x<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number 811-0005
LORD ABBETT AFFILIATED FUND, INC.
---------------------------------
(Exact name of registrant as specified in charter)
90 Hudson Street, Jersey City, NJ 07302
---------------------------------------
(Address of principal executive offices) (zip code)
Christina T. Simmons, Vice President & Assistant Secretary
90 Hudson Street, Jersey City, NJ 07302
---------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 201-6984
--------------
Date of fiscal year end: 10/31
-----
Date of reporting period: 4/30/04
-------
<Page>
ITEM 1: REPORT TO SHAREHOLDERS.
<Page>
LORD ABBETT
[LORD ABBETT LOGO]
SEMI-ANNUAL REPORT 2004
LORD ABBETT AFFILIATED FUND
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2004
<Page>
- --------------------------------------------------------------------------------
LORD ABBETT AFFILIATED FUND
SEMI-ANNUAL REPORT
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2004
DEAR SHAREHOLDERS: We are pleased to provide you with this six-month overview of
the Lord Abbett Affiliated Fund's strategies and performance for the period
ended April 30, 2004. On this and the following pages, we discuss the major
factors that influenced performance.
Thank you for investing in Lord Abbett Mutual Funds. We value the trust
that you place in us and look forward to serving your investment needs in the
years to come.
BEST REGARDS,
/s/ Robert S. Dow
ROBERT S. DOW
CHAIRMAN
- --------------------------------------------------------------------------------
Q: WHAT WERE THE OVERALL MARKET CONDITIONS OF THE REPORTING PERIOD?
A: Favorable economic news and strong U.S. equity returns during November and
December brought 2003 to a positive close. Manufacturing, inventory investment
and capital spending all showed signs of improvement. Unemployment reports were
also encouraging, as inflation and interest rates remained steady through
year-end. As a result of the tax bill and a positive macroeconomic environment,
capital spending increased, particularly in technology.
This economic growth continued into the beginning of 2004 largely due to
strong consumer and capital spending. Corporate profits rose, triggered by a
rise in industrial production. In January and February, inflation and short-term
interest rates continued to remain stable. However, somewhat disappointing
employment reports and higher energy prices weighed on consumer sentiment.
In March and April, the number of jobs increased and unemployment
stabilized. The U.S. housing market remained strong and there were improvements
in durable goods spending. But, retail sales dropped 0.5% in April after a 2%
gain in March. Meanwhile, producer prices moved higher both months (March 0.5%,
April 0.7%) driven by the higher costs of gasoline and food, suggesting an
inflationary trend and the possibility of an interest rate increase in the
coming months.
Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED APRIL 30, 2004?
A: For the six-month period ended April 30, 2004, the Fund returned 7.5%,
reflecting performance at the Net Asset Value (NAV) of Class A shares with all
distributions reinvested, compared with its benchmark, the Russell 1000(R) Value
Index,(1) which returned 8.2% over the same period. Standardized Average Annual
Total Returns, which reflect performance at the maximum 5.75% sales charge
applicable to Class A share investments and include the reinvestment
1
<Page>
- --------------------------------------------------------------------------------
of all distributions are 1 Year: 18.55%; 5 Years: 2.37% and 10 Years: 11.64%.
PERFORMANCE DATA QUOTED REFLECT PAST PERFORMANCE AND ARE NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
QUOTED. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE SO THAT SHARES, ON ANY GIVEN DAY OR WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. YOU CAN OBTAIN PERFORMANCE DATA CURRENT
TO THE MOST RECENT MONTH END BY CALLING LORD ABBETT AT 800-821-5129 OR REFERRING
TO OUR WEBSITE AT www.LordAbbett.com.
Q. WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
A. Stock selection within the financial services, producer durables and
technology sectors were the greatest positive contributors to performance. In
the technology sector, the portfolio's largest holding benefited from a
management change and the announcement of a successful spin-off of a product
line that was not a part of the company's core business.
Detracting from the Fund's performance was its stock selection in the auto
and transportation sector. Also detracting from performance was stock selection
within the materials and processing sector, as price declines in the commodity
markets negatively impacted the portfolio's holdings in gold stocks.
The Fund's portfolio is actively managed and, therefore, its holdings and
weightings of a particular issuer or particular sector as a percentage of
portfolio assets are subject to change. Sectors may include many industries.
(1) The Russell 1000(R) Value Index measures the performance of those Russell
1000 companies with lower price-to-book ratios and lower forecasted growth
values. Indices are unmanaged, do not reflect the deduction of fees or expenses
and are not available for direct investment.
IMPORTANT PERFORMANCE AND OTHER INFORMATION
The views of the Fund's management and the portfolio holdings described in this
report are as of April 30, 2004; these views and portfolio holdings may have
changed subsequent to this date and they do not guarantee the future performance
of the markets or the Fund. Information provided in this report should not be
considered a recommendation to purchase or sell securities.
A NOTE ABOUT RISK: See Notes to Financial Statements for a discussion of
investment risks. For a more detailed discussion of the risks associated with
the Fund, please see the Fund's Prospectus.
PERFORMANCE: BECAUSE OF ONGOING MARKET VOLATILITY, FUND PERFORMANCE MAY BE
SUBJECT TO SUBSTANTIAL FLUCTUATION. Except where noted, comparative fund
performance does not account for the deduction of sales charges and would be
different if sales charges were included. The Fund offers additional classes of
shares with distinct pricing options. For a full description of the differences
in pricing alternatives, please see the Fund's Prospectus.
THE PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND, INCLUDING THE
FUND'S INVESTMENT OBJECTIVES, RISKS, CHARGES AND ONGOING EXPENSES, THAT YOU
SHOULD CAREFULLY CONSIDER BEFORE INVESTING. TO OBTAIN A PROSPECTUS ON THIS FUND
OR ANY LORD ABBETT MUTUAL FUND, PLEASE CONTACT YOUR INVESTMENT PROFESSIONAL OR
LORD ABBETT DISTRIBUTOR LLC AT 800-874-3733 OR VISIT www.LordAbbett.com. READ
THE PROSPECTUS CAREFULLY BEFORE INVESTING.
MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS
OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
2
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)
APRIL 30, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.27%
AEROSPACE & DEFENSE 0.07%
Honeywell
International, Inc. 352,790 $ 12,199
---------------
AIRLINES 0.36%
AMR Corp.*^ 3,517,482 39,923
Delta Air Lines, Inc.^(b) 3,367,050 20,943
---------------
TOTAL 60,866
---------------
BEVERAGES 2.12%
Diageo plc ADR^ 759,100 41,371
PepsiCo, Inc. 5,761,715 313,956
---------------
TOTAL 355,327
---------------
CHEMICALS 3.18%
E.I. du Pont de
Nemours & Co. 2,372,200 101,886
Monsanto Co. 2,931,509 101,401
Potash Corp. of
Saskatchewan(a) 1,029,850 83,891
Praxair, Inc. 4,192,700 153,243
Rohm & Haas Co. 2,401,770 93,141
---------------
TOTAL 533,562
---------------
COMMERCIAL BANKS 8.73%
Bank of America Corp. 2,210,688 177,938
Bank of New York
Co., Inc. 6,088,315 177,414
Bank One Corp. 7,575,470 374,001
Mellon Financial Corp. 7,640,460 226,463
U.S. Bancorp 4,603,990 118,046
Wachovia Corp. 4,767,815 218,128
Wells Fargo & Co. 3,036,205 171,424
---------------
TOTAL 1,463,414
---------------
COMMERCIAL SERVICES & SUPPLIES 0.85%
Waste
Management, Inc. 5,037,275 143,059
---------------
COMMUNICATIONS EQUIPMENT 3.47%
Corning, Inc.*^ 7,977,735 $ 87,994
Motorola, Inc.^ 24,142,840 440,607
Nortel Networks
Corp.*(a) 13,983,852 52,300
---------------
TOTAL 580,901
---------------
COMPUTERS & PERIPHERALS 3.38%
Apple
Computer, Inc.* 10,734,335 276,194
EMC Corp.* 24,595,725 274,488
International
Business
Machines Corp. 180,600 15,924
---------------
TOTAL 566,606
---------------
DIVERSIFIED FINANCIALS 4.19%
Citigroup, Inc. 7,258,500 349,061
iShares MSCI
Japan Index Fund^ 5,028,700 50,991
J.P. Morgan
Chase & Co.^ 2,543,570 95,638
Merrill Lynch &
Co., Inc. 2,967,095 160,906
The Goldman Sachs
Group, Inc. 465,700 44,940
---------------
TOTAL 701,536
---------------
DIVERSIFIED TELECOMMUNICATION
SERVICES 4.08%
BellSouth Corp. 3,259,290 84,122
Qwest Communications
Int'l., Inc.* 15,776,975 63,424
SBC
Communications, Inc. 6,900,295 171,817
Verizon
Communications, Inc. 9,639,600 363,799
---------------
TOTAL 683,162
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
APRIL 30, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES 2.85%
Consolidated
Edison, Inc.^ 1,403,900 $ 57,855
Constellation Energy
Group, Inc.^ 998,375 38,417
FPL Group, Inc.^ 1,701,540 108,252
PG&E Corp.* 626,200 17,233
Progress Energy, Inc.^ 3,535,730 151,223
Public Service
Enterprise Group, Inc.^ 1,429,000 61,304
Southern Co. 1,489,175 42,829
---------------
TOTAL 477,113
---------------
ELECTRICAL EQUIPMENT 0.71%
Emerson Electric Co. 1,968,000 118,513
---------------
ELECTRONIC EQUIPMENT &
INSTRUMENTS 0.61%
Agilent
Technologies, Inc.*^ 1,039,955 28,089
Solectron Corp.*^ 15,072,535 73,856
---------------
TOTAL 101,945
---------------
ENERGY EQUIPMENT &
SERVICES 3.61%
Baker Hughes, Inc.^ 7,325,080 268,684
GlobalSantaFe Corp.^ 2,832,795 74,701
Schlumberger Ltd.^ 4,482,855 262,381
---------------
TOTAL 605,766
---------------
FOOD & STAPLES RETAILING 0.87%
CVS Corp. 1,862,915 71,964
Kroger Co.* 4,213,170 73,731
---------------
TOTAL 145,695
---------------
FOOD PRODUCTS 4.18%
Archer-Daniels-
Midland Co. 5,269,995 92,541
General Mills, Inc.^ 2,369,160 115,497
H.J. Heinz Co. 1,490,610 56,926
Kellogg Co. 3,411,990 146,374
Kraft Foods, Inc.
