<PAGE>
--------------------------------------------------------
Lord Abbett U.S. GOVERNMENT
SECURITIES FUND
--------------------------------------------------------
Semi-Annual Report for the Six Months Ended May 31, 1995
A mutual fund
with the objective
of providing you
with high [PHOTO - Picture of Front Porch of a]
current income
from a portfolio of home with the American Flag
U.S. Government hanging]
securities.
<PAGE>
- --------------------------------------------------------------------------------
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND
Professional Management: U.S. Government securities -- among all
income-producing investments available
Lord, Abbett & Co. has over 65 years -- have the top investment grade and
of investment experience. The Firm thus carry the least credit risk. Lord
manages a family Abbett U.S. Government Securities Fund,
of mutual funds and private with $3.3 billion in assets, is actively
advisory accounts. managed in an effort to maintain its
long-standing record of high dividends
for shareholders and produce attractive
total returns over the long term.
[PHOTO - Grandfather playing banjo on porch for his grandchildren]
Investment Strategy
The Fund invests in obligations issued or guaranteed by the U.S. Government, its
Agencies and Instrumentalities.
The Fund's Long-Term Record Outpaced Other High-Quality, Fixed-Income
Investments and Inflation
AVERAGE ANNUAL RATES OF TOTAL RETURN
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
Ended Ended Ended
6/30/95 6/30/95 6/30/95
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
The Fund(1) 9.8% 8.7% 9.1%
Average of U.S.
Gov't Funds(2) 10.9% 8.3% 8.4%
CDs(3) 6.0% 5.0% 6.4%
Consumer
Price Index 3.3% 3.2% 3.5%
</TABLE>
SEC RETURNS
Average annual compound returns for the periods ended 6/30/95 at the 4.75%
maximum sales charge, with all distributions reinvested:
<TABLE>
<S> <C>
1 year: 4.70%
5 years: 7.68%
10 years: 8.61%
</TABLE>
The Fund's SEC yield for the 30 days ended 6/30/95 was 5.41%.
The results quoted herein represent past performance which is no indication of
future results. The investment return and principal value of an investment in
the Fund will fluctuate so that shares, on any given day or when redeemed, may
be worth more or less than their original cost.
Total return is the percent change in value assuming the reinvestment of all
distributions. Results of the CD investment reflect the average six-month CD
rate available each year during the period. It is important to remember that,
unlike the Fund, a CD's rate and principal are guaranteed if held to maturity.
The FDIC insures CDs up to $100,000.
(1) At net asset value. Prior to 10/15/85, the Fund invested in both corporate
and U.S. Government securities.
(2) Source: Lipper Analytical Services.
(3) Source: Salomon Brothers.
<PAGE>
- --------------------------------------------------------------------------------
Report to Shareholders For the Six Months Ended May 31, 1995
[PHOTO - Picture of Ronald P. Lynch]
- ----------------------------------------
Ronald P. Lynch, Chairman
June 16, 1995
Lord Abbett U.S. Government Securities Fund ended the first half of fiscal 1995
on May 31 with net assets of $3.3 billion. The Fund's distribution rate was 8.4%
based on the net asset value of $2.71 on May 31 and 8.0% based on that same
day's maximum offering price of $2.85 (these rates are based on the monthly
dividend of $.019 per share, annualized). For the period, the Fund's total
return (the percent change in net asset value, assuming the reinvestment of all
distributions) was 9.3%.
The last recession officially ended in 1991; over the past four years the
economy exhibited strong, yet inconsistent, growth. The economy, as measured by
Gross Domestic Product, grew 5.1% in the fourth quarter of 1994 alone
(contributing to an overall 4.1% growth rate for all of last year). But, recent
data suggests that the higher interest-rate environment of 1994 has begun to
negatively impact consumer spending. As a result, the same sectors which were
the backbone of 1994's strong showing (houses, autos and retail sales) are the
leading cause of the slowdown so far in 1995. Additionally, the rate of
employment growth also has slowed from 1994's pace.
In targeting an annual growth rate of 2.5%, the Federal Reserve's goal is
twofold: keep inflation in check without halting the current economic expansion.
The Fed would need a more restrictive monetary policy to neutralize inflation,
should it become imbedded in the economy.
Throughout most of 1994, the fixed-income markets reacted negatively to the
Fed's less accommodative monetary policy. However, as evidence of an economic
slowdown surfaced, the fixed-income markets rallied. Long-term U.S. Treasury
bond yields moved from 8.00% in November to 6.65% on May 31, 1995. Additionally,
foreign investors have increased their investments in U.S. securities,
supporting the rally in the marketplace.
