UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS
OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
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
(Address of principal executive offices) (Zip code)
Thomas R. Phillips, Esq., 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: 7/31/2013
Item 1: | Schedule of Investments. |
Schedule of Investments (unaudited)
LORD ABBETT AFFILIATED FUND, INC. July 31, 2013
Investments | Shares | Fair Value (000) | |||||
COMMON STOCKS 99.70% | |||||||
Aerospace & Defense 3.26% | |||||||
Boeing Co. (The) | 379,800 | $ | 39,917 | ||||
Honeywell International, Inc. | 1,043,800 | 86,614 | |||||
Lockheed Martin Corp. | 335,600 | 40,312 | |||||
Raytheon Co. | 210,300 | 15,108 | |||||
Rockwell Collins, Inc. | 121,900 | 8,676 | |||||
United Technologies Corp. | 373,600 | 39,441 | |||||
Total | 230,068 | ||||||
Air Freight & Logistics 0.80% | |||||||
United Parcel Service, Inc. Class B | 646,100 | 56,082 | |||||
Automobiles 1.07% | |||||||
Ford Motor Co. | 4,459,954 | 75,284 | |||||
Beverages 1.04% | |||||||
Coca-Cola Co. (The) | 791,200 | 31,711 | |||||
Dr. Pepper Snapple Group, Inc. | 226,600 | 10,591 | |||||
PepsiCo, Inc. | 367,700 | 30,718 | |||||
Total | 73,020 | ||||||
Capital Markets 1.32% | |||||||
Ares Capital Corp. | 381,000 | 6,778 | |||||
BlackRock, Inc. | 13,750 | 3,877 | |||||
Goldman Sachs Group, Inc. (The) | 328,475 | 53,880 | |||||
Invesco Ltd. | 165,700 | 5,334 | |||||
Lazard Ltd. Class A | 28,800 | 1,047 | |||||
Morgan Stanley | 430,288 | 11,708 | |||||
State Street Corp. | 63,282 | 4,409 | |||||
Waddell & Reed Financial, Inc. Class A | 123,200 | 6,290 | |||||
Total | 93,323 | ||||||
Chemicals 2.48% | |||||||
Airgas, Inc. | 66,500 | 6,864 | |||||
Dow Chemical Co. (The) | 1,472,859 | 51,609 | |||||
E.I. du Pont de Nemours & Co. | 1,147,000 | 66,170 | |||||
Eastman Chemical Co. | 275,200 | 22,134 | |||||
Huntsman Corp. | 522,800 | 9,421 | |||||
International Flavors & Fragrances, Inc. | 56,900 | 4,591 |
See Notes to Schedule of Investments.
Schedule of Investments (unaudited)(continued)
LORD ABBETT AFFILIATED FUND, INC. July 31, 2013
Investments | Shares | Fair Value (000) | |||||
Chemicals (continued) | |||||||
Monsanto Co. | 63,200 | $ | 6,243 | ||||
Mosaic Co. (The) | 200,300 | 8,230 | |||||
Total | 175,262 | ||||||
Commercial Banks 6.36% | |||||||
BB&T Corp. | 1,079,549 | 38,529 | |||||
Comerica, Inc. | 543,155 | 23,106 | |||||
Fifth Third Bancorp | 4,293,670 | 82,567 | |||||
PNC Financial Services Group, Inc. (The) | 269,779 | 20,517 | |||||
Regions Financial Corp. | 1,489,600 | 14,911 | |||||
SunTrust Banks, Inc. | 1,272,304 | 44,263 | |||||
U.S. Bancorp | 1,810,100 | 67,553 | |||||
Wells Fargo & Co. | 3,611,453 | 157,098 | |||||
Total | 448,544 | ||||||
Commercial Services & Supplies 0.34% | |||||||
Pitney Bowes, Inc. | 1,454,400 | 24,012 | |||||
Communications Equipment 2.94% | |||||||
Cisco Systems, Inc. | 3,607,100 | 92,162 | |||||
QUALCOMM, Inc. | 1,785,800 | 115,273 | |||||
Total | 207,435 | ||||||
Computers & Peripherals 4.57% | |||||||
Apple, Inc. | 503,500 | 227,834 | |||||
Hewlett-Packard Co. | 3,684,031 | 94,606 | |||||
Total | 322,440 | ||||||
Construction & Engineering 0.42% | |||||||
Fluor Corp. | 379,700 | 23,754 | |||||
KBR, Inc. | 195,400 | 6,112 | |||||
Total | 29,866 | ||||||
Consumer Finance 1.92% | |||||||
Capital One Financial Corp. | 1,963,400 | 135,514 | |||||
Containers & Packaging 0.09% | |||||||
Packaging Corp. of America | 121,900 | 6,557 |
See Notes to Schedule of Investments.