Class A 8,763,672 288,413
---------------
TOTAL 699,751
---------------
HEALTHCARE EQUIPMENT &
SUPPLIES 0.86%
Baxter Int'l., Inc.^ 4,570,927 $ 144,670
---------------
HEALTHCARE PROVIDERS &
SERVICES 1.68%
Cardinal Health, Inc.^ 2,486,615 182,145
CIGNA Corp. 1,527,740 98,554
---------------
TOTAL 280,699
---------------
HOUSEHOLD DURABLES 0.28%
Newell
Rubbermaid, Inc.^ 1,965,950 46,475
---------------
HOUSEHOLD PRODUCTS 0.53%
Kimberly Clark Corp. 1,364,120 89,282
---------------
INDUSTRIAL CONGLOMERATES 2.53%
General Electric Co. 7,123,100 213,337
Tyco Int'l., Ltd.^(a) 7,679,560 210,804
---------------
TOTAL 424,141
---------------
INSURANCE 3.09%
Allstate Corp. 1,471,665 67,549
American Int'l
Group, Inc. 5,023,100 359,905
Hartford Financial
Group, Inc.^ 1,207,040 73,726
St. Paul Travelers
Cos., Inc. 400,786 16,300
---------------
TOTAL 517,480
---------------
LEISURE EQUIPMENT &
PRODUCTS 0.28%
Eastman Kodak Co.^ 1,842,880 47,528
---------------
MACHINERY 5.85%
Caterpillar, Inc.^ 1,541,600 119,829
Deere & Co. 6,341,374 431,467
Eaton Corp. 3,820,100 226,837
Illinois Tool Works, Inc. 1,904,810 164,214
Parker Hannifin Corp. 686,540 37,959
---------------
TOTAL 980,306
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
APRIL 30, 2004
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
MEDIA 8.04%
Clear Channel
Communications, Inc. 4,160,210 $ 172,607
Comcast Corp.* 9,543,148 276,656
Cox
Communications, Inc.*^ 2,968,672 97,046
The Walt Disney Co.^ 14,203,515 327,107
Time Warner, Inc.* 2,106,595 35,433
Tribune Co. 5,072,400 242,866
Viacom, Inc. 5,071,194 196,002
---------------
TOTAL 1,347,717
---------------
METALS & MINING 3.26%
Alcoa, Inc. 7,624,560 234,455
Barrick Gold Corp.^(a) 5,116,065 98,382
Newmont Mining Corp.^ 5,711,784 213,621
---------------
TOTAL 546,458
---------------
MULTI-LINE RETAIL 1.12%
Target Corp. 4,344,160 188,406
---------------
OFFICE ELECTRONICS 1.49%
Xerox Corp.* 18,542,995 249,032
---------------
OIL & GAS 6.87%
BP plc ADR 2,873,800 152,024
Exxon Mobil Corp. 23,499,600 999,908
---------------
TOTAL 1,151,932
---------------
PAPER & FOREST PRODUCTS 2.16%
International Paper Co. 8,149,215 328,576
Weyerhaeuser Co.^ 558,700 33,075
---------------
TOTAL 361,651
---------------
PERSONAL PRODUCTS 0.82%
Gillette Co. 3,342,675 136,782
---------------
PHARMACEUTICALS 7.29%
Abbott Laboratories 3,111,700 136,977
Bristol-Myers
Squibb Co. 3,629,300 91,096
Merck & Co., Inc. 3,531,875 165,998
Novartis AG ADR 5,355,455 239,924
Pfizer, Inc. 1,880,800 $ 67,257
Schering-Plough Corp.^ 14,463,045 241,967
Wyeth 7,308,135 278,221
---------------
TOTAL 1,221,440
---------------
ROAD & RAIL 1.82%
Canadian National
Railway(a) 1,734,660 65,518
CSX Corp.^ 3,606,960 110,950
Union Pacific Corp. 2,194,180 129,303
---------------
TOTAL 305,771
---------------
SEMICONDUCTOR EQUIPMENT &
PRODUCTS 0.57%
Teradyne, Inc.*^ 2,295,510 46,783
Texas Instruments, Inc. 1,910,400 47,951
---------------
TOTAL 94,734
---------------
SPECIALTY RETAIL 1.42%
The Gap, Inc.^ 10,803,435 237,784
---------------
TEXTILES & APPAREL 1.05%
NIKE, Inc. Class B^ 2,445,185 175,931
---------------
TOTAL COMMON STOCKS
(Cost $13,843,003,988) 15,797,634
===============
CONVERTIBLE PREFERRED STOCKS 0.44%
INSURANCE 0.44%
Hartford Financial
Group, Inc.
7.0% 8/16/2006
(Cost $60,209,460) 1,200,000 73,188
===============
SHORT-TERM INVESTMENTS 7.77%
COLLATERAL FOR SECURITIES ON LOAN 2.24%
State Street Navigator
Securities
Lending Prime
Portfolio, 1.07%(c) 375,102 375,102
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONCLUDED)
APRIL 30, 2004
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
INVESTMENTS (000) (000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT 5.53%
Repurchase Agreement
dated 4/30/2004,
1.00% due 5/3/2004
with State Street Bank
& Trust Co. collateralized
by $130,380,000 of
Federal Home Loan Bank
at 5.125% due 3/6/2006
and $175,340,000 of
Federal Home Loan
Mortgage Corp. from
5.625% to 6.25% due
from 7/15/2004 to
3/15/2011 and
$624,640,000 of
Federal National
Mortgage Assoc.
from zero coupon to
3.02% due from
7/1/2004 to 7/3/2018;
value: $945,562,425;
proceeds: $927,024,545 $ 926,947 $ 926,947
===============
TOTAL SHORT-TERM INVESTMENTS
(Cost $1,302,049,594) 1,302,049
===============
TOTAL INVESTMENTS
102.48% (Cost $15,205,263,042) $ 17,172,871
===============
</Table>
* Non-income producing security.
^ Security (or a portion of security) on loan. See Note 5.
(a) Foreign security traded in U.S. dollars.
(b) Affiliated issuer (holding represents 5% or more of the underlying issuer's
outstanding voting shares). See Note 10.
(c) Rate shown reflects 7 day yield as of April 30, 2004.
