1933 Act File No. 2-64536
1940 Act File No. 811-2924
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 21 [X]
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
Amendment No. 19
LORD ABBETT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
Exact Name of Registrant as Specified in Charter
767 FIFTH AVENUE, NEW YORK, N. Y. 10153-0203
Address of Principal Executive Office
REGISTRANT'S TELEPHONE NUMBER (212) 848-1800
Kenneth B. Cutler, Vice President & Secretary
767 FIFTH AVENUE, NEW YORK, N. Y. 10153
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately on filing pursuant to paragraph (b) of Rule 485
X on November 1, 1996 pursuant to paragraph (b) of Rule 485
- -------
60 days after filing pursuant to paragraph (a) (1) of Rule 485
on (date) pursuant to paragraph (a) (1) of Rule 485
75 days after filing pursuant to paragraph (a) (2) of Rule 485
on (date) pursuant to paragraph (a) (2) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
LORD ABBETT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND, INC.
FORM N-1A
Cross Reference Sheet
Post-Effective Amendment No. 21
Pursuant to Rule 481(a)
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
1 Cover Page
2 Fee Table
3 (a) Financial Highlights; Performance
3 (b) N/A
4 (a) (i) Cover Page
4 (a) (ii) Investment Objective; How We Invest
4 (b) (c) How We Invest
5 (a) (b) (c) Our Management; Back Cover Page
5 (d) N/A
5 (e) Back Cover Page
5 (f) Our Management
5 (g) N/A
5 A Performance
6 (a) Cover Page
6 (b) (c) (d) N/A
6 (e) Cover Page
6 (f) (g) Dividends, Capital Gains
Distributions and Taxes
7 (a) Back Cover Page
7 (b) (c) (d)
(e) (f) Purchases
8 Redemptions and Repurchases
9 N/A
10 Cover Page
11 Cover Page - Table of Contents
12 N/A
13 Investment Objective and Policies
14 Directors and Officers
15 (a) (b) N/A
15 (c) Directors and Officers
16 (a) (i) Investment Advisory and Other Services
16 (a) (ii) Directors and Officers
16 (a) (iii) Investment Advisory and Other Services
16 (b) Investment Advisory and Other Services
16 (c) (d) (e)
(g) N/A
16 (f) Purchases, Redemptions
and Shareholder Services
16 (h) Investment Advisory and Other Services
<PAGE>
Form N-1A Location In Prospectus or
ITEM NO. STATEMENT OF ADDITIONAL INFORMATION
16 (i) N/A
17 (a) Portfolio Transactions
17 (b) N/A
17 (c) Portfolio Transactions
17 (d) Portfolio Transactions
17 (e) N/A
18 (a) Cover Page
18 (b) N/A
19 (a) (b) Purchases, Redemptions
and Shareholder Services
19 (c) N/A
20 Taxes
21 (a) Purchases, Redemptions
and Shareholder Services
21 (b) (c) N/A
22 (a) N/A
22 (b) Past Performance
23 Financial Statements
<PAGE>
LORD ABBETT U.S. GOVERNMENT
SECURITIES MONEY MARKET FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
Our Fund, Lord Abbett U.S. Government Securities Money Market Fund, Inc. ("we"
or the "Fund"), is a mutual fund with three classes of shares. These classes,
called Class A, B and C shares, provide investors with different investment
options in purchasing shares of the Fund. See "Purchases" for a description of
these choices. The Class B and Class C shares may be acquired only in exchange
for shares of the same class of another Lord Abbett-sponsored fund. See
"Purchases".
The investment objective of the Fund is to provide high current income and
preservation of capital through investments in high-quality, short-term liquid
securities. There can be no assurance that this objective will be achieved.
Under normal circumstances, the Fund seeks to attain its investment objective by
investing at least 65% of its total assets in obligations issued or backed by
the U.S. Government, its agencies or instrumentalities.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Additional information about
the Fund has been filed with the Securities and Exchange Commission and is
available upon request without charge. The Statement of Additional Information
is incorporated by reference into this Prospectus and may be obtained, without
charge, by writing directly to the Fund or by calling the Fund at 800-874-3733.
Ask for "Part B of the Prospectus -- the Statement of Additional Information."
The date of this Prospectus, and the date
of the Statement of Additional Information, is November 1, 1996.
PROSPECTUS
Investors should read and retain this Prospectus. Shareholder inquiries should
be made in writing to the Fund or by calling 800-821-5129. In addition, you can
make inquiries through your broker-dealer.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and the shares are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. An
investment in the Fund involves risks, including the possible loss of principal.
CONTENTS PAGE
1 Investment Objective 2
2 Fee Table 2
3 Financial Highlights 3
4 How We Invest 3
5 Net Asset Value 4
6 Purchases 4
7 Dividends, Yield and Taxes 8
8 Redemptions 9
9 Our Management 10
10 Shareholder Services 10
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Our policy is to maintain, and we have maintained, a constant net asset value of
$1.00 per share. However, an investment in the Fund is neither insured nor
guaranteed by the U.S. Government and there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share.
<PAGE>
1 INVESTMENT OBJECTIVE
Our investment objective is to provide high current income and preservation of
capital through investments in high-quality, short-term liquid securities.
2 FEE TABLE
A summary of the Fund's expenses is set forth in the table below. The example is
not a representation of past or future expenses. Actual expenses may be greater
or less than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF THE OFFERING PRICE)
Maximum Sales Load(1) on Purchases
(See "Purchases") None(2) None(2)(3) None(2)
Deferred Sales Load(1) (See "Purchases") None(2) 5% if shares are None(2)
redeemed before 1st
anniversary of purchase,
declining to 1% before 6th
anniversary and eliminated on
and after 6th anniversary(2)
ANNUAL FUND OPERATING EXPENSES(4)
(AS A PERCENTAGE OF AVERAGE NET ASSESTS)
Management Fees (See "Our Management") 0.50% 0.50% 0.50%
12b-1 Fees (See "Purchases") None(2) 0.75%(2)(3) None(2)
Other Expenses (See "Our Management") 0.31% 0.31% 0.31%
Total Operating Expenses 0.81% 1.56% 0.81%
<FN>
EXAMPLE:
Assume an annual return is 5% and no change in the level of expenses described
above. For a $1,000 investment, with reinvestment of all dividends and
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A shares(4) $8 $26 $45 $100
Class B shares(4) $55 $79 $95 $166(5)
Class C shares(4) $8 $26 $45 $100
(1) Sales "load" is referred to as sales "charge", "deferred sales load" is
referred to as "contingent deferred sales charge" (or "CDSC") and "12b-1 fees"
which consist of a "service fee" and a "distribution fee" are referred to by
either or both of these terms where appropriate with respect to Class A, Class B
and Class C shares throughout this Prospectus.
(2)The Fund has no Class A and Class C CDSC of its own but it does have its own
Class B CDSC. The Fund will collect Class A and Class C CDSCs on behalf of the
other Lord Abbett funds and the Class B CDSC on behalf of Lord Abbett
Distributor LLC. See "Collection of CDSCs by the Fund" and "Acquiring Class B
Shares", both under "Purchases". Other Lord Abbett-sponsored funds have
instituted Class A and Class C Rule 12b-1 plans that provide for a CDSC on such
shares subject to a Rule 12b-1 fee of up to 1% paid under such a plan where
those shares (or any shares of another fund received in exchange for those
shares) are redeemed within 24 months after the month of purchase (in the case
of Class A shares) and within 12 months of purchase (in the case of Class C
shares). The Fund pays no Rule 12b-1 fees with respect to Class A or Class C
shares. With respect to Class B shares, an "anniversary" is, the 365th day
subsequent to the original purchase, or a prior anniversary of such purchase, of
"B Exchanged Shares", i.e. shares of the same class of another Lord
Abbett-sponsored fund used in an exchange for the Fund's Class B shares.
(3)Although the Fund does not, with respect to the Class B shares, charge a
front-end sales charge, investors should be aware that long-term shareholders
may pay, under the Rule 12b-1 plan applicable to the Class B shares of the Fund
(which pays annual 0.75% distribution fees), more than the economic equivalent
of the maximum front-end sales charge as permitted by certain rules of the
National Association of Securities Dealers, Inc.
(4)The annual operating expenses shown in the summary are the actual expenses
for the Fund for the fiscal year ended June 30, 1996 except for the 12b-1 fees
for Class B shares, which are estimated.
(5)Based on conversion of Class B shares to Class A shares on the eighth
anniversary of the purchase of Class B shares and closing your account by
redeeming Class A shares after ten years.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in the Fund.
</FN>
</TABLE>
<PAGE>
3 FINANCIAL HIGHLIGHTS
The following table has been audited by Deloitte & Touche LLP, independent
public accountants, in connection with their annual audit of the Fund's Class A
share Financial Statements, whose report thereon is incorporated by reference
into the Statement of Additional Information and may be obtained upon request
and has been included herein in reliance upon their authority as experts in
auditing and accounting.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER CLASS A SHARE OPERATING Year Ended June 30,
PERFORMANCE: 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .048 .046 .025+ .024+ .038+ .064 .077 .080 .062 .052
LESS DISTRIBUTIONS
Dividends from net investment income (.048 (.046) (.025) (.024) (.038) (.064) (.077) (.080) (.062) (.052)
NET ASSET VALUE, END OF YEAR $1.0 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 4.85% 4.65% 2.54% 2.43% 3.87% 6.55% 8.01% 8.32% 6.35% 5.31%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $152,531 $140,642 $156,069 $122,782 $147,229 $195,134 $195,547 $212,001 $211,795 $168,871
Ratios to Average Net Assets:
Expenses, including waiver 0.81% 0.86% 0.85% 0.87% 1.01% 0.95% 0.90% 0.87% 0.88% 1.03%
Expenses, excluding waiver 0.81% 0.86% 0.90% 0.96% 1.02% 0.95% 0.90% 0.87% 0.88% 1.03%
Net investment income 4.75% 4.54% 2.56% 2.41% 3.86% 6.40% 7.74% 8.02% 6.17% 5.22%
<FN>
+After taking into account management fee waiver. See Notes to Financial
Statements.
</FN>
</TABLE>
4 HOW WE INVEST
Our investment objective is to provide high current income and preservation of
capital through investments in high-quality, short-term liquid securities. Under
normal circumstances, the Fund will seek to achieve its objective by investing
at least 65% of its total assets in obligations issued or backed by the U.S.
Government, its agencies or instrumentalities. These obligations, which must be
eligible investments for a money market fund, include: (1) obligations issued by
the U.S. Treasury, differing only in their interest rates, maturities and time
of issuance, and including Treasury bills, notes and bonds and (2) obligations
issued or guaranteed by U.S. Government agencies and instrumentalities which are
supported by any of the following: (a) the full faith and credit of the United
States (such as GNMA certificates), (b) the right of the issuer to borrow from
the U.S. Treasury or (c) the credit of the agency or instrumentality. Agencies
and instrumentalities include Federal Home Loan Banks, Federal Home Loan
Mortgage Association, Federal National Mortgage Association, Federal Farm Credit
Banks and Student Loan Marketing Association.
With respect to not more than 35% of the Fund's total assets, the Fund may
invest in high-quality, short-term liquid securities, including certificates of
deposit of domestic banks, corporate commercial paper, banker's acceptances,
repurchase agreements, corporate bonds and notes and other debt instruments.