Schedule of Investments (unaudited)(continued)
LORD ABBETT AFFILIATED FUND, INC. July 31, 2013
Investments | Shares | Fair Value (000) | |||||
Diversified Financial Services 5.87% | |||||||
Bank of America Corp. | 1,747,670 | $ | 25,516 | ||||
Citigroup, Inc. | 2,244,860 | 117,047 | |||||
JPMorgan Chase & Co. | 4,874,742 | 271,669 | |||||
Total | 414,232 | ||||||
Diversified Telecommunication Services 2.90% | |||||||
AT&T, Inc. | 1,826,549 | 64,422 | |||||
CenturyLink, Inc. | 132,600 | 4,754 | |||||
Verizon Communications, Inc. | 2,741,651 | 135,657 | |||||
Total | 204,833 | ||||||
Electric: Utilities 2.80% | |||||||
American Electric Power Co., Inc. | 517,200 | 23,972 | |||||
Duke Energy Corp. | 1,249,239 | 88,696 | |||||
Entergy Corp. | 252,700 | 17,057 | |||||
Great Plains Energy, Inc. | 188,100 | 4,550 | |||||
NextEra Energy, Inc. | 110,400 | 9,562 | |||||
PPL Corp. | 1,077,300 | 34,226 | |||||
Southern Co. (The) | 299,000 | 13,407 | |||||
Westar Energy, Inc. | 150,500 | 5,055 | |||||
Xcel Energy, Inc. | 33,500 | 1,004 | |||||
Total | 197,529 | ||||||
Electrical Equipment 0.78% | |||||||
Eaton Corp. plc (Ireland)(a) | 265,660 | 18,317 | |||||
Emerson Electric Co. | 519,700 | 31,894 | |||||
Rockwell Automation, Inc. | 52,900 | 5,124 | |||||
Total | 55,335 | ||||||
Electronic Equipment, Instruments & Components 0.39% | |||||||
Arrow Electronics, Inc.* | 250,936 | 11,455 | |||||
Avnet, Inc.* | 425,900 | 16,044 | |||||
Total | 27,499 | ||||||
Energy Equipment & Services 1.38% | |||||||
Cameron International Corp.* | 333,700 | 19,788 | |||||
Halliburton Co. | 278,971 | 12,607 | |||||
Schlumberger Ltd. | 647,198 | 52,637 | |||||
Seadrill Ltd. | 294,800 | 12,582 | |||||
Total | 97,614 |
See Notes to Schedule of Investments.