ADR- American Depository Receipt.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<Page>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
April 30, 2004
<Table>
ASSETS:
Investment in unaffiliated issuers, at value (cost $15,169,549,543) $ 17,151,928,337
Investment in affiliated issuer, at value (cost $35,713,499) 20,943,051
Receivables:
Interest and dividends 22,063,244
Investment securities sold 3,749,999
Capital shares sold 42,315,532
Prepaid expenses and other assets 798,212
- -------------------------------------------------------------------------------------------
TOTAL ASSETS 17,241,798,375
- -------------------------------------------------------------------------------------------
LIABILITIES:
Payable upon return of securities on loan 375,102,295
Payables:
Investment securities purchased 73,229,143
Capital shares reacquired 14,163,666
Management fee 4,723,631
12b-1 distribution fees 9,650,060
Fund administration 595,180
Directors' fees 3,674,413
To affiliate 261,029
Accrued expenses and other liabilities 2,909,638
===========================================================================================
TOTAL LIABILITIES 484,309,055
===========================================================================================
NET ASSETS $ 16,757,489,320
===========================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 14,538,945,957
Undistributed net investment income 10,828,176
Accumulated net realized gain on investments 240,106,841
Net unrealized appreciation on investments 1,967,608,346
- -------------------------------------------------------------------------------------------
NET ASSETS $ 16,757,489,320
===========================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 13,070,065,329
Class B Shares $ 1,375,417,860
Class C Shares $ 1,308,328,154
Class P Shares $ 256,656,658
Class Y Shares $ 747,021,319
OUTSTANDING SHARES BY CLASS:
Class A Shares (1.6 billion shares of common stock authorized) 965,802,795
Class B Shares (300 million shares of common stock authorized) 101,444,770
Class C Shares (300 million shares of common stock authorized) 96,648,084
Class P Shares (200 million shares of common stock authorized) 18,994,293
Class Y Shares (100 million shares of common stock authorized) 55,082,720
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE (NET ASSETS
DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 13.53
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) $ 14.36
Class B Shares-Net asset value $ 13.56
Class C Shares-Net asset value $ 13.54
Class P Shares-Net asset value $ 13.51
Class Y Shares-Net asset value $ 13.56
===========================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<Page>
STATEMENT OF OPERATIONS (UNAUDITED)
For the Six Months Ended April 30, 2004
<Table>
INVESTMENT INCOME:
Dividends $ 136,893,895
Interest 4,472,807
Securities lending-net 615,624
Foreign withholding tax (773,481)
- -------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 141,208,845
- -------------------------------------------------------------------------------
EXPENSES:
Management fee 24,834,429
12b-1 distribution plan-Class A 22,195,743
12b-1 distribution plan-Class B 6,780,757
12b-1 distribution plan-Class C 6,081,648
12b-1 distribution plan-Class P 506,221
Shareholder servicing 8,962,107
Professional 87,373
Reports to shareholders 518,271
Fund administration 3,247,578
Custody 250,573
Directors' fees 152,265
Registration 58,475
Subsidy (see Note 3) 223,393
Other 1,138,978
- -------------------------------------------------------------------------------
Gross expenses 75,037,811
Expense reductions (64,254)
- -------------------------------------------------------------------------------
NET EXPENSES 74,973,557
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME 66,235,288
- -------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on investments in unaffiliated issuers 264,553,646
Net realized loss on investment in affiliated issuer (17,127,239)
Net change in unrealized appreciation on investments 786,713,823
===============================================================================
NET REALIZED AND UNREALIZED GAIN 1,034,140,230
===============================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,100,375,518
===============================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<Page>
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE
SIX MONTHS ENDED
APRIL 30, 2004 FOR THE YEAR ENDED
INCREASE IN NET ASSETS (UNAUDITED) OCTOBER 31, 2003
OPERATIONS:
Net investment income $ 66,235,288 $ 129,291,087
Net realized gain on investments 247,426,407 148,888,869
Net change in unrealized appreciation on investments 786,713,823 2,373,953,298
- ---------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,100,375,518 2,652,133,254
===================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (92,520,976) (168,906,309)
Class B (5,549,820) (11,271,869)
Class C (4,889,828) (8,852,699)
Class P (1,416,363) (1,873,979)
Class Y (5,851,340) (8,151,250)
Net realized gain
Class A (1,646,119) (333,971,436)
Class B (176,249) (35,468,501)
Class C (151,417) (26,650,798)
Class P (26,262) (3,226,274)
Class Y (84,562) (10,642,638)
- ---------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (112,312,936) (609,015,753)
===================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 2,213,478,590 2,490,553,771
Reinvestment of distributions 90,284,681 490,435,007
Cost of shares reacquired (864,270,766) (1,416,280,618)
- ---------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS 1,439,492,505 1,564,708,160
===================================================================================================
NET INCREASE IN NET ASSETS 2,427,555,087 3,607,825,661
===================================================================================================
NET ASSETS:
Beginning of period 14,329,934,233 10,722,108,572
- ---------------------------------------------------------------------------------------------------
END OF PERIOD $ 16,757,489,320 $ 14,329,934,233
===================================================================================================
UNDISTRIBUTED NET INVESTMENT INCOME $ 10,828,176 $ 54,821,215
===================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2004 ----------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 12.68 $ 10.80 $ 13.04 $ 16.47 $ 16.22 $ 14.56
=========== ======== ======== ======== ======== ========
Investment operations
Net investment income(a) .06 .13 .14 .19 .24 .21
Net realized and
unrealized gain (loss) .89 2.36 (1.59) (1.99) 2.01 2.64
----------- -------- -------- -------- -------- --------
Total from investment
operations .95 2.49 (1.45) (1.80) 2.25 2.85
----------- -------- -------- -------- -------- --------
Distributions to shareholders from:
Net investment income (.10) (.20) (.22) (.24) (.24) (.24)
Net realized gain -(d) (.41) (.57) (1.39) (1.76) (.95)
----------- -------- -------- -------- -------- --------
Total distributions (.10) (.61) (.79) (1.63) (2.00) (1.19)
----------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 13.53 $ 12.68 $ 10.80 $ 13.04 $ 16.47 $ 16.22
=========== ======== ======== ======== ======== ========
Total Return(b) 7.53%(c) 24.07% (12.21)% (11.98)% 15.12% 20.69%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .42%(c) .84% .85% .79% .79% .74%
Expenses, excluding expense
reductions .42%(c) .84% .85% .80% .80% .74%
Net investment income .45%(c) 1.17% 1.08% 1.28% 1.62% 1.36%
</Table>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2004 ----------------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