We seek to keep money at work in what we consider to be the most attractive
short-term debt investments consistent with our objective. We invest in a
portfolio of short-term liquid securities which have maturities of not more than
12 months from the date of settlement of our purchase, which may include, among
other investments, the following.
BANK OBLIGATIONS . Obligations (including certificates of deposit and banker's
acceptances) of U.S. banks and savings and loan associations which at the date
of their latest public reporting had total assets in excess of $1 billion and
capital, surplus and undivided profits in excess of $100 million.
COMMERCIAL PAPER. Commercial paper (short-term unsecured promissory notes of
corporations including variable amount master demand notes) which at the date of
investment is rated A-1 by Standard & Poor's Corporation ("S&P") or P-1 by
Moody's Investors Service, Inc. ("Moody's") or, if not rated, is issued by
companies having outstanding debt rated AAA or AA by S&P or Aaa or Aa by
Moody's.
SHORT-TERM CORPORATE DEBT SECURITIES. Corporate debt securities (bonds and
debentures) with no more than 12 months remaining to maturity at date of
settlement and rated AAA or AA by S&P or Aaa or Aa by Moody's.
<PAGE>
REPURCHASE AGREEMENTS. Repurchase agreements with (i) any member bank of the
Federal Reserve System or primary dealer in U.S. Government securities or (ii) a
broker-dealer for periods not to exceed 30 days and only with respect to
underlying money market securities which throughout the period have a value at
least equal to the amount of the repurchase price (including accrued interest).
CONCENTRATION. We will not invest more than 25% of our assets, taken at market
value, in the securities of issuers in any one industry, except that there is no
percentage limitation on our investments in obligations issued or backed by the
U.S. Government, its agencies or instrumentalities as described above.
We may invest in obligations (for example, commercial paper with a bank letter
of credit or commercial paper of a subsidiary accompanied by a guarantee of the
parent) other than those listed above if the obligation is accompanied by a
guarantee of principal and interest, provided that the guarantee is that of a
bank or corporation whose obligations we may otherwise purchase. Any such
obligation and guarantee must be due within no more than 12 months from the date
of settlement of our purchase.
We have no present plans to change our policies with regard to the types or
maturities of securities in which we invest. However, if we determine that our
investment objective can best be achieved by a change in investment policy or
strategy, we may make such a change without shareholder approval by disclosing
it in our Prospectus.
RULE 2A-7. In addition to the foregoing, our investment practices are also
governed by certain portfolio maturity, diversification and quality requirements
contained in Rule 2a-7, as amended, under the Investment Company Act of 1940
(the "Rule"). The Rule imposes these requirements on the Fund, both because we
hold ourselves out as a "money market fund" and because we employ the amortized
cost method of valuing our portfolio securities (see also "Net Asset Value").
The Rule's maturity requirements limit the Fund's dollar-weighted average
portfolio maturity to not more than 90 days and the maturity of any single
portfolio instrument to not more than 397 days. Generally speaking, the
diversification provisions of the Rule limit our investments in (i) the
securities of any one issuer, other than U.S. Government securities or
repurchase agreements fully collateralized by U.S. Government securities
(limited to 5% of our total assets, except with respect to certain investments
held for three business days or less), (ii) securities issued by or subject to
puts from any single institution (limited to 5% of total assets, except that
unconditional puts are treated less restrictively) and (iii) securities that are
neither rated nor comparable in quality to securities that are rated in the
highest category by a requisite number of rating agencies (generally, limited to
5% of our total assets overall and the greater of $1 million or 1% of total
assets in such securities of one issuer). Finally, as to the "quality" of our
portfolio securities, the Rule permits us to invest only in securities that
present minimal credit risks as determined by Lord, Abbett & Co. ("Lord Abbett")
(where such determination is delegable by the Board of Directors under the Rule)
or by the Board of Directors (where not delegable) and that satisfy certain
requirements in the Rule relating to ratings by nationally-recognized rating
organizations.
If the Board of Directors should determine that continuing to abide by the
conditions of the Rule is not in the best interest of our shareholders, we would
neither use amortized cost nor hold ourselves out as a money market fund.
However, we would continue to comply with our remaining policies and
restrictions.
5 NET ASSET VALUE
The net asset value of our shares is calculated twice on each day that the New
York Stock Exchange is open for trading; at 12 noon and at 2 P.M. (New York
time). Securities are valued at cost plus (minus) amortized discount (premium),
if any, pursuant to the Rule. The conditions of the Rule are briefly described
above under "How We Invest".
6 PURCHASES
ALTERNATIVE SALES ARRANGEMENTS
CLASS SHARES. The Fund offers investors three different classes of shares. The
different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and are likely to have
different dividends and yields. Investors should read this section carefully to
determine which class represents the best investment option for their particular
situation.
CLASS A SHARES. If you buy Class A shares, you pay no sales charge. If you
acquire Class A shares in exchange for shares of the same class of another Lord
Abbett-sponsored fund subject to a contingent deferred sales charge ("CDSC") and
you redeem any of the Class A shares within 24 months after the month in which
you initially purchased shares of such fund, the Fund will collect for such fund
a CDSC of 1% which is remitted to such fund to reimburse it. The CDSC and an
inactive Rule 12b-1 Plan for Class A shares are described in "Acquiring Class A
Shares" and "Collection of CDSCs by the Fund" below.
<PAGE>
CLASS B SHARES. Class B shares may only be acquired in exchange for shares of
the same class of another Lord Abbett-sponsored fund. See "Shareholder Services
- -- Telephone Exchanges" below. If you redeem your shares before the sixth
anniversary of the initial purchase of shares of such fund, you will normally
pay a CDSC to Lord Abbett Distributor LLC (hereinafter referred to as "Lord
Abbett Distributor"). That CDSC varies depending on how long you own shares.
Class B shares are subject to distribution fees at an annual rate of 0.75 of 1%
of the annual net asset value of the Class B shares. The CDSC and the Rule 12b-1
Plan applicable to the Class B shares are described in "Acquiring Class B
Shares" and "Class B Rule 12b-1 Plan" below.
CLASS C SHARES. Class C shares may only be acquired in exchange for shares of
the same class of another Lord Abbett-sponsored fund. See "Shareholder Services
- -- Telephone Exchanges" below. If you redeem your shares before the first
anniversary of the initial purchase of shares of such fund, you will normally
pay the Fund a CDSC of 1%. The CDSC and an inactive Rule 12b-1 Plan for Class C
shares are described in "Acquiring Class C Shares" and "Collection of CDSCs by
the Fund" below.
GENERAL
HOW MUCH YOU INVEST. The minimum initial investment for Class A, B and C shares
is $1,000 for regular accounts; $250 for IRAs, 403(b) plans and "Retirement
Plans" (i.e., employer-sponsored retirement plans under the Internal Revenue
Code). We may waive the initial investment minimum for plans involving
continuous investments. Subsequent investments can be made in any amount. There
is no sales charge except for the Class B shares which have an asset-based sales
charge of 0.75 of 1%. See "Class B 12b-1 Plan" below. Our shares (Class A, B and
C) are continuously offered at their net asset value (normally $1.00 per share)
next determined after the purchase order in proper form is received by the Fund.
Class B and C shares may be purchased only by exchange for shares of the same
class of another Lord Abbett-sponsored fund, as discussed below. Proper purchase
order form includes federal funds received by our custodian bank.
HOW YOU OPEN AN ACCOUNT? You may open an account either by mail or wire. To open
an account by mail, send the completed Application Form plus payment to Lord
Abbett U.S. Government Securities Money Market Fund, Inc., P.O. Box 419576,
Kansas City, Missouri 64141. Checks should be made payable to Lord Abbett U.S.
Government Securities Money Market Fund, Inc.
To open an account by wire, first call us at 800-821-5129 to obtain an account
number. You should direct payment wired in federal funds to our custodian bank,
United Missouri Bank of Kansas City, N.A., Tenth and Grand, Kansas City,
Missouri and specify the name of the Fund and your account number in the wire.
The Fund is not responsible for any delays in the wiring system.
In accordance with our investment objective, we intend to be invested as fully
as possible at all times. Since we will be investing in instruments which
normally require immediate payment in federal funds (monies credited to our
custodian bank's account with its regional Federal Reserve Bank), if your
purchase order in all other respects is found to be in proper form, payment to
complete a proper order normally will be considered received as follows.
1. Payment transmitted by federal funds wire -- if wire and order, in proper
form, are received by the Fund prior to 12 noon (New York time) dividends begin
accruing on the day of receipt. If wire and order, in proper form, are received
after 12 noon (New York time) dividends begin accruing on the following business
day.
receipt of an order in proper form by the Fund, dividends begin accruing on the
business day on which the federal funds represented by such check or draft are
made available to our custodian bank. Checks drawn on foreign banks will not be
accepted unless provision is made for payment in U.S. dollars through a U.S.
bank.
A purchase or redemption order is in proper form when it contains all of the
information and documentation required by the order form or required
supplementally by Lord Abbett Distributor or the Fund to carry out the order.
Payments must be converted to federal funds by being credited to our custodian
bank's account with its Federal Reserve Bank. For required signatures, if the
signer has any legal capacity, the signature and such capacity must be
guaranteed by an eligible guarantor. Certain legal documents may be required
from corporations or other organizations, executors, trustees and others in a
fiduciary or representative capacity. If you have any questions concerning a
purchase or redemption, call the Fund at 800-821-5129.
<PAGE>
Subsequent investments can be made either by mail or wire. We reserve the right
to withdraw all or any part of the offering made by this Prospectus or to reject
any purchase order. We also reserve the right to waive, increase or establish
minimum investment requirements. All purchase orders are subject to our
acceptance and are not binding until confirmed or accepted in writing. Stock
certificates are issued only upon request for Class A shares and no stock
certificates are issued for fractional shares or Class B and C shares. ACQUIRING
CLASS A SHARES. Class A shares are sold directly to investors at net asset value
per share without a sales charge and also may be acquired in exchange for shares
of the same class of any other Lord Abbett-sponsored fund (an "initial fund").
Class A shares normally will be subject to a 1.0% CDSC when redeemed for cash on
or before the end of the twenty-fourth month after the month in which they were
first purchased if the initial fund paid a distribution fee on such shares under
its Class A 12b-1 plan. The CDSC will be assessed on the lesser of the net asset
value of the shares at the time of redemption or the original purchase price.
The CDSC is not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends). The Class A CDSC is paid to the Fund for
remittance to the initial fund to reimburse it, in whole or in part, for the
service and distribution fee payments made by that initial fund at the time such
shares were first sold.
CLASS A RULE 12B-1 PLAN. The service fees described below are not being paid by
the Fund and have not been paid since the effective date of the Class A share
Rule 12b-1 Plan (the "A Plan").
The A Plan authorizes the Fund to pay service fees through Lord Abbett
Distributor to authorized institutions (except with respect to certain accounts
for which tracking data is not available) in order to provide additional
incentives for them to provide continuing information and investment services to
their Class A shareholder accounts and otherwise to encourage their Class A
accounts to remain invested in the Fund. The annual service fee (payable
quarterly) consists of .15% of the average daily net asset value of the Fund's
shares sold by authorized institutions.
