Lord
Abbett
U. S. Government Securities
Money Market Fund, Inc.
Prospectus
November 1, 1999
[LOGO]
As with all mutual funds, the Securities and Exchange
Commission does not guarantee that the information in this
prospectus is accurate or complete, and it has not judged
this fund for investment merit. It is a criminal offense to
state otherwise.
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Table of Contents
The Fund Page
What you should know Goal/Strategy 2
about the fund Main Risks 2
Past Performance 3
Fees and Expenses 4
Your Investment Your Investment
Information for managing Purchases 5
your fund account Sales Compensation 6
Opening Your Account 6
Redemptions 7
Distributions and Taxes 8
Services For Fund Investors 8
Management 9
For More Information Your Investment
How to learn more Glossary of Shaded Terms 10
about the fund
Financial Information Your Investment
Financial Highlights 11
How to learn morea bout the Back Cover
fund and other Lord Abbett funds
<PAGE>
GOAL / STRATEGY
The investment objective of the fund is to seek high current income and
preservation of capital through investments in high quality, short-term,
liquid securities. These securities are commonly known as money market
instruments. The fund is a money market fund which attempts to manage its
portfolio to maintain a stable share price of $1.00 in accordance with
strict rules of the Securities and Exchange Commission ("SEC"). The fund
normally invests all of its assets in:
o Securities issued or guaranteed by the U.S. government, including
Treasury bills, notes, bonds and certificates of indebtedness,
o Securities issued or guaranteed by agencies or instrumentalities of
the U.S. government, such as the Government National Mortgage
Association, Federal National Mortgage Association, Student Loan
Marketing Association, Federal Home Loan Mortgage Corporation and
Federal Home Loan Banks, and
o Repurchase agreements involving these securities.
In selecting investments for the fund, we focus on securities that appear
to offer the best relative value.
Although the fund does not currently intend to do so, the fund may invest
up to 35% of its assets in other money market instruments such as
certificates of deposit, bankers' acceptances, commercial paper and other
short-term corporate debt securities.
MAIN RISKS
The fund's yield and the value of its investments may vary in response to
changes in interest rates and other market factors. As interest rates rise,
the fund's investments typically will lose value. Although the fund's U.S.
Treasury obligations and some U.S. government agency obligations are backed
by the full faith and credit of the U.S. government, other investments of
the fund do not have this guarantee. In addition, U.S. government
guarantees relate only to the interest and principal of the security. An
investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
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.
We or the fund refers to Lord Abbett U.S. Government Securities Money Market
Fund, Inc.
About the fund. This fund is a professionally managed portfolio primarily
holding securities purchased with the pooled money of investors. It strives to
reach its stated goal, although as with all mutual funds, it cannot guarantee
results.
2 The Fund
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U.S. Government Money Market Fund Symbols: Class A-LACXX
Past Performance
The information below provides some indication of the risks of investing in
the fund. The first table below shows changes in the fund's class A shares'
performance from calendar year to calendar year .
Past performance is not a prediction of future results.
[GRAPHIC OMITTED]
The class A shares' year-to-date return for the six months ending June 30, 1999
was 2.07%.
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For the fund's current yield, call toll-free 1-800-426-1130.
The table below shows the fund's class A, B and C performance over time. Fund
performance assumes reinvestment of dividends. All periods end on December 31,
1998.
Class 1 Year 5 Years 10 Years Inception(i)
A 4.64% 4.53% 4.90% 7.19%
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B 3.87% - - 3.43%
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C 4.64% - - 4.69%
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(i) The dates of inception of each class are: A - 6/27/79, B - 8/1/96 and C -
7/15/96.
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The Fund 3
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FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the fund.
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Fee table
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Shareholder Fees (Fees paid directly from your investment) Class A Class B Class C
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<S> <C> <C> <C>
Maximum Sales Charge on Purchases
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(as a % of offering price) none none none
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Maximum Deferred Sales Charge
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(as a % of the lesser of original purchase price or sale proceeds) none(1) 5.00%(2) none
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Annual Fund Operating Expenses (Expenses deducted from fund assets) (as a % of
average net assets)
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Management Fees (See "Management") 0.50% 0.50% 0.50%
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12b-1 Fees(3) none 0.75% none
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Other Expenses 0.26% 0.26% 0.26%
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Total Annual Fund Operating Expenses 0.76% 1.51% 0.76%
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(1) A contingent deferred sales charge of 1.00% may be assessed on certain
redemptions of class A shares made within 24 months following any
purchases made without a sales charge.
(2) Class B shares will convert to class A shares on the eighth anniversary of
your original purchase of class B shares.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will
increase the cost of your investment and may cost you more than paying
other types of sales charges.
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Example
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This example, like that in other funds' prospectuses, assumes a $10,000 initial
investment, 5% total return each year and no changes in expenses. You pay the
following expenses over the course of each period shown if you redeem your
shares at the end of the period, although your actual cost may be higher or
lower:
Share class 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Class A shares $ 78 $243 $ 422 $ 942
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Class B shares $654 $777 $1,024 $1,599
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Class C shares $ 78 $243 $ 422 $ 942
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You would pay the following expenses if, you did not redeem your shares:
Class A shares $ 78 $243 $ 422 $ 942
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Class B shares $154 $477 $ 824 $1,599
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Class C shares $ 78 $243 $ 422 $ 942
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This example is for comparison and is not a representation of the fund's actual
expenses or returns, either past or present.