==================================================================================================================================
Net assets, end of period (000) $ 13,070,065 $ 11,322,151 $ 8,744,220 $ 9,363,248 $ 10,309,845 $ 9,307,645
Portfolio turnover rate 15.43% 42.58% 59.88% 77.18% 52.27% 62.30%
==================================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2004 ----------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 12.70 $ 10.81 $ 13.06 $ 16.49 $ 16.23 $ 14.56
=========== ======== ======== ======== ======== ========
Investment operations
Net investment income(a) .02 .06 .06 .09 .14 .10
Net realized and
unrealized gain (loss) .90 2.36 (1.61) (1.99) 2.02 2.65
----------- -------- -------- -------- -------- --------
Total from investment
operations .92 2.42 (1.55) (1.90) 2.16 2.75
----------- -------- -------- -------- -------- --------
Distributions to shareholders from:
Net investment income (.06) (.12) (.13) (.14) (.14) (.13)
Net realized gain -(d) (.41) (.57) (1.39) (1.76) (.95)
----------- -------- -------- -------- -------- --------
Total distributions (.06) (.53) (.70) (1.53) (1.90) (1.08)
----------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 13.56 $ 12.70 $ 10.81 $ 13.06 $ 16.49 $ 16.23
=========== ======== ======== ======== ======== ========
Total Return(b) 7.24%(c) 23.29% (12.85)% (12.53)% 14.42% 19.87%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .75%(c) 1.50% 1.47% 1.42% 1.44% 1.43%
Expenses, excluding expense
reductions .75%(c) 1.50% 1.47% 1.43% 1.45% 1.43%
Net investment income .12%(c) .51% .46% .62% .94% .66%
</Table>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2004 ----------------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
==================================================================================================================================
Net assets, end of period (000) $ 1,375,418 $ 1,235,238 $ 928,421 $ 904,004 $ 713,161 $ 524,974
Portfolio turnover rate 15.43% 42.58% 59.88% 77.18% 52.27% 62.30%
==================================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2004 ----------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 12.68 $ 10.80 $ 13.02 $ 16.49 $ 16.23 $ 14.56
=========== ======== ======== ======== ======== ========
Investment operations
Net investment income(a) .02 .06 .08 .05 .14 .10
Net realized and
unrealized gain (loss) .90 2.35 (1.59) (1.99) 2.02 2.65
----------- -------- -------- -------- -------- --------
Total from investment
operations .92 2.41 (1.51) (1.94) 2.16 2.75
----------- -------- -------- -------- -------- --------
Distributions to shareholders from:
Net investment income (.06) (.12) (.14) (.14) (.14) (.13)
Net realized gain -(d) (.41) (.57) (1.39) (1.76) (.95)
----------- -------- -------- -------- -------- --------
Total distributions (.06) (.53) (.71) (1.53) (1.90) (1.08)
----------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 13.54 $ 12.68 $ 10.80 $ 13.02 $ 16.49 $ 16.23
=========== ======== ======== ======== ======== ========
Total Return(b) 7.26%(c) 23.23% (12.59)% (12.79)% 14.48% 19.80%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .75%(c) 1.50% 1.32% 1.70% 1.44% 1.43%
Expenses, excluding expense
reductions .75%(c) 1.50% 1.32% 1.71% 1.45% 1.43%
Net investment income .12%(c) .51% .61% .32% .93% .66%
</Table>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2004 ----------------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
==================================================================================================================================
Net assets, end of period (000) $ 1,308,328 $ 1,036,160 $ 692,976 $ 555,759 $ 331,910 $ 197,440
Portfolio turnover rate 15.43% 42.58% 59.88% 77.18% 52.27% 62.30%
==================================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2004 ----------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 12.66 $ 10.78 $ 13.02 $ 16.45 $ 16.19 $ 14.53
=========== ======== ======== ======== ======== ========
Investment operations
Net investment income(a) .05 .12 .12 .16 .22 .19
Net realized and
unrealized gain (loss) .89 2.36 (1.58) (1.97) 2.02 2.63
----------- -------- -------- -------- -------- --------
Total from investment
operations .94 2.48 (1.46) (1.81) 2.24 2.82
----------- -------- -------- -------- -------- --------
Distributions to shareholders from:
Net investment income (.09) (.19) (.21) (.23) (.22) (.21)
Net realized gain -(d) (.41) (.57) (1.39) (1.76) (.95)
----------- -------- -------- -------- -------- --------
Total distributions (.09) (.60) (.78) (1.62) (1.98) (1.16)
----------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 13.51 $ 12.66 $ 10.78 $ 13.02 $ 16.45 $ 16.19
=========== ======== ======== ======== ======== ========
Total Return(b) 7.48%(c) 24.01% (12.31)% (12.07)% 15.11% 20.51%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .47%(c) .95% .92% .87% .89% .88%
Expenses, excluding expense
reductions .47%(c) .95% .92% .88% .89% .88%
Net investment income .40%(c) 1.06% 1.01% 1.10% 1.30% 1.22%
</Table>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2004 ----------------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
==================================================================================================================================
Net assets, end of period (000) $ 256,657 $ 178,794 $ 82,038 $ 35,939 $ 12,072 $ 2,046
Portfolio turnover rate 15.43% 42.58% 59.88% 77.18% 52.27% 62.30%
==================================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2004 ----------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 12.70 $ 10.82 $ 13.07 $ 16.50 $ 16.25 $ 14.57
=========== ======== ======== ======== ======== ========
Investment operations
Net investment income(a) .09 .17 .18 .22 .30 .26
Net realized and
unrealized gain (loss) .89 2.36 (1.59) (1.97) 2.01 2.65
----------- -------- -------- -------- -------- --------
Total from investment
operations .98 2.53 (1.41) (1.75) 2.31 2.91
----------- -------- -------- -------- -------- --------
Distributions to shareholders from:
Net investment income (.12) (.24) (.27) (.29) (.30) (.28)
Net realized gain -(d) (.41) (.57) (1.39) (1.76) (.95)
----------- -------- -------- -------- -------- --------
Total distributions (.12) (.65) (.84) (1.68) (2.06) (1.23)
----------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 13.56 $ 12.70 $ 10.82 $ 13.07 $ 16.50 $ 16.25
=========== ======== ======== ======== ======== ========
Total Return(b) 7.77%(c) 24.51% (11.96)% (11.64)% 15.52% 21.15%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .24%(c) .50% .47% .42% .44% .43%
Expenses, excluding expense
reductions .24%(c) .50% .47% .43% .46% .43%
Net investment income .63%(c) 1.51% 1.46% 1.53% 1.96% 1.67%
</Table>
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2004 ----------------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2003 2002 2001 2000 1999
==================================================================================================================================
Net assets, end of period (000) $ 747,021 $ 557,591 $ 274,454 $ 215,165 $ 57,505 $ 48,649
Portfolio turnover rate 15.43% 42.58% 59.88% 77.18% 52.27% 62.30%
==================================================================================================================================
</Table>
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
(d) Amount is less than $.01.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
Lord Abbett Affiliated Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 (the "Act") as a diversified, open-end management
investment company organized in 1934 and was reincorporated under Maryland law
on November 26, 1975.
