Lord Abbett U.S. Government
Securities
Money Market Fund
1998 ANNUAL REPORT
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A fund designed to help you with your current
income needs and preserve your capital
[LOGO](R)
<PAGE>
Report to Shareholders
For the Fiscal Year Ended June 30, 1998
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/s/ Robert S. Dow
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Robert S. Dow
Chairman
July 20, 1998
"Your Fund's management team continues to focus on those areas we believe will
produce the highest available yields."
Lord Abbett U.S. Government Securities Money Market Fund completed its fiscal
year on June 30, 1998, with net assets of over $165 million and a seven-day
current yield of 4.59%.* Below is an overview of class-specific data during the
fiscal year.
Fiscal Year Ended June 30, 1998
----------------------------------
Class A Class B Class C
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Net asset value $1.00 $1.00 $1.00
Dividends $0.047 $0.039 $0.047
Average annual total return** +4.79% +4.01% +4.79%
During the period, we sought investments that provided the highest yield, while
attempting to maintain the average maturity at approximately 30 days. In an
effort to preserve capital and maintain liquidity, we invested only in
high-quality U.S. Government Agency discount notes. The Fund's average maturity
at June 30, 1998 was 33 days.
Discount note yields during the period moved steadily down from 5.50% to 5.44%,
primarily due to the U.S. Treasury's declining financing needs as its budget
moved from deficit to surplus. High investor demand for a finite supply of
short-term money market securities helped push yields lower over the period.
Your Fund's management team continues to focus on those areas we believe will
produce the highest available yields.
We believe recessions in Japan and other Asian countries will help keep U.S.
inflation low, slow our economic growth and dampen corporate profitability. Such
an environment should support lower interest rates and higher bond prices, with
long-term U.S. Treasury rates expected to range from 51/2% to 61/4%. Indications
are that the Federal Reserve will keep the Federal Funds rate at the current
5.5% level, at least until the economies in Asia show signs of strengthening.
The Federal Funds rate is the rate at which banks make overnight loans to each
other.
Lord Abbett U.S. Government Securities Money Market Fund seeks to provide
investors with income and preservation of capital in all interest-rate
environments. As a shareholder of the Fund, you have checkwriting privileges, as
well as the flexibility to exchange Fund shares for other Lord Abbett-managed
funds of the same share class.
We are pleased that you have included Lord Abbett U.S. Government Securities
Money Market Fund in your portfolio. We look forward to maintaining our
relationship in the coming years and helping you achieve your financial goals.
* The Fund's current yield refers to the income generated by an investment
in the Fund over a seven-day period, which is then annualized. The yield
quotation more closely reflects the current earnings of the Fund than the
total return quotations. Past performance is not indicative of future
results.
** Average annual total return in the percent change in net asset value,
assuming the reinvestment of all distributions. Returns do not reflect the
deduction of the applicable contingent deferred sales charges that apply
to Class B shares when held for less than six years. Please note that an
investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible
to lose money by investing in the Fund. The Fund is managed to maintain,
and has maintained, its stable $1.00 per share.
