Lord Abbett U.S. Government Securities
Money Market Fund
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SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
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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 Six Months Ended December 31, 1998
[PHOTO OMITTED]
/s/ Robert S. Dow
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ROBERT S. DOW
CHAIRMAN
JANUARY 8, 1999
"The Fund seeks to provide attractive levels of monthly sncome, preserve capital
and maintain liquidity for its shareholders in all interest-rate environments."
Lord Abbett U.S. Government Securities Money Market Fund completed the first
half of its fiscal year on December 31, 1998, with net assets of over $178
million and a seven-day current yield of 4.27%* for Class A shares. The
following chart provides an overview of class-specific data for this six-month
period.
Six Months Ended December 31, 1998
Class A Class B Class C
- --------------------------------------------------------------------------------
Dividends $0.023 $0.019 $0.023
Average annual total return** +2.24% +1.87% +2.24%
The period under review was an extremely interesting one for capital markets.
Economic disarray in Asia, Russia and Latin America triggered a worldwide
"flight to quality" during the third quarter. The period's overwhelmingly
bullish sentiment pushed U.S. Treasury bond yields much lower than they
previously had been. The yield on the 10-year Treasury Note, for example, dipped
to about 4.75% in September.+
The "flight to quality" reached its apex in October. After an overwhelmingly
bullish attitude pushed U.S. Treasury yields to near-historical lows, some
degree of calm was restored to markets during the fourth quarter as the Federal
Reserve Board cut interest rates and helped resolve potentially major crises
among certain credit markets and financial institutions.
The Fund seeks to provide attractive levels of monthly income, preserve capital
and maintain liquidity for its shareholders in all interest-rate environments.
We pursued these objectives during the period under review by concentrating on
specific areas of the money market yield curve that provided the highest
incremental yield. The most important of these were high-quality U.S. Government
Agency discount notes. Since money market rates remained relatively stable
throughout the period, the Fund's average maturity throughout the period was
maintained at approximately 30 days.
We are pleased that you have included Lord Abbett U.S. Government Securities
Money Market Fund in your investment portfolio. Please remember that, as a
shareholder of the Fund, you have check-writing privileges, as well as the
flexibility to exchange Fund shares for other Lord Abbett-managed funds of the
same share class.
* 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 is 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.
Unlike Treasury securities, an investment in the Fund is neither insured nor
guaranteed by the U.S.
<PAGE>
Statement of Net Assets
December 31, 1998
<TABLE>
<CAPTION>
Principal
Rating Amount Value
=================================================================================================
Investments in Securities 101.04%
=================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Federal Home Loan Banks
and Agency 4.30% due 1/4/1999 A1+ $10,700M $10,696,166
Obligations 101.04% 5.75% due 1/4/1999 A1+ 10,000M 9,995,208
Total 20,691,374
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Federal Home Loan Mortgage Corporation
5.04% due 1/4/1999 A1+ 10,000M 9,995,800
5.09% due 1/4/1999 A1+ 10,000M 9,995,758
5.10% due 1/4/1999 A1+ 10,000M 9,995,750
4.95% due 1/8/1999 A1+ 10,000M 9,990,375
5.02% due 1/11/1999 A1+ 5,000M 4,993,028
4.72% due 1/14/1999 A1+ 5,000M 4,991,478
5.08% due 1/14/1999 A1+ 5,000M 4,990,828
5.10% due 1/14/1999 A1+ 5,000M 4,990,792
4.95% due 1/15/1999 A1+ 10,000M 9,980,750
4.62% due 2/12/1999 A1+ 5,000M 4,973,050
4.62% due 2/16/1999 A1+ 5,000M 4,970,483
4.62% due 2/19/1999 A1+ 5,000M 4,968,558
4.92% due 2/22/1999 A1+ 10,000M 9,928,933
4.81% due 3/26/1999 A1+ 5,000M 4,943,883
Total 99,709,466
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Federal National Mortgage Association
5.03% due 1/7/1999 A1+ 5,000M 4,995,808
5.09% due 1/7/1999 A1+ 5,000M 4,995,758
5.02% due 1/8/1999 A1+ 5,000M 4,995,119
5.03% due 1/15/1999 A1+ 5,000M 4,990,219
5.03% due 2/5/1999 A1+ 5,000M 4,975,549
5.06% due 2/5/1999 A1+ 5,000M 4,975,403
5.00% due 2/18/1999 A1+ 5,000M 4,966,667
5.00% due 2/19/1999 A1+ 5,000M 4,965,972
4.97% due 3/3/1999 A1+ 5,000M 4,957,893
4.97% due 3/5/1999 A1+ 5,000M 4,956,513
4.93% due 3/18/1999 A1+ 5,000M 4,947,961
Total 54,722,862
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Student Loan Marketing Association
5.45% due 2/22/1999++ A1+ 5,000M 4,998,261
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Total U.S. Government and Agency Obligations* 180,121,963
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Other Assets, Less Liabilities (1.04)% (1,846,039)
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Net Assets 100.00% (equivalent to $1.00 a share on 168,050,306 Class A
shares, 6,497,649 Class B shares and 3,727,969 Class C
shares of $0.001 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) $178,275,924
=================================================================================================
</TABLE>
* Cost for Federal income tax purposes is $180,121,963
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
Investment Income Six Months Ended December 31, 1998
==============================================================================================================================
<S> <C> <C> <C>
Income Interest $4,722,399
Expenses -------------------------------------------------------------------------------------------------------------------
Management fee $ 449,059
Shareholder servicing 181,628
Registration 30,000
Professional 20,040
Reports to shareholders 15,174
12b-1 distribution plan-Class B 21,979
Other 3,170
Total expenses 721,050
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Net investment income $4,001,349
===================================================================================================================
</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
December 31, June 30,
Increase in Net Assets 1998 1998
==============================================================================================================================
<S> <C> <C> <C>
Operations Net investment income (declared as dividends to shareholders)
Class A $3,814,440 $6,834,313
Class B 108,873 40,717
Class C 78,036 49,867
Total 4,001,349 6,924,897
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Capital share transactions (dollar amounts and number of shares are the same)
- ------------------------------------------------------------------------------------------------------------------------------
Proceeds from shares sold:
Class A 204,806,303 328,880,426
Class B 11,912,317 7,463,527