The Fund's investment objective is long-term growth of capital and income
without excessive fluctuations in market value. The Fund offers five classes of
shares: Classes A, B, C, P and Y, each with different expenses and dividends. A
front-end sales charge is normally added to the Net Asset Value ("NAV") for
Class A shares. There is no front-end sales charge in the case of the Class B,
C, P and Y shares, although there may be a contingent deferred sales charge
("CDSC") as follows: certain redemptions of Class A shares made within 24 months
following any purchases made without a sales charge; Class B shares redeemed
before the sixth anniversary of purchase; and Class C shares redeemed before the
first anniversary of purchase. Class B shares will convert to Class A shares on
the eighth anniversary of the original purchase of Class B shares.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) INVESTMENT VALUATION-Securities traded on any recognized U.S. or non-U.S.
exchange or on NASDAQ, Inc. are valued at the last sale price or official
closing price on the exchange or system on which they are principally
traded. Unlisted equity securities are valued at the last quoted sales price
or, if no sales price is available, at the mean between the most recently
quoted bid and asked prices. Securities for which market quotations are not
readily available are valued at fair value as determined by management and
approved in good faith by the Board of Directors. Short-term securities with
60 days or less remaining to maturity are valued using the amortized cost
method, which approximates current market value.
(b) SECURITY TRANSACTIONS-Security transactions are recorded as of the date that
the securities are purchased or sold (trade date). Realized gains and losses
on sales of portfolio securities are calculated using the identified-cost
method. Realized and unrealized gains or losses are allocated to each class
of shares based upon the relative proportion of net assets at the beginning
of the day.
(c) INVESTMENT INCOME-Dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. Discounts are accreted and
premiums are amortized using the effective interest method. Investment
income is allocated to each class of shares based upon the relative
proportion of net assets at the beginning of the day.
(d) FEDERAL TAXES-It is the policy of the Fund to meet the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all taxable income and capital
gains to its shareholders. Therefore, no federal income tax provision is
required.
(e) EXPENSES-Expenses, excluding class specific expenses, are allocated to each
class of shares based upon the relative proportion of net assets at the
beginning of the day. Class A, B, C and P shares bear all expenses and fees
relating to their respective 12b-1 Distribution Plans.
15
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
(f) SECURITIES LENDING-The Fund may lend securities to member banks of the
Federal Reserve System and to registered broker/dealers approved by the
Fund. The loans are collateralized at all times by cash and/or U.S. Treasury
securities in an amount at least equal to 102% of the market value of
domestic securities loaned (105% in the case of foreign securities loaned)
as determined at the close of business on the preceding business day. The
dividend and interest income earned on the securities loaned is accounted
for in the same manner as other dividend and interest income. Lending
portfolio securities could result in a loss or delay in recovering the
Fund's securities if the borrower defaults.
(g) REPURCHASE AGREEMENTS-The Fund may enter into repurchase agreements with
respect to securities. A repurchase agreement is a transaction in which the
Fund acquires a security and simultaneously commits to resell that security
to the seller (a bank or securities dealer) at an agreed-upon price on an
agreed-upon date. The Fund requires at all times that the repurchase
agreement be collateralized by cash, U.S. Government securities or U.S.
government sponsored enterprises securities having a value equal to, or in
excess of, the value of the repurchase agreement. If the seller of the
agreement defaults on its obligation to repurchase the underlying securities
at a time when the value of those securities has declined, the Fund may
incur a loss upon disposition of the securities.
3. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE
The Fund has a management agreement with Lord, Abbett & Co. LLC ("Lord Abbett")
pursuant to which Lord Abbett supplies the Fund with investment management
services and executive and other personnel, pays the remuneration of officers,
provides office space and pays for ordinary and necessary office and clerical
expenses relating to research and statistical work and supervision of the Fund's
investment portfolio.
The management fee is based on average daily net assets at the following annual
rates:
<Table>
- ----------------------------------
First $200 million .50%
Next $300 million .40%
Next $200 million .375%
Next $200 million .35%
Over $900 million .30%
</Table>
Lord Abbett provides certain administrative services to the Fund pursuant to an
Administrative Services Agreement at an annual rate of .04% of the Fund's
average daily net assets.
12b-1 DISTRIBUTION PLAN
The Fund has adopted a distribution plan with respect to one or more classes of
shares pursuant to Rule 12b-1 of the Act, which provides for the payment of
ongoing distribution and service fees to Lord Abbett Distributor LLC
("Distributor"), an affiliate of Lord Abbett.
The fees are accrued daily at annual rates based upon average daily net assets
as follows:
<Table>
<Caption>
FEE CLASS A CLASS B CLASS C CLASS P
- --------------------------------------------------------------------------
Service .25%(1) .25% .25% .20%
Distribution .10%(2) .75% .75% .25%
</Table>
(1) Annual service fee on shares sold prior to June 1, 1990 is .15% of the
average daily net assets attributable to Class A.
(2) In addition, the Fund pays a one-time distribution fee of up to 1% on
certain qualifying purchases, which is generally amortized over a two-year
period. The Fund collected $13,204 of CDSCs for the six months ended April
30, 2004.
Class Y does not have a distribution plan.
16
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
COMMISSIONS
Distributor received the following commissions on sales of Class A shares of the
Fund, after concessions were paid to authorized dealers, for the six months
ended April 30, 2004:
<Table>
<Caption>
DISTRIBUTOR COMMISSIONS DEALERS' CONCESSIONS
- -----------------------------------------------
$ 4,500,953 $ 24,923,062
</Table>
One Director and certain of the Fund's officers have an interest in Lord Abbett.
The Fund and certain other funds managed by Lord Abbett (the "Underlying Funds")
have entered into a Servicing Arrangement with Balanced Series of Lord Abbett
Investment Trust ("Balanced Series") pursuant to which each Underlying Fund pays
a portion of the expenses of Balanced Series in proportion to the average daily
value of Underlying Fund shares owned by Balanced Series.
4. DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARD
Dividends from net investment income, if any, are declared and paid quarterly.