<PAGE>
Statement of Net Assets
June 30, 1998
<TABLE>
<CAPTION>
Principal
Rating+ Amount Market Value
=================================================================================================================
Investments in Securities 99.92%
=================================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Federal Home Loan Banks
and Agency 5.25% due 8/14/1998 A1+ $5,000M $ 4,967,917
Obligations 5.38% due 8/19/1998 A1+ 5,000M 4,963,386
99.92% Total 9,931,303
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Federal Home Loan Mortgage Corporation
5.41% due 7/1/1998 A1+ 5,000M 5,000,000
5.60% due 7/1/1998 A1+ 10,500M 10,500,000
5.29% due 7/6/1998 A1+ 5,000M 4,996,326
5.28% due 7/7/1998 A1+ 5,000M 4,995,600
5.39% due 7/7/1998 A1+ 5,000M 4,995,508
5.45% due 7/10/1998 A1+ 10,000M 9,986,375
5.42% due 7/14/1998 A1+ 5,000M 4,990,214
5.47% due 7/14/1998 A1+ 5,000M 4,990,124
5.38% due 7/17/1998 A1+ 5,000M 4,988,044
5.42% due 7/20/1998 A1+ 5,000M 4,985,697
5.47% due 7/24/1998 A1+ 5,000M 4,982,526
5.26% due 8/4/1998 A1+ 5,000M 4,975,161
5.39% due 8/5/1998 A1+ 5,000M 4,973,799
5.40% due 8/5/1998 A1+ 5,000M 4,973,750
5.40% due 8/13/1998 A1+ 5,000M 4,967,750
5.45% due 8/21/1998 A1+ 5,000M 4,961,396
Total 90,262,270
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Federal National Mortgage Association
5.38% due 7/2/1998 A1+ 5,000M 4,999,253
5.40% due 7/15/1998 A1+ 5,000M 4,989,500
5.561% due 7/17/1998 A1+ 10,000M 9,975,733
5.42% due 7/24/1998 A1+ 5,000M 4,982,686
5.27% due 7/30/1998 A1+ 5,000M 4,978,774
5.45% due 8/24/1998 A1+ 5,000M 4,959,125
5.48% due 9/11/1998 A1+ 5,000M 4,945,200
4.95% due 9/30/1998 A1+ 10,000M 9,982,861
Total 49,813,132
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Student Loan Marketing Association
5.321% due 7/7/1998++ A1+ 4,995M 4,994,950
5.411% due 7/7/1998++ A1+ 4,999M 4,998,638
5.45% due 2/22/1999 A1+ 5,000M 4,992,107
Total 14,985,695
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Total U.S. Government and Agency Obligations* 164,992,400
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Other Assets, Less Liabilities .08% 136,078
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Net Assets (equivalent to $1.00 a share on 162,630,556 Class A shares,
100.00% 1,760,371 Class B shares and 737,551 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) $165,128,478
=================================================================================================================
</TABLE>
+ Ratings have not been audited by Deloitte & Touche LLP.
++ Floating Rate Note.
* Cost for Federal income tax purposes is $164,992,400.
Average maturity of investments: 33 days.
See Notes to Financial Statements.
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
Investment Income For the Year Ended June 30, 1998
==============================================================================================================
<S> <C> <C> <C>
Income Interest $8,166,958
Expenses ---------------------------------------------------------------------------------------------------
Management fee $740,978
Shareholder servicing 349,861
Registration 66,420
Professional 41,720
Reports to shareholders 30,232
12b-1 distribution plan-Class B 7,786
Others 5,064
Total expenses 1,242,061
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Net investment income $6,924,897
===================================================================================================
See Notes to Financial Statements.
