<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: 811-00005
Lord Abbett Affiliated Fund, Inc.
---------------------------------
(Exact name of Registrant as specified in charter)
90 Hudson Street, Jersey City, NJ 07302
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(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: 4/30/05
-------
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ITEM 1: REPORT TO SHAREHOLDERS.
<Page>
[LORD ABBETT LOGO]
2005
SEMI-
ANNUAL
REPORT
LORD ABBETT
AFFILIATED FUND
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2005
<Page>
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LORD ABBETT AFFILIATED FUND
SEMI-ANNUAL REPORT
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2005
DEAR SHAREHOLDERS: We are pleased to provide you with this overview of Lord
Abbett Affiliated Fund's strategies and performance for the six-month period
ended April 30, 2005. 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: The U.S. economy began the six-month period ended April 30, 2005 with signs
of healthy growth. However, by period end, investor optimism waned as energy
prices soared and the stock market relinquished some of its previous gains.
Of greatest note, the Federal Reserve Board (the Fed) continued its measured
pace of interest rate hikes, raising the fed funds rate in 0.25% increments in
November, December, February and March, bringing the rate to 2.75% at the end of
the six-month period. (The fed funds rate is the rate charged by banks with
excess reserves at the Federal Reserve district bank to other banks needing
overnight loans to meet reserve requirements.) The March interest rate hike
marked the seventh quarter-point increase since June 2004.
Broad stock indices finished calendar year 2004 strong, but stumbled out of
the gate in early 2005. The S&P 500 Index(1) gained 4.1% in November 2004 and
3.4% in December 2004, finishing calendar year 2004 with a 10.9% gain. By the
end of the first quarter of 2005, however, the Index declined 2.2%, largely
reflecting investors' concerns that rising oil and gas prices would hurt
economic growth by cutting into corporate profits and dampening consumer
spending. Even with an agreement among members of the Organization of Petroleum
Exporting Countries (OPEC) to increase oil production, crude oil prices climbed
to over $57 per barrel.
Nonetheless, the U.S. economy continued to grow at a healthy pace during the
first quarter of 2005 and, despite rising interest rates, corporate fundamentals
remained positive. Improved profitability continued to generate excess cash,
strengthening corporate balance sheets, and business spending picked up.
Elsewhere, U.S. housing starts reached their highest reported level in 21
years, and the unemployment rate remained stable at 5.2%, except for a small
uptick to 5.4% in February of 2005.
1
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By the end of the six-month period, however, investors had more to fret
about than the price of oil when a warning on profits from General Motors
triggered a flight out of equity and the Consumer Price Index (CPI) showed a
slight upward bias. (The CPI is a commonly used measure of inflation, which
reflects changes in the prices paid by urban consumers for a representative
basket of goods and services.) In April, for the third consecutive month, the
Consumer Confidence Index declined. (Based on a representative sample of 5,000
households, the Consumer Confidence Index measures consumer confidence about
current business, employment and economic conditions as well as their
expectations for the same six months hence.) As the six-month period ended April
30, 2005 came to a close, investors were cautious.
Q: HOW DID THE FUND PERFORM OVER THE SIX-MONTH PERIOD ENDED APRIL 30, 2005?
A: For the six-month period ended April 30, 2005, the Fund returned 3.6%,
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,(2) which returned 6.7% 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 of all
distributions, are 1 Year: 1.35%; 5 Years: 2.46% and 10 Years: 10.60%. Class A
shares purchased subject to a front-end sales charge have no contingent deferred
sales charge (CDSC). However, certain purchases of Class A shares made without a
front-end sales charge may be subject to a CDSC of 1.0% if the shares are
redeemed within 12 months of the purchase.
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: The greatest detractor to the Fund's performance relative to its benchmark
for the six-month period ended April 30, 2005 was stock selection in the
producer durables sector. Producer durables include industrial and capital goods
used in the production of other goods such as industrial buildings, machinery
and equipment. A machinery manufacturer underperformed due to a slow down in
orders. Another machinery manufacturer holding underperformed due to
expectations of a moderation in final demand in calendar year 2005 and higher
material costs.
2
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A combination of stock selection and an overweight position in the materials
and processing sector also took away from portfolio performance. A gold company
disappointed based on overall declining gold prices between November 2004 and
February 2005. An aluminum products producer and a producer of paper, packaging
and forest products also performed poorly because of slowing demand in the first
quarter of 2005 as energy prices rose.
In addition, a technology and business services company and a semiconductor
testing equipment company were hurt by lower-than-expected corporate spending on
technology-related capital goods throughout the first quarter of calendar year
2005.
Stock selection in the technology sector was the greatest positive
contributor to the Fund's performance for the six-month period. A personal
computer company outperformed as consumer demand for its products exceeded
expectations. An overweight position in the healthcare sector was also a
significant positive contributor to portfolio performance. Four drug industry
holdings performed well as demand for drugs remained steady and a slowing
economy shifted investor focus to less economically sensitive 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.
A PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT A FUND, INCLUDING A FUND'S
INVESTMENT OBJECTIVES, RISKS, CHARGES AND ONGOING EXPENSES, THAT AN INVESTOR
SHOULD CAREFULLY CONSIDER BEFORE INVESTING. TO OBTAIN A PROSPECTUS ON ANY LORD
ABBETT MUTUAL FUND, CONTACT YOUR INVESTMENT PROFESSIONAL, OR LORD ABBETT
DISTRIBUTOR LLC AT (800) 874-3733 OR www.LordAbbett.com. READ THE PROSPECTUS
CAREFULLY BEFORE INVESTING.