ACQUIRING CLASS B SHARES. Class B shares are acquired at net asset value per
share without an initial sales charge only in exchange for "B Exchanged Shares",
i.e. shares of the same class of another Lord Abbett-sponsored fund used in such
exchange. See "Shareholder Services -- Telephone Exchanges" below. However, if
Class B shares are redeemed for cash before the sixth anniversary of the initial
purchase of B Exchanged Shares, a CDSC normally will be deducted from the
redemption proceeds. The charge will be assessed on the lesser of the net asset
value of the shares at the time of redemption or the original purchase price.
The CDSC is not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends). The Class B CDSC is paid to Lord Abbett
Distributor to reimburse part of its expenses associated with providing
distribution-related services to the Fund in connection with the distribution of
Class B shares.
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends (2)
shares held until the sixth anniversary of their initial purchase or later, and
(3) shares held the longest before the sixth anniversary of their initial
purchase.
The amount of the CDSC will depend on the number of years since you invested and
the dollar amount being redeemed, according to the following schedule.
<TABLE>
<CAPTION>
<S> <C> <C>
Anniversary
of the Day on Contingent Deferred
Which the Purchase Sales Charge on
Order Was Accepted Redemptions
(AS % OF AMOUNT
On Before SUBJECT TO SALES CHARGE)
1st 5.0%
1st 2nd 4.0%
2nd 3rd 3.0%
3rd 4th 3.0%
4th 5th 2.0%
5th 6th 1.0%
on or after the None
6th anniversary
</TABLE>
In the table, an "anniversary" is the 365th day subsequent to a purchase or a
prior anniversary. All purchases are considered to have been made on the
business day the original purchase of B Exchanged Shares was made. See "General"
above. WAIVER OF CLASS B SALES CHARGE. The Class B CDSC will not be applied to
shares purchased in certain types of transactions nor will it apply to shares
redeemed in certain circumstances as described below.
The Class B CDSC will be waived for redemptions of shares (i) in connection with
the Systematic Withdrawal Plan and Div-Move services, as described in more
detail under "Shareholder Services" below; (ii) by Retirement Plans due to any
benefit payment such as Plan loans, hardship withdrawals, death, retirement or
separation from service with respect to plan participants or the distribution of
any excess contributions, (iii) in connection with mandatory distributions under
403(b) plans and individual retirement accounts and (iv) in connection with the
death of a shareholder in a non-Retirement Plan situation.
<PAGE>
CLASS B RULE 12b-1 PLAN. The Fund has adopted a Class B share Rule 12b-1 Plan
(the "B Plan") under which (except as to certain accounts for which tracking
data is not available) the Fund periodically pays Lord Abbett Distributor an
annual distribution fee of 0.75 of 1% of the average daily net asset value of
the Class B shares that are outstanding for less than 8 years from the original
purchase date of B Exchanged Shares.
The 0.75% annual distribution fee is paid to Lord Abbett Distributor to
compensate it for its services rendered in connection with the distribution of
Class B shares, including the payment and financing of sales commissions on B
Exchanged Shares.
Lord Abbett Distributor pays an up-front payment to authorized institutions
totalling 4% with respect to B Exchanged Shares, consisting of 0.25% for service
and 3.75% for a sales commission as described below.
Under the Rule 12b-1 Plans ("other Plans") of other Lord Abbett-sponsored funds,
Lord Abbett Distributor pays the 0.25% service fee to authorized institutions in
advance for the first year after B Exchanged Shares have been sold by the
authorized institutions. After the shares have been held for a year, Lord Abbett
Distributor pays the service fee on a quarterly basis. Lord Abbett Distributor
is entitled to retain such service fee payable under the other Plans with
respect to accounts for which there is no authorized institution of record or
for which such authorized institution did not qualify.
Although B Exchanged Shares sold directly to investors by other Lord
Abbett-sponsored funds are sold without a front-end sales charge, Lord Abbett
Distributor pays authorized institutions responsible for sales of B Exchanged
Shares a sales commission of 3.75% of the purchase price. This payment is made
at the time of sale from Lord Abbett Distributor's own resources. Lord Abbett
Distributor has made arrangements to finance these commission payments, which
arrangements include non-recourse assignments by Lord Abbett Distributor to the
financing party of such distribution and CDSC payments which are made to Lord
Abbett Distributor by shareholders who redeem their Class B shares within six
years of the initial purchase of B Exchanged Shares.
The distribution fee and the CDSC payments described above allow investors to
acquire Class B shares with B Exchanged Shares. The CDSC is intended to
supplement Lord Abbett Distributor's reimbursement for the commission payments
it has made with respect to B Exchanged Shares and its related distribution and
financing costs. The distribution fee payments are at a fixed rate and the CDSC
payments are of a nature that, during any year, both forms of payment may not be
sufficient to reimburse Lord Abbett Distributor for its actual expenses. The
Fund is not liable for any expenses incurred by Lord Abbett Distributor in
excess of (i) the amount of such distribution fee payments to be received by
Lord Abbett Distributor and (ii) unreimbursed distribution expenses of Lord
Abbett Distributor incurred in a prior plan year, subject to the right of the
Board of Directors or shareholders to terminate the B Plan. Over the long-term
the expenses incurred by Lord Abbett Distributor are likely to be greater than
such distribution fee and CDSC payments. Nevertheless, there exists a
possibility that for a short-term period Lord Abbett Distributor may not have
sufficient expenses to warrant reimbursement by receipt of such distribution fee
payments. Although Lord Abbett Distributor undertakes not to make a profit under
the B Plan, the B Plan is considered a compensation plan (i.e., distribution
fees are paid regardless of expenses incurred) in order to avoid the possibility
of Lord Abbett Distributor not being able to receive distribution fees because
of a temporary timing difference between its incurring expenses and receipt of
such distribution fees.
AUTOMATIC CONVERSION OF CLASS B SHARES. On the eighth anniversary of your
original purchase of B Exchanged Shares, your Class B shares will automatically
convert to Class A shares. This conversion relieves Class B shareholders of the
higher annual distribution fee that applies to Class B shares under the Class B
Rule 12b-1 Plan. The conversion is based on the relative net asset value of the
two classes, and no sales charge or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends will also convert to Class A shares on a pro rata basis. The
conversion feature is subject to the continued availability of an opinion of
counsel or of a tax ruling described in "Class B Share Conversion Feature" in
the Statement of Additional Information.
<PAGE>
ACQUIRING CLASS C SHARES. Class C shares are acquired at net asset value per
share without a sales charge only in exchange for "C Exchanged Shares", i.e.
shares of the same class of another Lord Abbett-sponsored fund used in such
exchange. See "Shareholder Services -- Telephone Exchanges" below. However, if
Class C shares are redeemed for cash before the first anniversary of the initial
purchase of C Exchanged Shares, a CDSC of 1% normally will be deducted from the
redemption proceeds. The charge will be assessed on the lesser of the net asset
value of the shares at the time of redemption or the original purchase price.
The CDSC is not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends). The Class C CDSC is paid to the Fund for
remittance to the original Lord Abbett-sponsored fund to reimburse it, in whole
or in part, for the service and distribution fee payments made by that original
fund.
To determine whether the CDSC applies to a redemption, the Fund redeems shares
in the following order: (1) shares acquired by reinvestment of dividends, (2)
shares held for one year or more, and (3) shares held the longest before the
first anniversary of their initial purchase. If Class C shares are exchanged
into the same class of another Lord Abbett-sponsored fund and subsequently
redeemed before the first anniversary of their original purchase, the CDSC will
be collected by the other fund on behalf of the original fund. The Fund will
collect such a charge for other Lord Abbett-sponsored funds in a similar
situation.
CLASS C RULE 12B-1 PLAN. The service fees described below are not being paid by
the Fund and have not been paid since the effective date of the Class C share
Rule 12b-1 Plan (the "C Plan"). Under the C Plan, (except as to certain accounts
for which tracking data is not available) the Fund is permitted to pay
authorized institutions through Lord Abbett Distributor (1) a service fee at the
time shares are sold, not to exceed 0.25 of 1% of the net asset value of such
shares and (2) at each quarter-end after the first anniversary of the sale of
shares, fees for services at annual rates not to exceed 0.25 of 1% of the
average annual net asset value of such shares outstanding (payments with respect
to shares not outstanding during the full quarter to be prorated). These service
fees are for purposes similar to those mentioned above with respect to the A
Plan. Sales in clause (1) exclude shares issued for reinvested dividends and
shares outstanding in clause (2) include shares issued for reinvested dividends
after the first anniversary of their issuance.
COLLECTION OF CDSCs BY THE FUND. The Fund is currently collecting CDSCs on
behalf of other Lord Abbett-sponsored funds with operating 12b-1 plans even
though the Fund is currently not making service fee payments under its own A
Plan or C Plan. The timing, categories and calculation of this charge may be
changed by vote (including a disinterested directors' vote) of the Boards of
Directors of such other funds. Redemptions of Fund shares in exchange for
another Lord Abbett-sponsored fund (see "Telephone Exchange Privilege" under
"Shareholder Services") or by participants in Retirement Plans due to any
benefit payment, such as plan loans, hardship withdrawals, death, retirement or
separation from service or the distribution of any excess contributions are
excluded from the CDSCs mentioned above in the case of Class A and Class B
shares but not in the case of Class C shares.
7 DIVIDENDS, YIELD AND TAXES
DIVIDENDS: On each day that the New York Stock Exchange is open for trading, our
net income will be declared as a dividend to shareholders of record as of 12
noon (New York time) that day. Unless you elect to receive cash, dividends will
be reinvested in additional shares on the monthly reinvestment date.
If you elect a cash payment, (i) a check will be mailed to you as soon as
possible after the monthly reinvestment date or (ii) if you arranged for direct
deposit, your payment will be wired directly to your bank account within one day
after the payable date. If you redeem your entire account, all dividends
declared to the effective time of redemption will be paid to you. Dividends and
distributions declared in October, November or December of any year will be
treated for federal income tax purposes as having been received by shareholders
in that year if they are paid before February 1 of the following year.
YIELD: For the seven-day period ending June 30, 1996, our Class A share
annualized yield was 4.50% and the compounded effective yield was 4.60%. On that
date our portfolio had a dollar-weighted life to maturity of 49.2 days.
From time to time, the Fund may advertise its "yield" and "effective yield".
Both yield figures are based on historical earnings and are not intended to
indicate future performance. It can be expected that these yields will fluctuate
substantially. The "yield" of the Fund refers to the income generated by an
investment in the Fund over a seven-day period (which period will be stated in
any advertisement). This income is then "annualized". That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the investment.
The "effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment.
<PAGE>
Yield information is useful in reviewing the Fund's performance but, because
yields will fluctuate, such information may not provide a basis for comparison
with domestic bank deposits and other investments which pay a fixed yield for a
stated period of time or other investment companies which may use a different
method of computing yield.
TAXES: We intend to continue to qualify under the Internal Revenue Code as a
regulated investment company. We will try to distribute to shareholders all our
taxable income, so as to avoid the necessity of the Fund paying federal income
tax. Dividends, whether received in cash or reinvested in additional shares,
will generally be treated as ordinary income to shareholders for federal income
tax purposes.
Shareholders may be subject to a $50 penalty under the Internal Revenue Code and
we may be required to withhold and remit to the U.S. Treasury a portion (31%) of
any redemption proceeds (including the value of shares exchanged into another
Lord Abbett-sponsored fund), and of any dividend or distribution on any account,
where the payee (shareholder) failed to provide a correct taxpayer
identification number or to make certain required certifications. For more
details, see the Application Form.