Class C 21,209,107 5,938,698
Total 237,927,727 342,282,651
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Net asset value of shares issued to shareholders in reinvestment of net investment income:
Class A 3,501,947 6,329,635
Class B 83,412 28,189
Class C 56,975 32,002
Total 3,642,334 6,389,826
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Cost of shares reacquired:
Class A (202,888,500) (315,776,844)
Class B (7,258,451) (5,975,021)
Class C (18,275,664) (6,024,269)
Total (228,422,615) (327,776,134)
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Increase in net assets 13,147,44 20,896,343
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of year 165,128,478 144,232,135
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End of period $178,275,924 $ 165,128,478
==============================================================================================================================
</TABLE>
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------------------------
Per Share Six Months Year Ended
Operating Ended June 30,
Performance: 12/31/98 1998 1997 1996 1995 1994
==================================================================================================================================
<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 0.023 0.047 0.046 0.048 0.046 0.025
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from
net investment income (0.023) (0.047) (0.046) (0.048) (0.046) (0.025)
Net asset value,
end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return(d) 2.24%(b) 4.79% 4.66% 4.85% 4.65% 2.54%
==================================================================================================================================
Ratios/Supplemental
Data:
==================================================================================================================================
Net assets, end of year (000) $ 168,050 $ 162,631 $ 143,197 $ 152,531 $ 140,642 $ 156,069
==================================================================================================================================
Ratios to Average
Net Assets
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Expenses, including waiver 0.40%(b) 0.83% 0.84% 0.81% 0.86% 0.85%
Expenses, excluding waiver 0.40%(b) 0.83% 0.84% 0.81% 0.86% 0.90%
Net investment income 2.20%(b) 4.68% 4.57% 4.75% 4.54% 2.56%
==================================================================================================================================
<CAPTION>
Class B Class C
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Six Months Year 8/1/96(a)(c) Six Months Year 7/15/96(a)
Ended Ended to Ended Ended to
12/31/98 6/30/98 6/30/97 12/31/98 6/30/98 6/30/97
================================================================================== =========================================
<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 0.019 0.039 0.024 0.023 0.047 0.044
- ---------------------------------------------------------------------------------- -----------------------------------------
Distributions
Dividends from
net investment income (0.019) (0.039) (0.024) (0.023) (0.047) (0.044)
Net asset value,
end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------- -----------------------------------------
Total Return(d) 1.87(b) 4.01% 2.39%(b) 2.24(b) 4.79% 4.47%(b)
================================================================================== =========================================
Ratios/Supplemental
Data:
================================================================================== =========================================
Net assets, end of year (000) $ 6,498 $ 1,760 $ 244 $ 3,728 $ 738 $ 791
================================================================================== =========================================
Ratios to Average
Net Assets
- ---------------------------------------------------------------------------------- -----------------------------------------
Expenses, including waiver 0.78%(b) 1.59% 0.99%(b) 0.40%(b) 0.84% 0.81%(b)
Expenses, excluding waiver 0.78%(b) 1.59% 0.99%(b) 0.40%(b) 0.84% 0.81%(b)
Net investment income 1.90%(b) 3.96% 2.38%(b) 2.20%(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 Class C 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
December 31, 1998, under a deferred compensation plan, were approximately
$120,000.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
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GROWTH
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
INCOME
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Funds Growth & Balanced Fund Income Funds Tax-Free Money
Growth Fund Income Funds Income Funds Market Fund
Developing Alpha Fund Affiliated Fund Balanced Fund High Yield Fund o National U.S. Government
Growth Fund o California Securities
Global Equity Growth & Bond-Debenture o Connecticut Money Market
Fund Income Fund Fund o Florida Fund**+
o Georgia
Growth Large-Cap Global Income o Hawaii
Opportunities Research Fund Fund o Michigan
Fund o Minnesota
Limited Duration o Missouri
International U.S. Government o New Jersey
Fund Securities Fund** o New York
o Pennsylvania
Mid-Cap U.S. Government o Texas
Value Fund Securities Fund** o Washington
Small-Cap World Bond-
Value Fund* Debenture Fund
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your investment professional provides value in helping you identify and
understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only if
preceded or accompanied by a current prospectus for the Funds covered by this
report.
For more complete information about any other Lord Abbett fund, including
charges and expenses, call your investment professional or Lord Abbett
Distributor llc at 800-874-3733 for a prospectus. Read it carefully before
investing.
When you invest in a family of funds, you benefit from:
Diversification. You and your investment professional can diversify your
investments between equity and income funds.
Flexibility. As your investment goals change, your investment professional can
help you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to more than
30 portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking with
your investment professional to help you customize your investment plan.
Numbers to Keep Handy
For Shareholder Account or Statement
Inquiries: 800-821-5129
For Literature Only: 800-874-3733
24-Hour Automated Shareholder
Service Line: 800-865-7582
Visit Our Web Site:
http://www.lordabbett.com
* The Lord Abbett Small-Cap Value Fund Classes A, B and C are closed to new
investors.
** An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ An investment in the Fund 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. This Fund is managed
to maintain, and has maintained its stable $1.00 price per share.
[LOGO](R) LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
Lord Abbett mutual fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC
- ------------------------------------------------------------ LAMM-3-1298
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (2/99)