Schedule of Investments (unaudited)(continued)
LORD ABBETT AFFILIATED FUND, INC. July 31, 2013
Investments | Shares | Fair Value (000) | |||||
Food & Staples Retailing 2.77% | |||||||
CVS Caremark Corp. | 1,013,300 | $ | 62,308 | ||||
Kroger Co. (The) | 503,600 | 19,777 | |||||
Wal-Mart Stores, Inc. | 1,458,100 | 113,644 | |||||
Total | 195,729 | ||||||
Food Products 1.18% | |||||||
General Mills, Inc. | 1,500 | 78 | |||||
Ingredion, Inc. | 168,100 | 11,296 | |||||
Kellogg Co. | 323,100 | 21,402 | |||||
Kraft Foods Group, Inc. | 289,211 | 16,364 | |||||
Mondelez International, Inc. Class A | 1,087,134 | 33,995 | |||||
Total | 83,135 | ||||||
Health Care Equipment & Supplies 1.81% | |||||||
Baxter International, Inc. | 857,600 | 62,639 | |||||
Covidien plc (Ireland)(a) | 503,281 | 31,017 | |||||
Medtronic, Inc. | 618,500 | 34,166 | |||||
Total | 127,822 | ||||||
Health Care Providers & Services 1.85% | |||||||
Cardinal Health, Inc. | 490,300 | 24,559 | |||||
CIGNA Corp. | 155,600 | 12,110 | |||||
HCA Holdings, Inc. | 288,900 | 11,267 | |||||
McKesson Corp. | 292,000 | 35,817 | |||||
UnitedHealth Group, Inc. | 638,596 | 46,522 | |||||
Total | 130,275 | ||||||
Hotels, Restaurants & Leisure 1.63% | |||||||
Brinker International, Inc. | 205,200 | 8,239 | |||||
Marriott International, Inc. Class A | 331,972 | 13,800 | |||||
McDonald’s Corp. | 861,800 | 84,525 | |||||
Starwood Hotels & Resorts Worldwide, Inc. | 123,700 | 8,183 | |||||
Total | 114,747 | ||||||
Household Durables 0.12% | |||||||
Tupperware Brands Corp. | 97,200 | 8,192 | |||||
Household Products 1.69% | |||||||
Colgate-Palmolive Co. | 386,500 | 23,140 | |||||
Kimberly-Clark Corp. | 421,800 | 41,674 | |||||
Procter & Gamble Co. (The) | 678,300 | 54,467 | |||||
Total | 119,281 |
See Notes to Schedule of Investments.
Schedule of Investments (unaudited)(continued)
LORD ABBETT AFFILIATED FUND, INC. July 31, 2013
Investments | Shares | Fair Value (000) | |||||
Industrial Conglomerates 1.58% | |||||||
3M Co. | 242,000 | $ | 28,418 | ||||
General Electric Co. | 3,419,500 | 83,333 | |||||
Total | 111,751 | ||||||
Information Technology Services 1.52% | |||||||
International Business Machines Corp. | 551,400 | 107,545 | |||||
Insurance 6.30% | |||||||
ACE Ltd. (Switzerland)(a) | 627,900 | 57,377 | |||||
Aflac, Inc. | 427,700 | 26,381 | |||||
Allstate Corp. (The) | 1,634,200 | 83,312 | |||||
AXIS Capital Holdings Ltd. | 60,800 | 2,648 | |||||
Berkshire Hathaway, Inc. Class B* | 299,700 | 34,726 | |||||
Chubb Corp. (The) | 52,100 | 4,507 | |||||
Endurance Specialty Holdings Ltd. | 53,000 | 2,789 | |||||
Hartford Financial Services Group, Inc. | 1,336,400 | 41,241 | |||||
Lincoln National Corp. | 558,700 | 23,281 | |||||
Marsh & McLennan Cos., Inc. | 401,600 | 16,815 | |||||
MetLife, Inc. | 749,857 | 36,308 | |||||
Protective Life Corp. | 73,500 | 3,185 | |||||
Prudential Financial, Inc. | 858,500 | 67,796 | |||||
Travelers Cos., Inc. (The) | 322,300 | 26,928 | |||||
Validus Holdings Ltd. | 205,700 | 7,288 | |||||
XL Group plc (Ireland)(a) | 321,600 | 10,082 | |||||
Total | 444,664 | ||||||
Leisure Equipment & Products 0.09% | |||||||
Mattel, Inc. | 142,400 | 5,985 | |||||
Machinery 1.94% | |||||||
Caterpillar, Inc. | 1,137,607 | 94,319 | |||||
Cummins, Inc. | 328,000 | 39,750 | |||||
Joy Global, Inc. | 60,545 | 2,997 | |||||
Total | 137,066 | ||||||
Media 1.66% | |||||||
Cinemark Holdings, Inc. | 36,900 | 1,074 | |||||
Comcast Corp. Class A | 191,900 | 8,651 | |||||
Time Warner, Inc. | 436,016 | 27,146 |
See Notes to Schedule of Investments.
