Discontinuing the use of equalization will result in a simpler and
more meaningful financial statement presentation.
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, Class C
and Class P 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, (2) a
one-time distribution fee of up to 1% on certain qualifying purchases and (3) an
annual distribution fee of 0.10% of the average daily net asset value of the
Class A shares. 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. Pursuant to the Class
P Plan, the Company pays Distributor an annual service and distribution fee of
0.20% and 0.25%, respectively, of the average daily net asset value of the Class
P shares. Class Y does not have a Plan.
Distributor received $1,243,295 representing payment of commissions on sales of
Class A shares after deducting $7,671,421 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 as of April 30, 1999 for financial
reporting purposes aggregated $964,095,050.
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 19, 1999 and payable on May 27, 1999 to
shareholders of record as of May 19, 1999 were as follows:
Rate Per Aggregate
Net Investment Income Share Amount
- --------------------------------------------------------------------------------
Class A $0.060 $34,522,091
Class B 0.033 915,239
Class C 0.033 333,109
Class P 0.055 7,506
Class Y 0.073 207,894
- --------------------------------------------------------------------------------
4. Capital
The Company has authorized 1,500 million shares of $.001 par value capital stock
designated as follows: 1,150 million shares Class A, 100 million shares Class B,
100 million shares Class C, 75 million shares Class P and 75 million shares
Class Y. Paid in capital amounted to $6,217,092,685 as of April 30, 1999.
Transactions in shares of capital stock were as follows:
14
<PAGE>
Notes to Financial Statements
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
-----------------------------------------------------------------
Class A Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of shares 19,980,227 $ 299,413,540 44,496,423 $ 647,321,212
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 34,466,591 490,186,444 50,482,142 682,391,630
Total 54,446,818 789,599,984 94,978,565 1,329,712,842
- -----------------------------------------------------------------------------------------
Shares reacquired (31,185,017) (467,925,129) (46,371,906) (672,172,411)
Increase 23,261,801 $ 321,674,855 48,606,659 $ 657,540,431
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
-------------------------------------------------------------
Class B Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of shares 5,624,228 $ 84,693,740 12,095,054 $176,522,488
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 1,494,816 21,291,445 1,191,014 16,111,114
Total 7,119,044 105,985,185 13,286,068 192,633,602
- -----------------------------------------------------------------------------------------
Shares reacquired (1,665,816) (25,047,201) (1,852,596) (26,707,944)
Increase 5,453,228 $ 80,937,984 11,433,472 $165,925,658
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
-------------------------------------------------------------
Class C Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of shares 2,117,504 $ 31,966,596 4,987,808 $ 72,979,231
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 566,871 8,074,097 449,243 6,084,002
Total 2,684,375 40,040,693 5,437,051 79,063,233
- -----------------------------------------------------------------------------------------
Shares reacquired (1,106,577) (16,698,369) (1,074,218) (15,311,549)
Increase 1,577,798 $ 23,342,324 4,362,833 $ 63,751,684
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
December 8, 1997
(Commencement
of Offering
Six Months Ended Class P Shares) to
April 30, 1999 October 31, 1998
-----------------------------------------------------
Class P Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of shares 18,198 $ 272,958 136,502 $1,953,673
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 9,245 131,282 1,376 19,466
Total 27,443 404,240 137,878 1,973,139
- -----------------------------------------------------------------------------------------
Shares reacquired (17,363) (263,380) (13,227) (188,622)
Increase 10,080 $ 140,860 124,651 $1,784,517
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
March 27, 1998
(Commencement
of Offering
Six Months Ended Class Y Shares) to
April 30, 1999 October 31, 1998
---------------------------------------------------------
Class Y Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of shares 767,847 $11,503,572 2,136,585 $31,684,248
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 173,682 2,472,896 11,916 166,985
Total 941,529 13,976,468 2,148,501 31,851,233
- -----------------------------------------------------------------------------------------
Shares reacquired (310,967) (4,524,740) -- --
Increase 630,562 $ 9,451,728 2,148,501 $31,851,233
- -----------------------------------------------------------------------------------------
</TABLE>
5. Portfolio Securities
The Company may lend its securities to member banks of the Federal Reserve
System and to registered broker-dealers approved by the Company. The loans are
collateralized at all times by cash and/or U.S. Treasury securities in an amount
at least equal to the market value of the securities loaned.
As of April 30, 1999, the value of securities loaned was $379,236,333. These
loans were collateralized by cash of $386,775,060. Income from securities
lending of $227,889 is included in interest income on the Statement of
Operations. The dividend and interest income earned on the securities loaned is
accounted for in the same manner as other dividend and interest income.
Purchases and sales of investment securities (other than short-term securities)
aggregated $3,462,448,376 and $3,755,192,540, respectively.
As of April 30, 1999, unrealized appreciation based on cost for federal income
tax purposes aggregated $2,822,825,290, of which $2,874,321,913 related to
appreciated securities and $51,496,623 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 the Company 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 on
April 30, 1999 were $2,690,374.
7. Expense Reduction
The Company has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances were used to reduce a
portion of the Company's expenses.
8. Line of Credit
The Company, along with certain other funds managed by Lord Abbett, has a
$200,000,000 unsecured revolving credit facility ("Facility"), from a consortium
of banks, to be used for temporary or emergency purposes as an additional source
of liquidity to fund redemptions of investor shares. Any borrowings under this
Facility will bear interest at current market rates as defined in the agreement.
