Lord Abbett
Affiliated Fund
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED APRIL 30, 2000
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Helping you prepare for tomorrow, today
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<PAGE>
Lord Abbett Affiliated Fund Building Investor Confidence Since 1934
A Tradition of
Value
Investing
Affiliated's history highlights the con cept 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)
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Competitive Total Average Annual Rates of Total Return as of 4/30/00
Returns, Consistently
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For the past 50 years +12.79% per year
For the past 40 years +12.39% per year
For the past 30 years +13.95% per year
For the past 20 years +16.00% per year
For the past 10 years +15.77% per year
For the past year + 7.07% per year
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Consistency The Fund has increased in value 33
out of the last 40 fiscal years.
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Large and Growing Shareholders taking dividends in
Dividends cash saw an increase in their
dividend checks 31 out of the last
40 fiscal years.(2)
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Shareholder Satisfaction Lord Abbett Affiliated Fund's
history demonstrates its ability
to help shareholders realize their
financial objectives. That's
probably why, on average,
Affiliated Fund shareholders have
owned the Fund for over 15
years.(3)
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The Fund: Something "Lord Abbett Affiliated Fund isn't
to Talk About the life of the party, but it has
a good time anyway ... Hudson's
ability to pick up stocks on the
cheap and hold on to them has been
the key to the Fund's success."
Source: Morningstar Mutual Funds, September 1999
--------------------------------------------------------------------------------
SEC Average Annual SEC average annual rates of total
Total Returns return, at the Class A share
maximum sales charge of 5.75%, for
the periods ended 3/31/00 were:
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1 year + 8.90%
5 years +18.53%
10 years +14.71%
The Fund's SEC yield for the 30 days ended 4/30/00 for Class
A shares was 1.33%.
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 4/30/00 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 ended 10/31/99.
(3) Based on a survey of Lord Abbett Affiliated Fund
shareholders conducted by Lord, Abbett & Co. in 1998. See
Important Information on page 6.
<PAGE>
Report to Shareholders
For the Six-Month Period Ended April 30, 2000
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Robert S. Dow
Chairman
May 5, 2000
"In light of the recent shift in investor attention back to companies with
strong underlying fundamentals and positive earnings, we believe select
companies in many industries offer excellent value."
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Lord, Abbett & Co. is proud to announce we have received a DALBAR award for
providing consistently good service to shareholders, the 1999 Key Honors Award
for Mutual Fund Service. DALBAR, Inc., an independent research firm and
evaluator of mutual fund service, presents the awards to financial services
firms that provide consistently solid service to clients.
Lord Abbett Affiliated Fund completed the first six months of its fiscal
year on April 30, 2000. Below is an overview of some class-specific
financial information for the close of the period.
Six Months Ended April 30, 2000
--------------------------------------------------------------------------------
Class A Class B Class C Class P Class Y
--------------------------------------------------------------------------------
Net asset value $ 15.36 $15.37 $ 15.37 $15.34 $15.39
Dividends $ 0.12 $ 0.07 $ 0.07 $ 0.11 $ 0.15
Capital gains $ 1.76 $ 1.76 $ 1.76 $ 1.76 $ 1.76
Total return* 6.55% 6.18% 6.25% 6.58% 6.74%
1999 ended with continued strength in the stock market, rising interest
rates and steady growth in both the U.S. and global economies. This
environment favored a select group of well-known large company growth
stocks with strong earnings growth. Investors stayed with these familiar
names and benefited from their outstanding performance. In early 2000, the
variance between stocks of "old economy" companies (older, more established
firms in cyclical industries such as manufacturing and basic industries)
and "new economy" companies (newer firms primarily in the technology
sector) became apparent. As new economy stocks rallied, old economy stocks
underperformed, and two interest rate increases by the Federal Reserve
Board exacerbated the situation. Convinced that these rate hikes would not
hamper new economy companies, investors poured money into the small number
of stocks that had recently provided the highest returns. Excessively high
stock prices relative to company fundamentals made it difficult to find
value in much of the technology sector.
This bipolar stock market reversed in late March as value-oriented stocks
came roaring back while the NASDAQ, which is heavily weighted toward
growth-oriented technology companies, turned in negative performance for
the month. By the end of April, it was difficult for large-cap investors to
decide where they should put their money, as neither growth nor value was
the clear winner.
While many investors partook in a mass exodus from the volatile technology
sector in March and April, the carefully selected technology stocks we held
were the shining stars of the Fund. While we enjoyed the performance of
many of these stocks, we paid close attention to accelerating valuations
and sold off positions when prices appreciated to where we believed they
were fully-valued. Our relatively large exposure to energy companies also
paid off well, as rising oil prices helped boost the price of many of those
stocks. Select stocks of consumer non-cyclical companies (foods and drugs)
also enjoyed glimpses of sunshine.
The stocks in our portfolio which suffered the most during the period were
those of companies in interest rate-sensitive sectors, such as consumer
cyclicals (entertainment and retail companies), capital goods (industrial
equipment and electronics companies), basic industries (metals and
chemicals) and transportation. Stocks of financial services companies also
underperformed, but since investors had already discounted the prospect of
rate increases, they fared better than they typically have during periods
of interest rate anxiety.
In light of the recent shift in investor attention back to companies with
strong underlying fundamentals and positive earnings, we believe select
companies in many industries offer excellent value. We will continue to
invest selectively in stocks of mostly non-Internet technology companies,
paying close attention to valuations and long-term business prospects. We
expect corporate profits to increase in 2000, as foreign economies continue
to improve (thus expanding the level of margins on U.S. exports) even as
the U.S. economy slows. Although short-term interest rates may rise another
25 to 50 basis points during the next 6 to 12 months, long-term interest
rates should stabilize in the 6.5% range. These factors should bode well
for U.S. stocks, especially those of select old economy companies.