The Fund performed well during the period as mortgage-related securities
not only appreciated in price, but offered additional yield versus other fixed-
income securities, such as U.S. Treasury bonds.
- --------------------------------------------------------------------------------
"...as evidence of an economic slowdown surfaced, the fixed-income markets
rallied."
- --------------------------------------------------------------------------------
At the close of the period, the core of long-term mortgage-related U.S.
Government issues comprised 63% of the portfolio. The balance of the Fund's
portfolio was invested in U.S. Treasury and agency notes and bonds. The average
maturity of the portfolio was 5 years, 9 months.
The Fund seeks to minimize the negative effects of rising interest rates
and to benefit from the positive effects of declining interest rates. While
there is no guarantee that the Fund's net asset value will be preserved in
extreme interest-rate environments, the Fund's long-term investors have been
rewarded with positive total returns in the past.
High-quality bonds are an important part of a well-balanced investment
strategy. We are pleased that the Fund is a part of your investment portfolio
and remain committed to helping you achieve your financial goals in 1995 and
beyond.
1
<PAGE>
================================================================================
Total Return is Important to Fixed-Income Investors
- --------------------------------------------------------------------------------
Over the last 10 1/2 years, an investment in the Fund provided
relatively stable dividend income and, assuming the reinvestment of all
distributions, it grew by 163.2%. The Fund surpassed the increase in
inflation (as measured by the Consumer Price Index) over the last 10 1/2
years.
<TABLE>
<CAPTION>
Information About the Following Investment(1)
-----------------------------------------------------------------------
<S> <C>
Investment Period: 12/1/84 to 5/31/95
-----------------------------------------------------------------------
Amount Invested: $100,000
-----------------------------------------------------------------------
Sales Charge: 3.75% (for investments of $100,000)
-----------------------------------------------------------------------
Distributions: Capital gains and dividends
reinvested
-----------------------------------------------------------------------
</TABLE>
A Rewarding Total Return Record
[LINE GRAPH APPEARS HERE - Depicted below]
<TABLE>
<CAPTION>
LORD ABBETT U.S.
GOVERNMENT
SECURITIES FUND INFLATION
<S> <C> <C>
12/1/84 $100,000 $100,000
11/30/85 116,335 103,514
11/30/86 137,275 104,843
11/30/87 137,761 109,592
11/30/88 151,041 114,245
11/30/89 168,639 119,563
11/30/90 181,818 127,066
11/30/91 207,917 130,864
11/30/92 227,136 134,853
11/30/93 251,428 138,462
11/30/94 240,761 142,165
5/31/95 263,242 144,539
</TABLE>
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS(1) BASED ON CALENDAR YEAR
-----------------------------------------------------------------------------------------------------------------
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 6 Months
Ended
6/30/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Total Return(1) +23.0% +15.0% +1.6% +7.8% +12.7% +9.3% +16.9% +7.1% +9.2% -4.3% +8.8%(2)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total return is the percent change in value with both dividends and capital
gains distributions reinvested. In Annual Total Returns, results are at net
asset value. Net asset value purchases are available for investments of $1
million or more. For performance at the maximum sales charge, see inside
front cover. See Important Information on page 4.
(2) Not annualized.
2
<PAGE>
================================================================================
High Total Return Relative to Risk
- --------------------------------------------------------------------------------
Standard deviation is an industry measure of volatility or risk. The
higher the number, the greater the risk. Compared to the unmanaged index
shown, the Fund generated competitive returns with comparatively lower
risk.
<TABLE>
<CAPTION>
Average Risk
Annual Standard
12/31/84--6/30/95 Total Return Deviation
------------------------------------------------------------------------
<S> <C> <C>
[ ] Lord Abbett U.S. Government
Securities Fund/(1)/ 10.00% 6.29%
[ ] Lehman Brothers Long
Government Bond Index/(2)/ 12.98% 11.29%
[ ] Average of U.S. Government Funds/(3)/ 8.95% 5.44%
</TABLE>
(1) Based on net asset value.
(2) Unmanaged.
(3) Source: Lipper Analytical Services.
See SEC-required information on inside front cover.
[CHART APPEARS HERE Depicting information provided above]
================================================================================
Who Owns the Fund?