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Management fees are payable to Lord, Abbett & Co. ("Lord Abbett") for the fund's
investment management.
12b-1 fees refer to fees incurred for activities that are primarily intended to
result in the sale of fund shares and service fees for shareholder account
service and maintenance.
Other expenses include fees paid for miscellaneous items such as shareholder
service fees and professional fees.
4 The Fund
<PAGE>
PURCHASES
The fund offers in this prospectus three classes of shares, class A, B and
C, each with different expenses, dividends and yields. You may purchase
shares at the Net Asset Value ("NAV") per share next determined after we
receive and accept your purchase order submitted in proper form. Although
the fund has no front-end sales charge on purchases of its shares, the fund
does have a contingent deferred sales charge ("CDSC") in certain cases, as
described below.
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
or change minimum investment requirements. All purchase orders are subject to
our acceptance and are not binding until confirmed or accepted in writing.
Share Classes
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Class A o offered without a front-end sales charge
Class B * o no front-end sales charge, however, a CDSC is applied to
shares sold prior to the sixth anniversary of purchase
o higher annual expenses than class A or C shares
o automatically convert to class A shares after eight years
o asset-based sales charge 0.75 of 1% - See "Sales Compensation"
Class C o no front-end sales charge
o a CDSC is applied to shares sold prior to the
first anniversary of purchase
o acquired by exchange only
Class A Share CDSC. If you acquire class A shares in exchange for class A shares
of another Lord Abbett-sponsored fund subject to a CDSC and you redeem any of
the class A shares within 24 months after the month in which you initially
purchased those shares, the fund will collect a CDSC of 1%.
Class B Share CDSC. The CDSC for class B shares normally applies if you redeem
your shares before the sixth anniversary of their initial purchase. The CDSC
declines the longer you own your shares, according to the following schedule:
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Contingent Deferred Sales Charges - Class B Shares
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Anniversary(1) of the day on Contingent Deferred Sales Charge
which the purchase order on redemption (as % of amount
was accepted subject to charge)
On Before
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1st 5.0%
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1st 2nd 4.0%
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2nd 3rd 3.0%
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3rd 4th 3.0%
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4th 5th 2.0%
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5th 6th 1.0%
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on or after the 6th(2) None
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(1) The anniversary is the same calendar day in each respective year after the
date of purchase. For example, the anniversaries for shares purchased on
May 1 will be May 1 of each succeeding year.
(2) Class B shares will automatically convert to class A shares on the eighth
anniversary of the purchase of class B shares.
NAV per share for each class of fund shares is calculated at 12 noon and 2:00
p.m. Eastern time each business day that the New York Stock Exchange ("NYSE") is
open for trading. Purchases and sales of fund shares are executed at the NAV
next determined after the fund receives and accepts your order. In calculating
NAV, securities are valued at cost plus (minus) amortized discount (premium), if
any, pursuant to the requirements for money market funds.
You should read this section carefully to determine which class of shares
represents the best investment option for your particular situation.
CDSC, regardless of class, is not charged on shares acquired through
reinvestment of dividends or capital gain distributions and is charged on the
original purchase cost or the current market value of the shares at the time
they are being sold, whichever is lower. In addition, repayment of loans under
Retirement Plans and 403(b) Plans will constitute new sales for purposes of
assessing the CDSC. To minimize the amount of any CDSC, the fund redeems shares
in the following order:
1. shares acquired by reinvestment of dividends and capital gains (always free
of a CDSC)
2. shares held for six years or more (class B) or one year or more (class C)
3. shares held the longest before the sixth anniversary of their purchase
(class B) or before the first anniversary of their purchase (class C)
Your Investment 5
<PAGE>
The class B share CDSC generally will be waived under the following
circumstances:
o benefit payments under Retirement Plans such as loans, hardship
withdrawals, death, disability, retirement, separation from service or
any excess contribution or distribution under Retirement Plans
o Eligible Mandatory Distributions under 403(b) Plans and individual
retirement accounts
o death of the shareholder
o redemptions of shares in connection with Div-Move and Systematic
Withdrawal Plans (up to 12% per year)
See "Systematic Withdrawal Plan" under "Services For Fund Investors" below
for more information on CDSCs with respect to class B shares.
Class C Share CDSC. The 1% CDSC for class C shares normally applies if you
redeem your shares before the anniversary of the purchase of such shares.
SALES COMPENSATION
Compensation payments originate from two sources: CDSCs and 12b-1 fees paid
out of the fund's assets. The fund is currently not making 12b-1 fee
payments under the class A and class C share Rule 12b-1 plans. However,
Lord Abbett Distributor pays an up-front payment to authorized institutions
totaling 4%, consisting of 0.25% for services provided to shareholders and
3.75% for a sales commission in connection with purchases of class B shares
for dollar cost averaging accounts as described above.
