Lord Abbett U.S. Government
Securities
Money Market Fund
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
[PICTURE OF COINS]
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, 1996
[PHOTO]
/s/ ROBERT S. DOW
- -----------------
ROBERT S. DOW
CHAIRMAN
JANUARY 17, 1997
"... your Fund continued to
invest in issues offering
attractive yields, consistent
with low credit risk and
low volatility."
Lord Abbett U.S. Government Securities Money Market Fund completed the first
half of its fiscal year on December 31, 1996 with net assets of $153 million and
an average annualized seven-day yield of 4.50%. Below is an overview of
class-specific data for the period.
Six Months 8/1/96* - 7/15/96* -
Ended 12/31/96 12/31/96 12/31/96
--------------------------------------------
Class A Class B Class C
- --------------------------------------------------------------------------------
Net asset value $1.00 $1.00 $1.00
Dividends $ .023 $ .005 $ .021
Total return** +2.31%++ +0.48%++ +2.13%++
The lower interest-rate environment we forecast in our last letter has begun to
take shape. As economic growth slowed from a rapid pace in the second quarter
and new job development declined, investors' inflation fears calmed. As a
result, the yield on the 30-year Treasury bond declined to 6.6% by year end.
Within this environment, your Fund continued to invest in issues offering
attractive yields, consistent with low credit risk and low volatility. Over the
period, we maintained a heavy weighting in agency discount notes. Average
maturity of the Fund was approximately 26 days at the close of the fiscal half
year.
Our outlook for the financial markets remains positive. In 1997, we believe that
the economy will grow at a rate averaging just below 2%, with inflation
averaging between 2 1/2%-3%. Against this backdrop, the Federal Reserve does not
appear to have any compelling reason to increase the Federal Funds Rate from the
current 5.25% level. Over the long term, we believe interest rates will continue
to trend lower. Our analysis leads us to believe that yields on the 30-year
Treasury bond will decline towards the 6 1/4% - 6% level.
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. As a shareholder of the Fund, you also are offered checkwriting
privileges and have the flexibility to exchange Fund shares for other Lord
Abbett-managed funds of the same class, should your investment goals change.
We are pleased Lord Abbett U.S. Government Securities Money Market Fund is a
part of your investment portfolio and look forward to helping you attain your
financial goals in 1997 and beyond.
* Commencement of offering Class shares.
** Total return is the percent change in net asset value, assuming the
reinvestment of all distributions.
++ Not annualized.
<PAGE>
Statement of Net Assets
December 31, 1996
<TABLE>
<CAPTION>
Principal
Investment Rating Amount Market Value
===============================================================================================================================
Investments in Securities 100.00%
===============================================================================================================================
<S> <C> <C> <C>
U.S. Government and Federal Farm Credit Banks 5.23% due 1/27/1997 A1+ 5,000M $ 4,981,114
Agency Obligations -------------------------------------------------------------------------------------===========
100.00% Federal Home Loan Banks
5.25% due 1/2/1997 A1+ 5,000M 4,999,271
5.19% due 1/14/1997 A1+ 5,000M 4,990,629
5.27% due 1/23/1997 A1+ 5,000M 4,983,897
Total 14,973,797
-------------------------------------------------------------------------------------===========
Federal Home Loan Mortgage Corporation
5.70% due 1/2/1997 A1+ 4,000M 3,999,367
5.225% due 1/16/1997 A1+ 5,500M 5,488,026
5.45% due 1/17/1997 A1+ 4,945M 4,933,022
5.20% due 1/21/1997 A1+ 5,000M 4,985,555
5.25% due 1/31/1997 A1+ 4,400M 4,380,750
5.22% due 2/6/1997 A1+ 5,000M 4,973,900
5.23% due 2/12/1997 A1+ 5,000M 4,969,492
5.22% due 2/19/1997 A1+ 4,000M 3,971,580
5.31% due 2/24/1997 A1+ 6,000M 5,952,210
5.33% due 3/17/1997 A1+ 2,500M 2,472,240
Total 46,126,142
-------------------------------------------------------------------------------------===========
Federal National Mortgage Association
5.22% due 1/3/1997 A1+ 4,135M 4,133,801
5.26% due 1/7/1997 A1+ 5,000M 4,995,617
5.22% due 1/9/1997 A1+ 5,000M 4,994,200
5.31% due 1/13/1997 A1+ 5,000M 4,991,150
5.31% due 1/15/1997 A1+ 5,000M 4,989,675
5.205% due 1/24/1997 A1+ 5,000M 4,983,373
5.225% due 1/28/1997 A1+ 5,000M 4,980,406
5.23% due 2/3/1997 A1+ 5,000M 4,976,029
5.235% due 2/4/1997 A1+ 3,400M 3,383,190
5.23% due 2/13/1997 A1+ 2,985M 2,966,353
5.23% due 2/18/1997 A1+ 5,000M 4,965,133
5.49% due 3/10/1997 A1+ 5,000M 4,948,150
5.30% due 3/17/1997 A1+ 6,200M 6,131,542
Total 61,438,619
-------------------------------------------------------------------------------------===========
Student Loan Marketing Association
5.31% due 3/13/1997 A1+ 10,000M 10,000,000
5.36% due 4/10/1997 A1+ 5,000M 5,000,000
5.42% due 6/12/1997 A1+ 10,000M 10,000,000
Total 25,000,000
-------------------------------------------------------------------------------------===========
Total U.S. Government and Agency Obligations* 152,519,672
===============================================================================================================================
Other Assets, Less Liabilities .00% (282)
===============================================================================================================================