Schedule of Investments (unaudited)(continued)
LORD ABBETT AFFILIATED FUND, INC. July 31, 2013
Investments | Shares | Fair Value (000) | |||||
Media (continued) | |||||||
Viacom, Inc. Class B | 491,600 | $ | 35,774 | ||||
Walt Disney Co. (The) | 692,400 | 44,764 | |||||
Total | 117,409 | ||||||
Metals & Mining 0.82% | |||||||
Freeport-McMoRan Copper & Gold, Inc. | 2,014,700 | 56,976 | |||||
United States Steel Corp. | 41,200 | 715 | |||||
Total | 57,691 | ||||||
Multi-Line Retail 1.61% | |||||||
Kohl’s Corp. | 906,486 | 48,026 | |||||
Macy’s, Inc. | 1,047,400 | 50,631 | |||||
Target Corp. | 208,986 | 14,890 | |||||
Total | 113,547 | ||||||
Multi-Utilities 0.85% | |||||||
CMS Energy Corp. | 173,700 | 4,862 | |||||
PG&E Corp. | 1,005,300 | 46,133 | |||||
SCANA Corp. | 122,700 | 6,370 | |||||
TECO Energy, Inc. | 132,100 | 2,334 | |||||
Total | 59,699 | ||||||
Oil, Gas & Consumable Fuels 11.12% | |||||||
Anadarko Petroleum Corp. | 545,100 | 48,252 | |||||
Cenovus Energy, Inc. (Canada)(a) | 25,100 | 743 | |||||
Chevron Corp. | 1,398,532 | 176,061 | |||||
ConocoPhillips | 814,600 | 52,835 | |||||
EOG Resources, Inc. | 119,302 | 17,357 | |||||
Exxon Mobil Corp. | 1,281,792 | 120,168 | |||||
Hess Corp. | 263,629 | 19,630 | |||||
HollyFrontier Corp. | 176,200 | 8,026 | |||||
Kinder Morgan, Inc. | 543,003 | 20,504 | |||||
Marathon Oil Corp. | 930,100 | 33,818 | |||||
Marathon Petroleum Corp. | 212,500 | 15,583 | |||||
Occidental Petroleum Corp. | 1,697,684 | 151,179 | |||||
Range Resources Corp. | 68,939 | 5,453 | |||||
Suncor Energy, Inc. (Canada)(a) | 745,700 | 23,587 | |||||
Valero Energy Corp. | 2,544,650 | 91,022 | |||||
Total | 784,218 |
See Notes to Schedule of Investments.
Schedule of Investments (unaudited)(continued)
LORD ABBETT AFFILIATED FUND, INC. July 31, 2013
Investments | Shares | Fair Value (000) | |||||
Paper & Forest Products 0.94% | |||||||
International Paper Co. | 1,366,200 | $ | 66,001 | ||||
Personal Products 0.29% | |||||||
Herbalife Ltd. | 306,600 | 20,082 | |||||
Pharmaceuticals 7.44% | |||||||
Bristol-Myers Squibb Co. | 1,690,800 | 73,110 | |||||
Eli Lilly & Co. | 1,760,400 | 93,495 | |||||
GlaxoSmithKline plc ADR | 212,500 | 10,829 | |||||
Johnson & Johnson | 664,300 | 62,112 | |||||
Merck & Co., Inc. | 1,079,600 | 52,004 | |||||
Pfizer, Inc. | 7,985,800 | 233,425 | |||||
Total | 524,975 | ||||||
Professional Services 0.01% | |||||||
Robert Half International, Inc. | 19,600 | 730 | |||||
Real Estate Investment Trusts 2.50% | |||||||
Alexandria Real Estate Equities, Inc. | 85,100 | 5,829 | |||||
American Capital Agency Corp. | 307,200 | 6,921 | |||||
Annaly Capital Management, Inc. | 679,300 | 8,097 | |||||
BioMed Realty Trust, Inc. | 290,300 | 5,998 | |||||
Brandywine Realty Trust | 249,700 | 3,481 | |||||
BRE Properties, Inc. | 38,600 | 2,048 | |||||
Camden Property Trust | 118,000 | 8,324 | |||||
CBL & Associates Properties, Inc. | 298,400 | 6,795 | |||||
DDR Corp. | 753,900 | 12,877 | |||||
Duke Realty Corp. | 445,300 | 7,334 | |||||
General Growth Properties, Inc. | 509,900 | 10,575 | |||||
Health Care REIT, Inc. | 419,500 | 27,053 | |||||
Home Properties, Inc. | 89,400 | 5,705 | |||||
Host Hotels & Resorts, Inc. | 1,967,175 | 35,134 | |||||
Liberty Property Trust | 151,700 | 5,796 | |||||
Mack-Cali Realty Corp. | 141,600 | 3,407 | |||||
Piedmont Office Realty Trust, Inc. Class A | 184,400 | 3,336 | |||||
Post Properties, Inc. | 61,200 | 2,847 | |||||
Retail Properties of America, Inc. Class A | 183,400 | 2,584 | |||||
Vornado Realty Trust | 77,200 | 6,547 | |||||
Weingarten Realty Investors | 175,900 | 5,509 | |||||
Total | 176,197 |
See Notes to Schedule of Investments.
