Lord Abbett U.S. Government
Securities
Money Market Fund
1996 ANNUAL REPORT
[Graphic of historic U.S. currency]
A fund designed to help you
with your current income needs
and preserve your capital
[LOGO]
<PAGE>
Report to Shareholders
For the Fiscal Year Ended June 30, 1996
[PHOTO]
/s/ Robert S. Dow
Robert S. Dow
Chairman
July 12, 1996
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We would like to
thank all share-
holders who voted
their proxy ballots.
We are pleased
to announce that,
on June 19, 1996,
shareholders ap-
proved all the
proposals recom-
mended by your
Board of Directors.
- ----------
Lord Abbett U.S. Government Securities Money Market Fund completed its fiscal
year on June 30, 1996 with net assets of $152.5 million and an average
annualized seven-day yield of 4.50%.
The first half of the Fund's fiscal year was characterized by modest economic
growth and low inflation, which enabled the Federal Reserve to reduce short-term
interest rates in three, one-quarter point increments. Encouraged by this, many
investors thought additional reductions in interest rates would be forthcoming.
However, by February, economic growth began to pick up; it became evident that
there would be no near-term action by the Federal Reserve. Investor
disappointment gave way to concern that faster growth and higher inflation would
cause the Federal Reserve to raise rates. In response, long-term bond rates rose
sharply in March and April. The yield on the 30-year Treasury bond, which
yielded 6.6% one year ago, rose as high as 7.2% before ending the period near
6.9%.
Economic growth, while stronger than many investors expected, is unlikely to
trigger much inflation. We forecast that the U.S. economy will grow at a rate
averaging about 2 1/4% in 1996, with inflation remaining close to 3%. The rise
in the 30-year U.S. Treasury bond rate to 6.9% resulted from concern that the
Federal Reserve may be forced to raise short-term interest rates. We recognize
this possibility, particularly if the economy does not slow down in the next
month or two. Such action would keep bond rates near current levels. However, as
the economy slows later this year and in early 1997, the 30-year bond rate is
likely to fall towards a range of 6 1/2%-6 1/4%.
Based on our long-term outlook for declining interest rates, we continued to
invest in the highest yielding issues with low credit risk and low volatility;
in particular, agency discount notes. Since the beginning of the year, the Fund
increased its average maturity. As always, the Fund emphasizes conservative
investments to achieve high current income and preservation of capital.
Lord Abbett U.S. Government Securities Money Market Fund seeks to provide
investors with income and relative safety of principal in all interest-rate
environments. Shareholders of the Fund also are offered checkwriting privileges
and have the flexibility to exchange Fund shares for other Lord Abbett-managed
funds, should their investment goals change.
We regret to inform you that Ronald P. Lynch, Chairman of your Fund, passed away
on June 27, 1996. Mr. Lynch had been with the Firm since 1965. He will be sorely
missed. The Board of Directors has elected Robert S. Dow as the new Chairman of
your Fund.
We are pleased the Fund is a part of your portfolio and we look forward to
providing you with a relatively secure place for cash reserves.
<PAGE>
<TABLE>
Statement of Net Assets June 30, 1996
<CAPTION>
Principal Market Value
Security Rating Amount (Note 1a)
<S> <C> <C> <C> <C>
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INVESTMENTS IN SECURITIES 100.92%
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U.S. Government and Federal Farm Credit Banks
Agency Obligations 5.20% due 7/1/1996 A1+ $ 5,000M $ 5,000,000
5.16% due 9/26/1996 A1+ 2,160M 2,133,065
Total 7,133,065
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Federal Home Loan Banks
5.24% due 7/3/1996 A1+ 2,400M 2,399,302
5.21% due 10/16/1996 A1+ 3,000M 2,953,544
Total 5,352,846
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Federal Home Loan Mortgage Corporation
5.25% due 7/2/1996 A1+ 3,000M 2,999,564
5.25% due 7/3/1996 A1+ 3,000M 2,999,125
5.27% due 7/5/1996 A1+ 3,900M 3,897,717
5.27% due 7/8/1996 A1+ 1,325M 1,323,643
5.27% due 7/10/1996 A1+ 1,079M 1,077,579
5.28% due 7/15/1996 A1+ 4,535M 4,525,688
5.27% due 7/17/1996 A1+ 1,635M 1,631,170
5.27% due 7/22/1996 A1+ 2,875M 2,866,163
5.27% due 7/31/1996 A1+ 5,000M 4,978,043
5.225% due 8/5/1996 A1+ 10,000M 9,949,202
5.30% due 8/12/1996 A1+ 5,000M 4,969,083
5.22% due 8/15/1996 A1+ 4,000M 3,973,900
5.26% due 9/3/1996 A1+ 5,000M 4,953,244
5.265% due 9/6/1996 A1+ 5,000M 4,951,007
5.32% due 9/11/1996 A1+ 5,000M 4,946,800
5.335% due 9/19/1996 A1+ 3,600M 3,557,320
Total 63,599,248
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Federal National Mortgage Association
5.21% due 7/12/1996 A1+ 3,500M 3,494,428
5.19% due 7/18/1996 A1+ 3,000M 2,992,648
5.27% due 7/25/1996 A1+ 4,000M 3,985,948
5.27% due 7/26/1996 A1+ 4,000M 3,985,361
5.25% due 8/6/1996 A1+ 3,500M 3,481,625
5.15% due 8/22/1996 A1+ 2,000M 1,985,122
5.21% due 8/29/1996 A1+ 3,500M 3,470,115
5.26% due 9/5/1996 A1+ 5,000M 4,951,784
5.345% due 9/10/1996 A1+ 4,000M 3,957,834
5.265% due 9/12/1996 A1+ 7,000M 6,925,267
5.32% due 9/12/1996 A1+ 5,000M 4,946,061
5.345% due 9/13/1996 A1+ 10,000M 9,890,130
5.33% due 9/18/1996 A1+ 3,900M 3,854,384
5.32% due 9/26/1996 A1+ 5,000M 4,935,717
5.31% due 10/18/1996 A1+ 5,000M 5,000,000
Total 67,856,424
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Student Loan Marketing Association
5.30% due 12/12/1996 A1+ 10,000M 9,999,296
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Total U.S. Government and Agency Obligations* 153,940,879