(1) The S&P 500 Index is widely regarded as the standard for measuring large-cap
U.S. stock market performance. This popular index includes a representative
sample of leading companies in leading industries. The Index is unmanaged, does
not reflect the deduction of fees or expenses and is not available for direct
investment. Returns for the S&P 500 Index are with dividends reinvested.
(2) 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. The Index is unmanaged, does not reflect the deduction of fees or
expenses and is not available for direct investment. Returns for the Russell
1000(R) Value Index are with dividends reinvested.
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, 2005; 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 a
Fund, please see the Fund's Prospectus.
PERFORMANCE: BECAUSE OF ONGOING MARKET VOLATILITY, A FUND'S 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 Prospectus.
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.
3
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EXPENSE EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges on purchase payments (these charges vary among
the share classes); and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees (these charges vary among the share
classes); and other Fund expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period (November 1, 2004 through April 30,
2005).
ACTUAL EXPENSES
For each class of the Fund, the first line of the table on the following
page provides information about actual account values and actual expenses. You
may use the information in this line, together with the amount you invested, to
estimate the expenses that you paid over the period. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number in the first line under the heading
entitled "Expenses Paid During the Period 11/1/04 - 4/30/05" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
For each class of the Fund, the second line of the table on the following
page provides information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio and an assumed rate of return
of 5.0% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5.0% hypothetical
examples that appear in the shareholder reports of the other funds.
4
<Page>
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Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE PERIOD+
----------- ----------- -----------
11/1/04 -
11/1/04 4/30/05 4/30/05
----------- ----------- -----------
CLASS A
Actual $ 1,000.00 $ 1,035.50 $ 4.07
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.79 $ 4.04
CLASS B
Actual $ 1,000.00 $ 1,032.90 $ 7.42
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,017.49 $ 7.36
CLASS C
Actual $ 1,000.00 $ 1,032.30 $ 7.42
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,017.49 $ 7.36
CLASS P
Actual $ 1,000.00 $ 1,035.10 $ 4.68
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.19 $ 4.65
CLASS Y
Actual $ 1,000.00 $ 1,037.20 $ 2.34
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,022.49 $ 2.33
</Table>
+ For each class of the Fund, expenses are equal to the annualized expense
ratio for such class (0.81% for Class A, 1.47% for Classes B and C, 0.91%
for Class P and 0.46% for Class Y) multiplied by the average account value
over the period, multiplied by 181/365 (to reflect one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY SECTOR
APRIL 30, 2005
<Table>
<Caption>
SECTOR %*
Consumer Discretionary 7.96%
Consumer Staples 11.02%
Energy 9.68%
Financials 14.77%
Healthcare 15.90%
Industrials 17.18%
Information Technology 6.84%
Materials 11.21%
Short-Term Investment 0.93%
Telecommunication Services 3.39%
Utilities 1.12%
Total 100.00%
</Table>
* Represents percent of total investments.
5
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)
APRIL 30, 2005
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
COMMON STOCKS 98.78%
AEROSPACE & DEFENSE 1.57%
General Dynamics Corp. 1,182,700 $ 124,243
Honeywell Int'l., Inc. 3,666,851 131,127
Raytheon Co. 1,067,116 40,134
-------------
TOTAL 295,504
-------------
AIR FREIGHT & COURIERS 0.99%
United Parcel Service, Inc.
Class B 2,615,280 186,496
-------------
BEVERAGES 2.17%
Diageo plc ADR 1,257,500 75,135
PepsiCo, Inc. 5,958,315 331,521
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TOTAL 406,656
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BIOTECHNOLOGY 0.63%
MedImmune, Inc.* 4,651,731 118,014
-------------
CHEMICALS 5.42%
Dow Chemical Co. (The) 2,745,925 126,120
E.I. du Pont de Nemours & Co. 8,623,200 406,239
Monsanto Co. 2,322,405 136,139
Potash Corp. of Saskatchewan Inc.(a) 1,567,310 131,874
Praxair, Inc. 4,631,250 216,882
-------------
TOTAL 1,017,254
-------------
COMMERCIAL BANKS 4.98%
Bank of America Corp. 4,227,276 190,396
Bank of New York Co., Inc. (The) 8,508,862 237,738
Marshall & Ilsley Corp. 1,626,880 69,370
Mellon Financial Corp. 7,919,678 219,296
U.S. Bancorp 363,986 10,155
Wachovia Corp. 2,595,815 132,854
Wells Fargo & Co. 1,252,705 75,087
-------------
TOTAL 934,896
-------------
COMMERCIAL SERVICES & SUPPLIES 0.80%
Waste Management, Inc. 5,250,975 $ 149,600
-------------
COMMUNICATIONS EQUIPMENT 1.63%
Motorola, Inc. 19,977,838 306,460
-------------
COMPUTERS & PERIPHERALS 2.13%
EMC Corp.* 16,276,066 213,542
Hewlett-Packard Co. 9,084,401 185,958
-------------
TOTAL 399,500
-------------
CONSTRUCTION & ENGINEERING 0.16%
Fluor Corp. 567,651 29,268
-------------
DIVERSIFIED FINANCIALS 7.68%
Citigroup, Inc. 6,538,000 307,024
Goldman Sachs Group, Inc. (The) 1,854,029 197,992
iShares MSCI Japan Index Fund 17,703,710 181,463
JPMorgan Chase & Co. 12,256,734 434,992
MBNA Corp. 2,843,947 56,168
Merrill Lynch & Co., Inc. 4,396,095 237,081
Mitsubishi Tokyo Financial Group, Inc. ADR 3,123,475 27,018
-------------
TOTAL 1,441,738
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES 3.38%
SBC Communications, Inc. 8,902,645 211,883
Sprint FON Corp. 4,066,940 90,530
Verizon Communications, Inc. 9,277,700 332,142
-------------
TOTAL 634,555
-------------
ELECTRIC UTILITIES 0.72%
PG&E Corp. 947,175 32,886
Progress Energy, Inc. 2,428,440 101,970
-------------
TOTAL 134,856
-------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
APRIL 30, 2005
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 0.76%
Emerson Electric Co. 2,289,900 $ 143,508
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS 0.18%
Solectron Corp.* 10,336,231 34,110
-------------
ENERGY EQUIPMENT & SERVICES 3.19%
Baker Hughes Inc. 5,788,580 255,392
Schlumberger Ltd.(a) 5,025,849 343,819
-------------
TOTAL 599,211
-------------
FOOD & STAPLES RETAILING 2.32%
CVS Corp. 3,534,765 182,323
Kroger Co.* 16,117,879 254,179
-------------
TOTAL 436,502
-------------
FOOD PRODUCTS 3.50%
Archer Daniels Midland Co. 2,488,553 44,769
Campbell Soup Co. 2,164,812 64,382
H.J. Heinz Co. 3,670,285 135,250
Kraft Foods, Inc.