Schedule of Investments (unaudited)(continued)
LORD ABBETT AFFILIATED FUND, INC. July 31, 2013
Investments | Shares | Fair Value (000) | |||||
Road & Rail 1.75% | |||||||
CSX Corp. | 1,803,100 | $ | 44,735 | ||||
Hertz Global Holdings, Inc.* | 2,006,092 | 51,376 | |||||
Union Pacific Corp. | 173,500 | 27,515 | |||||
Total | 123,626 | ||||||
Semiconductors & Semiconductor Equipment 1.93% | |||||||
Broadcom Corp. Class A | 1,700 | 47 | |||||
Intel Corp. | 3,632,000 | 84,626 | |||||
Maxim Integrated Products, Inc. | 587,000 | 16,788 | |||||
Microchip Technology, Inc. | 365,400 | 14,521 | |||||
Texas Instruments, Inc. | 511,500 | 20,051 | |||||
Total | 136,033 | ||||||
Software 2.52% | |||||||
Microsoft Corp. | 5,589,100 | 177,901 | |||||
Specialty Retail 0.63% | |||||||
Home Depot, Inc. (The) | 294,700 | 23,290 | |||||
L Brands, Inc. | 364,200 | 20,312 | |||||
Lowe’s Cos., Inc. | 18,800 | 838 | |||||
Total | 44,440 | ||||||
Textiles, Apparel & Luxury Goods 0.18% | |||||||
Coach, Inc. | 238,500 | 12,672 | |||||
Tobacco 2.22% | |||||||
Altria Group, Inc. | 581,649 | 20,392 | |||||
Philip Morris International, Inc. | 1,524,600 | 135,964 | |||||
Total | 156,356 | ||||||
Wireless Telecommunication Services 0.02% | |||||||
Telephone & Data Systems, Inc. | 41,400 | 1,098 | |||||
Total Common Stocks (cost $5,726,376,601) | 7,033,316 | ||||||
Total Long-Term Investments (cost $5,726,376,601) | 7,033,316 |
See Notes to Schedule of Investments.
Schedule of Investments (unaudited)(concluded)
LORD ABBETT AFFILIATED FUND, INC. July 31, 2013
Investments | Principal Amount (000) | Fair Value (000) | |||||
SHORT-TERM INVESTMENT 0.23% | |||||||
Repurchase Agreement | |||||||
Repurchase Agreement dated 7/31/2013, 0.01% due 8/1/2013 with Fixed Income Clearing Corp. collateralized by $14,020,000 of U.S. Treasury Note at 3.75% due 11/15/2018 and $1,020,000 of U.S. Treasury Note at 1.75% due 10/31/2018; value: $16,755,225; proceeds: $16,423,186 (cost $16,423,182) | $ | 16,423 | $ | 16,423 | |||
Total Investments in Securities 99.93% (cost $5,742,799,783) | 7,049,739 | ||||||
Cash and Other Assets in Excess of Liabilities(b) 0.07% | 5,070 | ||||||
Net Assets 100.00% | $ | 7,054,809 |
ADR | American Depositary Receipt. | |
* | Non-income producing security. | |
(a) | Foreign security traded in U.S. dollars. | |
(b) | Cash and Other Assets in Excess of Liabilities include net unrealized appreciation on futures contracts as follows: |
Type | Expiration | Contracts | Position | Fair Value | Unrealized Appreciation |
|||||||||||
E-Mini S&P 500 Index | September 2013 | 200 | Long | $ | 16,805,000 | $ | 376,703 |
See Notes to Schedule of Investments.
