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Lord Abbett U.S. Government Securities
Money Market Fund
2000 ANNUAL REPORT
[GRAPHIC OMITTED]
A fund designed to help you
with your current income needs
and preserve your capital
[LOGO]
<PAGE>
Report to Shareholders
For the Fiscal Year Ended June 30, 2000
[PHOTO]
/s/ Robert S. Dow
Robert S. Dow
July 10, 2000
"Most money market investors benefited from the rise in short-term interest
rates during the past year."
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=====================
DALBAR
Honors Commitment To:
INVESTORS
1999
=====================
Lord, Abbett & Co. is proud to announce we have received a DALBAR award for
providing consistently good service to shareholder the 1999 Key Honor Award for
Mutual Fund Service. DALBAR, Inc. an independent research firm and evaluator of
mutual fund service, presents the award to financial services firms that provide
consistently solid service to clients.
--------------------------------------------------------------------------------
Lord Abbett U.S. Government Securities Money Market Fund completed its fiscal
year on June 30, 2000 with net assets of more than $201 million and a seven-day
current yield of 5.39%.* The following chart provides an overview of
class-specific data during the fiscal year.
FISCAL YEAR ENDED 6/30/00
CLASS A CLASS B CLASS C
--------------------------------------------------------------------------------
Net asset value $ 1.00 $ 1.00 $ 1.00
Dividends $ 0.049 $ 0.041 $ 0.049
Total return** + 4.9% + 4.1% + 4.9%
The most significant aspect of the Fund's fiscal year is perhaps the fact that
rising short-term interest rates proved to benefit most money market investors.
In general, investors kept a keen eye on the actions of the Federal Reserve
Board (the Fed). The Fed raised short-term interest rates six times between June
1999 and June 2000 in an effort to stem U.S. economic growth. Interestingly,
despite the Fed's three interest rate hikes in 1999, the year 2000 began with
strong economic growth, rising employment, healthy consumer spending and low
inflation. These conditions encouraged investors to shun most fixed-income
investments and seek returns in the equity markets. Concurrently, the Treasury
Department independently decided to buy back some of its long-term debt (30-year
Treasury bonds) and cut back on the number of auctions of 30-year Treasuries
during the year from four to two. These two decisions by the Treasury, coupled
with the interest rate hikes by the Fed, helped invert the Treasury yield curve
in February, causing an unusual situation in which longer-term bonds yield less
than bonds with shorter maturities. (The Treasury yield curve is a curve
depicting the yield of Treasuries of various maturities.) This resulted in
significant outflows of funds from fixed-income mutual funds as fixed-income
investments, in general, fell out of favor. However, most money market investors
avoided this volatility and benefited from the rise in short-term rates.
By early June, signs of a moderation in growth emerged. When the Fed did not
raise interest rates at its June 2000 meeting, many investors took this as a
sign that the Fed may be more satisfied that economic growth is, in fact,
slowing. On average, Treasuries have changed little since the first quarter of
this year. Although intermediate-term Treasuries have fallen slightly in yield,
they continue to yield more than long-term maturities.
Your Fund benefited from the increasing interest rate environment over the past
year. In terms of managing the portfolio, we maintained an average maturity of
approximately 30 days, while concentrating on specific areas of the money market
curve that we expected to provide the highest incremental yield. The most
significant of these segments continues to be U.S. Government Agency discount
notes.
We expect money market rates to track the overall level of interest rates,
rising in response to any further rate increases by the Fed. Based on economic
indicators from the second quarter of this year, it is still uncertain whether
the Fed has contained economic growth to a level that would not, in its opinion,
warrant additional rate hikes.
Thank you for including Lord Abbett U.S. Government Securities Money Market Fund
in your investment portfolio. We remain committed to helping you achieve your
long-term financial goals, and look forward to maintaining our relationship in
the coming years.
* The Fund's Class A 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 no indication of future results.
** Total return is the percent change in net asset value, assuming the
reinvestment of all distributions.
NOTE: 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 per share price.