We will inform shareholders of the federal tax status of each dividend and
distribution after the end of each calendar year. Shareholders should consult
their tax advisers concerning applicable state and local taxes as well as the
tax consequences of gains or losses from the redemption or exchange of our
shares.
8 REDEMPTIONS
We will redeem shares at our net asset value next determined after receipt by
the Fund of a redemption request in the form described below. If you redeem all
of your shares, you will receive, in addition to the net asset value thereof,
all declared but unpaid dividends. You may elect to use either the expedited or
regular redemption procedures or to redeem by check. If either the expedited
procedure or checkwriting has been elected, no stock certificates will be
issued. The expedited procedure and checkwriting may not be used to redeem
shares purchased by check until 15 days after acceptance of the order, or, in
the case of checks drawn on banks located outside of the United States, until
the Fund determines that the check has cleared. Redemption requests with payment
to be made by check will be accepted as of 2 P.M. (New York time) on the day of
receipt so that you will receive that day's dividend. Redemption requests with
payment to be made by wire transfer will be effected at the last determined net
asset value and you will not earn the dividend declared on the day shares are
redeemed by wire if such a request is received prior to 12 noon (New York time).
CHECKWRITING. The Fund will provide you, upon request, with forms of checks
drawn on the United Missouri Bank of Kansas City, N.A. (the "Bank"). These
checks may be made payable to any person in any amount of not less than $500 nor
more than $5,000,000. When such a check is presented to the Bank for payment,
the Bank, as your agent, will request the Fund to redeem a sufficient number of
full and fractional shares in your account to cover the amount of the check.
SHARES (FULL AND FRACTIONAL) IN AN ACCOUNT OF DIFFERENT CLASS THAN THOSE IN THE
ACCOUNT ON WHICH THE CHECK IS DRAWN WILL NOT BE REDEEMED TO COVER SUCH CHECK.
You will continue earning daily dividends until the check has cleared. You will
be subject to all applicable Bank rules and regulations including the right of
the Bank not to honor checks in amounts exceeding the value of the account at
the time the check is presented for payment, even though you may have another
account with sufficient value in your name on which the check was not written.
You do not establish a checking or other account with the Bank for the purpose
of FDIC federal deposit insurance or otherwise when you participate in this
checkwriting privilege. The Fund and the Bank each reserves the right to modify
or terminate this service at any time. Checks should not be used to close your
account since your account earns dividends until the check clears, and the
amount in your account, including accrued dividends, may not equal the amount of
the check.
EXPEDITED PROCEDURE. Under the expedited procedure, you should designate on the
Application Form an account at a domestic bank. Thereafter, the redemption
proceeds normally will be transmitted by wire (minimum $1,000) or mailed by
check to the designated account on the next business day following receipt of
the request, except that if a redemption request for wire transfer is received
prior to 12 noon (New York time), the redemption proceeds normally will be wired
that day and shares so redeemed will not earn that day's dividend. The Fund will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine and will employ reasonable procedures to
confirm that instructions received are genuine, including requesting proper
identification and recording all telephone redemptions and mailing the proceeds
only to the named shareholder at the address appearing on the account
registration.
<PAGE>
We reserve the right to increase the minimum that may be wired or to impose a
reasonable charge for this service. You may transmit a redemption request to the
Fund by telephone (call the Fund at 800-821-5129 and ask for "Expedited
Redemptions -- Lord Abbett U.S. Government Securities Money Market Fund") or in
writing. In order to use the expedited procedure, all redemption proceeds must
be paid to the same bank and account as designated on the Application Form. To
change the bank or account you must send a written request to the Fund with
signature(s) guaranteed as described below. REGULAR PROCEDURE. You must submit a
written redemption request to the Fund in proper form. See "Purchases" for a
description of when a redemption request (order) is in proper form. Normally,
payment will be made by check mailed within one business day after receipt of a
redemption request in proper form, although we reserve the right to make such
payment within three business days.
GENERAL. Within three days after acceptance of a redemption request, we make
payment in cash except that payment may be delayed until checks received for
shares purchased have cleared. In addition, we may suspend the right of
redemption or delay payment more than three days during any period when the New
York Stock Exchange is closed (other than customary weekend or holiday closings)
or an emergency exists as determined by the Securities and Exchange Commission
("SEC") so that disposal of our investments or determination of our net asset
value is not reasonably practicable, or for such other periods as the SEC, by
order, may permit for protection of our shareholders.
Under certain circumstances and subject to prior written notice, our Board of
Directors may authorize redemption of all of the shares in any account in which
there are fewer than 500 shares.
9 OUR MANAGEMENT
Our business is managed by our officers on a day-to-day basis under the overall
direction of our Board of Directors with the advice of Lord Abbett. We employ
Lord Abbett as investment manager pursuant to a Management Agreement. Lord
Abbett has been an investment manager for over 65 years and currently manages
over $20 billion in a family of mutual funds and other advisory accounts. Under
the Management Agreement, Lord Abbett provides us with investment management
services and executive and other personnel, pays the remuneration of our
officers and our directors affiliated with Lord Abbett, provides us with office
space and pays for ordinary and necessary office and clerical expenses relating
to research, statistical work and supervision of our portfolio and certain other
costs. Lord Abbett provides similar services to twelve other Lord
Abbett-sponsored funds having various investment objectives and also advises
other investment clients. David Seto, Executive Vice President, serves as
portfolio manager of the Fund and has done so since March 1992. Prior to joining
Lord Abbett, Mr. Seto was a portfolio manager for Lexington Management
Corporation.
Under the Management Agreement, we are obligated to pay Lord Abbett a monthly
fee, based on average daily net assets for each month. For the fiscal year ended
June 30, 1996, the fee paid to Lord Abbett as a percentage of average daily net
assets was at the annual rate of .50 of 1%. Our Class A share ratio of expenses,
including management fee expenses, to average net assets for this fiscal year
was .81%.
10 SHAREHOLDER SERVICES
We offer the following shareholder services:
TELEPHONE EXCHANGE PRVILEGE: Shares of any class may be exchanged, without a
service charge, (a) for shares of the same class of any other Lord
Abbett-sponsored fund except for (i) Lord Abbett Equity Fund ("LAEF"), any
Series of Lord Abbett Research Fund, Inc. not offered to the general public
("LARF") and Lord Abbett Series Fund, Inc. ("LASF") and (ii) certain tax-free
single-state series where the exchanging shareholder is a resident of a state in
which such series is not offered for sale and (b) for shares of any authorized
institution's affiliated money market fund satisfying Lord Abbett Distributor as
to certain omnibus account and other criteria (together, "Eligible Funds").
Class A Shares purchased directly from the Fund may be exchanged for Class A, B
or C shares of an Eligible Fund. Class B and Class C shares, which may not be
purchased directly from the Fund, but may be acquired in exchange for shares of
the same class of any Eligible Fund. You or YOUR REPRESENTATIVE WITH PROPER
IDENTIFICATION can instruct the Fund to exchange uncertificated shares (held by
the transfer agent) by telephone. Shareholders have this privilege unless they
refuse it in writing. The Fund will not be liable for following instructions
communicated by telephone that it reasonably believes to be genuine and will
employ reasonable procedures to confirm that instructions received are genuine,
including requesting proper identification and recording all telephone
exchanges.
<PAGE>
Exchanges for shares of any Eligible Fund will be based on the relative net
asset values of the shares exchanged, without a sales charge in most cases. A
sales charge, however, will be payable on exchanges for shares of any Eligible
Fund in the Lord Abbett Family of Funds in accordance with the prospectus of
that fund if the shares being exchanged are in Class A and were purchased
directly from the Fund (not including shares described under "Div-Move" below).
Instructions must be received by the Fund in Kansas City (800-821-5129) prior to
the close of the NYSE to obtain each fund's net asset value per share on that
day. Expedited exchanges by telephone may be difficult to implement in times of
drastic economic or market change. The exchange privilege should not be used to
take advantage of short-term swings in the market. The Fund reserves the right
to terminate or limit the privilege of any shareholder who makes frequent
exchanges. The Fund can revoke the privilege for all shareholders upon 60 days'
prior written notice. A prospectus for the other Lord Abbett-sponsored fund
selected by you should be obtained and read before an exchange. Exercise of the
Exchange Privilege will be treated as a sale for federal income tax purposes
and, depending on the circumstances, a capital gain or loss may be recognized.
SYSTEMATIC WITHDRAWAL PLAN ("SWP"): Except for Retirement Plans for which there
is no such minimum, if the offering price value of your uncertificated shares is
at least $10,000, you may have periodic cash withdrawals automatically paid to
you in either fixed or variable amounts. With respect to Class B shares, the
CDSC will be waived on redemptions of up to 12% per year of either the current
net asset value of your account or your original purchase price, whichever is
higher. For Class B shares (over 12% per year) and C shares, redemption proceeds
due to a SWP will be derived from the following sources in the order listed: (1)
shares acquired by reinvestment of dividends, (2) shares held for six years or
more (Class B) or one year or more (Class C); and (3) shares held the longest
before the sixth anniversary of their initial purchase (Class B) or before the
first anniversary of their initial purchase (Class C). Shareholders should be
careful in establishing a SWP, especially to the extent that such a withdrawal
exceeds the annual total return for a class, in which case, the shareholder's
original principal will be invaded and, over time, may be depleted.
DIV-MOVE: You can invest the dividends paid on your account ($50 minimum
investment) into an existing account in any other Eligible Fund. The account
must be either your account, a joint account for you and your spouse, a single
account for your spouse, or a custodial account for your minor child under the
age of 21. Such dividends are not subject to a CDSC. You should read the
prospectus of the other fund before investing.
INVEST-A-MATIC: You can make fixed, periodic investments ($50 minimum
investment) into an existing account in any Eligible Fund by means of automatic
money transfers from your bank checking account. You should read the prospectus
of the other fund before investing.
RETIREMENT PLAN: Lord Abbett makes available the retirement plan forms and
custodial agreements for IRAs (Individual Retirement Accounts, including
Simplified Employee Pensions), 403(b) plans and pension and profit-sharing
plans, including 401(k) plans.
HOUSEHOLDING; A single copy of an annual or
semi-annual report will be sent to an address to which more than one registered
shareholder of the Fund with the same last name has indicated mail is to be
delivered, unless additional reports are specifically requested in writing or by
telephone.
All correspondence should be directed to Lord Abbett U.S. Government
Securities Money Market Fund, Inc. (P.O. Box 419100, Kansas City,
Missouri 64141; 800-821-5129).
This Prospectus does not constitute an offering in any jurisdiction in which
such offer is not authorized or in which the person making such offer is not
qualified to do so or to anyone to whom it is unlawful to make such offer.
No person is authorized to give any information or to make any representations
not contained in this Prospectus or in supplemental sales material authorized by
the Fund and no person is entitled to rely upon any information or
representation not contained herein or therein.
<PAGE>
INVESTMENT MANAGER AND DISTRIBUTOR
Lord, Abbett & Co. and Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, New York 10153-0203
212-848-1800
CUSTODIAN, TRANSFER AGENT AND
DISTRIBUTING AGENT
United Missouri Bank of Kansas City, N.A.
Tenth and Grand
Kansas City, Missouri 64141
SHAREHOLDER SERVICING AGENT
DST Systems, Inc.