Thank you for investing with Lord Abbett and the Affiliated Fund. We value
the trust that you place in us, and look forward to serving your investment
needs in the years to come.
* Total return, which is not annualized, is the percent change in net asset
value assuming the reinvestment of all distributions.
1
<PAGE>
The Income Perspective
Income Generated from $100,000 Investments: 10/31/74-4/30/00
By reinvesting capital gains, long-term Affiliated shareholders received a
higher level of income from dividends than the income produced for investors in
short-term guaranteed CDs.
Year
Ended Six-Month CD Affiliated Fund
Oct. 31 Interest(1) Dividends(2)
---------------------------------------------------------
1975 7,480 4,578
1976 6,060 5,890
1977 5,750 6,588
1978 8,180 7,294
1979 11,570 8,362
1980 13,280 10,047
1981 17,570 12,325
1982 14,020 13,163
1983 9,520 13,022
1984 11,270 13,744
1985 8,770 15,725
1986 7,040 16,960
1987 6,920 17,343
1988 7,910 18,630
1989 9,610 19,477
1990 8,560 18,506
1991 6,610 18,180
1992 4,000 18,490
1993 3,380 17,142
1994 4,520 16,618
1995 6,310 16,729 If capital
1996 5,630 18,397 gains and
1997 5,820 19,982 dividends
1998 5,710 19,320 had been
1999 5,420 18,876 reinvested,
4/30/00 (6 months) 3,150 10,148 the Fund's
total value
Interest/Dividend Total $204,060 $375,536 would have been
-----------------------------========== =========== --$4,120,568
Over 25 Years Later
Initial $100,000
Investment plus Growth $100,000 $1,370,478
-----------------------------========== ===========
Total Value $304,060 $1,746,014
-----------------------------========== ===========
The Real Cost of the
CD Guarantee $1,441,954
======================================================
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 3.95% sales charge for Class A share
investments of $100,000. Dividends were taken in cash; capital gains were
reinvested.
See Important Information on page 6.
2
<PAGE>
Affiliated's Growth Record
Results Based on Fiscal Year-End October 31(1)
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 4/30/00
<S> <C> <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% + 18.9% + 5.7%
Dividend Return(3) + 5.2% + 4.4% + 4.9% + 4.1% + 3.5% + 3.0% + 2.9% + 2.7% + 2.5% + 1.9% + 1.8% + 0.9%
Total Return(4) + 18.0% - 7.6% + 28.0% + 10.4% + 17.8% + 6.7% + 20.5% + 23.2% + 25.8% + 10.3% + 20.7% + 6.6%
</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 7.
Affiliated's Growth Helped Protect Your Purchasing Power
In our illustration, the prices noted for April 1990 and 2000 are actual
costs--then and now. "Affiliated 2000" is what the 1990 amount would have grown
to had it been invested in the Fund.
Investments in Affiliated Fund (up 332.50%) surpassed increases in the cost of
living, which was up 32.82% in these 10 years. Protection against the erosion
caused by inflation is one important way to maintain--and enhance--your
lifestyle.
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<TABLE>
<CAPTION>
One-Year Private One-Family House(6) First-Class Stamp(7) Income per Capita(8)
College Tuition(5)
<S> <C> <C> <C> <C>
April 1990 $11,436 $115,300 $.25 $19,156
April 2000 $15,380 $133,400 $.33 $29,470
Affiliated 2000 $49,462 $498,682 $1.08 $82,852
</TABLE>
Affiliated's results reflect Class A share total return at net asset value, with
all distributions reinvested for the 10 years ended 4/30/00. See Important
Information on page 6.
(5) National average. Source: College Board Annual Survey of Colleges.
(6) Based on national average. Metropolitan Area Median home prices. Source:
National Association of Realtors, Research Division.
(7) Source: U.S. Postal Service.
(8) National average. 2000 figure is based on January-March figures. Source:
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 satisfaction of long-term Affiliated Shareholders.
Past performance is no indication of future results.
Growth of a $10,000 Fund Investment: 10/31/72-4/30/00(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
--------------------------------------------------------------------------------
1973 9,560 267 433 10,260
1974 7,258 394 762 8,414
1975 8,995 545 1,394 10,934
1976 10,746 887 2,250 13,883
1977 9,706 1,150 2,627 13,483
1978 9,434 1,382 3,263 14,079
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
1999 21,483 208,455 109,112 339,050
4/30/00 $20,344 $234,850 $106,079 $361,273
The dollar amounts of dividends and capital gains distributions reinvested
in shares were $72,509 and $177,559, respectively. The initial investment
plus all distributions reinvested amounted to $255,194. If dividends and
capital gains distributions had been withdrawn in cash, the amounts of
these payments would have been $14,711 and $23,445, 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 6.
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
-------------------------------------------------------------------------------
1972 - 1974 The last protected bear market; S & P 500 declined 28.8%.
Affiliated Fund held the decline to 10.7%
1980 - 1982 Interest rates rose dramatically; Prime Rate hit 20%; the economy
suffered a recession. During these two years, Affiliated rose 24.0%.
1986 - 1991 Two corrections jolted the stock market; was and recession followed
a year later. Affiliated rose 61.1% over this period.
1997 - 1998 Difficulties in Russian and Asian markets spurred a significant
correction in world markets. Affiliated rose 10.3% during this time of trial.