Taxable net realized gains from investment transactions, reduced by capital loss
carryforwards, if any, are declared and distributed to shareholders at least
annually. The capital loss carryforward amount is available to offset future net
capital gains. Dividends and distributions to shareholders are recorded on the
ex-dividend date. The amount of dividends and distributions from net investment
income and net realized capital gains are determined in accordance with federal
income tax regulations which may differ from accounting principles generally
accepted in the United States of America. These book/tax differences are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the components of net
assets based on their federal tax basis treatment; temporary differences do not
require reclassification. Dividends and distributions which exceed net
investment income and net realized capital gains for tax purposes are reported
as distributions of paid-in capital.
The tax character of distributions paid during the six months ended April 30,
2004 and the fiscal year ended October 31, 2003 are as follows:
<Table>
<Caption>
4/30/2004
(UNAUDITED) 10/31/2003
- ----------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 110,228,327 $ 200,136,442
Net long term capital gains 2,084,609 408,879,311
- ----------------------------------------------------------------------
Total taxable distributions $ 112,312,936 $ 609,015,753
======================================================================
</Table>
As of April 30, 2004, the aggregate unrealized security gains and losses based
on cost for U.S. federal income tax purposes are as follows:
<Table>
Tax cost $ 15,212,520,164
- ----------------------------------------------------------------------
Gross unrealized gain 2,440,938,422
Gross unrealized loss (480,587,198)
- ----------------------------------------------------------------------
Net unrealized security gain $ 1,960,351,224
======================================================================
</Table>
The difference between book-basis and tax-basis unrealized gains is primarily
attributable to wash sales and other temporary tax adjustments.
17
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
5. PORTFOLIO SECURITIES TRANSACTIONS
As of April 30, 2004, the value of securities loaned for the Fund is
$363,958,060. These loans are collateralized by cash of $375,102,295, which is
invested in a restricted money market account, and U.S. Treasury securities with
a value of $214,625 for a total of $375,316,920. In connection with the
securities lending program, State Street Bank and Trust Company ("SSB") received
fees of $263,839 for the six months ended April 30, 2004, which are netted
against securities lending income on the Statement of Operations.
Purchases and sales of investment securities (other than short-term investments)
for the six months ended April 30, 2004 are as follows:
<Table>
PURCHASES SALES
- -----------------------------------------------
$ 3,678,447,100 $ 2,368,101,170
</Table>
There were no purchases or sales of U.S. Government securities for the six
months ended April 30, 2004.
6. DIRECTORS' REMUNERATION
The Fund's officers and the one Director who are associated with Lord Abbett do
not receive any compensation from the Fund for serving in such capacities.
Outside Directors' fees are allocated among all Lord Abbett-sponsored funds
based on the net assets of each fund. There is an equity based plan available to
all outside Directors under which outside Directors must defer receipt of a
portion of, and may elect to defer receipt of an additional portion of
Directors' fees. The deferred amounts are treated as though equivalent dollar
amounts have been invested proportionately in the funds. Such amounts and
earnings accrued thereon are included in Directors' fees on the Statement of
Operations and in Directors' fees payable on the Statement of Assets and
Liabilities and are not deductible for U.S. federal income tax purposes until
such amounts are paid.
7. EXPENSE REDUCTIONS
The Fund has entered into arrangements with its transfer agent and custodian
whereby credits realized as a result of uninvested cash balances are used to
reduce a portion of the Fund's expenses.
8. LINE OF CREDIT
The Fund, along with certain other funds managed by Lord Abbett, has available a
$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 at an annual rate of .09%. At April 30, 2004, there
were no loans outstanding pursuant to this Facility nor was the Facility
utilized at any time during the six months then ended.
9. CUSTODIAN AND ACCOUNTING AGENT
SSB is the Fund's custodian and accounting agent. SSB performs custodian,
accounting and record keeping functions relating to portfolio transactions and
calculating the Fund's NAV.
18
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
10. TRANSACTIONS WITH AFFILIATED ISSUER
An affiliated issuer is one in which the Fund had ownership of at least 5% of
the voting securities at any time during the period. The Fund had the following
transactions with an affiliated issuer during the six months ended April 30,
2004:
<Table>
<Caption>
BALANCE OF BALANCE OF NET REALIZED LOSS
SHARES HELD GROSS GROSS SHARES HELD VALUE AT PERIOD ENDED
AFFILIATE AT 10/31/2003 PURCHASES SALES AT 4/30/2004 4/30/2004 4/30/2004
- -------------------------------------------------------------------------------------------------------------------
Delta Air Lines, Inc. 5,945,625 1,240,300 (3,818,875) 3,367,050 $ 20,943,051 $ (17,127,239)
</Table>
11. INVESTMENT RISKS
The Fund is subject to the general risks and considerations associated with
equity investing as well as the particular risks associated with value stocks.
The value of an investment will fluctuate in response to movements in the stock
market in general, and to the changing prospects of individual companies in
which the Fund invests. Large company value stocks may perform differently than
the market as a whole and other types of stocks, such as small company stocks
and growth stocks. Different types of stocks tend to shift in and out of favor
depending on market and economic conditions. The market may fail to recognize
the intrinsic value of particular value stocks for a long time. In addition, if
the Fund's assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is wrong, the Fund could suffer losses or
produce poor performance relative to other funds, even in a rising market. These
factors can affect Fund performance.
19
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONCLUDED)
12. SUMMARY OF CAPITAL TRANSACTIONS
The Fund has authorized 2.5 billion shares of $.001 par value capital stock
designated as follows: 1.6 billion Class A shares, 300 million Class B shares,
300 million Class C shares, 200 million Class P shares and 100 million Class Y
shares.