Class A 12,748,602 413,182
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TOTAL 657,583
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GAS UTILITIES 0.40%
El Paso Corp. 7,574,506 75,669
-------------
HEALTHCARE EQUIPMENT & SUPPLIES 1.94%
Baxter Int'l., Inc. 8,898,364 330,129
Guidant Corp. 473,919 35,108
-------------
TOTAL 365,237
-------------
HEALTHCARE PROVIDERS & SERVICES 2.55%
Cardinal Health, Inc. 5,544,164 308,089
CIGNA Corp. 1,858,775 170,970
-------------
TOTAL 479,059
-------------
HOUSEHOLD DURABLES 0.57%
Newell Rubbermaid, Inc. 4,972,525 108,053
-------------
HOUSEHOLD PRODUCTS 1.80%
Clorox Co. (The) 2,393,952 $ 151,537
Kimberly-Clark Corp. 2,976,720 185,896
-------------
TOTAL 337,433
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INDUSTRIAL CONGLOMERATES 4.39%
General Electric Co. 16,433,294 594,885
Tyco Int'l., Ltd.(a) 7,329,130 229,475
-------------
TOTAL 824,360
-------------
INSURANCE 2.08%
American Int'l. Group, Inc. 4,146,100 210,829
Chubb Corp., (The) 490,900 40,146
Hartford Financial Services Group, Inc. (The) 1,920,040 138,953
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TOTAL 389,928
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INTERNET SOFTWARE & SERVICES 0.08%
Automatic Data Processing, Inc. 347,900 15,113
-------------
MACHINERY 6.24%
Caterpillar Inc. 1,856,200 163,438
Deere & Co. 7,291,094 455,985
Eaton Corp. 3,624,322 212,567
Illinois Tool Works Inc. 742,817 62,263
Pall Corp. 1,886,891 50,625
Parker Hannifin Corp. 3,785,038 226,875
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TOTAL 1,171,753
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MEDIA 5.41%
Clear Channel Communications, Inc. 2,902,645 92,710
Comcast Corp.
Class A* 10,482,863 332,621
Tribune Co. 4,682,400 180,741
Viacom, Inc. Class B 2,899,604 100,384
Walt Disney Co. (The) 11,753,890 310,303
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TOTAL 1,016,759
-------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<Page>
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONCLUDED)
APRIL 30, 2005
<Table>
<Caption>
VALUE
INVESTMENTS SHARES (000)
- --------------------------------------------------------------------------------
METALS & MINING 3.70%
Alcoa, Inc. 6,744,565 $ 195,727
Barrick Gold Corp.(a) 6,748,752 150,632
Newmont Mining Corp. 9,182,708 348,668
-------------
TOTAL 695,027
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MULTI-LINE RETAIL 1.01%
Federated Department Stores, Inc. 437,257 25,142
Target Corp. 748,204 34,724
Wal-Mart Stores, Inc. 2,761,700 130,187
-------------
TOTAL 190,053
-------------
OFFICE ELECTRONICS 1.20%
Xerox Corp.* 17,021,818 225,539
-------------
OIL & GAS 6.46%
Exxon Mobil Corp. 21,270,383 1,213,050
-------------
PAPER & FOREST PRODUCTS 2.06%
International Paper Co. 11,297,115 387,378
-------------
PERSONAL PRODUCTS 1.20%
Gillette Co. (The) 4,366,202 225,471
-------------
PHARMACEUTICALS 10.73%
Bristol-Myers Squibb Co. 5,120,359 133,129
Eli Lilly & Co. 158,406 9,262
GlaxoSmithKline plc ADR 4,035,793 204,009
Johnson & Johnson 1,728,375 118,618
Merck & Co., Inc. 4,122,675 139,759
Novartis AG ADR 7,972,409 388,496
Pfizer, Inc. 14,586,278 396,309
Schering-Plough Corp. 10,119,258 211,189
Wyeth 9,221,451 414,412
-------------
TOTAL 2,015,183
-------------
ROAD & RAIL 2.22%
Canadian National Railway Co.(a) 2,926,935 167,450
CSX Corp. 1,522,230 61,087
Union Pacific Corp. 2,944,403 188,236
-------------
TOTAL 416,773
-------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS 0.28%
Texas Instruments, Inc. 2,075,590 $ 51,807
-------------
SOFTWARE 1.32%
Microsoft Corp. 9,804,600 248,056
-------------
TEXTILES & APPAREL 0.93%
NIKE, Inc. Class B 2,274,585 174,711
-------------
TOTAL COMMON STOCKS
(Cost $16,384,148,806) 18,552,123
=============
<Caption>
PRINCIPAL
AMOUNT
(000)
-------------
SHORT-TERM INVESTMENT 0.92%
REPURCHASE AGREEMENT 0.92%
Repurchase Agreement dated 4/29/2005, 2.22% due
5/2/2005 with State Street Bank & Trust Co.