-------------------------------------------------------------------------------
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Affiliated S&P 500 6 month CD Inflation
Oct-72 $ 9,426 $ 10,000 $10,000 $10,000
Oct-73 $ 10,260 $ 10,001 $10,804 $10,790
Oct-74 $ 8,414 $ 7,123 $11,930 $12,085
Oct-75 $ 10,934 $ 8,972 $12,822 $13,001
Oct-76 $ 13,883 $ 10,781 $13,599 $13,689
Oct-77 $ 13,483 $ 10,130 $14,381 $14,573
Oct-78 $ 14,079 $ 10,773 $15,557 $15,868
Oct-79 $ 17,433 $ 12,437 $17,357 $17,804
Oct-80 $ 22,317 $ 16,430 $19,663 $20,055
Oct-81 $ 22,815 $ 16,524 $23,117 $22,108
Oct-82 $ 27,665 $ 19,216 $26,358 $23,299
Oct-83 $ 35,709 $ 24,586 $28,868 $23,901
Oct-84 $ 37,636 $ 26,153 $32,121 $24,904
Oct-85 $ 44,788 $ 31,208 $34,938 $25,711
Oct-86 $ 61,084 $ 41,566 $37,398 $26,107
Oct-87 $ 62,819 $ 44,226 $39,986 $27,277
Oct-88 $ 70,478 $ 50,754 $43,148 $28,444
Oct-89 $ 83,190 $ 64,127 $47,295 $29,722
Oct-90 $ 76,892 $ 59,331 $51,343 $31,591
Oct-91 $ 98,423 $ 79,159 $54,737 $32,513
Oct-92 $108,617 $ 87,035 $56,927 $33,554
Oct-93 $127,911 $100,012 $58,851 $34,477
Oct-94 $336,432 $103,873 $61,511 $35,376
Oct-95 $164,350 $131,306 $65,392 $36,371
Oct-96 $202,516 $162,924 $69,074 $37,458
Oct-97 $254,753 $215,223 $73,094 $38,237
Oct-98 $280,919 $262,593 $77,268 $38,807
Oct-99 $339,050 $329,974 $81,455 $39,800
4/30/00 $361,273 $353,666 $84,021 $40,509
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Average Annual Total Returns
Over 27 1/2 Years(1)
Affiliated: 13.9%
S&P 500: 13.8%
CDs: 8.1%
Inflation: 5.2%
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 4/30/00.
(2) Average of six-month CD rates available each period. Source: Lipper, Inc.
See Important Information on page 6.
5
<PAGE>
Who Owns the Fund?
Investor Profile of Lord Abbett Affiliated Fund
--------------------------------------------------------------------------------
Fiduciaries Custodians for Minors 18,770
Pension, Profit-Sharing and 401(k) Retirement Plans 18,687
Trusts 10,316
457 Retirement and 403(b) Plans 5,572
Estates 271
--------------------------------------------------------------------------------
Institutions Broker-held Accounts 62,159
Banks, Credit Unions and Other Financial Institutions 433
Corporations 498
Religious, Charitable and welfare organizations 388
Clubs and Fraternal Organizations 97
Cemeteries 70
Nursing homes and hospitals 28
Colleges and universities 37
Government Agencies 28
--------------------------------------------------------------------------------
Individuals Single and Joint accounts 72,162
IRAs 60,819
Total Accounts in Affiliated on 4/30/00 250,335
================================================================================
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 6/30/00, this report must be accompanied by Lord
Abbett's Performance Quarterly for the most recently completed calendar
quarter.
6
<PAGE>
Statement of Net Assets
April 30, 2000
Investments Shares Value
--------------------------------------------------------------------------------
Common Stocks 91.06%
--------------------------------------------------------------------------------
Aerospace/Defense Boeing Co. 2,500,000 $ 99,218,750
2.67% TRW, Inc. 1,000,000 58,500,000
United Technologies
Corp.+ 2,000,000 124,375,000
Total 282,093,750
--------------------------------------------------------------==================
Aluminum 1.96% Alcoa, Inc.+ 3,200,000 207,600,000
--------------------------------------------------------------==================
Apparel .03% Russell Corp. 179,200 3,516,800
--------------------------------------------------------------==================
Automotive 1.77% General Motors Corp.+ 2,000,000 187,250,000
--------------------------------------------------------------==================
Banks: Money
Center 1.36% Chase Manhattan Corp. 2,000,000 144,125,000
--------------------------------------------------------------==================
Banks: Regional Bank One Corp. 4,000,000 122,000,000
4.63% Fleet Boston
Financial Corp.+ 5,500,000 194,906,250
Wells Fargo & Co.+ 4,200,000 172,462,500
Total 489,368,750
--------------------------------------------------------------==================
Cable Services .25% Time Warner, Inc.+ 300,000 26,981,250
--------------------------------------------------------------==================
Chemicals 3.26% Dow Chemical Co.+ 2,100,000 237,300,000
Rohm & Haas Co.+ 3,000,000 106,875,000
Total 344,175,000
--------------------------------------------------------------==================
Communications
Technology .31% QUALCOMM, Inc.* 300,000 32,531,250
--------------------------------------------------------------==================
Computer Services Computer
2.91% Sciences Corp.+* 1,300,000 106,031,250
First Data Corp.+ 2,700,000 131,456,250
Unisys Corp.* 3,000,000 69,562,500
Total 307,050,000
--------------------------------------------------------------==================
Computer: Hardware Apple Computer, Inc.+* 1,000,000 124,062,500
6.03% Compaq Computer Corp. 4,500,000 131,625,000
EMC Corp.* 750,000 104,203,125
International Business
Machines Corp.+ 1,500,000 167,437,500
Sun Microsystems, Inc.* 1,200,000 110,325,000
Total 637,653,125
--------------------------------------------------------------==================
Computer:
Software 1.89% Oracle Corp.* 2,500,000 199,843,750
--------------------------------------------------------------==================
Investments Shares Value
--------------------------------------------------------------------------------
Conglomerates Honeywell
3.37% International, Inc.+ 2,500,000 $ 140,000,000
Minnesota Mining &
Manufacturing Co. 2,500,000 216,250,000
Total 356,250,000
--------------------------------------------------------------==================
Construction/
Home Building .06% Manitowoc Co., Inc. 189,000 6,272,438