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LORD ABBETT U.S. GOVERNMENT SECURITIES FUND'S INVESTOR PROFILE
-------------------------------------------------------------------------------
<S> <C> <C>
Fiduciaries Pension & profit-sharing plans 6,671
-------------------------------------------------------------------------------
Custodians for minors 3,342
-------------------------------------------------------------------------------
Trusts 5,820
-------------------------------------------------------------------------------
Estates 235
-------------------------------------------------------------------------------
Institutions Corporate organizations 526
-------------------------------------------------------------------------------
Religious, charitable & welfare organizations 298
-------------------------------------------------------------------------------
Banks, credit unions & insurance companies 188
-------------------------------------------------------------------------------
Cemeteries & hospitals 74
-------------------------------------------------------------------------------
Government agencies 47
-------------------------------------------------------------------------------
Colleges & universities 21
-------------------------------------------------------------------------------
Individuals Single & joint accounts & IRAs 68,294
-------------------------------------------------------------------------------
Other 59,369
-------------------------------------------------------------------------------
Total Accounts on 5/31/95 144,885
-------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
================================================================================
Important Information
- --------------------------------------------------------------------------------
The SEC yield is calculated on the maximum offering price of $2.83 on
6/30/95, using a standard method which does not take into account
certain portfolio strategies. The Fund's distribution rate differs from
SEC yield primarily because the Fund purchases short- and intermediate-
term high-coupon securities at a premium and distributes to shareholders
all of the interest income on those securities without amortizing the
premiums. This practice is consistent with applicable tax regulations
and generally accepted accounting principles, but may result in a
decrease in the net asset value of shares of the Fund as the market
value of the premium securities decreases over time. Dividends paid from
this interest income are taxable to shareholders as ordinary income.
Results quoted herein represent past performance based on the current
sales charge schedule and reflect appropriate Rule 12b-1 Plan expenses
from commencement of the Plan. Tax consequences are not reflected. The
Fund's current sales charge structure has changed from the past. The
Lehman Brothers Long Government Bond Index is unmanaged. If interest
rates rise, the value of bonds purchased by the Fund would decrease,
causing a decrease in the Fund's share value. If used as sales material
after 9/30/95, this report must be accompanied by Lord Abbett's
Performance Quarterly for the most recently completed calendar quarter.
4
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets May 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
Principal Market Value
Security Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES 87.49%
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
U.S. Treasury U.S. Treasury Strips due 5/15/2003 $210,000M $ 127,837,500
21.49% ------------------------------------------------------------------------------------------------
U.S. Treasury Notes 5 3/8% due 5/31/1998 218,000M 214,525,625
------------------------------------------------------------------------------------------------
U.S. Treasury Notes 6 1/4% due 2/15/2003 129,500M 129,358,359
------------------------------------------------------------------------------------------------
U.S. Treasury Notes 7 5/8% due 5/31/1996 212,000M 215,610,625
------------------------------------------------------------------------------------------------
U.S. Treasury Notes 7 1/2% due 2/15/2005 21,000M 22,771,875
------------------------------------------------------------------------------------------------
Total 710,103,984
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government Federal National Mortgage Association 7 3/8% due 3/28/2005 25,000M 26,343,750
Agencies ------------------------------------------------------------------------------------------------
2.92% Federal National Mortgage Association 7.65% due 3/10/2005 65,000M 70,027,344
------------------------------------------------------------------------------------------------
Total 96,371,094
- -----------------------------------------------------------------------------------------------------------------------------------
Federal National 7 1/2% due on an announced basis 321,000M 321,802,500
Mortgage Association ------------------------------------------------------------------------------------------------
Pass-Through Securities 7.785% due 2/1/2019 17,966M 18,645,398
37.27% ------------------------------------------------------------------------------------------------
8% due on an announced basis 492,500M 502,196,096
------------------------------------------------------------------------------------------------
8% due 2024 to 2025 98,558M 100,667,592
------------------------------------------------------------------------------------------------
8 1/2% due 2025 278,918M 288,462,054
------------------------------------------------------------------------------------------------
Total 1,231,773,640
- -----------------------------------------------------------------------------------------------------------------------------------
Government National 7% due 2023 to 2024 352,424M 346,973,627
Mortgage Association ------------------------------------------------------------------------------------------------
Pass-Through Securities 8% due 2024 26,281M 26,950,520
25.81% ------------------------------------------------------------------------------------------------
8 1/4% due 2029 21,537M 21,903,318
------------------------------------------------------------------------------------------------
8 1/2% due on an announced basis 212,000M 220,082,465
------------------------------------------------------------------------------------------------
8 1/2% due 2028 to 2034 21,871M 22,499,211
------------------------------------------------------------------------------------------------
8 3/4% due 2026 to 2031 10,176M 10,521,170
