<PAGE>
LORD ABBETT U.S. GOVERNMENT
SECURITIES
MONEY MARKET FUND
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
[ART - Picture of U.S. currency]
A fund designed to help you
with your current income needs
and preserve your capital
<PAGE>
Report to Shareholders
For the Six Months Ended December 31, 1995
[PHOTO - Ronald P. Lynch]
/s/ Ronald P. Lynch
Ronald P. Lynch
Chairman
[PHOTO Robert S. Dow]
/s/ Robert S. Dow
Robert S. Dow
President
January 31, 1996
Lord Abbett U.S. Government Securities Money Market Fund ended the first half of
its fiscal year on December 31, 1995 with net assets of $169 million and an
average annualized seven-day yield of 4.84%.
After a surge last fall that heightened inflation concerns, the economy slowed
during the winter in response to credit restraints by the Federal Reserve. Since
December, the economy grew at a modest, annual rate of 2 1/2%, while inflation
(as measured by the Consumer Price Index) averaged just under 3%. The
combination of these factors enabled the Federal Reserve Bank to reverse course
and begin gradually lowering the Federal Funds Rate in three, one-quarter point
increments. The 30-year Treasury bond (which yielded 6.6% six months ago) closed
the year near 6%.
Despite the U.S. economy's continued expansion over the last five years,
inflation remained well behaved. Several factors helped keep inflation in check.
Labor cost increases (the largest component in the inflation pricing mechanism)
have been moderate, as it has become increasingly important for U.S.
corporations to remain competitive in the global marketplace. We are seeing a
continuous effort by U.S. producers to hold down wage costs through the use of
technology, outsourcing and capital equipment upgrades. Additionally, consumers
resisted price increases, thereby forcing companies to hold prices down.
We expect Gross Domestic Product in 1996 will grow at an annual rate of about
2%, with inflation remaining just below 3%. We believe this environment will
enable the Federal Reserve to lower the Federal Funds Rate from the current
5 1/4% level toward 4 1/2% by mid-year. Moderate growth and contained inflation,
combined with a lower interest-rate environment, should bode well for the
markets, although moderate volatility along the way is likely.
Given the declining interest-rate environment, we reduced the Fund's position in
floating rate notes in favor of locking in higher yields. We will continue to
seek out higher yields, as long as the current market conditions persist. As
always, the Fund emphasizes conservative investments to achieve high current
income and preservation of capital.
We are pleased to announce that the Fund's Board of Directors elected
Robert S. Dow as President of the Fund. Mr. Dow, who has been a partner of
Lord, Abbett & Co. for nine years, is the Firm's Chief Investment Officer.
"We will continue to seek out higher yields as long as the current market
conditions persist."
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 remain committed to the goal of
serving investors by providing a relatively secure place for cash reserves. We
are pleased the Fund is a part of your portfolio and we look forward to helping
you attain your financial objectives in 1996 and beyond.
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Statement of Net Assets December 31, 1995
<TABLE>
<CAPTION>
Principal Market Value
Security Rating Amount (Note 1a)
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INVESTMENTS IN SECURITIES 99.97%
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<S> <C> <C> <C> <C>
U.S. Government and Federal Farm Credit Banks
Agency Obligations 5.60% due 1/4/1996 A1+ $ 5,000M $ 4,997,667
5.63% due 1/9/1996 A1+ 1,660M 1,657,923
5.60% due 1/18/1996 A1+ 5,000M 4,986,778
5.66% due 2/1/1996 A1+ 10,000M 9,999,473
Total 21,641,841
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Federal Home Loan Banks
5.59% due 1/11/1996 A1+ 4,100M 4,093,634
5.57% due 2/8/1996 A1+ 3,000M 2,982,362
5.48% due 2/22/1996 A1+ 2,300M 2,281,794
5.50% due 2/26/1996 A1+ 2,900M 2,875,189
Total 12,232,979
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Federal Home Loan Mortgage
Corporation
5.63% due 1/9/1996 A1+ 940M 938,824
5.65% due 1/19/1996 A1+ 3,400M 3,390,395
5.63% due 1/22/1996 A1+ 3,200M 3,189,491
5.57% due 2/5/1996 A1+ 5,165M 5,137,030
5.35% due 3/1/1996 A1+ 5,000M 4,955,417
5.35% due 3/4/1996 A1+ 6,000M 5,943,825
5.44% due 3/11/1996 A1+ 3,400M 3,364,036
5.43% due 3/12/1996 A1+ 6,300M 6,232,532
5.33% due 3/14/1996 A1+ 5,400M 5,341,637
5.33% due 3/15/1996 A1+ 4,300M 4,252,888
Total 42,746,075
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Federal National Mortgage
Association
5.59% due 1/3/1996 A1+ 1,400M 1,399,565
5.57% due 1/5/1996 A1+ 2,500M 2,498,453
5.58% due 1/8/1996 A1+ 4,400M 4,395,226
5.58% due 1/16/1996 A1+ 5,000M 4,988,375
5.58% due 1/17/1996 A1+ 4,500M 4,488,840
5.59% due 1/29/1996 A1+ 6,960M 6,929,739
5.40% due 2/2/1996 A1+ 4,000M 3,980,800
5.55% due 2/6/1996 A1+ 4,600M 4,574,470
5.52% due 2/7/1996 A1+ 3,400M 3,380,711
5.15% due 2/16/1996+ A1+ 10,000M 10,000,000
5.25% due 4/29/1996 A1+ 3,800M 3,734,054
Total 50,370,233
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Student Loan Marketing Association
5.65% due 1/2/1996 A1+ 22,000M 21,996,548
5.23% due 5/14/1996+ A1+ 10,000M 9,997,542
5.29% due 6/13/1996+ A1+ 10,000M 10,000,000
Total 41,994,090
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Total U.S. Government and Agency Obligations* 168,985,218
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OTHER ASSETS, LESS LIABILITIES .03% 45,412
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Net Assets (equivalent to $1.00 a share on
100.00% 169,030,630 shares of $.001 par
value capital stock outstanding;
authorized, 1,000,000,000 shares) $169,030,630
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<FN>
+Floating Rate Note.