--------------------------------------------------------------==================
Copper .34% Phelps Dodge Corp. 769,300 35,580,125
--------------------------------------------------------------==================
Drugs 4.15% American Home
Products Corp. 5,000,000 280,937,500
Johnson & Johnson 96,000 7,920,000
Pharmacia Corp.+ 3,000,000 149,812,500
Total 438,670,000
--------------------------------------------------------------==================
Electric Power Allegheny Energy, Inc. 3,000,000 91,125,000
8.46% Carolina Power
& Light Co. 3,500,000 127,968,750
Dominion
Resources, Inc.+ 4,500,000 202,500,000
Duke Energy Corp.+ 3,500,000 201,250,000
Florida Progress Corp. 3,500,000 171,500,000
Unicom Corp. 2,500,000 99,375,000
Total 893,718,750
--------------------------------------------------------------==================
Electronics:
Semiconductor 1.39% Texas Instruments, Inc. 900,000 146,587,500
--------------------------------------------------------------==================
Energy Equipment & Schlumberger Ltd.+ 3,000,000 229,687,500
Services 2.62% Transocean Sedco
Forex, Inc. 1,000,000 47,000,000
Total 276,687,500
--------------------------------------------------------------==================
Financial Services Marsh McLennan &
2.38% Cos., Inc. 1,000,000 98,562,500
Morgan Stanley
Dean Witter & Co. 2,000,000 153,500,000
Total 252,062,500
--------------------------------------------------------------==================
Financial: FNMA 1,500,000 90,468,750
Miscellaneous 1.73% Freddie Mac 2,000,000 91,875,000
Total 182,343,750
--------------------------------------------------------------==================
Food 1.18% Archer-Daniels-
Midland Co. 4,000,000 39,750,000
7
<PAGE>
Statement of Net Assets
April 30, 2000
Investments Shares Value
--------------------------------------------------------------------------------
ConAgra, Inc.+ 4,500,000 84,937,500
Total 124,687,500
--------------------------------------------------------------==================
Health Care Services CIGNA Corp. 1,500,000 119,625,000
3.79% Columbia HCA
Healthcare Corp. 4,000,000 113,750,000
UnitedHealth
Group, Inc. 2,500,000 166,718,750
Total 400,093,750
--------------------------------------------------------------==================
Insurance 6.68% AON Corp.+ 3,500,000 94,718,750
Aegon NV ADR+ 1,500,000 108,562,500
American General Corp. 4,000,000 224,000,000
Chubb Corp. 1,750,000 111,343,750
HSB Group Inc 279,000 8,091,000
MetLife, Inc.+ 1,000,000 16,562,500
St. Paul Companies, Inc.+ 4,000,000 142,500,000
Total 705,778,500
--------------------------------------------------------------==================
Machinery:
Agriculture 1.53% Deere & Co.+ 4,000,000 161,500,000
--------------------------------------------------------------==================
Natural Gas .95% The Coastal Corp. 2,000,000 100,375,000
--------------------------------------------------------------==================
Office Furniture &
Business Equipment
.04% Miller (Herman), Inc.+ 144,000 3,942,000
--------------------------------------------------------------==================
Oil .67% Tosco Corp. 2,200,000 70,537,500
--------------------------------------------------------------==================
Oil: Integrated
International 9.03% BP Amoco plc ADR+ 4,000,000 204,000,000
Chevron Corp. 2,500,000 212,812,500
Exxon Mobil Corp. 4,000,000 310,750,000
Total Fina SA ADR+ 3,000,000 226,875,000
Total 954,437,500
--------------------------------------------------------------==================
Paper and Forest Bowater, Inc. 2,000,000 110,000,000
Products 2.71% Champion International
Corp. 1,600,000 105,200,000
Georgia-Pacific Corp.
(Timber Group) 3,000,000 69,562,500
Temple-Inland, Inc. 40,000 2,005,000
Total 286,767,500
--------------------------------------------------------------==================
Publishing 1.69% Dow Jones & Co., Inc. 2,750,000 178,406,250
--------------------------------------------------------------==================
Radio & TV
Broadcast 1.45% CBS Corp.* 2,600,000 152,750,000
--------------------------------------------------------------==================
Railroads .02% Norfolk Southern Corp. 54,000 951,750
Union Pacific Corp. 34,380 1,448,258
Total 2,400,008
--------------------------------------------------------------==================
Retail 1.32% Federated Department
Stores, Inc.+* 3,000,000 102,000,000
Kroger Co.+* 2,000,000 37,125,000
Total 139,125,000
--------------------------------------------------------------==================
Steel .41% Nucor Corp. 1,000,000 43,000,000
--------------------------------------------------------------==================
Telecommunications Alltel Corp.+ 2,250,000 149,906,250
4.15% Bell Atlantic Corp.+ 3,000,000 177,750,000
BellSouth Corp.+ 24,000 1,168,500
Investments Shares Value
--------------------------------------------------------------------------------
GTE Corp. 7,900 $ 535,225
SBC Communications, Inc. 2,500,000 109,531,250
Total 438,891,225
--------------------------------------------------------------==================
Telephone: AT&T Corp.+ 4,500,000 210,093,750
Long Distance MCI WorldCom, Inc.* 2,750,000 124,953,125
3.17% Total 335,046,875
--------------------------------------------------------------==================
Transportation: Arnold Industries, Inc. 600,000 7,012,500
Miscellaneous .70% United Parcel
Service, Inc. Class B+ 1,000,000 66,500,000
Total 73,512,500
--------------------------------------------------------------==================
Total Common Stocks
(Cost $7,326,170,315) 9,621,612,346
--------------------------------------------------------------==================
Convertible Preferred Stocks 5.45%
--------------------------------------------------------------------------------
Broadcasting 1.40% Houston Inds, Inc.