Net Assets 100.00% (Equivalent to $1.00 a share on 151,895,247 Class A shares,
303,582 Class B shares and 320,561 Class C shares of
$.001 par value capital stock outstanding; authorized,
700,000,000 Class A shares, 100,000,000 Class B
shares and 200,000,000 Class C shares) $152,519,390
===============================================================================================================================
</TABLE>
+ Floating Rate Note.
* Cost for Federal income tax purposes is
$152,519,672.
Average maturity of investments: 26 days.
See Notes to Financial Statements.
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
Investment Income Six Months Ended December 31, 1996
===============================================================================================================================
<S> <C> <C>
Income Interest $4,262,900
-----------------------------------------------------------------------------------------------------------------
Expenses Management fee $397,858
Shareholder servicing 175,000
Registration 25,000
Audit and legal 24,400
Reports to shareholders 20,000
Other 7,964
Total 650,222
-----------------------------------------------------------------------------------------------------------------
Net investment income $3,612,678
===============================================================================================================================
</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 1996 1996
===============================================================================================================================
<S> <C> <C>
Operations Net investment income (declared as dividends to shareholders)
Class A $ 3,595,304 $ 7,086,890
Class B 578 --
Class C 16,796 --
Total 3,612,678 7,086,890
-----------------------------------------------------------------------------------------------------------------
Capital share transactions (dollar amounts and number of shares are the same)(a)
- -------------------------------------------------------------------------------------------------------------------------------
Proceeds from shares sold:
Class A 133,301,274 195,939,486
Class B 387,392 --
Class C 1,219,579 --
Total 134,908,245 195,939,486
-----------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in reinvestment of net investment income:
Class A 3,307,429 6,646,051
Class B 577 --
Class C 11,565 --
Total 3,319,571 6,646,051
-----------------------------------------------------------------------------------------------------------------
Cost of shares reacquired:
Class A (137,244,263) (190,697,177)
Class B (84,387) --
Class C (910,583) --
Total (138,239,233) (190,697,177)
-----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (11,417) 11,888,360
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 152,530,807 140,642,447
-----------------------------------------------------------------------------------------------------------------
End of period $152,519,390 $152,530,807
=================================================================================================================
</TABLE>
(a) The Fund began offering Class C shares on July 15, 1996 and
Class B shares on August 1, 1996.
See Notes to Financial Statements.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B Class C
----------------------------------------------------------------- -------------- ------------------
Six Months August 1,(a) July 15,(a)
Ended Year Ended June 30, to to
December 31, ----------------------------------------------- December 31, December 31,
Per Share Operating Performance: 1996 1996 1995 1994 1993 1992 1996 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
================================================================================================== ============== ==================
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------- -------------- ------------------
Income from investment operations
Net investment income 0.023 0.048 0.046 0.025 0.024 0.038 0.005 0.021
------------------------------------------------------------------------------------------------ -------------- ------------------
Distributions
Dividends from net investment income (0.023) (0.048) (0.046) (0.025) (0.024) (0.038) (0.005) (0.021)
------------------------------------------------------------------------------------------------ -------------- ------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------- -------------- ------------------
Total Return 2.31%(b) 4.85% 4.65% 2.54% 2.43% 3.87% 0.48%(b) 2.13%(b)
================================================================================================== ============== ==================
Ratios/Supplemental Data:
================================================================================================== ============== ==================
Net assets, end of period (000) $151,895 $152,531 $140,642 $156,069 $122,782 $147,229 $ 304 $ 321
================================================================================================ ============== ==================
Ratios to Average Net Assets:
------------------------------------------------------------------------------------------------ -------------- ------------------
Expenses including waiver 0.41%(b) 0.81% 0.86% 0.85% 0.87% 1.01% 0.66%(b) 0.39%(b)
Expenses excluding waiver 0.41%(b) 0.81% 0.86% 0.90% 0.96% 1.02% 0.66%(b) 0.39%(b)
Net investment income 2.29%(b) 4.75% 4.54% 2.56% 2.41% 3.86% 1.53%(b) 2.14%(b)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of offering Class B and Class C shares, respectively.