------------------------------------------------------------------------------------------------
9% due 2010 to 2029 94,513M 99,492,777
------------------------------------------------------------------------------------------------
9 1/4% due 2023 to 2026 46,306M 48,274,688
------------------------------------------------------------------------------------------------
9 3/4% due 9/15/2023 8,965M 9,054,433
------------------------------------------------------------------------------------------------
10% due 2016 to 2020 41,621M 45,219,943
------------------------------------------------------------------------------------------------
10 1/4% due 6/15/2023 2,090M 2,110,598
------------------------------------------------------------------------------------------------
Total 853,082,750
------------------------------------------------------------------------------------------------
Total Investments in Securities (Cost $2,841,890,899) 2,891,331,468
------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets May 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
Principal Market Value
Security Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES 12.51%
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Other Short-Term Federal Home Loan Banks 12% due 3/18/1996 $ 50,000M $ 50,859,375
Assets Investments, ------------------------------------------------------------------------------------------------
at Market Federal Home Loan Banks 15% due 1995 729,000M 741,791,563
------------------------------------------------------------------------------------------------
Federal National Mortgage Association 12% due 3/11/1996 50,000M 50,859,375
------------------------------------------------------------------------------------------------
U.S. Treasury Notes 4 5/8% due 2/15/1996 92,500M 91,733,984
------------------------------------------------------------------------------------------------
U.S. Treasury Notes 5 1/2% due 4/30/1996 115,400M 115,021,344
------------------------------------------------------------------------------------------------
U.S. Treasury Notes 9 1/4% due 1/15/1996 152,500M 155,526,172
------------------------------------------------------------------------------------------------
U.S. Treasury Notes 9 3/8% due 4/15/1996 175,000M 180,058,594
------------------------------------------------------------------------------------------------
Total (Cost $1,458,023,920) 1,385,850,407
--------------------------------------------------------------------------------------------------------------------
Receivable for: Securities sold 1,546,423,757
------------------------------------------------------------------------------------------------
Other 75,225,363
------------------------------------------------------------------------------------------------
Total Other Assets 3,007,499,527
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities Payable for: Securities purchased 2,567,330,438
------------------------------------------------------------------------------------------------
Other 26,594,962
------------------------------------------------------------------------------------------------
Total Liabilities 2,593,925,400
------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 413,574,127
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $2.71 a share on 1,220,591,778 shares of $1.00 par
100.00% value capital stock outstanding; authorized, 1,700,000,000 shares) $3,304,905,595
------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Operations For the Six Months Ended May 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Investment Income
--------------------------------------------------------------------------------------------------------------------
Income Interest $168,278,803
Expenses ---------------------------------------------------------------------------------------------------
Management fee (Note 5) $ 8,061,000
---------------------------------------------------------------------------------------------------
12b-1 distribution plan (Note 5) 4,505,722
---------------------------------------------------------------------------------------------------
Shareholder servicing 2,200,000
---------------------------------------------------------------------------------------------------
Reports to shareholders 140,000
---------------------------------------------------------------------------------------------------
Audit and legal 76,000
---------------------------------------------------------------------------------------------------
Registration 25,000
---------------------------------------------------------------------------------------------------
Other 114,229
---------------------------------------------------------------------------------------------------
Total expenses 15,121,951
---------------------------------------------------------------------------------------------------
Net investment income 153,156,852
---------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Investments (Note 4)
--------------------------------------------------------------------------------------------------------------------
Net realized loss from security transactions
---------------------------------------------------------------------------------------------------
Proceeds from sales 13,381,350,889
---------------------------------------------------------------------------------------------------
Cost of securities sold 13,389,961,253
---------------------------------------------------------------------------------------------------
Net realized loss (8,610,364)
--------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
---------------------------------------------------------------------------------------------------
Beginning of period (173,585,976)
---------------------------------------------------------------------------------------------------
End of period (22,732,944)
---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 150,853,032
---------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 142,242,668
---------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $295,399,520
--------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statements of Changes in Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
May 31, November 30,
Increase (Decrease) in Net Assets 1995 1994
------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Operations Net investment income $ 153,156,852 $ 320,699,269
---------------------------------------------------------------------------------------------------------------
Net realized loss from security transactions (8,610,364) (349,270,920)