$3.22 Conv. Pfd. into
Time Warner, Inc. 1,000,000 148,062,500
Containers .46% Owens-Illinois, Inc.
4.750% Conv. Pfd. 2,000,000 48,750,000
--------------------------------------------------------------==================
Electric Power .82% Texas Utilities Co.
$9.25 Conv. Pfd.+ 2,000,000 86,250,000
--------------------------------------------------------------==================
Entertainment .72% Seagram Co. Ltd.
7.50% Conv. Pfd. 1,500,000 76,312,500
--------------------------------------------------------------==================
Insurance .78% ACE Ltd. 8.25% Conv. Pfd. 1,000,000 54,000,000
MetLife Capital Trust, Inc.
8.00% Conv. Pfd. 500,000 28,050,780
Total 82,050,780
--------------------------------------------------------------==================
Natural Gas .70% The Coastal Corp.
6.625% Conv. Pfd. 2,500,000 74,062,500
--------------------------------------------------------------==================
Paper and Forest Georgia-Pacific Group
Products .57% 7.50% Conv. Pfd. 1,500,000 60,750,000
--------------------------------------------------------------==================
Total Convertible
Preferred Stocks
(Cost $547,548,577) 576,238,280
--------------------------------------------------------------==================
Principal
Amount
Corporate Bonds .06% (000)
--------------------------------------------------------------------------------
Banks: Money Bank of America Corp.
Center .02% 7.875% due 12/01/2002 $1,000 1,008,760
Morgan JP & Co., Inc.
7.625% due 9/15/2004 1,000 1,004,220
Total 2,012,980
--------------------------------------------------------------==================
Electric Power PG&E Corp.
.01% (Pacific Gas & Elec)
6.25% due 3/1/2004 500 478,145
--------------------------------------------------------------==================
Financial Services Bear Stearns Co., Inc.
.02% 6.50% due 8/1/2002 500 487,490
GMAC 7.125% due 5/1/03 500 492,370
Household Finance Corp.
7.25% due 7/15/2003 1,000 987,210
Total 1,967,070
--------------------------------------------------------------==================
Financial: CitiFinancial
Miscellaneous .00% (Comm Credit Co.)
6.875% due 5/1/2002 500 494,455
--------------------------------------------------------------==================
8
<PAGE>
Statement of Net Assets
April 30, 2000
Principal
Amount
Investments (000) Value
--------------------------------------------------------------------------------
Insurance .01% Lincoln National Corp.
7.25% due 5/15/2005 $ 1,500 $ 1,462,860
--------------------------------------------------------------==================
Total Corporate Bonds
(Cost $6,625,747) 6,415,510
--------------------------------------------------------------==================
Total Long-Term
Investments 96.57%
(Cost $7,880,344,639) 10,204,266,136
--------------------------------------------------------------==================
Short-Term Investments 3.51%
--------------------------------------------------------------------------------
Associates Corp. NA
6.03% due 5/1/2000 138,910 138,910,000
Prudential
Funding Corp.
6.03% due 5/1/2000 231,880 231,880,000
Total Short-Term
Investments
(Cost $370,790,000) 370,790,000
--------------------------------------------------------------==================
Total Investments 100.08%
(Cost $8,251,134,639) 10,575,056,136
--------------------------------------------------------------==================
Other Assets, Less Liabilities (.08)%
--------------------------------------------------------------------------------
Other (See Note 5) 929,494,831
--------------------------------------------------------------==================
Cash 666,569
--------------------------------------------------------------==================
Receivables for: Securities sold 18,446,826
Dividends and interest 14,121,959
Capital stock sold 12,758,197
Total Other Assets 975,488,382
--------------------------------------------------------------==================
Payables for: Collateral on securities loaned $ 929,494,831
Securities purchased 34,729,744
Capital stock reacquired 6,512,916
Other 13,353,512
Total Liabilities 984,091,003
--------------------------------------------------------------==================
Total Other Assets,
Less Liabilities (8,602,621)
================================================================================
Net Assets 100.00% $10,566,453,515
================================================================================
Class A Shares-Net asset value
($9,643,795,290 / 627,766,477
shares outstanding) $15.36
Class A Shares-Maximum offering price
(net asset value plus sales charge
of 5.75% of the offering price) $16.30
Class B Shares-Net asset value
($608,201,851 / 39,558,122
shares outstanding) $15.37
Class C Shares-Net asset value
($257,339,534 / 16,737,854
shares outstanding) $15.37
Class P Shares-Net asset value
($3,812,561 / 248,591
shares outstanding) $15.34
Class Y Shares-Net asset value
($53,304,279 / 3,463,683)
shares outstanding) $15.39
+ Securities (or a portion of securities) on loan.
See Note 5.
*Non-income producing security.
ADR American Depositary Receipt.
See Notes to Financial Statements.