collateralized by $98,020,000 of Federal Home
Loan Bank at 2.22% due 6/9/2006 and $79,805,000
of Federal National Mortgage Assoc. at 2.75% and
3.25% due 7/12/2006 and 2/6/2007; value:
$176,940,538; proceeds: $173,498,641 (Cost
$173,466,550) $ 173,467 173,467
-------------
TOTAL INVESTMENTS IN SECURITIES 99.70%
(Cost $16,557,615,356) 18,725,590
=============
OTHER ASSETS IN EXCESS OF LIABILITIES 0.30% 56,257
=============
NET ASSETS 100.00% $ 18,781,847
=============
</Table>
* Non-income producing security.
(a) Foreign security traded in U.S. dollars.
ADR American Depository Receipt.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<Page>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 2005
<Table>
ASSETS:
Investment in securities, at value (Cost $16,557,615,356) $ 18,725,589,991
Receivables:
Interest and dividends 27,191,401
Investment securities sold 145,595,811
Capital shares sold 24,438,304
Prepaid expenses and other assets 979,722
- ---------------------------------------------------------------------------------
TOTAL ASSETS 18,923,795,229
- ---------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 102,479,710
Capital shares reacquired 16,465,513
Management fee 4,894,201
12b-1 distribution fees 10,532,762
Fund administration 618,529
Directors' fees 3,548,570
To affiliate 8,040
Accrued expenses and other liabilities 3,400,695
- ---------------------------------------------------------------------------------
TOTAL LIABILITIES 141,948,020
=================================================================================
NET ASSETS $ 18,781,847,209
=================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 15,850,980,880
Distributions in excess of net investment income (2,628,194)
Accumulated net realized gain on investments 765,519,888
Net unrealized appreciation on investments 2,167,974,635
- ---------------------------------------------------------------------------------
NET ASSETS $ 18,781,847,209
=================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 14,440,602,491
Class B Shares $ 1,426,930,788
Class C Shares $ 1,562,884,360
Class P Shares $ 359,784,353
Class Y Shares $ 991,645,217
OUTSTANDING SHARES BY CLASS:
Class A Shares (1.6 billion shares of common stock authorized) 1,024,149,613
Class B Shares (300 million shares of common stock authorized) 100,998,443
Class C Shares (300 million shares of common stock authorized) 110,806,168
Class P Shares (200 million shares of common stock aurhorized) 25,557,827
Class Y Shares (100 million shares of common stock authorized) 70,173,492
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 14.10
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 5.75%) $ 14.96
Class B Shares-Net asset value $ 14.13
Class C Shares-Net asset value $ 14.10
Class P Shares-Net asset value $ 14.08
Class Y Shares-Net asset value $ 14.13
=================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 2005
<Table>
INVESTMENT INCOME:
Dividends $ 203,776,271
Interest 6,365,503
Securities lending-net 76,902
Foreign withholding tax (1,421,425)
- -------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 208,797,251
- -------------------------------------------------------------------------------------
EXPENSES:
Management fee 28,817,651
12b-1 distribution plan-Class A 25,192,265
12b-1 distribution plan-Class B 7,370,445
12b-1 distribution plan-Class C 7,802,145
12b-1 distribution plan-Class P 765,510
Shareholder servicing 9,705,198
Professional 249,573
Reports to shareholders 582,914
Fund administration 3,779,541
Custody 376,378
Directors' fees 196,753
Registration 139,695
Subsidy (See Note 3) 455,400
Other 211,595
- -------------------------------------------------------------------------------------
Gross expenses 85,645,063
Expense reductions (See Note 7) (134,111)
- -------------------------------------------------------------------------------------
NET EXPENSES 85,510,952
- -------------------------------------------------------------------------------------
NET INVESTMENT INCOME 123,286,299
=====================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments 738,286,712
Net change in unrealized appreciation (depreciation) on investments (235,813,243)
=====================================================================================
NET REALIZED AND UNREALIZED GAIN 502,473,469
=====================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 625,759,768
=====================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED APRIL 30, 2005 YEAR ENDED
INCREASE IN NET ASSETS (UNAUDITED) OCTOBER 31, 2004
OPERATIONS:
Net investment income $ 123,286,299 $ 138,202,021
Net realized gain (loss) on investments 738,286,712 387,399,016
Net change in unrealized appreciation (depreciation)
on investments (235,813,243) 1,222,893,355
- ---------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 625,759,768 1,748,494,392
===================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (100,322,150) (190,044,003)
Class B (5,548,187) (11,189,860)
Class C (5,839,757) (10,471,562)
Class P (2,136,918) (3,361,062)
Class Y (8,357,559) (12,996,610)
Net realized gain
Class A (247,741,399) (1,646,679)
Class B (25,512,719) (176,248)
Class C (26,322,767) (151,265)
Class P (5,583,311) (26,262)
Class Y (16,355,732) (84,562)
- ---------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (443,720,499) (230,148,113)
===================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 1,521,172,440 3,697,230,204
Reinvestment of distributions 370,160,562 186,023,631
Cost of shares reacquired (1,173,017,017) (1,850,042,392)
- ---------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS 718,315,985 2,033,211,443
===================================================================================================
Net increase in net assets 900,355,254 3,551,557,722