Class B Rule 12b-1 Plan. The Fund has adopted a class B share Rule 12b-1
plan under which we periodically pay Lord Abbett Distributor an annual
distribution fee of 0.75 of 1% of the average daily net asset value of the
class B shares.
The 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 class B
shares at the time of their original purchase. Because 12b-1 fees are paid
out of the fund's assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost you more than paying
other types of sales charges.
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
o Regular account (Class A) $1,000
(Class B) $5,000
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o Individual Retirement Accounts (Class A) $250
(Class B) $2,000
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For Retirement Plans no minimum investment is required, regardless of share
class.
You may purchase shares through any independent securities dealer who has a
sales agreement with Lord Abbett Distributor or you can fill out the
attached application and send it to the fund at the address stated below.
You should carefully read the paragraph below entitled "Proper Form" before
placing your order to ensure that your order will be accepted.
Retirement Plans include employer-sponsored retirement plans under the Internal
Revenue Code, excluding Individual Retirement Accounts.
Lord Abbett offers a variety of Retirement Plans. Call 800-253-7299 for
information about:
o Traditional, Rollover, Roth and Education IRAs
o Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
o Defined Contribution Plans
Lord Abbett Distributor LLC ("Lord Abbett Distributor") acts as agent for the
fund to work with investment professionals that buy and/or sell shares of the
fund on behalf of their clients. Generally, Lord Abbett Distributor does not
sell fund shares directly to investors.
6 Your Investment
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Lord Abbett
U.S. Government Securities Money Market Fund, Inc.
P.O. Box 419100
Kansas City, MO 64141
By Wire. Telephone the fund to obtain an account number. You can then
instruct your bank to wire the amount
of your investment to:
United Missouri Bank of Kansas City, N.A.
Tenth and Grand o Kansas City, MO 64141
Account # 980103352-2 ABA # 1010-0069-5
Specify the name of the fund, your account number and the name(s) in which
the account is registered. Your bank may charge you a fee to wire funds.
Wires received prior to 12 noon Eastern time will receive the dividends for
that day. Otherwise, dividends will begin accruing on the next business
day.
By Exchange. Telephone the fund at 800-821-5129 to request an exchange from
any eligible Lord Abbett-sponsored fund.
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MINIMUM INITIAL INVESTMENT
<S> <C> <C>
o Regular account (Class A, B and C) $1,000
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o Individual Retirement Accounts (Traditional,
Education and Roth),403(b) and employer-
sponsored retirement plans under the
Internal Revenue Code (Class A, B and C) $250
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</TABLE>
Proper Form. An order submitted directly to the fund must contain: (1) a
completed application, and (2) payment by check. When purchases are made by
check, redemption proceeds will not be paid until the fund or transfer
agent is advised that the check has cleared, which may take up to 15
calendar days. For more information, call the fund at 800-821-5129.
REDEMPTIONS
By Broker. Call your investment professional for instructions on how to
redeem your shares.
By Telephone. To obtain the proceeds of a redemption of $50,000 or less
from your account, you or your representative should call the fund at
800-821-5129. This method of redeeming shares is only available, however,
if you have completed section 9C of the account application.
By Mail. Submit a written redemption request indicating the name(s) in
which the account is registered, the fund's name, the class of shares, your
account number, and the dollar value or number of shares you wish to sell.
Include all necessary signatures. If the signer has any Legal Capacity, the
signature and capacity must be guaranteed by an Eligible Guarantor. Certain
other legal documentation may be required. For more information regarding
proper documentation call 800-821-5129.
Normally a check will be mailed to the name(s) and address in which the
account is registered (or otherwise according to your instruction) within
three business days after receipt of your redemption request. Your account
balance must be sufficient to cover the amount being redeemed or your
redemption order will not be processed. Under unusual
Exchange Limitations. Exchanges should not be used to try to take advantage of
short-term swings in the market. Frequent exchanges create higher expenses for
the fund. Accordingly, the fund reserves the right to limit or terminate this
privilege for any shareholder making frequent exchanges or abusing the
privilege. The fund also may revoke the privilege for all shareholders upon 60
days' written notice.
Small Accounts. Our Board may authorize closing any account in which there are
fewer than 25 shares if it is in a fund's best interest to do so.
Eligible Guarantor is any broker or bank that is a member of the Medallion Stamp
Program. Most major securities firms and banks are members of this program. A
notary public is not an eligible guarantor.
Your Investment 7
<PAGE>
circumstances, the fund may suspend redemptions, or postpone payment for
more than seven days, as permitted by federal securities laws.
Checkwriting. You may write checks against your account for a minimum of
$500 up to a maximum of $5,000,000. A check drawn on an account will be
honored based only on those shares in the account on which the check is
drawn. This method of redeeming shares is only available, however, if you
have completed section 9B of the account application.
DISTRIBUTIONS AND TAXES
The fund normally pays its shareholders dividends from its net investment
income on a monthly basis. These dividends will be taxable to shareholders
at the federal ordinary income tax rate and will be reinvested in the fund
unless you instruct the fund to pay them to you in cash. The fund does not
expect to make any capital gain distributions to shareholders.