<PAGE>
Statement of Net Assets (unaudited)
June 30, 2000
Principal
Amount
Investments Rating+ (000) Value
Investments in Securities 100.41%
U.S. Government Federal Home Loan Bank
Agency Obligations 5.85% due 8/15/2000 A1+ $ 576 $ 571,703
100.41% 6.09% due 8/25/2000 A1+ 5,000 4,952,776
6.16% due 7/7/2000 A1+ 5,000 4,994,813
6.24% due 8/29/2000 A1+ 5,000 4,948,329
6.31% due 7/5/2000 A1+ 5,000 4,996,478
6.42% due 7/21/2000 A1+ 5,000 4,982,141
Total 25,446,240
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Federal Home Loan Mortgage Corporation
6.01% due 7/6/2000 A1+ 5,000 4,995,775
6.04% due 7/6/2000 A1+ 10,000 9,991,495
6.10% due 8/17/2000 A1+ 5,000 4,959,578
6.11% due 7/27/2000 A1+ 10,000 9,955,380
6.36% due 7/18/2000 A1+ 10,000 9,969,839
6.41% due 8/1/2000 A1+ 10,000 9,944,556
6.44% due 7/13/2000 A1+ 2,035 2,030,625
6.45% due 8/17/2000 A1+ 2,000 1,983,134
6.47% due 9/14/2000 A1+ 25,000 24,662,293
6.57% due 7/3/2000 A1+ 36,800 36,786,566
Total 115,279,241
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Federal National Mortgage Association
5.82% due 8/28/2000 A1+ 290 287,220
6.06% due 8/3/2000 A1+ 1,000 994,363
6.06% due 8/21/2000 A1+ 5,000 4,956,526
6.06% due 8/22/2000 A1+ 5,000 4,955,674
6.06% due 8/23/2000 A1+ 5,000 4,954,821
6.09% due 8/10/2000 A1+ 5,000 4,965,608
6.10% due 8/24/2000 A1+ 5,000 4,953,558
6.12% due 8/17/2000 A1+ 5,000 4,959,401
6.41% due 7/18/2000 A1+ 12,800 12,761,124
6.42% due 8/1/2000 A1+ 8,200 8,154,522
6.52% due 8/24/2000 A1+ 10,000 9,901,630
Total 61,844,447
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Total U.S. Government Agency Obligations* 202,569,928
================================================================================
Other Assets, Less Liabilities (0.41%) (836,926)
================================================================================
Net Assets 100.00% (Equivalent to $1.00 a share on 190,817,236
Class A shares, 8,986,809 Class B shares and
1,928,957 Class C shares of $.001 par value
capital stock outstanding; 700,000,000 Class A
shares, 100,000,000 Class B shares and
200,000,000 Class C shares authorized) $201,733,002
================================================================================
+ Ratings are unaudited.
* Cost for federal income tax purposes is $202,569,928.
Average maturity of investments: 33 days.
See Notes to Financial Statements.
<PAGE>
Statement of Operations (unaudited)
Investment Income Year Ended June 30, 2000
================================================================================
Income Interest $12,712,009
Expenses --------------------------------------------------------------------
Management fee $ 1,139,097
12b-1 distribution plan-Class B 77,319
Shareholder servicing 646,624
Registration 60,163
Reports to shareholders 30,634
Professional 28,144
Directors' fees 5,315
Other 2,408
Total expenses before reductions 1,989,704
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Expense reductions (105,739)
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Net expenses 1,883,965
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Net investment income $10,828,044
====================================================================
See Notes to Financial Statements.
Statements of Changes in Net Assets
Year Ended June 30,
Increase in Net Assets 2000 1999
Operations Net investment income (declared as dividends to shareholders)
Class A $ 10,218,972 $ 7,538,290
Class B 412,327 258,502
Class C 196,745 164,760
Total 10,828,044 7,961,552
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Capital share transactions (dollar amounts and numbers of shares are the same)
--------------------------------------------------------------------------------
Proceeds from shares sold:
Class A 487,800,620 510,782,049
Class B 16,787,939 25,887,755
Class C 12,989,578 42,179,622
Total 517,578,137 578,849,426
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Net asset value of shares issued to shareholders in reinvestment of dividends:
Class A 9,349,965 6,951,998
Class B 348,228 205,821
Class C 156,512 129,445
Total 9,854,705 7,287,264
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Cost of shares reacquired:
Class A (490,933,187) (495,764,765)
Class B (19,337,886) (16,627,593)
Class C (16,409,786) (37,891,791)
Total (526,680,859) (550,284,149)
--------------------------------------------------------------------
Increase in net assets 751,983 35,852,541
--------------------------------------------------------------------------------
Net Assets
Beginning of year 200,981,019 165,128,478
--------------------------------------------------------------------
End of year $ 201,733,002 $ 200,981,019
================================================================================
See Notes to Financial Statements.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B
---------------------------------------------------- ----------------------------------------
Year Year 8/1/1996(a)
Per Share Operating Ended Ended to
Performance: 2000 1999 1998 1997 1996 2000 1999 6/30/1998 6/30/1997
=================================================================================== ========================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 1.00
----------------------------------------------------------------------------------- ----------------------------------------
Income from investment
operations
Net investment income 0.049 0.043 0.047 0.046 0.048 0.041 0.036 0.039 0.024
----------------------------------------------------------------------------------- ----------------------------------------
Distributions
Dividends from