===================================================================================================
NET ASSETS:
Beginning of period 17,881,491,955 14,329,934,233
- ---------------------------------------------------------------------------------------------------
END OF PERIOD $ 18,781,847,209 $ 17,881,491,955
===================================================================================================
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME $ (2,628,194) $ (3,709,922)
===================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2005 -----------------------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
PER SHARE OPERATING
PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF
PERIOD $ 13.95 $ 12.68 $ 10.80 $ 13.04 $ 16.47 $ 16.22
============ ============ ============ ============ ============ ============
Investment operations:
Net investment income(a) .10 .12 .13 .14 .19 .24
Net realized and unrealized
gain (loss) .40 1.35 2.36 (1.59) (1.99) 2.01
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations .50 1.47 2.49 (1.45) (1.80) 2.25
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholders
from:
Net investment income (.10) (.20) (.20) (.22) (.24) (.24)
Net realized gain (.25) -(c) (.41) (.57) (1.39) (1.76)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions (.35) (.20) (.61) (.79) (1.63) (2.00)
------------ ------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 14.10 $ 13.95 $ 12.68 $ 10.80 $ 13.04 $ 16.47
============ ============ ============ ============ ============ ============
Total Return(b) 3.55%(d) 11.71% 24.07% (12.21)% (11.98)% 15.12%
RATIOS TO AVERAGE NET ASSETS:
Expenses, including expense
reductions .40%(d) .83% .84% .85% .79% .79%
Expenses, excluding expense
reductions .40%(d) .83% .84% .85% .80% .80%
Net investment income .69%(d) .92% 1.17% 1.08% 1.28% 1.62%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2005 -----------------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 14,440,603 $ 13,790,608 $ 11,322,151 $ 8,744,220 $ 9,363,248 $ 10,309,845
Portfolio turnover rate 17.98% 33.02% 42.58% 59.88% 77.18% 52.27%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2005 -----------------------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
PER SHARE OPERATING
PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE, BEGINNING OF
PERIOD $ 13.97 $ 12.70 $ 10.81 $ 13.06 $ 16.49 $ 16.23
============ ============ ============ ============ ============ ============
Investment operations:
Net investment income(a) .05 .04 .06 .06 .09 .14
Net realized and unrealized
gain (loss) .41 1.34 2.36 (1.61) (1.99) 2.02
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations .46 1.38 2.42 (1.55) (1.90) 2.16
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholders
from:
Net investment income (.05) (.11) (.12) (.13) (.14) (.14)
Net realized gain (.25) -(c) (.41) (.57) (1.39) (1.76)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions (.30) (.11) (.53) (.70) (1.53) (1.90)
------------ ------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF
PERIOD $ 14.13 $ 13.97 $ 12.70 $ 10.81 $ 13.06 $ 16.49
============ ============ ============ ============ ============ ============
Total Return(b) 3.29%(d) 10.94% 23.29% (12.85)% (12.53)% 14.42%
RATIOS TO AVERAGE NET ASSETS:
Expenses, including expense
reductions .73%(d) 1.48% 1.50% 1.47% 1.42% 1.44%
Expenses, excluding expense
reductions .73%(d) 1.48% 1.50% 1.47% 1.43% 1.45%
Net investment income .37%(d) .27% .51% .46% .62% .94%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2005 -----------------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 1,426,931 $ 1,424,229 $ 1,235,238 $ 928,421 $ 904,004 $ 713,161
Portfolio turnover rate 17.98% 33.02% 42.58% 59.88% 77.18% 52.27%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2005 -----------------------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
PER SHARE OPERATING
PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF
PERIOD $ 13.95 $ 12.68 $ 10.80 $ 13.02 $ 16.49 $ 16.23
============ ============ ============ ============ ============ ============
Investment operations:
Net investment income(a) .05 .04 .06 .08 .05 .14
Net realized and unrealized
gain (loss) .40 1.34 2.35 (1.59) (1.99) 2.02
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations .45 1.38 2.41 (1.51) (1.94) 2.16
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholders
from:
Net investment income (.05) (.11) (.12) (.14) (.14) (.14)
Net realized gain (.25) -(c) (.41) (.57) (1.39) (1.76)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions (.30) (.11) (.53) (.71) (1.53) (1.90)
------------ ------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 14.10 $ 13.95 $ 12.68 $ 10.80 $ 13.02 $ 16.49
============ ============ ============ ============ ============ ============
Total Return(b) 3.23%(d) 10.97% 23.23% (12.59)% (12.79)% 14.48%
RATIOS TO AVERAGE NET ASSETS:
Expenses, including expense
reductions .73%(d) 1.48% 1.50% 1.32% 1.70% 1.44%
Expenses, excluding expense
reductions .73%(d) 1.48% 1.50% 1.32% 1.71% 1.45%
Net investment income .37%(d) .27% .51% .61% .32% .93%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2005 -----------------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 1,562,884 $ 1,457,255 $ 1,036,160 $ 692,976 $ 555,759 $ 331,910
Portfolio turnover rate 17.98% 33.02% 42.58% 59.88% 77.18% 52.27%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2005 -----------------------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
PER SHARE OPERATING
PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE, BEGINNING OF
PERIOD $ 13.93 $ 12.66 $ 10.78 $ 13.02 $ 16.45 $ 16.19
============ ============ ============ ============ ============ ============
Investment operations:
Net investment income(a) .09 .11 .12 .12 .16 .22
Net realized and unrealized
gain (loss) .40 1.35 2.36 (1.58) (1.97) 2.02