9
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
Investment Income Six Months Ended April 30, 2000
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Income Dividends $ 114,028,095
Interest 12,257,163
Foreign taxes withheld (80,503)
Total income 126,204,755
-----------------------------------------------------------------------------------------------------------------------------------
Expenses Management fee 15,491,710
12b-1 distribution plan-Class A 15,992,290
12b-1 distribution plan-Class B 2,757,797
12b-1 distribution plan-Class C 1,098,495
12b-1 distribution plan-Class P 5,269
Shareholder servicing 5,894,830
Directors' fees 194,940
Reports to shareholders 372,314
Professional 100,296
Registration 217,534
Other 1,158,049
Total expenses before reductions 43,283,524
-----------------------------------------------------------------------------------------------------------------------------------
Expense reductions (615,447)
-----------------------------------------------------------------------------------------------------------------------------------
Net expenses 42,668,077
-----------------------------------------------------------------------------------------------------------------------------------
Net investment income 83,536,678
-----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
===================================================================================================================================
Net realized gain from investment transactions 1,002,655,202
-----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments (429,524,994)
-----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 573,130,208
-----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $ 656,666,886
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, October 31,
Increase in Net Assets 2000 1999
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations Net investment income $ 83,536,678 $ 127,030,402
Net realized gain from investment transactions 1,002,655,202 1,108,589,813
Net change in unrealized appreciation of investments (429,524,994) 499,850,810
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 656,666,886 1,735,471,025
-----------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (72,475,689) (137,028,835)
Class B (2,391,413) (3,320,304)
Class C (928,082) (1,232,723)
Class P (15,390) (27,346)
Class Y (479,972) (760,283)
-----------------------------------------------------------------------------------------------------------------------------------
Total (76,290,546) (142,369,491)
-----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain from investment
transactions:
Class A (1,008,895,460) (524,634,632)
Class B (57,497,458) (20,854,149)
Class C (21,865,836) (7,962,546)
Class P (222,549) (117,804)
Class Y (5,313,261) (2,155,302)
-----------------------------------------------------------------------------------------------------------------------------------
Total (1,093,794,564) (555,724,433)
-----------------------------------------------------------------------------------------------------------------------------------
Total distributions (1,170,085,110) (698,093,924)
-----------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sales of shares (Notes 4 and 9) 658,125,280 911,822,030
Net asset value of shares issued in reinvestment of dividends and distributions 994,872,682 576,481,381
-----------------------------------------------------------------------------------------------------------------------------------
Total 1,652,997,962 1,488,303,411
-----------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (653,880,004) (965,529,945)
-----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets derived from capital share transactions 999,117,958 522,773,466
-----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 485,699,734 1,560,150,567
-----------------------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 10,080,753,781 8,520,603,214
-----------------------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income of
$19,936,500 and $12,690,368, respectively) $10,566,453,515 $10,080,753,781
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended October 31,
Per Share Operating Performance: 4/30/2000 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.22 $ 14.56 $ 14.84 $ 13.02 $ 11.98 $ 11.03
------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .13(e) .21(e) .24 .30 .30 .32
Net realized and unrealized gain on investments .89 2.64 1.14 2.85 2.23 1.70
Total from investment operations 1.02 2.85 1.38 3.15 2.53 2.02
------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.12) (.24) (.27) (.30) (.30) (.30)
Distributions from net realized gain (1.76) (.95) (1.39) (1.03) (1.19) (.77)
Total distributions (1.88) (1.19) (1.66) (1.33) (1.49) (1.07)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.36 $ 16.22 $ 14.56 $ 14.84 $ 13.02 $ 11.98
------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 6.55%(d) 20.69% 10.27% 25.80% 23.23% 20.46%
====================================================================================================================================
Ratios to Average Net Assets:
Expenses(b) .40%(d) .74% .63% .65% .66% .63%
Net investment income .84%(d) 1.36% 1.64% 2.15% 2.61% 2.90%
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
---------------------------------------------------------------------------------------------------------------------
Six Months Year Ended 8/1/1996(c)
Ended October 31, to
Per Share Operating Performance: 4/30/2000 1999 1998 1997 10/31/1996
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.23 $14.56 $14.84 $13.03 $11.88
---------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .08(e) .10(e) .14 .20 .060
Net realized and unrealized gain on investments .89 2.65 1.12 2.84 1.142
Total from investment operations .97 2.75 1.26 3.04 1.202
---------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.07) (.13) (.15) (.20) (.052)
Distributions from net realized gain (1.76) (.95) (1.39) (1.03) -
Total distributions (1.83) (1.08) (1.54) (1.23) (.052)
---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.37 $16.23 $14.56 $14.84 $13.03
---------------------------------------------------------------------------------------------------------------------
Total Return(a) 6.18%(d) 19.87% 9.41% 24.78% 10.15%(d)
=====================================================================================================================
Ratios to Average Net Assets:
Expenses(b) .72%(d) 1.43% 1.38% 1.42% .34%(d)
Net investment income .51%(d) .66% .87% 1.19% .27%(d)
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
----------------------------------------------------------------------------------------------------------------------
Six Months Year Ended 8/1/1996(c)
Ended October 31, to
Per Share Operating Performance: 4/30/2000 1999 1998 1997 10/31/1996
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.23 $14.56 $14.84 $13.02 $11.88
----------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .08(e) .10(e) .14 .22 .062
Net realized and unrealized gain on investments .89 2.65 1.12 2.83 1.130
Total from investment operations .97 2.75 1.26 3.05 1.192
----------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.07) (.13) (.15) (.20) (.052)
Distributions from net realized gain (1.76) (.95) (1.39) (1.03) -
Total distributions (1.83) (1.08) (1.54) (1.23) (.052)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.37 $16.23 $14.56 $14.84 $13.02
----------------------------------------------------------------------------------------------------------------------
Total Return(a) 6.25%(d) 19.80% 9.41% 24.88% 10.07%(d)
======================================================================================================================
Ratios to Average Net Assets:
Expenses(b) .72%(d) 1.43% 1.40% 1.34% .33%(d)