net investment income (0.049) (0.043) (0.047) (0.046) (0.048) (0.041) (0.036) (0.039) (0.024)
Net asset value,
end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 1.00
----------------------------------------------------------------------------------- ----------------------------------------
Total Return(c) 4.93% 4.36% 4.79% 4.66% 4.85% 4.13% 3.76% 4.01% 2.39%(b)
=================================================================================== ========================================
Ratios/Supplemental Data:
=================================================================================== ========================================
Net assets,
end of year (000) $190,817 $184,600 $162,631 $143,197 $152,531 $ 8,987 $11,188 $ 1,760 244
=================================================================================== ========================================
Ratios to Average Net Assets
----------------------------------------------------------------------------------- ----------------------------------------
Expenses(d) 0.84% 0.76% 0.83% 0.84% 0.81% 1.59% 1.52% 1.59% 0.99%(b)
Net investment income 4.79% 4.31% 4.68% 4.57% 4.75% 4.01% 3.52% 3.96% 2.38%(b)
=================================================================================== ========================================
<CAPTION>
Class C
-----------------------------------------
Year 7/15/1996(a)
Per Share Operating Ended to
Performance: 2000 1999 6/30/1998 6/30/1997
========================================================================
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------------
Income from investment
operations
Net investment income 0.049 0.043 0.047 0.044
------------------------------------------------------------------------
Distributions
Dividends from
net investment income (0.049) (0.043) (0.047) (0.044)
Net asset value,
end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------------
Total Return(c) 4.93% 4.36% 4.79% 4.47%(b)
========================================================================
Ratios/Supplemental Data:
========================================================================
Net assets,
end of year (000) $ 1,929 $ 5,193 $ 738 $ 791
========================================================================
Ratios to Average Net Assets
------------------------------------------------------------------------
Expenses(d) 0.84% 0.76% 0.84% 0.81%(b)
Net investment income 4.78% 4.27% 4.73% 4.39%(b)
========================================================================
</TABLE>
(a) Commencement of offering Class B and Class C shares respectively.
(b) Not annualized.
(c) Total return assumes reinvestment of all distributions.
(d) The ratios for 2000 include expenses paid through an expense offset
arrangement.
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 accounting principles generally accepted in the United States of
America, which permit 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 the 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 accounting principles generally accepted in
the United States of America.
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. At
June 30, 2000, the management fees payable were $77,974.
The Company has Rule 12b-1 plans and agreements (the "Class A, Class B and Class
C Plans") with Lord Abbett Distributor LLC, an affiliate of Lord Abbett, which
provides for payments of 0.15% of the average daily net asset value of Class A
shares, 0.75% of the average daily net asset value of Class B shares and 0.25%
of the average daily net asset value of Class C shares sold, and, at each
quarter-end after the first anniversary of the sale of such shares, 0.25% of the
average daily net asset value of such shares outstanding. At June 30, 2000, the
12b-1 fees payable with respect to Class B shares were $5,532. The Company is
currently not making payments under the Class A and Class C Plans.
Certain of the Company`s officers and directors have an interest in Lord Abbett.
3. Directors` Remuneration
The Directors of the Company associated with Lord Abbett and all officers of the
Company receive no compensation from the Company for acting as such. Outside
Directors' fees and retirement costs are allocated among all funds in the Lord
Abbett group based on the net assets of each fund. Directors' fees payable at
June 30, 2000, under a deferred compensation plan, were approximately $127,071.
4. Expense Reduction
The Company has entered into an arrangement with its transfer agent whereby
credits realized as a result of uninvested cash balances are used to reduce a
portion of the Company's expenses.
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders,
Lord Abbett U.S. Government Securities Money Market Fund, Inc.:
We have audited the accompanying statement of net assets of Lord Abbett U.S.
Government Securities Money Market Fund, Inc. (the "Company") as of June 30,
2000, the related statements of operations for the year then ended and of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the periods presented. These financial
statements and the financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned at June 30, 2000 by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Lord Abbett U.S.
Government Securities Money Market Fund, Inc. at June 30, 2000, the results of
its operations, the changes in its net assets and the financial highlights for
each of the periods presented in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
New York, New York
August 10, 2000
[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
-----------------------------------------------------
90 Hudson Street o Jersey City, New Jersey 07302-3973 LAMM-2-600
(8/00)