P.O. Box 419576
Kansas City, Missouri 64141
800-821-5129
AUDITORS
Deloitte & Touche LLP
COUNSEL Debevoise & Plimpton Printed in the U.S.A.
<PAGE>
PROSPECTUS `96
NOVEMBER 1, 1996
Application Inside
LORD ABBETT
U.S. GOPVERNMENT
SECURITIES
MONEY MARKET
FUND
A mutual fund seeking high current income and preservation of capital through
investments in high-quality, short-term liquid securities.
<PAGE>
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 1, 1996
LORD ABBETT
U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND, INC.
This Statement of Additional Information is not a Prospectus. A Prospectus may
be obtained from Lord Abbett Distributor LLC ("Lord Abbett Distributor") at The
General Motors Building, 767 Fifth Avenue, New York, New York 10153-0203. This
Statement relates to, and should be read in conjunction with, the Prospectus
dated November 1, 1996.
Lord Abbett U.S. Government Securities Money Market Fund, Inc. (sometimes
referred to as "we" or the "Fund") has 1,000,000,000 shares of authorized
capital stock consisting of three classes (A, B and C), $.001 par value. The
Board of Directors will allocate these authorized shares of capital stock among
the classes from time to time. Only Class A shares may be purchased directly and
may be acquired in exchange for shares of the same class of another Lord Abbett
sponsored fund. Class B and Class C shares may be acquired only in exchange for
shares of the same class of another Lord Abbett sponsored fund. See "Telephone
Exchange Privilege" for more information. All shares have equal noncumulative
voting rights and equal rights with respect to dividends, assets and
liquidation, except for certain classspecific expenses. They are fully paid and
nonassessable when issued and have no preemptive or conversion rights.
Rule 18f-2 under the Act provides that any matter required to be submitted, by
the provisions of the Act or applicable state law or otherwise, to the holders
of the outstanding voting securities of an investment company such as the Fund
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each class affected by such
matter. Rule 18f-2 further provides that a class shall be deemed to be affected
by a matter unless the interests of each class in the matter are substantially
identical or the matter does not affect any interest of such class. However, the
Rule exempts the selection of independent public accountants, the approval of
principal distributing contracts and the election of directors from its separate
voting requirements.
TABLE OF CONTENTS PAGE
1. Investment Policies 2
2. Yield Calculation 3
3. Directors and Officers 4
4. Investment Advisory and Other Services 6
5. Portfolio Transactions 7
6. Net Asset Value and Dividends 7
7. Telephone Exchange Privilege and Rule 12b-1 Plans 8
8. Class B Share Conversion Feature 9
9. Shareholder Programs and Retirement Plans 10
11. Commercial Paper and Bond Ratings 11
12. Taxes 12
12. Further Information About the Fund 12
13. Financial Statements 14
<PAGE>
1.
INVESTMENT POLICIES
FUNDAMENTAL INVESTMENT RESTRICTIONS
We are subject to the following investment restrictions which cannot be changed
without approval of a majority of our outstanding shares. The Fund may not: (1)
borrow money, except that (i) the Fund may borrow from banks (as defined in the
Investment Company Act of 1940, as amended (the "Act")) in amounts up to 33 1/3%
of its total assets (including the amount borrowed), (ii) the Fund may borrow up
to an additional 5% of its total assets for temporary purposes, (iii) the Fund
may obtain such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities and (iv) the Fund may purchase
securities on margin to the extent permitted by applicable law; (2) pledge its
assets (other than to secure borrowings, or to the extent permitted by the
Fund's investment policies as permitted by applicable law); (3) engage in the
underwriting of securities, except pursuant to a merger or acquisition or to the
extent that, in connection with the disposition of its portfolio securities, it
may be deemed to be an underwriter under federal securities laws; (4) make loans
to other persons, except that the acquisition of bonds, debentures or other
corporate debt securities and investment in government obligations, commercial
paper, pass-through instruments, certificates of deposit, bankers acceptances,
repurchase agreements or any similar instruments shall not be subject to this
limitation, and except further that the Fund may lend its portfolio securities,
provided that the lending of portfolio securities may be made only in accordance
with applicable law; (5) buy or sell real estate, although the Fund may buy
short-term securities secured by real estate or interests therein, or issued by
companies which invest in real estate or interests therein, nor may the Fund buy
or sell commodities or commodity contracts, interests in oil, gas or other
mineral exploration or development programs; (6) with respect to 75% of the
gross assets of the Fund, buy securities of one issuer representing more than 5%
of the Fund's gross assets, except securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; (7) invest more than 25% of its
assets, taken at market value, in the securities of issuers in any particular
industry (excluding U.S. Government securities as described in the Fund's
prospectus); (8) issue senior securities to the extent such issuance would
violate applicable law; or (9) buy common stocks or other voting securities.
With respect to the restrictions mentioned herein, compliance therewith will not
be affected by changes in the market value of portfolio securities but will be
determined at the time of purchase or sale of such securities.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to the investment
restrictions above which cannot be changed without shareholder approval, we also
are subject to the following non-fundamental investment policies which may be
changed by the Board of Directors without shareholder approval. The Fund may
not: (1) borrow in excess of 5% of its gross assets taken at cost or market
value, whichever is lower at the time of borrowing, and then only as a temporary
measure for extraordinary or emergency purposes; (2) make short sales of
securities or maintain a short position except to the extent permitted by
applicable law; (3) invest knowingly more than 15% of its net assets (at the
time of investment) in illiquid securities, except for securities qualifying for
resale under Rule 144A of the Securities Act of 1933, deemed to be liquid by the
Board of Directors; (4) invest in the securities of other investment companies
except as permitted by applicable law; (5) invest in securities of issuers
which, with their predecessors, have a record of less than three years'
continuous operations, if more than 5% of the Fund's total assets would be
invested in such securities (this restriction shall not apply to
mortgaged-backed securities, asset-backed securities or obligations issued or
guaranteed by the U. S. Government, its agencies or instrumentalities); (6) hold
securities of any issuer if more than 1/2 of 1% of the securities of such issuer
are owned beneficially by one or more officers or directors of the Fund or by
one or more partners or members of the Fund's underwriter or investment adviser
if these owners in the aggregate own beneficially more than 5% of the securities
of such issuer; (7) invest in warrants if, at the time of the acquisition, its
investment in warrants, valued at the lower of cost or market, would exceed 5%
of the Fund's total assets (included within such limitation, but not to exceed
2% of the Fund's total assets, are warrants which are not listed on the New York
or American Stock Exchange or a major foreign exchange); (8) write, purchase or
sell puts, calls, straddles, spreads or combinations thereof, except to the
extent permitted in the Fund's prospectus and statement of additional
information, as they may be amended from time to time; or (9) buy from or sell
to any of its officers, directors, employees, or its investment adviser or any
of its officers, directors, partners or employees, any securities other than
shares of the Fund's common stock.
2
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Direct U.S. Government obligations are issued by the U.S. Treasury and include
bills, certificates of indebtedness, notes and bonds. U.S. agency obligations
are issued by agencies established under the authority of an act of Congress
including, but not limited to, the Bank for Cooperatives, Federal Home Loan
Banks and Federal Intermediate Credit Banks.
Certificates of deposit are certificates issued in consideration for funds
deposited in a bank or savings and loan association. They are for a definite
period of time, earn a specified rate of return and are negotiable. Banker's
acceptances are short-term credit instruments primarily used to finance the
import, export, transfer or storage of goods.
They are termed "accepted" when a bank guarantees their payment at maturity.
Variable amount master demand notes are demand obligations that permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to arrangements between the issuer and a commercial bank acting as agent for the
payees of such notes; each party has the right to vary the amount of the
outstanding indebtedness of the notes.
REPURCHASE AGREEMENTS. A repurchase agreement is an instrument under which the
purchaser (i.e., the Fund) acquires the obligation (debt security) and the
seller agrees, at the time of the sale, to repurchase the obligation at a
mutually agreed upon time and repurchase price, thereby determining the yield
during the purchaser's holding period. This results in a fixed rate of return
insulated from market fluctuation during such period. The underlying securities
will consist only of securities in which the Fund may otherwise invest and their
value will be marked to market daily to ensure that such value is at least equal
to the repurchase price (including accrued interest). Repurchase agreements
usually are for short periods. In the event of bankruptcy or other default by
the seller, the Fund would be subject to possible risks such as delays and
expenses in liquidating the underlying securities, decline in value of the
underlying securities and loss of interest. To minimize any such risk, the
creditworthiness of entities with whom we enter into repurchase agreements is
carefully evaluated by our investment manager, Lord Abbett.
2.
YIELD CALCULATION
Each Class calculates its "yield" and "effective yield" based on the number of
days in the period for which the calculation is made ("base period"). Each
Class' "yield" is computed by determining the net change for the base period
(exclusive of capital changes) in the value of a hypothetical preexisting
account having a balance of one share at the start of the base period and
subtracting this value from the value of the account at the end of the base
period and dividing the result by the account's beginning value to come up with
a "base period return" which is then multiplied by 365 over the number of days
in the base period. "Effective yield" is determined by compounding the "base
period return" by adding one, raising the sum to a power equal to 365 divided by
the number of days in the base period and subtracting one from the result. Prior
to July 12, 1996 we had one class of shares which is now divided between Class A
and Class C. An example follows for the seven-day period ended June 30, 1996 of
the calculation of both "yield" and "effective yield" for one Class A share:
Value of hypothetical account with
exactly one share at beginning of
base period $ 1.000000000
Value of same account at end of base
period $ 1.000880495
Net change in account value $ .000880495
3
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Base period return (net change in
account value divided by the
beginning account value) .000880495%
"Yield" [base period return
times (366 divided by 7)] 4.50%
"Effective yield" [(base period
return + 1) 366/7] - 1 4.60%
On June 30, 1996, our portfolio had a dollar-weighted life to maturity of 49.2
days.
Publishing of the annualized yield for a given period provides investors with a
basis for comparing our yield with that of other investment vehicles. However,
yields of other investment vehicles may not always be comparable because of
different methods of calculating yield. In addition, the safety and yield of the
Fund and other money market funds are a function of portfolio quality, portfolio
maturity and operating expenses, while the yields on competing bank accounts are
established by the bank and their principal is generally insured.
Each Class' yield is not fixed. It fluctuates and the annualization of a yield
rate is not a representation by the Class as to what an investment in the Class
will actually yield for any given period. Actual yields will depend not only on
changes in interest rates on money market instruments during the course of the
period in which the investment in the Class is held, but also on such matters as
any realized and unrealized gains and losses, changes in the expenses of the
Class during the period and on the relative amount of new money coming into the
Class which has to be invested at a different yield than that represented by
existing assets.
3.
DIRECTORS AND OFFICERS
The following director is a partner of Lord, Abbett & Co., The General Motors
Building, 767 Fifth Avenue, New York, New York 10153-0203. He has been
associated with Lord Abbett for over five years and is also an officer, director
or trustee of the twelve other Lord Abbett-sponsored funds. He is an "interested
person" as defined in the Act, and as such, may be considered to have an
indirect financial interest in the Rule 12b-1 Plan described in the Prospectus.
Robert S. Dow, age 51, Chairman & President
The following outside directors are also directors or trustees of the twelve
other Lord Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Time Warner Cable
300 First Stamford Place
Stamford, Connecticut
President and Chief Executive Officer of Time Warner Cable Programming, Inc.