------------
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OTHER ASSETS, LESS LIABILITIES (.92)% (1,410,072)
------------
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Net Assets (equivalent to $1.00 a share on 152,530,807 shares of $.001 par value capital
100.00% stock outstanding; authorized, 1,000,000,000 shares) $152,530,807
------------
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+Ratings have not been audited by Deloitte & Touche LLP. Floating Rate Note.
*Cost for federal income tax purposes is $153,940,879.
Average Maturity of Investments: 49 days.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations For the Year Ended June 30, 1996
<S> <C> <C>
Investment Income
====================================================================================================================================
Income Interest $8,297,473
- ------------------------------------------------------------------------------------------------------- ---------- -----------
Expenses Management fee (Note 2) $748,926
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Shareholder servicing 315,000
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Audit and legal 42,700
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Reports to shareholders 37,500
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Registration 35,100
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Other 31,357
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Total expenses 1,210,583
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Net investment income $7,086,890
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</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended June 30,
Increase (Decrease) in Net Assets 1996 1995
====================================================================================================================================
<S> <C> <C>
Operations Net investment income (declared as dividends to shareholders)* $ 7,086,890 $ 7,038,929
=================================================================================== ============== ==============
Capital share transactions (dollar amounts and number of shares are the same)
------------------------------------------------------------------ -------------- --------------
Proceeds from shares sold 195,939,486 183,892,809
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Net asset value of shares issued to shareholders in reinvestment
of net investment income 6,646,051 6,186,410
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Total 202,585,537 190,079,219
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Cost of shares reacquired (190,697,177) (205,505,736)
- ----------------------------------------------------------------------------------- -------------- --------------
Increase (decrease) in net assets 11,888,360 (15,426,517)
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Net Assets
====================================================================================================================================
Beginning of year 140,642,447 156,068,964
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End of year $ 152,530,807 $ 140,642,447
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</TABLE>
* See Financial Highlights for per-share data.
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Year Ended June 30,
Per Share Operating Performance: 1996 1995 1994 1993 1992
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------------------------------------- -------------- -------------- -------------- -------------- --------------
Income from investment operations
-------------------------------------------- -------------- -------------- -------------- -------------- --------------
Net investment income 0.048 0.046 0.025+ 0.024+ 0.038+
-------------------------------------------- ============== ============== ============== ============== ==============
Distributions
-------------------------------------------- -------------- -------------- -------------- -------------- --------------
Dividends from net investment income (0.048) (0.046) (0.025) (0.024) (0.038)
- ---------------------------------------------------- -------------- -------------- ------------- --------------- --------------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------- ============== ============== ============= =============== ==============
Total Return 4.85% 4.65% 2.54% 2.43% 3.87%
==================================================== ==============================================================================
Ratios/Supplemental Data:
==================================================== ==============================================================================
Net assets, end of year (000) $ 152,531 $ 140,642 $ 156,069 $ 122,782 $ 147,229
-------------------------------------------- -------------- -------------- -------------- -------------- --------------
Ratios to Average Net Assets:
-------------------------------------------- -------------- -------------- -------------- -------------- --------------
Expenses, including waiver 0.81% 0.86% 0.85% 0.87% 1.01%
-------------------------------------------- -------------- -------------- -------------- -------------- --------------
Expenses, excluding waiver 0.81% 0.86% 0.90% 0.96% 1.02%
-------------------------------------------- -------------- -------------- -------------- -------------- --------------
Net investment income 4.75% 4.54% 2.56% 2.41% 3.86%
====================================================================================================================================
</TABLE>
+Net of management fee waiver.