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations .49 1.46 2.48 (1.46) (1.81) 2.24
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholders
from:
Net investment income (.09) (.19) (.19) (.21) (.23) (.22)
Net realized gain (.25) -(c) (.41) (.57) (1.39) (1.76)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions (.34) (.19) (.60) (.78) (1.62) (1.98)
------------ ------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 14.08 $ 13.93 $ 12.66 $ 10.78 $ 13.02 $ 16.45
============ ============ ============ ============ ============ ============
Total Return(b) 3.51%(d) 11.60% 24.01% (12.31)% (12.07)% 15.11%
RATIOS TO AVERAGE NET ASSETS:
Expenses, including expense
reductions .46%(d) .93% .95% .92% .87% .89%
Expenses, excluding expense
reductions .46%(d) .93% .95% .92% .88% .89%
Net investment income .63%(d) .82% 1.06% 1.01% 1.10% 1.30%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2005 -----------------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 359,784 $ 302,389 $ 178,794 $ 82,038 $ 35,939 $ 12,072
Portfolio turnover rate 17.98% 33.02% 42.58% 59.88% 77.18% 52.27%
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2005 -----------------------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
PER SHARE OPERATING
PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE, BEGINNING OF
PERIOD $ 13.98 $ 12.70 $ 10.82 $ 13.07 $ 16.50 $ 16.25
============ ============ ============ ============ ============ ============
Investment operations:
Net investment income(a) .12 .17 .17 .18 .22 .30
Net realized and unrealized
gain (loss) .40 1.35 2.36 (1.59) (1.97) 2.01
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations .52 1.52 2.53 (1.41) (1.75) 2.31
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholders
from:
Net investment income (.12) (.24) (.24) (.27) (.29) (.30)
Net realized gain (.25) -(c) (.41) (.57) (1.39) (1.76)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions (.37) (.24) (.65) (.84) (1.68) (2.06)
------------ ------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 14.13 $ 13.98 $ 12.70 $ 10.82 $ 13.07 $ 16.50
============ ============ ============ ============ ============ ============
Total Return(b) 3.72%(d) 12.14% 24.51% (11.96)% (11.64)% 15.52%
RATIOS TO AVERAGE NET ASSETS:
Expenses, including expense
reductions .23%(d) .48% .50% .47% .42% .44%
Expenses, excluding expense
reductions .23%(d) .48% .50% .47% .43% .46%
Net investment income .86%(d) 1.27% 1.51% 1.46% 1.53% 1.96%
<Caption>
SIX MONTHS
ENDED YEAR ENDED 10/31
4/30/2005 -----------------------------------------------------------------------------
SUPPLEMENTAL DATA: (UNAUDITED) 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of
period (000) $ 991,645 $ 907,011 $ 557,591 $ 274,454 $ 215,165 $ 57,505
Portfolio turnover rate 17.98% 33.02% 42.58% 59.88% 77.18% 52.27%
</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) Amount is less than $.01.
(d) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
16
<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 Classes 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
(12 months if shares were purchased on or after November 1, 2004) following
certain 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 sale price
or, if no sale 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 (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.
17
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
(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. Classes A, B, C and P shares bear all expenses and
fees relating to their respective 12b-1 Distribution Plans.
(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.
Government securities in an amount at least equal to 102% of the market
value of the 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. At their October 21, 2004
meeting, the Board of Directors voted to discontinue, as soon as
practicable, the Fund's securities lending program.
(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 or by securities of the U.S. Government,
its agencies, its instrumentalities, or U.S. Government sponsored
enterprises having a value equal to, or in excess of, the value of the
repurchase agreement (including accrued interest). If the seller of the
agreement defaults on its obligation to repurchase the underlying securities
at a time when the value of these 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
18
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
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>
FEES 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) Until October 1, 2004, the Fund paid a one-time distribution fee of up to
1.00% on certain qualifying purchases of Class A shares. Effective October
1, 2004, the Distributor commenced payment of such one-time distribution
fee. The unamortized balance of prepaid distribution fees as of April 30,
2005 was $459,831. This amount will continue to be amortized by the Fund,
generally over a two-year period. The amount of CDSC collected by the Fund
during the six months ended April 30, 2005 was $29,824.
Class Y does not have a distribution plan.
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, 2005:
<Table>
DISTRIBUTOR DEALERS'
COMMISSIONS CONCESSIONS
- ------------------------------
$ 3,747,911 $ 20,496,813
</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 Agreement with Balanced Fund of Lord Abbett
Investment Trust ("Balanced Fund") pursuant to which each Underlying Fund pays a
portion of the expenses of Balanced Fund in proportion to the average daily
value of Underlying Fund shares owned by Balanced Fund. Amounts paid pursuant to
the Servicing Agreement are included in Subsidy on the Statement of Operations.
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, if any, 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 earnings and profits for tax purposes are reported as
a tax return of capital.