The tax status of distributions is the same for all shareholders regardless
of how long they have owned fund shares and whether distributions are
reinvested or paid in cash.
Information concerning the tax treatment of distributions will be mailed to
shareholders each year. Because everyone's tax situation is unique, you
should consult your tax adviser regarding the treatment of distributions
under the federal, state and local tax rules that apply to you.
SERVICES FOR FUND INVESTORs
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described
below. With each service, you select a schedule and amount, subject to
certain restrictions. You may set up most of these services when filling
out your application or by calling 800-821-5129.
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For investing
<S> <C>
Invest-A-Matic You may make fixed, periodic investments ($250 initial and $50 subsequent
(Dollar-cost minimum) into your fund account by means of automatic money transfers from
averaging) your bank checking account. See the attached application for instructions.
Div-Move You may automatically reinvest the dividends and distributions from your
account into another account in any Eligible Fund ($50 minimum).
For selling shares
Systematic You may make regular withdrawals from most Lord Abbett funds. Automatic
Withdrawal cash withdrawals will be paid to you from your account in fixed or variable
Plan ("SWP") amounts. To establish a plan, the value of your shares must be at least
$10,000, except for Retirement Plans for which there is no minimum.
Class B shares The CDSC will be waived on SWP redemptions of up to 12% of the current net
asset value of your account at the time of your SWP request. For class B share
SWP redemptions over 12% per year, the CDSC will apply to the entire redemption.
Please contact the fund for assistance in minimizing the CDSC in this situation.
Class B and Redemption proceeds due to a SWP for class B and class C shares will be
C shares redeemed in the order described under "Purchases."
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Important Information. You may be subject to a $50 penalty under the Internal
Revenue Code if you do not provide a correct taxpayer identification number
(Social Security Number for individuals) or make certain required
certifications. In addition, we may be required to withhold from your account
and pay to the U.S. Treasury 31% of any redemption proceeds and of any dividend
or distribution from your account.
8 Your Investment
<PAGE>
OTHER SERVICES
Telephone Investing. After we have received the attached application
(selecting "yes" under Section 9C and completing Section 8), you may
instruct us by phone to have money transferred from your bank account to
purchase shares of the fund for an existing account. The fund will purchase
the requested shares when it receives the money from your bank.
Exchanges. You or your investment professional may instruct the fund to
exchange shares of any class for shares of the same class of any Eligible
Fund. Instruction may be provided in writing or by telephone, with proper
identification, by calling 800-821-5129. The fund must receive instructions
for the exchange before the close of the NYSE on the day of your call in
which case you will get the NAV per share of the Eligible Fund determined
on that day. Exchanges will be treated as a sale for federal tax purposes.
Be sure to read the current prospectus for any fund into which you are
exchanging.
Account Statements. Every Lord Abbett investor automatically receives
quarterly account statements.
Householding. Shareholders with the same last name and address will receive
a single copy of a prospectus and an annual or semi-annual report, unless
additional reports are specifically requested in writing to the fund.
Account Changes. For any changes you need to make to your account, consult
your investment professional or call the fund at 800-821-5129.
Systematic Exchange. You or your investment professional can establish a
schedule of exchanges between the same classes of any Eligible Fund.
MANAGEMENT
The fund operates under the supervision of its Board with the advice of
Lord, Abbett & Co., its investment adviser, which is located at 767 Fifth
Avenue, New York, NY 10153-0203. On or about January 17, 2000 the new
address will be 90 Hudson Street, Jersey City, NJ 07302-3973. Founded in
1929, Lord Abbett manages one of the nation's oldest mutual fund complexes,
with over $32 billion in more than 35 mutual fund portfolios and other
advisory accounts. For more information about the services Lord Abbett
provides to the fund, see the Statement of Additional Information.
The fund pays Lord Abbett a monthly fee based on average daily net assets
for each month as shown below. For the fiscal year ended June 30, 1999, the
fee paid to Lord Abbett was at an annual rate of .50 of 1% of average daily
net assets. In addition, the fund pays all expenses not expressly assumed
by Lord Abbett.
Management Fee Rate
.50% on the first $250 million in assets
.45% on the next $250 million
.40% on assets over $500 million
Telephone Transactions. You have this privilege in amounts of up to $50,000
unless you refuse it in writing. For your security, telephone transaction
requests are recorded. We will take measures to verify the identity of the
caller, such as asking for the name on the account, account number, social
security or taxpayer identification number and other relevant information. The
fund will not be liable for following instructions communicated by telephone
that it reasonably believes to be genuine. Transactions by telephone may be
difficult to implement in times of drastic economic or market change.
Year 2000 Issues. The fund could be adversely affected if the computers used by
the fund and its service providers do not properly process and calculate
date-related information from and after January 1, 2000.
Lord Abbett is working to avoid such problems and has received assurances from
the fund's service providers that they are taking similar steps. Of course, the
Year 2000 problem is unprecedented and, therefore, Lord Abbett cannot eliminate
altogether the possibility that it or the fund will be affected.