---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 150,853,032 (134,045,232)
---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 295,399,520 (162,616,883)
------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders
---------------------------------------------------------------------------------------------------------------
Net investment income (145,892,117) (320,169,990)
---------------------------------------------------------------------------------------------------------------
Net realized gain from security transactions - (55,523,286)
---------------------------------------------------------------------------------------------------------------
Total distributions (145,892,117) (375,693,276)
------------------------------------------------------------------------------------------------------------------------------
Capital share transactions
---------------------------------------------------------------------------------------------------------------
Net proceeds from sales of 53,816,952 and 153,323,760 shares, respectively 141,543,152 431,760,453
---------------------------------------------------------------------------------------------------------------
Net asset value of 24,950,359 and 61,959,642 shares, respectively, issued to
shareholders in reinvestment of net investment income and realized gain
from security transactions 65,555,318 173,697,048
---------------------------------------------------------------------------------------------------------------
Total 207,098,470 605,457,501
---------------------------------------------------------------------------------------------------------------
Cost of 107,914,860 and 269,024,754 shares reacquired, respectively (283,712,743) (745,002,756)
---------------------------------------------------------------------------------------------------------------
Decrease in net assets derived from capital share transactions (net decrease
of 29,147,549 and 53,741,352 shares, respectively) (76,614,273) (139,545,255)
------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 72,893,130 (677,855,414)
------------------------------------------------------------------------------------------------------------------------------
Net Assets
------------------------------------------------------------------------------------------------------------------------------
Beginning of period 3,232,012,465 3,909,867,879
---------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income of $25,179,301
and $17,914,566, respectively) $3,304,905,595 $3,232,012,465
------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended November 30,
May 31, ------------------------------------------------------------------
Per Share Operating Performance: 1995 1994 1993 1992 1991 1990
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 2.59 $ 3.00 $ 2.94 $ 2.94 $ 2.83 $ 2.92
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
-------------------------------------------------------------------------------------------------------------------------
Net investment income .123+ .247 .239 .267 .282 .299
-------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments .1136 (.3685) .070 (.003) .105 (.088)
-------------------------------------------------------------------------------------------------------------------------
Total from investment operations .2366 (.1215) .309 .264 .387 .211
------------------------------------------------------------------------------------------------------------------------------
Distributions
-------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (.1166) (.246) (.249) (.264) (.277) (.301)
-------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain - (.0425) - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 2.71 $ 2.59 $ 3.00 $ 2.94 $ 2.94 $ 2.83
----------------------------------------------------------------------------------------------------------------------------------
Total Return 9.34%+ (4.24)% 10.70% 9.24% 14.35% 7.82%
----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $3,304,906 $3,232,012 $3,909,868 $3,275,052 $2,293,345 $1,555,648
-------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
------------------------------------------------------------------------------------------------------------------------------
Expenses .47%+ .90% .89% .87% .94% .89%
-------------------------------------------------------------------------------------------------------------------------
Net investment income 4.71%+ 8.92% 7.94% 9.18% 9.63% 10.55%
------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 375.87% 790.57% 586.18% 458.70% 544.19% 578.18%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Total return does not consider the effects of sales loads.
+Not annualized.
See Notes to Financial Statements.
6
<PAGE>
================================================================================
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Company is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The following is a summary
of significant accounting policies consistently followed by the Company. The
policies are in conformity with generally accepted accounting principles.
(a) Market value is determined as follows: Government securities (long- and
short-term) are valued at the mean between the bid and asked prices. Securities
for which market quotations are not available are valued at fair value under
procedures approved by the Board of Directors.
(b) It is the policy of the Company to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income in taxable distributions. Therefore, no income tax
provision is required.
(c) Security transactions are accounted for on the date that the securities are
purchased or sold (trade date). Distributions to shareholders are recorded on
the ex-dividend date. Discounts on strips are accrued to maturity using the
constant yield method. The Company has elected not to amortize the premiums on
U.S. Government bonds, which is consistent with the treatment for federal income
tax purposes.
2. Distributions
Dividends from net investment income are declared daily and paid monthly. Net
realized gain from security transactions, if any, is distributed to shareholders
in the succeeding year. Accumulated net realized loss at May 31, 1995 for
financial reporting purposes, which is substantially the same as for federal
income tax purposes, aggregated $357,873,937.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from methods used to determine the
corresponding income and capital gains amounts in accordance with generally
accepted accounting principles.