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2004 (UNAUDITED) OCTOBER 31, 2003
- ----------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
SHARES SOLD 116,158,877 $ 1,556,375,398 144,313,946 $ 1,632,410,156
REINVESTMENT OF DISTRIBUTIONS 5,794,338 76,120,042 37,706,619 411,354,108
SHARES REAQUIRED (49,291,455) (665,829,238) (98,730,342) (1,088,894,839)
- ----------------------------------------------------------------------------------------------------------
INCREASE 72,661,760 $ 966,666,202 83,290,223 $ 954,869,425
- ----------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ----------------------------------------------------------------------------------------------------------
SHARES SOLD 9,502,545 $ 128,786,624 20,461,545 $ 230,700,867
REINVESTMENT OF DISTRIBUTIONS 351,694 4,621,750 3,431,912 37,502,812
SHARES REAQUIRED (5,670,957) (77,034,361) (12,491,500) (137,525,209)
- ----------------------------------------------------------------------------------------------------------
INCREASE 4,183,282 $ 56,374,013 11,401,957 $ 130,678,470
- ----------------------------------------------------------------------------------------------------------
CLASS C SHARES
- ----------------------------------------------------------------------------------------------------------
SHARES SOLD 20,508,021 $ 277,386,148 27,433,164 $ 311,216,548
REINVESTMENT OF DISTRIBUTIONS 216,610 2,843,665 1,896,726 20,699,243
SHARES REAQUIRED (5,793,058) (78,474,033) (11,792,406) (130,952,342)
- ----------------------------------------------------------------------------------------------------------
INCREASE 14,931,573 $ 201,755,780 17,537,484 $ 200,963,449
- ----------------------------------------------------------------------------------------------------------
CLASS P SHARES
- ----------------------------------------------------------------------------------------------------------
SHARES SOLD 6,356,732 $ 85,952,747 8,924,945 $ 101,342,808
REINVESTMENT OF DISTRIBUTIONS 59,801 785,906 201,112 2,204,293
SHARES REAQUIRED (1,549,218) (20,922,436) (2,607,134) (28,911,513)
- ----------------------------------------------------------------------------------------------------------
INCREASE 4,867,315 $ 65,816,217 6,518,923 $ 74,635,588
- ----------------------------------------------------------------------------------------------------------
CLASS Y SHARES
- ----------------------------------------------------------------------------------------------------------
SHARES SOLD 12,367,563 $ 164,977,673 19,580,241 $ 214,883,392
REINVESTMENT OF DISTRIBUTIONS 448,839 5,913,318 1,701,205 18,674,551
SHARES REAQUIRED (1,634,166) (22,010,698) (2,738,625) (29,996,715)
- ----------------------------------------------------------------------------------------------------------
INCREASE 11,182,236 $ 148,880,293 18,542,821 $ 203,561,228
- ----------------------------------------------------------------------------------------------------------
</Table>
20
<Page>
HOUSEHOLDING
The Fund has adopted a policy that allows it to send only one copy of the Fund's
Prospectus, proxy material, annual report and semi-annual report to certain
shareholders residing at the same "household." This reduces Fund expenses, which
benefits you and other shareholders. If you need additional copies or do not
want your mailings to be "householded," please call Lord Abbett at 800-821-5129
or send a written request with your name, the name of your fund or funds and
your account number or numbers to Lord Abbett Family of Funds, P.O. Box 219336,
Kansas City, MO 64121.
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that Lord Abbett uses to vote
proxies related to the Fund's portfolio securities is available without charge,
upon request, (i) by calling 888-522-2388; (ii) on Lord Abbett's web site at
www.LordAbbett.com, and (iii) on the Securities and Exchange Commission's
("SEC") website at www.sec.gov.
SHAREHOLDER REPORTS AND QUARTERLY PORTFOLIO DISCLOSURE
The Fund will be required to file its complete schedule of portfolio holdings
with the SEC for its first and third fiscal quarters on Form N-Q for fiscal
quarters ending on or after July 9, 2004. Once filed, the Fund's Forms N-Q will
be available without charge, upon request on the SEC's website at www.sec.gov
and may be available by calling Lord Abbett at 800-821-5129; or on Lord Abbett's
website at www.LordAbbett.com. You can also obtain copies of Form N-Q by (i)
visiting the SEC's Public Reference Room in Washington, DC (information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330); (ii) sending your request and a duplicating fee to the SEC's
Public Reference Room, Washington, DC 20549-0102; or (iii) sending your request
electronically to publicinfo@sec.gov.
21
<Page>
LORD ABBETT [LORD ABBETT LOGO]
This report when not used for the
general information of shareholders
of the Fund is to be distributed
only if preceded or accompanied by
a current Fund prospectus. LORD ABBETT AFFILIATED FUND, INC.
Lord Abbett Mutual Fund shares are
distributed by: LAA-3-4/04
LORD ABBETT DISTRIBUTOR LLC (6/04)
90 Hudson Street - Jersey City,
New Jersey 07302-3973
<Page>
ITEM 2: CODE OF ETHICS.
Not applicable
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4-8: [RESERVED]
ITEM 9: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 10: CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the Registrant's disclosure
controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940) as of June 21, 2004, the Chief
Executive Officer and Chief Financial Officer of the Registrant
have concluded that such disclosure controls and procedures are
reasonably designed and effective to ensure that material
information relating to the Registrant, including its
consolidated subsidiaries, is made known to them by others
within those entities.
(b) There were no significant changes in the Registrant's internal
controls over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act of 1940) that occurred during
the Registrant's last fiscal half-year that have materially
affected, or are reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 11: EXHIBITS.
ITEM 11(a): NOT APPLICABLE.
ITEM 11(b):
(i) Certification of each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2) is attached hereto as a part of
EX-99.CERT.
(ii) Certification of each principal executive officer and principal
financial officer of the registrant as required by Section 906
of the Sarbanes-Oxley Act of 2002 is attached hereto as a part
of EX-99.906CERT.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Lord Abbett Affiliated Fund, Inc.
/s/Robert S. Dow
----------------
Robert S. Dow
Chief Executive Officer,
Chairman and President
/s/Joan A. Binstock
-------------------
Joan A. Binstock
Chief Financial Officer and Vice President
Date: June 21, 2004
<Page>
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Lord Abbett Affiliated Fund, Inc.
/s/Robert S. Dow
----------------
Robert S. Dow
Chief Executive Officer,
Chairman and President
/s/Joan A. Binstock
-------------------
Joan A. Binstock
Chief Financial Officer and Vice President
Date: June 21, 2004