Your Investment 9
<PAGE>
GLOSSARY OF SHADED TERMS
Eligible Fund. An Eligible Fund is any Lord Abbett-sponsored fund except
for (1) certain tax-free, single-state funds where the exchanging
shareholder is a resident of a state in which such a fund is not offered
for sale; (2) Lord Abbett Equity Fund; (3) Lord Abbett Series Fund; and (4)
the fund. An Eligible Fund also is any Authorized Institution's affiliated
money market fund satisfying Lord Abbett Distributor as to certain omnibus
account and other criteria.
Eligible Mandatory Distributions. If class B shares represent a part of an
individual's total IRA or 403(b) investment, the CDSC will be waived only
for that part of a manda-tory distribution which bears the same relation to
the entire mandatory distribution as the B share investment bears to the
total investment.
Legal Capacity. With respect to a redemption request, if (for example) the
request is on behalf of the estate of a deceased shareholder, John W. Doe,
by a person (Robert A. Doe) who has the legal capacity to act for the
estate of the deceased shareholder because he is the executor of the
estate, then the request must be executed as follows: Robert A.Doe,
Executor of the Estate of John W. Doe. That signature using that capacity
must be guaranteed by an Eligible Guarantor.
Similarly, if (for example) the redemption request is on behalf of the ABC
Corporation by a person (Mary B. Doe) who has the legal capacity to act on
behalf of this corporation, because she is the President of the
corporation, then the request must be executed as follows: ABC Corporation
by Mary B.Doe, President. That signature using that capacity must be
guaranteed by an Eligible Guarantor (see example in right column).
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
In the case of the estate --
Robert A. Doe
Executor of the Estate of
John W. Doe
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
In the case of the corporation --
ABC Corporation
Mary B. Doe
By Mary B. Doe, President
[Date]
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
NAME OF GUARANTOR
[SIGNATURE ILLEGIBLE]
- --------------------------------------------------
AUTHORIZED SIGNATURE
(960) X 9 6 0 3 4 7 0
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM'sm'
SR
10 For More Information
<PAGE>
FINANCIAL HIGHLIGHTS
This table describes the fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These Financial Highlights have
been audited by Deloitte & Touche LLP, the fund's independent auditors, in
conjunction with their annual audit of the fund's financial statements.
Financial statements for the fiscal year ended June 30, 1999 and the
Independent Auditors' Report thereon appear in the Annual Report to
Shareholders for the fiscal year ended June 30, 1999 and are incorporated
by reference into the Statement of Additional Information, which is
available upon request. Certain information reflects financial results for
a single fund share.
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Class A Shares
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Year Ended June 30,
Per Share Operating Performance: 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
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Income from investment operations
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Net investment income .043 .047 .046 .048 .046
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Distributions
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Dividends from net investment income (.043) (.047) (.046) (.048) (.046)
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Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
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Total Return(c) 4.36% 4.79% 4.66% 4.85% 4.65%
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Ratios to Average Net Assets:
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Expenses 0.76% 0.83% 0.84% 0.81% 0.86%
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Net investment income 4.31% 4.68% 4.57% 4.75% 4.54%
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<TABLE>
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Class B Shares Class C Shares
Period Ended June 30, Period Ended June 30,
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Per Share Operating Performance: 1999 1998 1997(a) 1999 1998 1997(a)
<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
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Income from investment operations
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Net investment income .036 .039 .024 .043 .047 .044
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Distributions
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Dividends from net investment income (.036) (.039) (.024) (.043) (.047) (.044)
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Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
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Total Return(c) 3.76% 4.01% 2.39%(b) 4.36% 4.79% 4.47%(b)
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Ratios to Average Net Assets:
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Expenses 1.52% 1.59% 0.99%(b) 0.76% 0.84% 0.81%(b)
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Net investment income 3.52% 3.96% 2.38%(b) 4.27% 4.73% 4.39%(b)
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Year Ended June 30,
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Supplemental Data For All Classes: 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net assets, end of year (000) $200,981 $165,128 $144,232 $152,531 $140,642
</TABLE>
(a) Commencement of offering respective class of shares: B - August 1, 1996, C
- July 15, 1996.
(b) Not annualized.
(c) Total return assumes reinvestment of all distributions.
Financial Information 11
<PAGE>
More information on this fund is available free upon request, including the
following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the fund and lists portfolio holdings.
STATEMENT OF ADDITIONAL INFORMATION (" SAI")
Provides more details about the fund and its policies. A current SAI is on
file with the Securities and Exchange Commission (" SEC") and is
incorporated by reference(is legally considered part of this prospectus).
To obtain information:
By telephone. Call the fund at:
800-201-6984
By mail. Write to the fund at:
The Lord Abbett Family of Funds
767 Fifth Avenue
New York, NY 10153-0203
Via the Internet.
Lord, Abbett & Co.
http://www.lordabbett.com Text only versions of fund documents can be viewed
online or downloaded from:
SEC
http://www.sec.gov
You can also obtain copies by
visiting the SEC's Public Reference Room in Washington, DC (phone 800-SEC-0330)
or by sending your request and a duplicating fee to the SEC's Public Reference
Section, Washington, DC 20549-6009.