Formerly President and Chief Operating Officer of Home Box Office, Inc. Age 55.
Stewart S. Dixon
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive (Suite 2800)
Chicago, Illinois
Partner in the law firm of Wildman, Harrold, Allen & Dixon. Age 65.
4
<PAGE>
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 70.
C. Alan MacDonald
The Marketing Partnership, Inc.
27 Signal Road
Stamford, Connecticut
General Partner, The Marketing Partnership, Inc., a full service marketing
consulting firm. Formerly Chairman and Chief Executive Officer of Lincoln
Snacks, Inc., manufacturer of branded snack foods (1992-1994). Formerly
President and Chief Executive Officer of Nestle Foods Corp, and prior to that,
President and Chief Executive Officer of Stouffer Foods Corp., both subsidiaries
of Nestle SA, Switzerland. Currently serves as Director of Den West Restaurant
Co., J. B. Williams, and Fountainhead Water Company. Age 63.
Hansel B. Millican, Jr.
Rochester Button Company
1100 Noblin Avenue
South Boston, Virginia
President and Chief Executive Officer of Rochester Button Company. Age 68.
Thomas J. Neff
Spencer Stuart & Associates
277 Park Avenue
New York, New York
Chairman of Spencer Stuart U.S., an executive search consulting firm. Age 59.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third and fourth columns set forth information
with respect to the retirement plan for outside directors maintained by the Lord
Abbett-sponsored funds. The fifth column sets forth the total compensation
payable by such funds to the outside directors. No director of the Fund
associated with Lord Abbett and no officer of the Fund received any compensation
from the Fund for acting as a director or officer.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR THE FISCAL YEAR ENDED JUNE 30, 1996
(1) (2) (3) (4) (5)
Pension or Estimated Annual For Year Ended
Retirement Benefits Benefits Upon December 31, 1995
Accrued by the Retirement Proposed Total Compensation
Aggregate Fund and Twelve to be Paid by the Accrued by the Fund and
Compensation Other Lord Fund and Twelve Twelve Other Lord
Accrued by Abbett-sponsored Other Lord Abbett- Abbett-sponsored
NAME OF DIRECTOR THE FUND1 Funds2 Sponsored Funds2 Funds3
- ---------------- --------- ------------------ ------------------ -----------------
E. Thayer Bigelow $476 $9,772 $33,600 $41,700
Stewart S. Dixon $470 $22,472 $33,600 $42,000
John C. Jansing $484 $28,480 $33,600 $42,960
C. Alan MacDonald $482 $27,435 $33,600 $42,750
Hansel B. Millican, Jr. $489 $24,707 $33,600 $43,000
Thomas J. Neff $467 $16,126 $33,600 $42,000
5
<PAGE>
<FN>
1. Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on net
assets of each fund. Fees payable by the Fund to its outside directors are being
deferred under a plan that deems the deferred amounts to be invested in shares
of the Fund for later distribution to the directors. The amounts of the
aggregate compensation payable by the Fund for the fiscal year ended June 30,
1996 deemed invested in Fund shares, including dividends reinvested and changes
in net asset value applicable to such deemed investments, were as follows as of
June 30, 1996: Mr. Bigelow, $982; Mr. Dixon, $21,132; Mr. Jansing, $21,922; Mr.
MacDonald, $9,123; Mr. Millican, $22,269 and Mr. Neff, $22,482.
2. Each Lord Abbett-sponsored fund has a retirement plan providing that outside
directors may receive annual retirement benefits for life equal to 100% of their
final annual retafners following retirement at or after age 72 with at least 10
years of service. Each plan also provides for a reduced benefit upon early
retirement under certain circumstances, a pre-retirement death benefit and
actuarially reduced joint-and-survivor spousal benefits. Such retirement plans,
and the deferred compensation plans referred to in footnote one, have been
amended recently to, among other things, enable outside directors to elect to
convert their prospective benefits under the retirement plans to equity-based
benefits under the deferred compensation plans (to be renamed the equity-based
plans). The amounts accrued in column 3 were accrued by the Lord
Abbett-sponsored funds during the fiscal year ended June 30, 1996 with respect
to the retirement plans. These accruals were based on the retirement plans as in
effect before the recent amendments and on the fees payable to outside directors
during the fiscal year of the Fund ended June 30, 1996. Under the recent
amendments, the annual retirement benefits were increased from 80% to 100% of
the final annual retainers. The amounts stated in column 4 would be payable
annually under the retirement plans as recently amended if the directors were to
retire at age 72 and the annual retainers payable by the funds were the same as
they are today.
3. This column shows aggregate compensation, including director's fees and
attendance fees for board and committee meetings, of a nature referred to in
footnote one, accrued by the Lord Abbett-sponsored funds during the year ended
December 31, 1995.
</FN>
</TABLE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Allen, Brown, Carper, Cutler, Ms. Foster, Messrs. Morris, Noelke, Nordberg and
Walsh are partners of Lord Abbett; the others are employees: David Seto, age 36,
Executive Vice President, Kenneth B. Cutler, age 64, Vice President and
Secretary; Stephen I. Allen, age 43; Zane E. Brown, age 44; Daniel E. Carper,
age 44; Daria L. Foster, age 42; Robert G. Morris, age 51; Robert Noelke, age
39; E. Wayne Nordberg, age 59; Paul A. Hilstad, age 53 (with Lord Abbett since
1995; formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.); Thomas F. Konop, age 54; Victor W. Pizzolato, age
63; John J. Walsh, age 60, Vice Presidents; and Keith O'Connor, age 40, Vice
President and Treasurer
The Fund's By-Laws provide that the Fund shall not hold an annual meeting of its
stockholders in any year unless one or more matters are required to be acted on
by stockholders under the Act, as amended (the "Act"), or unless called by a
majority of the Board of Directors or by stockholders holding at least one
quarter of the stock of the Fund outstanding and entitled to vote at the
meeting. When any such annual meeting is held, the stockholders will elect
directors and vote on the approval of the independent auditors of the Fund.
As of September 30, 1996, our directors and officers, as a group, owned less
than 1% of our outstanding shares.
4.
INVESTMENT ADVISORY AND OTHER SERVICES
As described under "Our Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. The ten general partners of Lord Abbett, all of whom are
officers and/or directors of the Fund, are: Stephen I. Allen, Zane E. Brown,
Daniel E. Carper, Kenneth B. Cutler, Robert S. Dow, Daria L. Foster , Robert G.
Morris, Robert Noelke, E. Wayne Nordberg and John J. Walsh. The address of each
partner is The General Motors Building, 767 Fifth Avenue, New York, New York
10153-0203.
The services performed by Lord Abbett are described under "Our Management" in
the Prospectus. Under the Management Agreement we pay Lord Abbett a monthly fee,
based on average daily net assets for each month, at the annual rate of .5 of 1%
of the portion of our net assets not in excess of $250,000,000, .45 of 1% of
such assets in excess of $250,000,000 but not in excess of $500,000,000 and .4
of 1% of such assets over $500,000,000. This fee is allocated among Classes A, B
and C based on each class' proportionate share of such average daily net assets.
For the fiscal years ended June 30, 1996, 1995 and 1994, the management fees
attributable to the Class A and Class C shares only and paid
6
<PAGE>
to Lord Abbett amounted to $748,926, $775,871 and $595,657, respectively. For
the fiscal year ended June 30, 1994, the management fee would have been
$661,762, had Lord Abbett not waived a portion of its fee for that year. Lord
Abbett did not waive a portion of its fees for the fiscal years ended June 30,
1995 and 1996.
We pay all expenses not expressly assumed by Lord Abbett, including, without
limitation, 12b-1 expenses, outside directors' fees and expenses, association
membership dues, legal and auditing fees, taxes, transfer and dividend
disbursing agent fees, shareholder servicing costs, fees and expenses of
registering our shares under federal and state securities laws, expenses of
preparing, printing and mailing prospectuses to existing shareholders, insurance
premiums, brokerage and other expenses connected with executing portfolio
security transactions expenses.
We have agreed with the State of California to limit operating expenses
(including management fees but excluding taxes, interest, extraordinary expenses
and brokerage commissions) to 2 1/2% of average annual net assets up to
$30,000,000, 2% of the next $70,000,000 of such assets and 1 1/2% of such assets
in excess of $100,000,000. The expense limitation is a condition on the
registration of investment company shares for sale in California and applies so
long as our shares are registered for sale in that State.
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent auditors of the Fund and must be approved at least annually by
our Board of Directors to continue in such capacity. They perform audit services
for the Fund including the examination of financial statements included in our
annual report to shareholders.
United Missouri Bank of Kansas City, N.A., Tenth and Grand, Kansas City,
Missouri, is the Fund's custodian. The custodian pays for and collects proceeds
of securities bought and sold by the Fund and attends to the collection of
principal and income.
5.
PORTFOLIO TRANSACTIONS
We expect that purchases and sales of portfolio securities usually will be
principal transactions. Portfolio securities normally will be purchased directly
from the issuer or from an underwriter or market maker for the securities. We
usually will pay no brokerage commissions for such purchases and no brokerage
commissions have been paid over the last three fiscal years. Purchases from
underwriters of portfolio securities will include a commission or concession
paid by the issuer to the underwriter and purchases from dealers serving as
market makers will include a dealer's markup. Decisions as to the purchase and
sale of portfolio securities are made by Lord Abbett. Our traders, who are
officers of the Fund and also employees of Lord Abbett, implement these
decisions. They do the trading as well for other accounts- -investment companies
(of which they are also officers) and other clients--managed by Lord Abbett.
They are responsible for the negotiation of prices and commissions.
Our policy is to have purchases and sales of portfolio securities executed at
the most favorable prices, considering all costs of the transaction, including
brokerage commissions and dealer markups and markdowns, consistent with
obtaining best execution. This policy governs the selection of dealers. We make
no commitments regarding the allocation of brokerage business to or among
broker-dealers.
6.
NET ASSET VALUE AND DIVIDENDS
NET ASSET VALUE. The determination of our net asset value is described under
"Net Asset Value" in the Prospectus.
As disclosed in the Prospectus, we calculate our net asset value, declare
dividends and otherwise are open for business on each day that the New York
Stock Exchange (the "NYSE") is open for trading. The NYSE is closed on Saturdays
and Sundays and the following holidays: New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
7
<PAGE>
We attempt to maintain a net asset value of $1.00 per share for all classes for
purposes of sales and redemptions but there is no assurance that we shall be
able to do so. Although we have received an exemptive order from the Securities
and Exchange Commission which permits us to round our net asset value per share
to the nearest cent for such purpose, our Board of Directors has determined that
it is in the best interests of the Fund and its shareholders to value our
portfolio securities under the amortized cost method of securities valuation
pursuant to Rule 2a-7 under the Act so long as that method fairly reflects the
Fund's market-based net asset value. Rule 2a-7, as amended, contains certain
maturity, diversification and quality requirements that apply to any fund
employing the amortized cost method in reliance on the Rule and to any
registered investment company which, like the Fund, holds itself out as a money
market fund. (See Prospectus - "How We Invest - Rule 2a-7".)
DIVIDENDS. As described in the Prospectus under "Dividends, Yield and Taxes,"
our net income will be declared as a dividend daily. Net income consists of (1)
all interest income and discount earned (including original issue discount and
market discount) less (2) a provision for all expenses, including class-specific
expenses, plus or minus (3) all short-term realized gains and losses on
portfolio assets.