Schedule of Investments (unaudited)(concluded)
July 31, 2013
The following is a summary of the inputs used as of July 31, 2013 in valuing the Fund’s investments carried at fair value(1):
Investment Type(2)(3) | Level 1 (000) | Level 2 (000) | Level 3 (000) | Total (000) | ||||||||||||
Common Stocks | $ | 7,033,316 | $ | — | $ | — | $ | 7,033,316 | ||||||||
Repurchase Agreement | — | 16,423 | — | 16,423 | ||||||||||||
Total | $ | 7,033,316 | $ | 16,423 | $ | — | $ | 7,049,739 | ||||||||
Other Financial Instruments | ||||||||||||||||
Futures Contracts | ||||||||||||||||
Assets | $ | 377 | $ | — | $ | — | $ | 377 | ||||||||
Liabilities | — | — | — | — | ||||||||||||
Total | $ | 377 | $ | — | $ | — | $ | 377 |
(1) | Refer to Note 2(f) for a description of fair value measurements and the three-tier hierarchy of inputs. |
(2) | See Schedule of Investments for fair values in each industry and identification of foreign issuers and/or geography. |
(3) | There were no level transfers during the period ended July 31, 2013. |
Notes to Schedule of Investments (unaudited)
1. ORGANIZATION
Lord Abbett Affiliated Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. The Fund was 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.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) | Investment Valuation-Under procedures approved by the Fund’s Board of Directors (the “Board”), Lord, Abbett & Co. LLC (“Lord Abbett”), the Fund’s investment manager, has formed a Pricing Committee to administer the pricing and valuation of portfolio investments and to ensure that prices utilized reasonably reflect fair value. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value. |
Securities actively traded on any recognized U.S. or non-U.S. exchange or on The NASDAQ Stock Market LLC are valued at the last sale price or official closing price on the exchange or system on which they are principally traded. Events occurring after the close of trading on non-U.S. exchanges may result in adjustments to the valuation of foreign securities to reflect their fair value as of the close of regular trading on the New York Stock Exchange LLC. The Fund may rely on an independent fair valuation service in adjusting the valuations of foreign securities. 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. Exchange traded options and futures contracts are valued at the last sale price in the market where they are principally traded. If no sale has occurred, the mean between the most recently quoted bid and asked prices is used. | |
Securities for which prices are not readily available are valued at fair value as determined by the Pricing Committee and approved by the Board. The Pricing Committee considers a number of factors, including observable and unobservable inputs, when arriving at fair value. The Pricing Committee may use related or comparable assets or liabilities, recent transactions, market multiples, book values and other relevant information to determine fair value of portfolio investments. The Board or a designated committee thereof regularly reviews fair value determinations made by the Pricing Committee and employs techniques such as reviewing related market activity, reviewing inputs and assumptions, and retrospectively comparing prices of subsequent purchases and sales transactions to fair value determinations made by the Pricing Committee. | |
Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates fair value. | |
(b) | Security Transactions-Security transactions are recorded as of the date that the securities are purchased or sold (trade date). |
(c) | Foreign Transactions-The books and records of the Fund are maintained in U.S. dollars and transactions denominated in foreign currencies are recorded in the Fund’s records at the rate prevailing when earned or recorded. |
(d) | Futures Contracts-The Fund entered into index futures contracts to manage cash, or as a substitute position for holding the underlying asset on which the instrument is based. At the time of entering into a futures transaction, an investor is required to deposit and maintain a specified amount of cash or eligible securities called “initial margin.” Subsequent payments made or received by a fund called “variation margin” are made on a daily basis as the market price of the futures contract fluctuates. The Fund will record an unrealized gain (loss) based on the amount of variation margin. When a contract is closed, a realized gain (loss) is recorded equal to the difference between the opening and closing value of the contract. |
(e) | Repurchase Agreements-The Fund may enter into repurchase agreements with respect to securities. A repurchase agreement is a transaction in which a 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 |
Notes to Schedule of Investments (unaudited)(continued)
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 fair value of these securities has declined, the Fund may incur a loss upon disposition of the securities. | |
(f) | Fair Value Measurements-Fair value is defined as the price that the Fund would receive upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk - for example, the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below: |