</TABLE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended June 30,
Increase (Decrease) in Net Assets 1998 1997
===========================================================================================================
<S> <C> <C>
Operations Net investment income (declared as dividends to shareholders)
Class A $ (6,834,313) $ (7,000,498)
Class B 40,717 5,627
Class C 49,867 40,045
Total 6,924,897 7,046,170
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Capital share transactions (dollar amounts and number of shares are the same)(a)
- -----------------------------------------------------------------------------------------------------------
Proceeds from shares sold:
Class A 328,880,426 268,128,291
Class B 7,463,527 866,542
Class C 5,938,698 3,189,828
Total 342,282,651 272,184,661
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Net asset value of shares issued to shareholders in reinvestment of net
investment income:
Class A 6,329,635 6,474,938
Class B 28,189 3,906
Class C 32,002 25,667
Total 6,389,826 6,504,511
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Cost of shares reacquired:
Class A 15,776,844) (283,936,697)
Class B (5,975,021) (626,772)
Class C (6,024,269) (2,424,375)
Total (327,776,134) (286,987,844)
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Increase (decrease) in net assets 20,896,343 (8,298,672)
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Net Assets
Beginning of year 144,232,135 152,530,807
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End of year $ (165,128,478) $(144,232,135)
===========================================================================================================
</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
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Year Ended
Year Ended June 30, June 30,
Per Share Operating Performance: 1998 1997 1996 1995 1994 1998
==============================================================================================
<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 0.047 0.046 0.048 0.046 0.025 0.039
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Distributions
Dividends from
net investment income (0.047) (0.046) (0.048) (0.046) (0.025) (0.039)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------
Total Return(d) 4.79% 4.66% 4.85% 4.65% 2.54% 4.01%
==============================================================================================
Ratios/Supplemental Data:
==============================================================================================
Net assets, end of year (000) $ 162,631 $ 143,197 $ 152,531 $ 140,64 $ 156,069 $ 1,760
==============================================================================================
Ratios to Average Net Assets
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Expenses, including waiver 0.83% 0.84% 0.81% 0.86% 0.85% 1.59%
Expenses, excluding waiver 0.83% 0.84% 0.81% 0.86% 0.90% 1.59%
Net investment income 4.68% 4.57% 4.75% 4.54% 2.56% 3.96%
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
-------------------------------------------------------
Year Ended,
August 1, 1996(a)(c) June 30, July 15,1996(a)
Per Share Operating Performance: to June 30, 1997 1998 to June 30, 1997
======================================================================================
<S> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------------
Income from investment
operations
Net investment income 0.024 0.047 0.044
- --------------------------------------------------------------------------------------
Distributions
Dividends from
net investment income (0.024) (0.047) (0.044)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------------
Total Return(d) 2.39%(b) 4.79% 4.47%(b)
======================================================================================
Ratios/Supplemental Data:
======================================================================================
Net assets, end of year (000) $ 244 $ 738 $ 791
======================================================================================
Ratios to Average Net Assets
- --------------------------------------------------------------------------------------
Expenses, including waiver 0.99%(b) 0.84% 0.81%(b)
Expenses, excluding waiver 0.99%(b) 0.84% 0.81%(b)
Net investment income 2.38%(b) 4.73% 4.39%(b)
======================================================================================
</TABLE>
(a) Commencement of offering Class B and Class C shares, respectively.
(b) Not annualized.
(c) November 15, 1996 commencement of operations.
(d) Total return assumes reinvestment of all distributions.
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 financial statements have been prepared in
conformity with generally accepted accounting principles, which require
management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Company:
(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. Therefore, no federal 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) is
allocated to each class of shares based upon the relative proportion of net
assets at the beginning of the day.
(e) Income distributions are determined in accordance with income tax
regulations, which may differ from methods used to determine the corresponding
income 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 Lord Abbett 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 Class C 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 the net assets of each fund. Directors' fees payable at
June 30, 1998, under a deferred compensation plan, were approximately $116,000.
<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, 1998, the related
statements of operations and of changes in net assets, and the financial
highlights for each of the periods presented. 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,
1998 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, 1998, the results of
its operations, the changes in its net assets and the financial highlights for
each of the periods presented in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
July 31, 1998
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 419100
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche llp
New York, NY
Counsel
Debevoise & Plimpton
New York, NY
Numbers to Keep Handy
For Shareholder Account or
Statement Inquiries:
800-821-5129
For Literature:
800-874-3733
For 24-Hour Automated Shareholder
Service Line:
800-865-7582
Visit Our Web Site:
http://www.lordabbett.com
An investment in this Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund. The Fund is managed to maintain, and has
maintained, its stable $1.00 per share.
Mutual funds are not distributed by the Federal Deposit Insurance Corporation,
are not deposits or other obligations of, or guaranteed by banks, and are
subject to investment risks including possible loss of principal amount
invested.
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Copyright (C) 1998 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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[LOGO](R) LORD ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
Lord Abbet mutual fund shares are distributed by:
LORD ABBET DISTRIBUTOR LLC
- ------------------------------------------------------------ LAMM-2-698
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (8/98)