Lord Abbett U. S. Government Securities
Money Market Fund, Inc.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
On or about January 17, 2000 the new address will be:
90 Hudson Street,
Jersey City, NJ 07302-3973
LAMM-1-1199
SEC file number: 811-2924 (11/99)
<PAGE>
LORD ABBETT
Statement of Additional Information November 1, 1999
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 your securities dealer or from Lord Abbett Distributor LLC
("Lord Abbett Distributor") at The General Motors Building, 767 Fifth Avenue,
New York, New York 10153-0203.On or about January 17, 2000, the new address
will be 90 Hudson Street, Jersey City, New Jersey 07302-3973. This Statement
relates to, and should be read in conjunction with, the Prospectus dated
November 1, 1999.
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. Class A and B shares may be purchased directly
and may be acquired in exchange for shares of the same class of another Lord
Abbett-Sponsored fund. Class C shares may be acquired only in exchange from
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 class-specific expenses. They are fully paid and
nonassessable when issued and have no preemptive or conversion rights. Although
no present plans exist to do so, further classes may be added in the future. The
Investment Company Act of 1940, as amended (the "Act"), requires that where more
than one class exists, each class must be preferred over all other classes in
respect of assets specifically allocated to such class.
TABLE OF CONTENTS PAGE
1. Investment Policies 2
2. Yield Calculation 4
3. Directors and Officers 5
4. Investment Advisory and Other Services 7
5. Portfolio Transactions 8
6. Net Asset Value and Dividends 9
7. Telephone Exchange Privilege and Rule 12b-1 Plans 10
8. Class B Share Conversion Feature 11
9. Shareholder Programs and Retirement Plans 11
10. Commercial Paper and Bond Ratings 12
11. Taxes 14
12. Information About the Fund 14
13. Financial Statements 14
1
<PAGE>
1.
Investment Policies
The Fund is a diversified open-end management company registered under the Act.
Fundamental Investment Restrictions. The Fund is 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.
Compliance with the investment restrictions in this section 1 will be
determinted at the time of the purchase or sale of the portfolio investments.
Non-Fundamental Investment Restrictions. In addition to the policies in the
Prospectus and 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 33 1/3% of its total assets (including the amount
borrowed), 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;
(3) invest knowingly more than 15% of its net assets (at the time of investment)
in illiquid securities, except for securities quualifying for resale under Rule
144A of the Securities Act of 1933, deemed to be liquid by the Board of
Directors (in accordance with currently applicable SEC requirements, the Fund
will not invest knowingly more than 10% of its net assets (at the time of
investment) in such illiquid securities);
(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
2
<PAGE>
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.
Repurchase Agreements. Repurchase agreements are instruments 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. These result in fixed rates 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 which 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. An
example follows for the seven-day period ended June 30, 1999 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 $ 1.000880274
Net change in account value $ .000880274
3
<PAGE>
Base period return (net change in
account value divided by the
beginning account value) .0880274%
------
"Yield" [base period return
times (365 divided by 7)] 4.59%
------
"Effective yield" [(base period
return + 1) 365/7] - 1 4.70%
On June 30, 1999, our portfolio had a dollar-weighted life to maturity of 21
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 Board of Directors of the Fund is responsible for the management of the
business and affairs of the Fund.
The following director is a partner of Lord, Abbett & Co. ("Lord Abbett"), 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
and/or director or trustee of the other Lord Abbett-sponsored funds.
*Robert S. Dow, age 54, Chairman and President
*Mr. Dow is an "interested person" as defined in the Act.
The following outside trustees are also directors or trustees of the other Lord
Abbett-sponsored funds referred to above.
E. Thayer Bigelow
Time Warner Inc.
1271 Avenue of the Americas
New York, New York
Senior Adviser, Time Warner Inc. Formerly, Acting Chief Executive Officer of
Courtroom Television Network (1997-1998). Formerly, President and Chief
Executive Officer of Time Warner Cable Programming, Inc. (1991-1997). Prior to
that, President and Chief Operating Officer of Home Box Office, Inc. Age 58.
William H. T. Bush
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
4
<PAGE>
Co-founder and Chairman of the Board of financial advisory firm of
Bush-O'Donnell & Company. Age 61.
Robert B. Calhoun, Jr.
Monitor Clipper Partners
650 Madison Avenue, 9th Floor
New York, New York
Managing Director of Monitor Clipper Partners and President of The Clipper
Group, both private equity investment funds. Age 57.
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 68.
John C. Jansing
162 S. Beach Road
Hobe Sound, Florida
Retired. Former Chairman of Independent Election Corporation of America, a proxy
tabulating firm. Age 73.
C. Alan MacDonald
415 Round Hill Road
Greenwich, Connecticut
Currently involved in golf development management on a consultancy basis.