*Cost for federal income tax purposes is $168,985,218.
Average Maturity of Investments: 30 days.
See Notes to Financial Statements.
</TABLE>
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STATEMENT OF OPERATIONS For the Six Months Ended December 31, 1995
<TABLE>
<CAPTION>
Investment Income
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<S> <C> <C> <C>
Income Interest $ 4,375,727
Expenses Management fee (Note 2) $ 381,417
Shareholder servicing 175,000
Audit and legal 21,000
Registration 19,500
Reports to shareholders 19,500
Other 17,678
Total expenses 634,095
Net investment income $ 3,741,632
</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets 1995 1995
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<S> <C> <C>
Operations Net investment income (declared as dividends to shareholders)* $ 3,741,632 $ 7,038,929
Capital share transactions (dollar amounts and number of shares are the same)
Proceeds from shares sold 109,831,412 183,892,809
Net asset value of shares issued to shareholders in reinvestment
of net investment income 3,430,090 6,186,410
Total 113,261,502 190,079,219
Cost of shares reacquired (84,873,319) (205,505,736)
Increase (decrease) in net assets 28,388,183 (15,426,517)
Net Assets
Beginning of period 140,642,447 156,068,964
End of period $169,030,630 $140,642,447
</TABLE>
*See Financial Highlights for per-share data.
See Notes to Financial Statements.
This report to shareholders inaugurates a new procedure whereby a single copy of
the report is 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.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Six Months
Ended
December 31, Year Ended June 30,
Per Share Operating Performance: 1995 1995 1994 1993 1992 1991
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<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.025 0.046 0.025+ 0.024+ 0.038+ 0.064+
----------- --------- --------- ---------- -------- -------
Distributions
Dividends from net investment income (0.025) (0.046) (0.025) (0.024) (0.038) (0.064)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- --------- --------- ---------- --------- -------
Total Return 2.50%++ 4.65% 2.54% 2.43% 3.87% 6.55%
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Ratios/Supplemental Data:
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Net assets, end of period (000) $ 169,031 $140,642 $156,069 $122,782 $147,229 $195,134
Ratios to Average Net Assets:
Expenses, including waiver 0.42%++ 0.86% 0.85% 0.87% 1.01% 0.95%
Expenses, excluding waiver 0.42%++ 0.86% 0.90% 0.96% 1.02% 0.95%
Net investment income 2.47%++ 4.54% 2.56% 2.41% 3.86% 6.40%
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+ Net of management fee waiver.
++ Not annualized.
See Notes to Financial Statements.
</TABLE>
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 account-
ing 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 $381,417 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 $1,823 (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 December 31,
1995, the aggregate amount in Directors' accounts maintained under the Plan was
$112,054. Retirement costs accrued during the period amounted to $900.
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.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
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GROWTH
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INCOME
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<S> <C> <C> <C> <C> <C>
Growth Growth & Balanced Income Tax-Free Money
Funds Income Funds Fund Funds Income Funds Market Fund
Developing Affiliated Fund Investment U.S. Government . National U.S. Government
Growth Trust- Securities Fund* . California Securities
Fund Fundamental Balanced Series . Connecticut Money Market
Value Fund Bond-Debenture . Florida Fund*+
Value Fund . Georgia
Appreciation . Hawaii
Fund Global Fund- . Michigan
Income Series . Minnesota
Global Fund- . Missouri
Equity Series Investment . New Jersey
Trust-Limited . New York
Duration U.S. . Pennsylvania
Government . Texas
Securities . Washington
Series*
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your financial adviser provides value in helping you identify and
understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only if
preceded or accompanied by a current prospectus for Lord Abbett U.S. Government
Securities Money Market Fund.
For more complete information about a Lord Abbett fund, including charges and
expenses, call your financial adviser or Lord, Abbett & Co. at 800-874-3733 for
a prospectus. Read it carefully before investing.
When you invest in a family of funds, you benefit from:
Diversification. You and your financial adviser can diversify your investments
between equity and income funds.
Flexibility. As your investment goals change, your financial adviser can help
you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 25
portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking with
your financial adviser to help you customize your investment plan.
* An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ 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.