19
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
The tax character of distributions paid during the six months ended April 30,
2005 and the fiscal year ended October 31, 2004 are as follows:
<Table>
<Caption>
SIX MONTHS ENDED
04/30/2005 YEAR-ENDED
(UNAUDITED) 10/31/2004
- -------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 147,915,561 $ 228,063,097
Net long term capital gains 295,804,938 2,085,016
- -------------------------------------------------------------------------
Total taxable distributions $ 443,720,499 $ 230,148,113
=========================================================================
</Table>
As of April 30, 2005, the aggregate unrealized security gains and losses based
on cost for U.S. Federal income tax purposes are as follows:
<Table>
Tax cost $ 16,570,731,931
- -----------------------------------------------------
Gross unrealized gain 2,812,864,545
Gross unrealized loss (658,006,485)
- -----------------------------------------------------
Net unrealized security gain $ 2,154,858,060
=====================================================
</Table>
The difference between book-basis and tax-basis unrealized gains is primarily
attributable to wash sales and other temporary tax adjustments.
5. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
for the six months ended April 30, 2005 were as follows:
<Table>
<Caption>
PURCHASES SALES
- --------------------------------------
$ 4,203,438,035 $ 3,288,681,826
</Table>
There were no purchases or sales of U.S. Government securities for the six
months ended April 30, 2005.
In connection with the securities lending program, State Street Bank & Trust
Company ("SSB") received fees of $32,958 for the six months ended April 30,
2005, which are netted against Securities Lending Income on the Statement of
Operations. As of April 30, 2005, there were no securities on loan.
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.
20
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
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.
For the period November 1, 2004 through December 9, 2004, the fee for this
Facility was at an annual rate of .09%. Effective December 10, 2004, the
Facility was renewed at an annual rate of .08%. As of April 30, 2005, there were
no loans outstanding pursuant to this Facility nor was the Facility utilized at
any time during the six months ended April 30, 2005.
9. CUSTODIAN AND ACCOUNTING AGENT
SSB is the Fund's custodian and accounting agent. SSB performs custodial,
accounting and recordkeeping functions relating to portfolio transactions and
calculating the Fund's NAV.
10. 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 the Fund's performance.
21
<Page>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONCLUDED)
11. SUMMARY OF CAPITAL TRANSACTIONS
Transactions in shares of capital stock are as follows:
<Table>
<Caption>
SIX MONTHS ENDED
APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Shares sold 73,469,548 $ 1,061,828,937 186,782,525 $ 2,513,340,313
Reinvestment of distributions 20,688,446 296,627,260 11,790,263 155,957,709
Shares reacquired (58,844,533) (850,476,618) (102,877,671) (1,390,790,407)
- --------------------------------------------------------------------------------------------------------------
Increase 35,313,461 $ 507,979,579 95,695,117 $ 1,278,507,615
- --------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Shares sold 6,216,642 $ 89,992,795 16,343,934 $ 221,714,546
Reinvestment of distributions 1,768,864 25,417,129 693,511 9,192,411
Shares reacquired (8,903,025) (128,787,820) (12,382,971) (168,101,874)
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) (917,519) $ (13,377,896) 4,654,474 $ 62,805,083
- --------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 13,776,606 $ 199,176,169 34,650,798 $ 469,193,828
Reinvestment of distributions 1,259,106 18,056,523 448,473 5,938,007
Shares reacquired (8,676,155) (125,380,557) (12,369,171) (167,643,035)
- --------------------------------------------------------------------------------------------------------------
Increase 6,359,557 $ 91,852,135 22,730,100 $ 307,488,800
- --------------------------------------------------------------------------------------------------------------
CLASS P SHARES
Shares sold 6,918,348 $ 99,753,677 13,726,123 $ 185,689,280
Reinvestment of distributions 381,543 5,462,923 145,732 1,928,799
Shares reacquired (3,457,412) (49,645,708) (6,283,485) (84,986,773)
- --------------------------------------------------------------------------------------------------------------
Increase 3,842,479 $ 55,570,892 7,588,370 $ 102,631,306
- --------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Shares sold 4,858,258 $ 70,420,862 22,864,995 $ 307,292,237
Reinvestment of distributions 1,710,841 24,596,727 981,035 13,006,705
Shares reacquired (1,293,902) (18,726,314) (2,848,219) (38,520,303)
- --------------------------------------------------------------------------------------------------------------
Increase 5,275,197 $ 76,291,275 20,997,811 $ 281,778,639
- --------------------------------------------------------------------------------------------------------------
</Table>
22
<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, PROCEDURES, AND RECORD
A description of the policies and procedures that Lord Abbett uses to vote
proxies related to the Fund's portfolio securities, and information on how Lord
Abbett voted the Fund's proxies during the 12-month period ended June 30, 2004,
are available without charge, upon request, (i) by calling 888-522-2388; (ii) or
on Lord Abbett's website 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. Copies of the filings 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. 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 800-SEC-0330); (ii) sending your request and duplicating fee
to the SEC's Public Reference Room, Washington, DC 20549-0102; or (iii) sending
your request electronically to publicinfo@sec.gov.
23
<Page>
APPROVAL OF ADVISORY CONTRACT
At a meeting on December 9, 2004, the Board of Directors of the Fund, including
all Directors who are not interested persons of the Fund, considered whether to
approve the continuation of the existing management agreement between the Fund
and Lord Abbett. In addition to the materials the Board had reviewed throughout
the course of the year, the Board received materials relating to the management
agreement before the meeting and had the opportunity to ask questions and
request further information in connection with its consideration.