• | Level 1 - unadjusted quoted prices in active markets for identical investments; | |
• | Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.); and | |
• | Level 3 - significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
A summary of inputs used in valuing the Fund’s investments as of July 31, 2013, and if applicable, Level 1/Level 2 transfers and Level 3 rollforwards for the nine months then ended is included in the Fund’s Schedule of Investments. | |
Changes in valuation techniques may result in transfers into or out of an assigned level within the three-tier hierarchy. All transfers between different levels within the three-tier hierarchy are deemed to have occurred as of the beginning of the reporting period. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. | |
(g) | Disclosures about Derivative Instruments and Hedging Activities-The Fund entered into E-Mini S&P 500 Index futures contracts during the period ended July 31, 2013 (as described in note 2(d)) to manage cash. The Fund bears the risk that the underlying index will move unexpectedly, in which case the Fund may realize a loss. There is minimal counterparty credit risk to the Fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees futures against default. As of July 31, 2013, the Fund had an index futures contract with a cumulated unrealized appreciation of $376,703, which is included on the Schedule of Investments. |
3. FEDERAL TAX INFORMATION
As of July 31, 2013, the aggregate unrealized security gains and losses based on cost for U.S. federal income tax purposes were as follows:
Tax cost | $ | 5,771,533,423 | ||
Gross unrealized gain | 1,315,682,916 | |||
Gross unrealized loss | (37,477,422 | ) | ||
Net unrealized security gain | $ | 1,278,205,494 |
The difference between book-basis and tax-basis unrealized gains (losses) is attributable to the tax treatment of certain securities and wash sales.
Notes to Schedule of Investments (unaudited)(concluded)
4. RECENT ACCOUNTING STANDARD
In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-11 “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This disclosure requirement is intended to help investors and other financial statement users better assess the effect or potential effect of offsetting arrangements on a fund’s financial position. ASU 2011-11 requires entities to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of assets and liabilities; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. In addition, in January 2013, FASB issued Accounting Standards Update No. 2013-01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”), specifying exactly which transactions are subject to disclosures about offsetting. ASU 2011-11 and ASU 2013-01 are effective for public entities for interim and annual periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the adoption of ASU 2011-11 and ASU 2013-01 will have on the Fund’s financial statement disclosures.
Item 2: | 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 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 last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 3: | Exhibits. |
Certification of each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 is attached hereto as a part of EX-99.CERT. |
SIGNATURES
Pursuant to the requirements of the Securities 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. | |||
By: | /s/ Daria L. Foster | ||
Daria L. Foster | |||
President and Chief Executive Officer |
Date: September 30, 2013
By: | /s/ Joan A. Binstock | ||
Joan A. Binstock | |||
Chief Financial Officer and Vice President |
Date: September 30, 2013
Pursuant to the requirements of the Securities 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.
By: | /s/ Daria L. Foster | ||
Daria L. Foster | |||
President and Chief Executive Officer |
Date: September 30, 2013
By: | /s/ Joan A. Binstock | ||
Joan A. Binstock | |||
Chief Financial Officer and Vice President |
Date: September 30, 2013
CERTIFICATIONS
I, Daria L. Foster, certify that:
1. | I have reviewed this report on Form N-Q of Lord Abbett Affiliated Fund, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the Registrant as of the end of the fiscal quarter for which the report is filed; |
4. | The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and | |
(d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer(s) and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Date: September 30, 2013
/s/ Daria L. Foster | |
Daria L. Foster | |
President and Chief Executive Officer |
CERTIFICATIONS
I, Joan A. Binstock, certify that:
1. | I have reviewed this report on Form N-Q of Lord Abbett Affiliated Fund, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the Registrant as of the end of the fiscal quarter for which the report is filed; |
4. | The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and | |
(d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer(s) and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): | |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Date: September 30, 2013
/s/ Joan A. Binstock | |
Joan A. Binstock | |
Chief Financial Officer and Vice President |