7.
TELEPHONE EXCHANGE PRIVILEGE AND
RULE 12B-1 PLANS
TELEPHONE EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for those in
the same class of (a) any other Lord Abbett-sponsored fund except for (i) Lord
Abbett Equity Fund ("LAEF"), Lord Abbett Series Fund ("LASF") and any series of
Lord Abbett Research Fund not offered to the general public ("LARF") and (ii)
certain single-state tax-free series and funds where the exchanging shareholder
is a resident of a state in which such series or fund is not offered for sale,
and (b) any authorized institution's affiliated money market fund satisfying
Lord Abbett Distributor as to certain omnibus account and other criteria,
hereinafter referred to as an "authorized money market fund" or "AMMF". Class B
and Class C shares of the Fund may be acquired only by exchange for shares in
the same class of any eligible Lord Abbett-sponsored fund or AMMF.
You or your representative with proper identification can instruct the Fund to
exchange by telephone. All shareholders have this privilege unless they refuse
it in writing. Exchanges for shares in the same class of any eligible Lord
Abbett- sponsored fund or AMMF will be based on the relative net asset values of
the shares exchanged, without a sales charge in most cases. Only Class A shares
may be purchased directly from the Fund or acquired by exchange. In addition,
Class A shares purchased directly from the fund may be exchanged for Class A, B
or C shares of an eligible Lord Abbett-sponsored fund. Therefore, a sales charge
will be payable on exchanges for shares of any eligible fund in the Lord Abbett
Family of Funds in accordance with the prospectus of that fund if the Class A
shares being exchanged were purchased directly from the Fund (not including
shares described under "Div-Move" below). Instructions for the exchange must be
received by the Fund in Kansas City prior to the close of the NYSE to obtain the
other fund's net asset value per share calculated on that day. Securities
dealers may charge for their services in expediting exchange transactions.
Before making an exchange you should read the prospectus of the other fund which
is available from your securities dealer or Lord Abbett Distributor. An
"exchange" is effected through the redemption of Fund shares and the purchase of
shares of such other Lord Abbett-sponsored fund or AMMF. Exercise of the
exchange privilege will be treated as a sale for federal income tax purposes,
and, depending on the circumstances, a capital gain or loss may be recognized.
This privilege may be modified or terminated at any time.
You should not view the exchange privilege as a means for taking advantage of
short-term swings in the market and the Fund reserves the right to terminate or
limit the privilege of any shareholder who makes frequent exchanges.
RULE 12B-1 PLANS. The Fund is not making payments of Rule 12b-1 fees for its
Class A share Rule 12b-1 Plan ("A Plan") and its Class C share Rule 12b-1 Plan
("C Plan"). The Fund is making annual distribution fee payments (0.75 of 1% of
the average daily net asset value of the Class B shares that are outstanding for
less than 8 years) pursuant to its Class B share Rule 12b-1 Plan ("B Plan"). As
described in the Fund's current Prospectus, the Fund has adopted a Distribution
Plan and Agreement pursuant to Rule 12b-1 under the Act for each Class. In
adopting each Plan and in
8
<PAGE>
approving its continuance, the Board of Directors has concluded that based on
information requested by the Board and provided by Lord Abbett, there is a
reasonable likelihood that each Plan will benefit the Class and its
shareholders. The expected benefits include (in the case of the Class B Plan)
greater sales and lower redemptions of Class B shares and (in the case of the
Class A and C Plan) a higher quality of service to shareholders by dealers than
otherwise would be the case. Lord Abbett is to use all amounts received under
each Plan for payments to dealers for (i) providing continuous services to each
Class' shareholders (in the case of the A and C Plans), such as answering
shareholder inquiries, maintaining records, and assisting shareholders in making
redemptions, transfers, additional purchases and exchanges and (ii) their
assistance in distributing Class B shares (in the case of the B Plan).
Each Plan requires the Board of Directors to review, on a quarterly basis,
written reports of all amounts expended pursuant to the Plan and the purposes
for which such expenditures were made. Each Plan shall continue in effect only
if its continuance is specifically approved at least annually by vote of the
Board of Directors and of the Fund's directors who are not interested persons of
the Fund and who have no direct or indirect financial interest in the operation
of the Plan or in any agreements related to the Plan ("outside directors"), cast
in person at a meeting called for the purpose of voting on such Plan. Each Plan
may not be amended to increase materially the amount spent for distribution
expenses without approval by a majority of the Fund's directors, including a
majority of the outside directors. Each Plan may be terminated at any time by
vote of a majority of the Fund's outside directors or by vote of the holders of
a majority of the appropriate Class' outstanding voting securities.
As stated in the Prospectus, a contingent deferred sales charge ("CDSC") is
imposed with respect to those shares of the Fund bought in exchange for shares
of another Lord Abbett-sponsored fund or series on which the other fund has paid
a 12b-1 fee if such shares are redeemed out of the Fund (a) within a period of
24 months from the end of the month in which the original sale occurred in the
case of Class A shares acquired in exchange for shares in the same class of a
fund in the Lord Abbett Family of Funds or (b) within 6 years of their original
purchase in the case of Class B shares, or (c) within a period of 12 months from
the end of the month in which the original sale occurred in the case of Class C
shares.
As described in the Prospectus, in no event will the amount of the CDSC exceed
1% in the case of Class A and C shares or 5% scaled down to 1%, in the case of
Class B shares, of the lesser of (i) the net asset value of the shares redeemed
or (ii) the original cost of the shares for which such shares were exchanged
("Exchanged Shares"). No CDSC will be imposed when the investor redeems (i)
amounts derived from increases in the value of the account above the total cost
of shares being redeemed due to increases in net asset value, (ii) shares with
respect to which no Lord Abbett fund paid a 12b-1 fee (including shares acquired
through reinvestment of dividend income and capital gains distributions) or
(iii) shares which, together with Exchanged Shares, have been held continuously
(a) for 24 months from the end of the month in which the original sale occurred
in the case of Class A shares, (b) until the 6th anniversary of their original
purchase in the case of Class B shares and (c) until the 1st anniversary of
their original purchase in the case of Class C shares. In determining whether a
CDSC is payable, (a) shares not subject to the CDSC will be redeemed before
shares subject to the CDSC and (b) of shares subject to a CDSC, those held the
longest will be the first to be redeemed.
8.
CLASS B SHARE CONVERSION FEATURE
The conversion of Class B shares on the eight anniversary of their purchase is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an option of counsel or tax advisor, to the effect
that the conversion of Class B shares does not constitute a taxable event for
the holder under Federal income tax law. If such revenue ruling or opinion is no
longer available, the automatic conversion feature may be suspended, in which
event no further conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged for Class A
shares on the basis of relative net asset value of the two classes, without the
imposition of a sales charge or fee, such exchange could constitute a taxable
event for the holder.
9
<PAGE>
9.
SHAREHOLDER PROGRAMS AND RETIREMENT PLANS
We have several programs available. These include automatic subsequent
investments of $50 or more from your checking account, a systematic withdrawal
plan, cash payments of monthly dividends to a designated third party and
expedited exchanges among the Lord Abbett-sponsored funds. Forms are available
from the Fund or Lord Abbett.
DIV-MOVE. Under the Div-Move service described in the Prospectus, you can invest
the dividends paid on your account into an existing account in any other
Eligible Fund. The account must be either your account, a joint account for you
and your spouse, a single account for your spouse, or a custodial account for
your minor child under the age of 21. You should read the prospectus of the
other fund before investing.
INVEST-A-MATIC. The Invest-A-Matic method of investing in the Fund and/or any
other Eligible Fund is described in the Prospectus. To avail yourself of this
method you must complete the application form, selecting the time and amount of
your bank checking account withdrawals and the funds for investment, include a
voided, unsigned check and complete the bank authorization.
SYSTEMATIC WITHDRAWAL PLAN. The Systematic Withdrawal Plan (the "SWP") also is
described in the Prospectus. You may establish a SWP if you own or purchase
uncertificated shares having a current offering price value of at least $10,000.
Lord Abbett prototype retirement plans have no such minimum. The SWP involves
the planned redemption of shares on a periodic basis by receiving either fixed
or variable amounts at periodic intervals. With respect to Class B shares, the
CDSC will be waived on redemptions of up to 12% per year of either the current
net asset value of your account or your original purchase price, whichever is
higher. Since the value of shares redeemed may be more or less than their cost,
gain or loss may be recognized for income tax purposes on each periodic payment.
RETIREMENT PLANS. The Prospectus indicates the types of retirement plans for
which Lord Abbett provides forms and explanations. Lord Abbett makes available
the retirement plan forms and custodial agreements for IRAs (Individual
Retirement Accounts including Simplified Employee Pensions), 403(b) plans and
qualified pension and profit-sharing plans, including 401(k) plans. The forms
name Investors Fiduciary Trust Company as custodian and contain specific
information about the plans. Explanations of the eligibility requirements,
annual custodial fees and allowable tax advantages and penalties are set forth
in the relevant plan documents. Adoption of any of these plans should be on the
advice of your legal counsel or qualified tax adviser.
REDEMPTIONS. A redemption order is in proper form when it contains all of the
information and documentation required by the order form or supplementally by
Lord Abbett Distributor or the Fund to carry out the order. The signature(s) and
any legal capacity of the signer(s) must be guaranteed by an eligible guarantor.
See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be
suspended if the NYSE is closed (except for weekends or customary holidays),
trading on the NYSE is restricted or the Securities and Exchange Commission
deems an emergency to exist.
Our Board of Directors may authorize redemption of all of the shares in any
account in which there are fewer than 500 shares. Before authorizing such
redemption, the Board must determine that it is in our economic best interest or
necessary to reduce disproportionately burdensome expenses in servicing
shareholder accounts. At least 60 days' prior written notice will be given
before any such redemption, during which time shareholders may avoid redemption
by bringing their accounts up to the minimum set by the Board.
10
<PAGE>
10.
COMMERCIAL PAPER AND BOND RATINGS
COMMERCIAL PAPER RATINGS
The rating A-1+ is the highest commercial paper rating assigned by Standard &
Poor's Corporation ("S&P"). Paper rated A-1 has the following characteristics:
Liquidity ratio is adequate to meet cash requirements; long-term senior debt is
rated A or better; the issuer has access to diverse channels of borrowing; core
earnings and cash flow have an upward trend with allowance made for unusual
circumstances; typically, the issuer's industry is well established and the
issuer has a strong position within the industry; the reliability and quality of
management are sound. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus (+) sign designation.
The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Service, Inc. ("Moody's"). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of parent company
and the relationships which exist with the issuer; and (8) recognition by the
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations.
BOND RATINGS
Moody's Investors Service, Inc.'s Corporate Bond Ratings
Aaa - Bonds which are rated Aaa are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds which are rated Aa are judged to be of high-quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium- grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
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B - Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.
Caa - Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds that are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds that are rated C are the lowest-rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Standard & Poor's Corporation's Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong and in the majority of instances they
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB-B-CCC-CC-C - Debt rated BB, B, CCC, CC and C is regarded as having
predominately speculative characteristics with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of
speculation and "CCC" the highest. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
D - Debt rated "D" is in payment default. The "D" rating
category is used when interest payments or principal payments are not made on
the date due even if the applicable grace period has not expired, unless S&P
believes such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
11.