The materials received by the Board as to the Fund included, but were not
limited to, (1) information provided by Lipper Analytical Services, Inc.
regarding the investment performance of the Fund compared to the investment
performance of a group of funds with substantially similar investment objectives
(the "performance universe") and to the investment performance of an appropriate
securities index (if such an index existed), for various time periods each
ending September 30, 2004, (2) information on the effective management fee rates
and expense ratios for funds with similar objectives and similar size (the "peer
group"), (3) sales and redemption information for the Fund, (4) information
regarding Lord Abbett's financial condition, (5) an analysis of the relative
profitability of the management agreement to Lord Abbett, (6) information
regarding the distribution arrangements of the Fund, (7) information regarding
the personnel and other resources devoted by Lord Abbett to managing the Fund.
The specific considerations as to the Fund are discussed below.
INVESTMENT MANAGEMENT SERVICES GENERALLY. The Board considered the investment
management services provided by Lord Abbett to the Fund, including investment
research, portfolio management, and trading. The Board noted that Lord Abbett
did not use brokerage commissions to purchase third-party research.
INVESTMENT PERFORMANCE AND COMPLIANCE. The Board reviewed the Fund's investment
performance as well as the performance of the performance universe of funds,
both in terms of total return and in terms of other statistical measures. The
Board noted that the performance of the Class A shares of the Fund was in the
fourth quintile of its performance universe for the nine-month and one-year
periods, but in the second quintile in the three-year period and in the first
quintile in the five- and ten-year periods. The Board also noted that the
performance was below that of the Lipper Large-Cap Value Index for the
nine-month and one-year periods, but above that of the Index for the three-,
five-, and ten-year periods.
LORD ABBETT'S PERSONNEL AND METHODS. The Board considered the qualifications of
the personnel providing investment management services to the Fund, in light of
the Fund's investment objective and discipline. Among other things, it
considered the size and experience of Lord Abbett's investment management staff,
Lord Abbett's investment methodology and philosophy, and Lord Abbett's approach
to recruiting, training, and retaining investment management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board considered the nature, quality,
costs, and extent of administrative and other services performed by Lord Abbett
and Lord Abbett Distributor and the nature and extent of Lord Abbett supervision
of third party service providers, including the Fund's transfer agent and
custodian.
24
<Page>
EXPENSES. The Board considered the expense ratios of each class and the expense
ratios of peer groups. It also considered the amount and nature of the fees paid
by shareholders. The Board noted that, as of September 30, 2004, the contractual
management fees and administrative services fees, taken together, for the Fund
were approximately twenty basis points below the median of the peer group, as
were the actual management and administrative services fees. The Board also
noted that the total expense ratio of Class A was approximately twenty-four
basis points below the median of the peer group, the total expense ratios of
Classes B and C were approximately twenty-five basis points below the median,
the total expense ratio of Class P was approximately thirteen basis points below
the median, and total expense ratio of Class Y was approximately forty-four
basis points below the median.
PROFITABILITY. The Board considered the level of Lord Abbett's profits in
managing the Fund, including a review of Lord Abbett's methodology for
allocating its costs to its management of the Fund. The Board concluded that the
allocation methodology had a reasonable basis and was appropriate. It considered
the profits realized by Lord Abbett in connection with the operation of the Fund
and whether the amount of profit was fair for the management of the Fund. The
Board also considered the profits realized from other businesses of Lord Abbett,
which may benefit from or be related to the Fund's business. The Board
considered Lord Abbett's profit margins in comparison with available industry
data, both accounting for and ignoring marketing and distribution expenses, and
how those profit margins could affect Lord Abbett's ability to recruit and
retain investment personnel. The Board noted that Lord Abbett's profitability
had increased, in part due to an increase in assets under management.
ECONOMIES OF SCALE. The Board considered whether there had been any economies of
scale in managing the Fund, whether the Fund had appropriately benefited from
any such economies of scale, and whether there was potential for realization of
any further economies of scale.
OTHER BENEFITS TO LORD ABBETT. The Board considered the character and amount of
fees paid by the Fund and the Fund's shareholders to Lord Abbett and Lord Abbett
Distributor for services other than investment. The Board also considered the
revenues and profitability of Lord Abbett's investment advisory business apart
from its mutual fund business, and the intangible benefits enjoyed by Lord
Abbett by virtue of its relationship with the Fund.
ALTERNATIVE ARRANGEMENTS. The Board considered whether, instead of approving
continuation of the management agreement, employing one or more alternative
arrangements might be in the best interests of the Fund, such as continuing to
employ Lord Abbett, but on different terms.
In considering whether to approve the continuation of the management agreement,
the Board did not identify any single factor as paramount or controlling. This
summary does not discuss in detail all matters considered. After considering all
of the relevant factors, the Board unanimously found that continuation of the
existing management agreement was in the best interests of the Fund and its
shareholders and voted unanimously to approve the continuation of the management
agreement.
25
<Page>
[LORD ABBETT(R) LOGO]
This report when not used for
the general information of
shareholders of the Fund, is
to be distributed only if Lord Abbett Affiliated Fund, Inc.
preceded or accompanied by
a current Fund prospectus.
Lord Abbett Mutual Fund
shares are distributed by LAA-3-0405
LORD ABBETT DISTRIBUTOR LLC (06/05)
<Page>
ITEM 2: CODE OF ETHICS.
Not applicable
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4-8: PRINCIPAL ACCOUNTANT FEES AND SERVICES. [RESERVED]
Not applicable.
ITEM 5: AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6: SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7: DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8: PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM10: 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 a date within 90 days
prior to the filing date of this report, 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
control over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act of 1940) that occurred during
the Registrant's second fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
<Page>
ITEM 11: EXHIBITS.
(a)(1) Amendments to Code of Ethics - Not applicable.
(a)(2) 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.
(a)(3) 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 22, 2005
<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 22, 2005