The fee for this Facility is 0.06% per annum. There were no loans outstanding
pursuant to this Facility as of April 30, 1999, nor was the Facility utilized at
any time during the year.
15
<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, 1999, the related statements of operations
and of changes in net assets 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, 1999 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, 1999, the results of its operations, the
changes in its net assets and its financial highlights for the respective
periods, presented in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
June 4, 1999
Our Management
Board of Directors
Robert S. Dow
E. Thayer Bigelow*
William H.T. Bush*+
Robert B. Calhoun, Jr.*
Stewart S. Dixon*+
John C. Jansing*+
C. Alan MacDonald*+
Hansel B. Millican, Jr.*
Thomas J. Neff*+
* Outside Director
+ Audit Committee
Officers
Robert S. Dow, Chairman and President
W. Thomas Hudson, Jr., Executive Vice
President and Portfolio Manager
Paul A. Hilstad, Vice President
and Secretary
Daniel E. Carper, Vice President
Robert G. Morris, Vice President
John J. Walsh, Vice President
Lawrence H. Kaplan, Vice President
and Assistant Secretary
A. Edward Oberhaus III, Vice President
Keith F. O'Connor, Vice President
Eli M. Salzmann, Vice President
Donna McManus, Treasurer
Joseph Van Dyke, Assistant Treasurer
Lydia Guzman, Assistant Secretary
Robert M. Hickey, Assistant Secretary
Investment Manager and
Underwriter
Lord, Abbett & Co. and
Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Custodian
The Bank of New York
New York, NY
Transfer Agent
United Missouri Bank of
Kansas City, N.A.
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche LLP
New York, NY
Counsel
Debevoise & Plimpton
New York, NY
Copyright (C) 1999 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.
Portfolio
Manager
Profile
[PHOTO OMITTED]
W. Thomas Hudson, Jr.
Partner and Portfolio Manager
Lord Abbett Affiliated Fund
W. Thomas Hudson, Jr., Partner and Portfolio Manager of Lord Abbett Affiliated
Fund, joined the Firm in 1982, and has over 32 years of professional experience
in the financial services industry. During his tenure with Lord Abbett, Mr.
Hudson has served as Director of Research, Portfolio Manager of the COVA
Variable Annuity Growth and Income Portfolio and Portfolio Manager of the
American Skandia Lord Abbett Growth and Income Portfolio.
Mr. Hudson holds a B.S. in Finance and Accounting from St. Mary`s College in
California.
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, William Bush.
William Bush
Director--Lord Abbett
Affiliated Fund
[PHOTO OMITTED]
Mr. Bush received his B.A. degree from Yale University in 1960. He co-founded
the financial advisory firm of Bush-O'Donnell & Company which provides
investment management and financial advisory services to corporations and
individuals throughout the United States and abroad.
Mr. Bush serves as a member of the Board of Directors of Right Choice Managed
Care Inc., Maritz Inc., Mississippi Valley Bancshares, Inc. and INTRAV, Inc.,
all of St. Louis, and DT Industries Inc. of Springfield, Missouri. He was named
an independent director for all of Lord Abbett's funds in 1998.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Funds Growth & Balanced Fund Income Funds Tax-Free Money
Growth Fund Income Funds Income Funds Market Fund
Research Fund - Balanced Series** World Bond-
Developing Small-Cap Value Research Fund - Debenture Series o National U.S. Government
Growth Fund Series Large-Cap o California Securities Money
Series Global Fund - o Connecticut Market Fund+++
Alpha Series* Income Series o Florida
Growth & o Georgia
International Income Series High Yield Fund o Hawaii
Series o Michigan
Affiliated Fund Bond-Debenture o Minnesota
Mid-Cap Fund o Missouri
Value Fund o New Jersey
Limited Duration o New York
Growth U.S. Government o Pennsylvania
Opportunities Securities Series+ o Texas
Fund o Washington
U.S. Government
Global Fund - Securities Series+
Equity Series
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your investment professional 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 Lord Abbett fund, including risks,
charges and ongoing expenses, call your investment professional or Lord Abbett
Distributor LLC at 800-874-3733 for a prospectus. Read it carefully before
investing.
The Lord Abbett Family of Funds lets you access more than 30 portfolios designed
to meet a variety of investment needs.
Diversification. You and your investment professional can diversify your
investments between equity and income funds.
Flexibility. As your investment goals change, your investment professional can
help you reallocate your portfolio.
You may reallocate assets among our funds at any time. Speak with your
investment professional to help you customize your investment plan.
Numbers to Keep Handy
For Shareholder Account or Statement Inquiries: 800-821-5129
For Literature Only: 800-874-3733
24-Hour Automated Shareholder Service Line: 800-865-7582
Visit Our Web Site: http://www.lordabbett.com
* Lord Abbett Securities Trust - Alpha Series is a fund of funds investing in
shares of Lord Abbett Developing Growth Fund, Lord Abbett Research Fund -
Small-Cap Value Series and Lord Abbett Securities Trust - International
Series.
** Lord Abbett Balanced Series is a fund of funds investing in shares of certain
other Lord Abbett funds.
+ An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
++ An investment in this Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund. This Fund is managed to
maintain, and has maintained its stable $1.00 price per share.
[LOGO](R) LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
Lord Abbett mutual fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC
- ------------------------------------------------------------ LAA-3-499
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (6/99)