(b) Not annualized.
See Notes to Financial Statements.
Notes to Financial Statements
1. Significant Accounting Policies
Lord Abbett U.S. Government Securities Money Market Fund (the "Company") is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The following summarizes the significant
accounting policies of the Company. The financial statements have been prepared
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 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. Net investment income (other than distribution and service fees) are
allocated to each class of shares based upon the proportion of net assets at the
beginning of the day.
(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.
2. Management Fee and Other Transactions with Affiliates
The Company has a management agreement with Lord, Abbett & Co. ("Lord Abbett")
pursuant to which it supplies the Company with investment management, research,
statistical and advisory services and pays officers' remuneration and certain
other expenses of the Company. The management fee 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 Rule 12b-1 plans and agreements (the "Class A, Class B and Class
C Plans") with Lord Abbett Distributor LLC, an affiliate of Lord Abbett, which
provides for payments of 0.15% of the average daily net asset value of Class A
shares, 0.75% of the average daily net asset value of Class B shares and 0.25%
of the average daily net asset value of ClassC shares sold, and, at each
quarter-end after the first anniversary of the sale of such shares, 0.25% of the
average daily net asset value of such shares outstanding. The Company is
currently not making payments under the Class A and Class C Plans.
Certain of the Company's officers and directors have an interest in Lord Abbett.
3. Directors' Remuneration
The Directors of the Company associated with Lord Abbett and all officers of the
Company receive no compensation from the Company for acting as such. Outside
Directors' fees and retirement costs are allocated among all funds in the Lord
Abbett group based on net assets of each fund. The Directors' fees accrued
during the period were $1,830, 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, 1996, the aggregate
amount in Directors' accounts maintained under the Plan was $117,888.
<PAGE>
Notes to Financial Statements
4. Proxy Results (unaudited)
The Company's shareholders voted on the following proposals at the Annual
Meeting of Shareholders held on June 19, 1996. Each Director was elected and all
other proposals were approved. The description of each proposal and the results
of the shareholder vote are as follows:
Election of Directors For Withheld
- --------------------------------------------------------------------------------
Ronald P. Lynch 91,323,016 1,540,600
Robert S. Dow 91,427,652 1,435,964
E. Thayer Bigelow 91,360,286 1,503,330
Stewart S. Dixon 91,488,579 1,375,037
John C. Jansing 91,476,866 1,386,750
C. Alan MacDonald 91,466,394 1,397,222
Hansel B. Millican, Jr. 91,519,120 1,344,496
Thomas J. Neff 91,521,515 1,342,101
- --------------------------------------------------------------------------------
For Against Abstain Non-Vote
- --------------------------------------------------------------------------------
Ratification of Deloitte &
Touche LLP as independent
public accountants 90,333,152 588,153 1,942,311 --
Approval of certain changes
in fundamental investment
policies and restrictions 80,749,967 5,018,124 4,604,972 2,490,553
Approval of new Rule 12b-1
Distribution Plans and
Agreements 80,813,956 5,905,208 3,653,828 2,490,624
Approval of an amendment
to the Articles of
Incorporation authorizing
the creation of classes
and series of shares and
confirming that the
Directors may impose
contingent deferred sales
charges on certain
redemptions of new
classes of shares 79,769,554 6,896,239 3,707,279 2,490,544
- --------------------------------------------------------------------------------
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) 1997 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.
- --------------------------------------------------------------------------------
Numbers to Keep Handy
For Shareholder Account or
Statement Inquiries:
800-821-5129
For Literature:
800-874-3733
For More Information:
800-426-1130
Visit our Web site:
http://www.lordabbett.com
[LOGO] LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
LORD ABBETT DISTRIBUTOR LLC LAMM-3-1296
- ------------------------------------------------------------
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (2/97)