Formerly, Managing Director of The Directorship Group, Inc., a consultancy in
executive search, board management and corporate governance (1997-1999). Prior
to that, General Partner of The Marketing Partnership, Inc., a full service
marketing consulting firm (1994 - 1997), Chairman and Chief Executive Officer of
Lincoln Snacks, Inc., manufacturer of branded snack foods (1992 - 1994). His
career includes 36 years at Stouffers and Nestle with 18 of those years as Chief
Executive Officer. Currently serves as Director of J.B. Williams Company, Inc.,
Fountainhead Water Company, CARESIDE, Inc. and Lincoln Snacks Company. Age 66.
Hansel B. Millican, Jr.
Rochester Button Company
1328 Broadway (Suite 816)
New York, New York
President and Chief Executive Officer of Rochester Button Company. Currently
serves as Director of Polyvision Corporation. Age 71.
Thomas J. Neff
Spencer Stuart
277 Park Avenue
New York, New York
Chairman of Spencer Stuart, an executive search consulting firm. Currently,
serves as Director of Ace, Ltd. (NYSE). Age 62.
The second column of the following table sets forth the compensation accrued for
the Fund's outside directors. The third column sets forth information with
respect to the equity-based benefits accrued for outside directors by the Lord
Abbett-sponsored funds. The fourth 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.
5
<PAGE>
<TABLE>
<CAPTION>
For the Fiscal Year Ended June 30, 1999
---------------------------------------
(1) (2) (3) (4)
Pension or For Year Ended
Retirement Benefits December 31, 1998
Accrued by the Total Compensation
Aggregate Fund and Accrued by the Fund and
Compensation Thirteen Other Lord all other Lord
Accrued by Abbett-sponsored Abbett-sponsored
Name of Director the Fund/1/ Funds/2/ Funds/3/
- ------------------ ------------- ----------------- -----------------------
<S> <C> <C> <C>
E. Thayer Bigelow $587 $17,068 $57,400
William H. T. Bush* $577 None $27,500
Robert B. Calhoun, Jr.** $577 None $33,500
Stewart S. Dixon $588 $32,190 $56,500
John C. Jansing $582 $45,0854 $55,500
C. Alan MacDonald $572 $30,703 $55,000
Hansel B. Millican, Jr. $577 $37,747 $55,500
Thomas J. Neff $592 $19,853 $56,500
</TABLE>
* Elected August 13, 1998.
** Elected June 17, 1998.
1.Outside directors' fees, including attendance fees for board and committee
meetings, are allocated among all Lord Abbett-sponsored funds based on the
net assets of each fund. A portion of the fees payable by the Fund to its
outside directors/trustees is being deferred under a plan ("equity based
plan") that deems the
deferred amounts to be invested in shares of the Fund for later distribution
to the directors/trustees.The amounts of the aggregate compensation payable
by the Fund in accordance with the equity based plan as of June 30, 1999
deemed invested in Fund shares, including dividends reinvested and changes in
net asset value applicable to such deemed investments, were: Mr. Bigelow,
$2,921; Mr. Bush,$0; Mr. Calhoun, $611; Mr. Dixon, $11,266; Mr. Jansing,
$26,863; Mr. MacDonald, $10,436; Mr. Millican, $27,259 and Mr. Neff, $27,512.
If the amounts deemed invested in Fund shares were added to each director's
actual
holdings of Fund shares as of June 30, 1999, each would own the following:
Mr. Bigelow, 2,921 shares; Mr. Bush, 0 shares; Mr. Calhoun, 611 shares, Mr.
Dixon, 12,071 shares; Mr. Jansing, 26,863 shares; Mr. MacDonald, 11,653
shares; Mr. Millican, 27,259 shares; and Mr. Neff, 27,512 shares.
2. The amounts in Column 3 were accrued by the Lord Abbett-sponsored Funds for
the 12 months ended October 31, 1998 with respect to the equity based plan
established for independent directors/trustees in 1996. This plan supercedes
a previously approved retirement plan for all future directors/trustees.
Current directors had the option to convert their accrued benefits under the
retirement plan. All of the outside directors except one made such an
election. Each plan also provides for a pre-retirement death benefit and
actuarially reduced joint-and-survivor spousal benefits.
3. This column shows aggregate compensation, including directors/trustees 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, 1998.
4. Mr. Jansing chose to continue to receive benefits under the retirement plan,
which provides that outside directors/trustees may receive annual retirement
benefits for life equal to their final annual retainer following retirement
at or after age 72 with at least ten years of service. Thus, if Mr. Jansing
were to retire and the annual retainer payable by the funds were the same as
it is today, he would receive annual retirement benefits of $50,000.
6
<PAGE>
Except where indicated, the following executive officers of the Fund have been
associated with Lord Abbett for over five years. Of the following, Messrs.
Brown, Carper, Gerber, Hilstad, Morris, and Walsh are partners of Lord Abbett;
the others are employees: None have received Compensation from the Fund.
Executive Vice President:
Robert Gerber, age 45, Executive Vice President (with Lord Abbett since July
1997; formerly Senior Portfolio Manager of Sanford C. Bernstein & Co., Inc.)
Vice Presidents:
Joan Binstock, age 45, Executive Vice President (with Lord Abbett since July
1997; formerly Senior Portfolio Manager of Sanford C. Bernstein & Co., Inc.)