Net investment income .51%(d) .66% .85% 1.28% .25%(d)
======================================================================================================================
</TABLE>
12
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class P Shares Class Y Shares
------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended 12/8/1997(c) Six Months Year Ended 3/27/1998(c)
Per Share Operating Performance: Ended 4/30/2000 10/31/1999 to 10/31/1998 Ended 4/30/2000 10/31/1999 to 10/31/1998
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.19 $14.53 $14.24 $16.25 $14.57 $15.44
-----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .11(e) .19(e) .18 .15(e) .26(e) .15
Net realized and unrealized gain (loss)
on investments .91 2.63 .27 .90 2.65 (.89)
Total from investment operations 1.02 2.82 .45 1.05 2.91 (.74)
-----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.11) (.21) (.16) (.15) (.28) (.13)
Distributions from net realized gain (1.76) (.95) - (1.76) (.95) -
Total distributions (1.87) (1.16) (.16) (1.91) (1.23) (.13)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.34 $16.19 $14.53 $15.39 $16.25 $14.57
-----------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 6.58%(d) 20.51% 3.21%(d) 6.74%(d) 21.15% (4.77)%(d)
===================================================================================================================================
Ratios to Average Net Assets:
Expenses(b) .46%(d) .88% .76%(d) .23%(d) .43% .24%(d)
Net investment income .74%(d) 1.22% 1.21%(d) 1.01%(d) 1.67% 1.03%(d)
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months Year Ended October 31,
Supplemental Data for All Classes: Ended 4/30/2000 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $10,566,454 $10,080,754 $8,520,603 $7,697,754 $6,100,665 $4,964,525
Portfolio turnover rate 34.09% 62.30% 56.49% 46.41% 47.06% 53.84%
====================================================================================================================================
</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, 1999 and 2000 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 permit 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 secur ities.
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 dis tribute 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.
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. At
April 30, 2000, the Company had a management fee payable in the amount of
$2,539,412.
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 of
Class A shares. Pursuant to the Class B Plan, the Company pays Distri butor 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. At April 30, 2000, the Company had 12b-1
fees payable in the amount of $6,172,560.
The Company along with certain other funds managed by Lord Abbett (the
"Underlying Funds") has entered into a Servicing Arrangement with the Balanced
Series of Lord Abbett Investment Trust pursuant to which the Underlying Funds
will pay a portion of the expenses of the Balanced Series in proportion to the
average daily value of shares owned by the Balanced Series. Other expenses
include approximately $101,000 accrued pursuant to this Servicing Arrangement.
Distributor received $1,332,318 representing payment of commissions on sales of
Class A shares after deducting $7,650,368 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, 2000 for financial
reporting purposes aggregated $1,015,362,727.
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 gain amounts in accordance with generally
accepted accounting principles.
Dividends from net investment income declared on May 17, 2000 and payable on May
25, 2000 to shareholders of record as of May 17, 2000 were as follows:
Rate Per Aggregate
Share Amount
--------------------------------------------------------------------------------
Class A $.060 $37,653,291
Class B $.034 $ 1,362,559
Class C $.034 $ 581,239
Class P $.056 $ 14,314
Class Y $.074 $ 256,313
--------------------------------------------------------------------------------
4. Capital
The Company has authorized 1.5 billion shares of $.001 par value capital stock
designated as follows: 1.15 billion 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 $7,207,232,791 as of April 30, 2000.
Transactions in shares of capital stock were as follows:
14
<PAGE>
Notes to Financial Statements
Six Months Ended Year Ended
April 30, 2000 October 31, 1999
--------------------------------------------------------------------------------
Class A Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 22,797,075 $ 340,731,827 39,694,036 $ 618,554,913
Shares issued in
connection with
acquisition of
Real Silk 8,900,457 131,459,455 - -
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 60,365,771 910,018,806 37,601,360 541,579,692
Total 92,063,303 1,382,210,088 77,295,396 1,160,134,605
--------------------------------------------------------------------------------
Shares reacquired (38,237,868) (569,585,282) (56,461,608) (876,717,900)
Increase 53,825,435 $ 812,624,806 20,833,788 $ 283,416,705
--------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 2000 October 31, 1999
--------------------------------------------------------------------------------
Class B Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 7,206,879 $107,866,294 12,120,448 $189,940,250
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 3,782,599 57,155,660 1,605,000 23,100,835
Total 10,989,478 165,021,954 13,725,448 213,041,085
--------------------------------------------------------------------------------
Shares reacquired (3,785,521) (56,039,097) (3,055,952) (47,511,701)
Increase 7,203,957 $108,982,857 10,669,496 $165,529,384
--------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 2000 October 31, 1999
--------------------------------------------------------------------------------
Class C Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 4,889,334 $ 73,021,900 5,202,798 $81,918,057
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 1,434,005 21,667,232 607,399 8,739,598
Total 6,323,339 94,689,132 5,810,197 90,657,655
--------------------------------------------------------------------------------
Shares reacquired (1,754,029) (26,057,075) (1,914,461) (29,737,368)
Increase 4,569,310 $ 68,632,057 3,895,736 $60,920,287
--------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 2000 October 31, 1999
--------------------------------------------------------------------------------
Class P Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 139,896 $2,089,749 27,936 $ 430,275
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 15,800 237,840 10,124 145,672
Total 155,696 2,327,589 38,060 575,947
--------------------------------------------------------------------------------
Shares reacquired (33,474) (496,920) (36,342) (578,481)
Increase (Decrease) 122,222 $1,830,669 1,718 $ (2,534)
--------------------------------------------------------------------------------
Six Months Ended Year Ended
April 30, 2000 October 31, 1999
--------------------------------------------------------------------------------
Class Y Shares Amount Shares Amount
--------------------------------------------------------------------------------
Sales of shares 197,505 $ 2,956,055 1,351,162 $ 20,978,535
Shares issued to
shareholders in
reinvestment of
dividends and
distributions 383,933 5,793,144 200,651 2,915,584
Total 581,438 8,749,199 1,551,813 23,894,119
--------------------------------------------------------------------------------
Shares reacquired (111,768) (1,701,630) (706,301) (10,984,495)
Increase 469,670 $ 7,047,569 845,512 $ 12,909,624
--------------------------------------------------------------------------------
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 secu rities in an
amount at least equal to the market value of the securities loaned.