TAXES
The Fund will be subject to a 4% nondeductible excise tax on certain amounts not
distributed (and not treated as having been distributed) on a timely basis in
accordance with a calendar year distribution requirement. The Fund intends to
distribute to shareholders each year an amount adequate to avoid the imposition
of such excise tax.
Dividends paid by the Fund will not qualify for the dividends-received deduction
for corporations.
12.
FURTHER INFORMATION ABOUT THE FUND
The directors, trustees and officers of Lord Abbett-sponsored mutual funds,
together with the partners and employees of Lord Abbett, are permitted to
purchase and sell securities for their personal investment accounts. In engaging
in
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personal securities transactions, however, such persons are subject to
requirements and restrictions contained in the Fund's Code of Ethics which
complies, in substance, with each of the recommendations of the Investment
Company Institute's Advisory Group on Personal Investing. Among other things,
the Code requires that Lord Abbett partners and employees obtain advance
approval before buying or selling securities, submit confirmations and quarterly
transaction reports, and obtain approval before becoming a director of any
company; and it prohibits such persons from investing in a security 7 days
before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account
considers a trade or trades in such security, from profiting on trades of the
same security within 60 days and from trading on material and non-public
information. The Code imposes certain similar requirements and restrictions on
the independent directors and trustees of each Lord Abbett-sponsored mutual fund
to the extent contemplated by the recommendations of the Advisory Group.
13
<PAGE>
13.
FINANCIAL STATEMENTS
The Class A share financial statements for the fiscal year ended June 30, 1996
and the report of Deloitte & Touche LLP, independent auditors, on such financial
statements contained in the 1996 Annual Report to Shareholders of Lord Abbett
U.S. Government Securities Money Market Fund, Inc. are incorporated herein by
reference to such financial statements and report in reliance upon the authority
of Deloitte & Touche LLP as experts in auditing and accounting.
14
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PART C OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Part A -Financial Highlights for the ten years ended
June 30, 1996
Part B - Statement of Net Assets at November 30, 1995
Statement of Operations for the year ended
June 30, 1996
Statements of Changes in Net Assets for the years
ended June 30, 1996 and 1995
Financial Highlights for the five years ended
June 30, 1996
EXHIBITS
(b) 11 Consent of Deloitte & Touche*
16 Compulation of Yield*
27 Financial Data Schedule*
* Filed herewith.
If an exhibit is not mentioned above, it is not applicable
or has been previously filed.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 26. NUMBER OF RECORD HOLDERS OF SECURITIES
At October 1, 1996 - 9,872
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Item 27. INDEMNIFICATION
Registrant is incorporated under the laws of the State of
Maryland and is subject to Section 2-418 of the Corporations
and Associations Article of the Annotated Code of the State of
Maryland controlling the indemnification of directors and
officers. Since Registrant has its executive offices in the
State of New York, and is qualified as a foreign corporation
doing business in such State, the persons covered by the
foregoing statute may also be entitled to and subject to the
limitations of the indemnification provisions of Section
721-726 of the New York Business Corporation Law.
The general effect of these statutes is to protect officers,
directors and employees of Registrant against legal liability
and expenses incurred by reason of their positions with the
Registrant. The statutes provide for indemnification for
liability for proceedings not brought on behalf of the
corporation and for those brought on behalf of the
corporation, and in each case place conditions under which
indemnification will be permitted, including requirements that
the officer, director or employee acted in good faith. Under
certain conditions, payment of expenses in advance of final
disposition may be permitted. The By-Laws of Registrant,
without limiting the authority of Registrant to indemnify any
of its officers, employees or agents to the extent consistent
with applicable law, makes the indemnification of its
directors mandatory subject only to the conditions and
limitations imposed by the above-mentioned Section 2-418 of
Maryland Law and by the provisions of Section 17(h) of the
Investment Company Act of 1940 as interpreted and required to
be implemented by SEC Release No. IC-11330 of September 4,
1980.
In referring in its By-Laws to, and making indemnification of
directors subject to the conditions and limitations of, both
Section 2-418 of the Maryland Law and Section 17(h) of the
Investment Company Act of 1940, Registrant intends that con
ditions and limitations on the extent of the indemnification
of directors imposed by the provisions of either Section 2-418
or Section 17(h) shall apply and that any inconsistency
between the two will be resolved by applying the provisions of
said Section 17(h) if the condition or limitation imposed by
Section 17(h) is the more stringent. In referring in its
By-Laws to SEC Release No. IC-11330 as the source for
interpretation and implementation of said Section 17(h),
Registrant understands that it would be required under its
By-Laws to use reasonable and fair means in determining
whether indemnification of a director should be made and
undertakes to use either (1) a final decision on the merits by
a court or other body before whom the proceeding was brought
that the person to be indemnified ("indemnitee") was not
liable to Registrant or to its security holders by reason of
willful malfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office
("disabling conduct") or (2) in the absence of such a
decision, a reasonable determination, based upon a review of
the facts, that the indemnitee was not liable by reason of
such disabling conduct, by
2
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(a) the vote of a majority of a quorum of directors who are
neither "interested persons" (as defined in the 1940 Act) of
Registrant nor parties to the proceeding, or (b) an
independent legal counsel in a written opinion. Also,
Registrant will make advances of attorneys' fees or other
expenses incurred by a director in his defense only if (in
addition to his undertaking to repay the advance if he is not
ultimately entitled to indemnification) (1) the indemnitee
provides a security for his undertaking, (2) Registrant shall
be insured against losses arising by reason of any lawful
advances, or (3) a majority of a quorum of the non-interested,
non-party directors of Registrant, or an independent legal
counsel in a written opinion, shall determine, based on a
review of readily available facts, that there is reason to
believe that the indemnitee ultimately will be found entitled
to indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expense incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue. In addition,
Registrant maintains a directors' and officers' errors and
omissions liability insurance policy protecting directors and
officers against liability for breach of duty, negligent act,
error or omission committed in their capacity as directors or
officers. The policy contains certain exclusions, among which
is exclusion from coverage for active or deliberate dishonest
or fraudulent acts and exclusion for fines or penalties
imposed by law or other matters deemed uninsurable.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Lord, Abbett & Co. acts as investment advisor for twelve other
open-end investment companies (of which it is principal
underwriter for thirteen), and as investment adviser to
approximately 5,100 private accounts. Other than acting as
directors and/or officers of open-end investment companies
managed by Lord, Abbett & Co., none of Lord, Abbett & Co.'s
partners has, in the past two fiscal years, engaged in any
other business, profession, vocation or employment of a
substantial nature for his own account or in the capacity of
director, officer, employee, partner or trustee of any entity
except as follows:
3
<PAGE>
John J. Walsh
Trustee
The Brooklyn Hospital Center
100 Parkside Avenue
Brooklyn, N.Y.
Item 29. PRINCIPAL UNDERWRITER
(a) Lord Abbett Affiliated Fund, Inc.
Lord Abbett Bond-Debenture Fund, Inc.
Lord Abbett Mid-Cap Value Fund, Inc.
Lord Abbett Developing Growth Fund, Inc.
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett Global Fund, Inc.
Lord Abbett Series Fund, Inc.
Lord Abbett Equity Fund, Inc.
Lord Abbett Tax-Free Income Trust
Lord Abbett Securities Trust
Lord Abbett Investment Trust
Lord Abbett Research Fund, Inc.
INVESTMENT ADVISER
American Skandia Trust (Lord Abbett Growth and Income Portfolio)
4
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(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices
BUSINESS ADDRESS (1) WITH REGISTRANT
Robert S. Dow Chairman and President
Kenneth B. Cutler Vice President & Secretary
Stephen I. Allen Vice President
Zane E. Brown Vice President
Daniel E. Carper Vice President
Daria L. Foster Vice President
Robert Noel Vice President
E. Wayne Nordberg Vice President
John J. Walsh Vice President
(1) Each of the above has a principal business address
767 Fifth Avenue, New York, NY 10153
(c) Not applicable
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Registrant maintains the records, required by Rules 31a - 1(a)
and (b), and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules
31a - 1(f) and 31a - 2(e) at its main office.
Certain records such as canceled stock certificates and
correspondence may be physically maintained at the main office
of the Registrant's Transfer Agent, Custodian, or Shareholder
Servicing Agent within the requirements of Rule 31a-3.
Item 31. MANAGEMENT SERVICES
None
Item 32. UNDERTAKINGS
The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
The registrant undertakes, if requested to do so by the holders
of at least 10% of the registrant's outstanding shares, to call
a meeting of shareholders for the purpose of voting upon the
question of removal of a director or directors and to assist in
communications with other shareholders with other shareholders
as required by Section 16(c).
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement
and/or any amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on the
31st day of October, 1996
LORD ABBETT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND, INC.
By /s/ Robert S. Dow
Robert S. Dow,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
/s/ Robert S. Dow Chairman, President
and Director
Robert S. Dow (Title) 10/31/96
/s/ E. Thayer Bigelow Director
E. Thayer Bigelow (Title) 10/31/96
/s/ Stewart S. Dixon Director
Stewart S. Dixon (Title) 10/31/96
/s/ John C. Jansing Director
John C. Jansing (Title) 10/31/96
/s/ C. Alan MacDonald Director
C. Alan MacDonald (Title) 10/31/96
/s/ Hansel B. Millican, Jr. Director
Hansel B. Millican, Jr. (Title) 10/31/96
/s/ Thomas J. Neff Director
Thomas J. Neff (Title)
CONSENT OF INDEPENDENT AUDITORS
Lord Abbett U.S. Government Securities Money Market Fund, Inc.:
We consent to the incorporation by reference in Post-Effective Amendment No.20
to Registration Statement No. 2-64536 of our report dated July 29,1996 appearing
in the annual report to shareholders and to the reference to us under the
caption "Financial Highlights" in the Prospectus and to the references to us
under the headings of "Investment Advisory and Other Services" and "Financial
Statements" in the Statement of Additional Information, both of which are part
of such Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
October 28, 1996
EXHIBIT 16
YIELD CALCULATION
We calculate our "yield" and "effective yield" based on the number of days in
the period for which the calculation is made ("base period"). Our "yield" is
computed by determining the net change for the base period (exclusive of capital
charges) in the value of a hypothetical preexisting account having a balance of
one share at the start of the base period by subtracting this value from the
value of the account at the end of the base period and dividing the result by
the account's beginning value to come up with a "base period return" which is
then multiplied by 365 over the number of days in the base period. "Effective
yield" is determined by compounding the "base period return" by adding one,
raising the sum to a power equal to 365 divided by the number of days in the
base period and subtracting one from the result. An example follows for the
seven-day period ended June 30, 1996 of the calculation of both "yield" and
"effective yield":
Value of hypothetical account with
exactly one share at beginning of
base period $1.000000000
- --------------------------------------------------------------------------------
Value of same account at end of base
period $ 1.000880495
Net change in account value $ .000880495
Base period return (net change in
account value divided by the
beginning account val .000880495%
- --------------------------------------------------------------------------------
"Yield" [base period return
times (366 divided by 7)] 4.50%
- --------------------------------------------------------------------------------
"Effective yield" [(base period
return + 1) 366/7] - 1 4.60%
On June 30, 1996, our portfolio had a dollar-weighted life to maturity of 49.2
days.