Zane E. Brown, age 46
Daniel E. Carper, age 47
Paul A. Hilstad, age 56, Vice President and Secretary (with Lord Abbett since
1995; formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.)
Lawrence H. Kaplan, age 42, (with Lord Abbett since 1997 - formerly Vice
President and Chief Counsel of Salomon Brothers Asset Management Inc from 1995
to 1997, prior thereto Senior Vice President, Director and General Counsel of
Kidder Peabody Asset Management, Inc.)
Robert G. Morris, age 54
A.Edward Oberhaus, III, age 39
Tracie Richter, age 31, (with Lord Abbett since 1999, formerly Vice President -
Head of Fund Administration of Morgan Grenfell from 1998 to 1999, Vice
Presdient of Bankers Trust from 1996 to 1998, prior thereto Tax Associate of
Goldman Sachs.
John J. Walsh, age 63
Treasurer:
Donna M. McManus, age 38, (with Lord Abbett since 1996, formerly a Senior
Manager at Deloitte & Touche LLP)
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 October 29, 1999, our directors and officers, as a group, owned less than
1% of our outstanding shares. As of October 29, 1999, the record holders of 5%
or more of each class of the Fund's outstanding shares are as follows:
Class A: Lord Abbett & Co., 767 Fifth Avenue, New York, NY 10153 - 6.24%
Class B: Edward Jones & Co., 201 Progess Pkwy, Maryland Hts, MO 63043 - 15.01%
Class C: Edward Jones & Co., 201 Progress Pkwy, Maryland Hts, MO 63043 - 13.40%
Wachovia Securities, Inc. P.O. Box 1220, Charlotte, NC 28201 - 10.66%
Salmon Smith Barney Inc., 333 West 34th Street, New York, NY 10001 -
10.40%
4.
Investment Advisory and Other Services
As described under "Management" in the Prospectus, Lord Abbett is the Fund's
investment manager. Of the general partners of Lord Abbett, the following are
officers and/or directors of the Fund: Zane E. Brown, Daniel E. Carper, Robert
S. Dow, Robert I. Gerber, Paul A. Hilstad, Robert G. Morris, and John J. Walsh.
The other general partners are: Stephen I. Allen, John E. Erard, Robert P.
Fetch, Daria L. Foster, W. Thomas Hudson, Stephen J. McGruder,
7
<PAGE>
Michael B. McLaughlin, Robert J. Noelke, R. Mark Pennington, and Christopher J.
Towle. 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 "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 .50 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 .40
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, 1999, 1998, and 1997, the management fees
paid to Lord Abbett amounted to $930,679, $740,978, and $773,869, respectively.
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.
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 a
contract with a principal underwriter and the election of directors from its
separate voting requirements.
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 may be
officers of the Fund and are 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.
8
<PAGE>
6.
Net Asset Value and Dividends
Net Asset Value. The determination of our net asset value is described under
"Redemptions - 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, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
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.
Dividends. As described in the Prospectus under "Dividends, Taxes and Yield,"
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 any class 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
(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 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. Class A
and B shares of the Fund may be acquired either by such an exchange or by direct
purchase.
You or your investment professional, 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 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. 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
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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 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, regardless of
whether this increase is reflected in reinvested dividends or distributions, in
the case of Class A shares, and due to such an increase because of reinvested
dividends and capital gains, in the case of Class B and C shares, (ii) shares
with respect to which no Lord Abbett fund paid a 12b-1 fee 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.
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8.
Class B Share Conversion Feature
The conversion of Class B shares on the eighth anniversary of their purchase is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion 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.
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 the current net
asset value of your account at the time your SWP is established. 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. The SWP may be
terminated by you or by us at any time by written notice.
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 Traditional, Education, Roth, Simplified Employee
Pension Plans and Simple IRA's), 403(b) plans and qualified pension and
profit-sharing plans, including 401(k) plans. The forms 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.
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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.
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 rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
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 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 or 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.
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A - Bonds 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 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 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.
B - Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa - Bonds 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 rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C - Bonds 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. The obligor's
capacity to meet its financial commitment on the obligation is extremely strong.
AA - Bonds rated AA differ form the highest rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A - Bonds rated A are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB - Bonds rated BBB exhibit adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.
BB-B-CCC-CC-C - Obligations rated BB, B, CCC, CC and C are regarded as having
significant speculative characteristics. 'BB' indicates the least degree of
speculation and 'C' the highest. while such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
D - Obligations rated 'D' is in payment default. The 'D' rating category is used
when interest payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The 'D' rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
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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.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to United States persons (United States citizens or residents and
United States domestic corporations, partnerships, trusts and estates). Each
shareholder who is not a United States person should consult his tax adviser
regarding the U.S. and foreign tax consequences of the ownership of shares of
the Fund, including a 30% (or lower treaty rate) United States withholding tax
on dividends representing ordinary income and net short-term capital gains, and
the applicability of United States gift and estate taxes to non-United States
persons who own Fund shares.
12.
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 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.
Financial Statements
The financial statements for the fiscal year ended June 30, 1999 and the report
of Deloitte & Touche LLP, independent auditors, on such financial statements
contained in the 1999 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.
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