As of April 30, 2000, the value of securities loaned was $893,017,729. These
loans were collateralized by cash of $929,494,831. Income from securities
lending of $719,383 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 $3,347,611,449 and $3,608,683,097, respectively. As of April 30,
2000, unrealized appreciation based on cost for federal income tax purposes
aggregated $2,323,921,497, of which $2,528,422,891 related to appreciated
securities and $204,501,394 related to depreciated securities. The cost of
investments for federal income tax purposes is substantially the same as that
used for financial reporting purposes.
6. Directors` Remuneration
The Directors of theCompany associated with Lord Abbett and all officers of the
Company receive no compensation from the Company for acting as such. Outside
Directors' fees and retirement costs are allocated among all funds in the Lord
Abbett group based on the net assets of each fund. Directors' fees payable at
April 30, 2000, under a deferred compensation plan, were $2,978,448.
7. Expense Reduction
The Company has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances are 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 was at an annual rate of 0.06% during the year ended
October 31, 1999. Effective December 17, 1999, this fee was increased to 0.09%
per annum. There were no loans outstanding pursuant to this Facility as of April
30, 2000, nor was the Facility utilized at any time during the period.
9. Acquisition of Real Silk Investments, Inc.
On December 15, 1999, the Company acquired all the net assets of Real Silk
Investments, Inc. ("Real Silk") pursuant to a plan of merger. The merger was
accomplished by a tax-free exchange of 8,900,457 Class A shares of the Company
valued at $131,459,455 (including $96,203,567 of unrealized appreciation) for
164,683 shares of Real Silk.
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. ("Company") as of April 30, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000 by cor res pondence 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, 2000, the results of its operations, the
changes in its net assets and its financial highlights for the respective
periods, presented in conformity with accounting principles generally accepted
in the United States of America.
[GRAPHIC OMITTED]
New York, New York
June 2, 2000
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 Investment Manager
Robert G. Morris, Executive Vice President
Eli M. Salzmann, Executive Vice President
Paul A. Hilstad, Vice President
and Secretary
Daniel E. Carper, Vice President
Lawrence H. Kaplan, Vice President
and Assistant Secretary
A. Edward Oberhaus III, Vice President
Joan A. Binstock, Vice President
Tracie E. Richter, Vice President
Donna McManus, Treasurer
Lydia Guzman, Assistant Secretary
Robert M. Hickey, Assistant Secretary
Investment Manager and
Underwriter
Lord, Abbett & Co. and
Lord Abbett Distributor LLC
90 Hudson Street
Jersey City, NJ 07302-3973
800-201-6984
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
Wilmer, Cutler & Pickering
Washington, DC
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)2000 by Lord Abbett Affiliated Fund, Inc., 90 Hudson Street,
Jersey City, NJ 07302-3973
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.
Investment
Team Leader
Profile
[PHOTO OMITTED]
W. Thomas Hudson, Jr.
Partner and Investment Team Leader
Lord Abbett Affiliated Fund
W. Thomas Hudson, Jr., Partner and Investment Team Leader 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 BS 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 regard ing your Fund. Every
member of the Board possesses extensive business experience. Lord Abbett
Affiliated'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, E.
Thayer Bigelow, Jr.
[PHOTO]
E. Thayer Bigelow, Jr.
Director Lord Abbett Affiliated Fund
Mr. Bigelow is a graduate of Trinity College and earned his MBA at the
University of Virginia's Darden Business School. He is currently Senior Advisor
at Time Warner Inc. Prior to that, he was acting CEO of Courtroom Television
Network, and previously served for five years as President and CEO of Time
Warner Cable Programming, Inc.
Mr. Bigelow serves as a member of the Board of Trustees for the Cate School. He
is also a member of the Board of Directors of Crane Co. He has been an
independent director for all of Lord Abbett's Family of Funds since 1994.
<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
Growth Large-Cap Research Fund - Balanced World Bond- National U. S. Government
Opportunities Growth Fund Large-Cap Series** Debenture Series California Securities Money
Fund Research Fund- Series Global Fund - Connecticut Market Fund +++
Small-Cap Value Growth & Income Series Florida
Series Income Series High Yield Fund Georgia
Alpha Series* Affiliated Fund Bond-Debenture Hawaii
Developing International Fund Michigan
Growth Fund Series Limited Duration Minnesota
Lord Abbett Mid-Cap U. S. Government Missouri
Developing Value Fund Securities Series+ New Jersey
Growth Fund Global Fund- U. S. Government) New York
is closed to Equity Series Securities Series+ Pennsylvania
new investors Texas
Washington
</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
under stand your investment objectives and, ultimately, offering fund recom
mendations 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 the fund(s) covered by this
report.
For more complete information about any Lord Abbett fund, in cluding 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:
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]
Lord Abbett mutual fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC
90 Hudson Street o Jersey City, New Jersey 07302-3973
LAA-3-400
(6/00)