*See Notes to Financial Statements.
Notes to Financial Statements
1. Significant Accounting Policies
The Company is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The following is a summary
of significant accounting policies consistently followed by the Company. The
policies are in conformity with generally accepted accounting principles.
(a) The Company values securities utilizing the amortized cost method, which
approximates market value. Under this method, all investments purchased at a
discount are valued by amortizing the difference between the original purchase
price and maturity value of the issue over a period to maturity. Securities
purchased at face value are evenly valued at cost, which approximates market
value.
(b) It is the policy of the Company to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income in taxable distributions. Therefore, no income tax
provision is required.
(c) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Interest income is recorded on the accrual
basis.
(d) Dividends from net investment income are declared each business day and paid
monthly.
(e) Income and capital gains distributions are determined in accordance with
income tax regulations which may differ from methods used to determine the
corresponding income and capital gains amounts in accordance with generally
accepted accounting principles. These differences are primarily caused by
differences in the timing of recognition of certain components of income,
expense, or capital gain. Where such differences are permanent in nature, they
are reclassified in the Sources of Net Assets based upon their ultimate
characterization for federal income tax purposes. Any such reclassifications
will have no effect on net assets, results of operations, or net asset value of
the Fund.
2. Management Fee and Other Transactions with Affiliates
Lord, Abbett & Co. received a management fee of $748,926 for which it supplied
investment management, research, statistical and advisory services and paid
officers' remuneration and certain other expenses of the Company. The management
fee paid to Lord, Abbett & Co. is based on average daily net assets at the
following annual rates: 0.50% on the first $250 million, 0.45% on the next $250
million and 0.40% on the excess over $500 million. The Company has adopted a
Rule 12b-1 Plan which provides for the payment to dealers of .15% of the average
daily net asset value of the Company's shares sold by such dealers. Effective
July 1, 1992, 12b-1 payments have been suspended.
Certain of the Company's officers and directors have an interest in Lord, Abbett
& Co.
3. Directors' Remuneration
The Directors of the Company associated with Lord, Abbett & Co. and all officers
of the Company receive no compensation from the Company for acting as such.
Outside Directors' fees, including attendance fees for board and committee
meetings, and outside Directors' retirement costs, are allocated among all funds
in the Lord Abbett group based on net assets of each fund. The direct
remuneration accrued during the period for outside Directors of the Company as a
group was $2,827 (exclusive of expenses), a portion of which has been deemed
invested in shares of the Company under a deferred compensation plan
contemplating future payment of the value of those shares. As of June 30, 1996,
the aggregate amount in Directors' accounts maintained under the Plan was
$116,174. Retirement costs accrued during the period amounted to $1,800.
4. Subsequent Event
On June 19, 1996 the Fund's shareholders approved the issuance of Class B and C
shares. There was no impact on the net asset value of the Fund's previously
issued shares, which will now be designated as Class A shares.
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders,
Lord Abbett U.S. Government Securities Money Market Fund, Inc.:
We have audited the accompanying statement of net assets of Lord Abbett U.S.
Government Securities Money Market Fund, Inc. as of June 30, 1996, the related
statements of operations for the year then ended and of changes in net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and the financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits. We
conducted our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at June 30, 1996 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. In our opinion, such
financial statements and financial highlights present fairly, in all material
respects, the financial position of Lord Abbett U.S. Government Securities Money
Market Fund, Inc. at June 30, 1996, the results of its operations, the changes
in its net assets and the financial highlights for the above-stated periods in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
July 29, 1996
Our Management
Investment Manager and
Underwriter
Lord, Abbett & Co. and
Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Custodian,Transfer Agent and
Dividend Disbursing Agent
United Missouri Bank of
Kansas City, N.A.
Tenth and Grand
Kansas City, MO 64141
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419576
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche LLP
New York, NY
Numbers to Keep Handy
For Literature: 800-874-3733
For Account Information: 800-821-5129
For Fund Information: 800-426-1130
An investment in this Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that this Fund will be able to maintain
a stable net asset value of $1.00 per share. This Fund is managed to maintain,
and has maintained, its stable $1.00 per share price.
- --------------------------------------------------------------------------------
Copyright (C) 1996 by Lord Abbett U.S. Government Securities Money Market Fund,
Inc., 767 Fifth Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett U.S. Government Securities Money Market Fund, Inc., is to be
distributed only if preceded or accompanied by a current prospectus which
includes information concerning the Fund's investment objective and policies and
other matters. There is no guarantee that the forecasts contained within this
publication will come to pass.
All rights reserved. Printed in the U.S.A.
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Investment Management
A Tradition of Performance Through Disciplined Investing
LORD ABBETT DISTRIBUTOR LLC LAMM-2-696
- ------------------------------------------------------------ (8/96)
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203