3. Capital Paid In
At May 31, 1995, capital paid in aggregated $3,660,333,175.
4. Portfolio Securities
The Company loans its portfolio securities to brokers. As of May 31, 1995, the
market value of securities on loan to brokers was $383,791,690 for which the
Company has obtained collateral aggregating $385,349,375 consisting of cash and
U.S. Treasury securities.
Purchases and sales of investment securities (other than short-term investments)
aggregated $11,998,679,278 and $13,026,929,568, respectively. Security gains and
losses are computed on the identified cost basis.
As of May 31, 1995, net unrealized depreciation of investments for federal
income tax purposes aggregated $22,732,944 of which $65,429,724 related to
appreciated securities and $88,162,668 related to depreciated securities.
The cost of investments for federal income tax purposes is substantially the
same as that used for financial reporting purposes.
5. Management Fee and Other Transactions with Affiliates
Lord, Abbett & Co. received a management fee of $8,061,000 for which it supplied
investment management, research, statistical and advisory services and paid
officers' remuneration and certain other expenses of the Company. For the
services performed, the Company paid a fee at the rate of .50 of 1% per annum of
the portion of its average daily net assets not in excess of $3,000,000,000 plus
.45 of 1% of such assets over $3,000,000,000. Lord, Abbett & Co. also received
$559,228 representing payment of commissions on sales of capital stock of the
Company after deducting $3,820,194 allowed to authorized distributors as
concessions.
Certain of the Company's officers and directors have an interest in Lord, Abbett
& Co.
The Company adopted a Rule 12b-1 Plan providing for the quarterly payment of
compensation to dealers of (1) an annual service fee of .25% of the average
daily net asset value of shares issued on and after September 1, 1985 and .15%
of the average daily net asset value of such shares sold prior to that date and
(2) a one-time 1% distribution fee, at the time of sale, on such shares sold at
net asset value of $1 million or more.
6. Directors' Remuneration
The Directors of the Company associated with Lord, Abbett & Co. and all officers
of the Company receive no compensation from the Company for acting as such.
Outside Directors' fees, including attendance fees for board and committee
meetings, and outside Directors' retirement costs, are allocated among all funds
in the Lord Abbett group based on net assets of each fund. The direct
remuneration accrued during the period for outside Directors of the Company as a
group was $35,044 (exclusive of expenses), which has been deemed invested in
shares of the Company under a deferred compensation plan contemplating future
payment of the value of those shares. As of May 31, 1995, the aggregate amount
in Directors' accounts maintained under the plan was $498,539. Retirement costs
accrued during the period amounted to $19,829.
7
<PAGE>
================================================================================
Our Management
- --------------------------------------------------------------------------------
Board of Directors
Ronald P. Lynch
Robert S. Dow
E. Thayer Bigelow*
Stewart S. Dixon*
John C. Jansing*+
C. Alan MacDonald*+
Hansel B. Millican, Jr.*+
Thomas J. Neff*
*Outside Director
+Audit Committee
Officers
Ronald P. Lynch, Chairman
and President
Robert S. Dow, Executive Vice
President and Portfolio Manager
Kenneth B. Cutler, Vice President
and Secretary
Stephen I. Allen, Vice President
Daniel E. Carper, Vice President
Thomas S. Henderson,
Vice President
E. Wayne Nordberg,
Vice President
John J. Walsh, Vice President
John J. Gargana, Jr.,
Vice President
Thomas F. Konop, Vice President
and Assistant Secretary
Victor W. Pizzolato,
Vice President
David Seto, Vice President
Keith F. O'Connor, Treasurer
Joseph Van Dyke,
Assistant Treasurer
Lydia Guzman,
Assistant Secretary
Robert M. Hickey,
Assistant Secretary
A. Edward Oberhaus III,
Assistant Secretary
Investment Manager
and Underwriter
Lord, Abbett & Co.
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Custodian
Morgan Guaranty
Trust Company
of New York
Transfer Agent
United Missouri Bank of
Kansas City, N.A.
Shareholder
Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche LLP
New York, NY
Counsel
Debevoise & Plimpton
New York, NY
- --------------------------------------------------------------------------------
Copyright (C) 1995 by Lord Abbett U.S. Government Securities Fund, Inc.
767 Fifth Avenue, New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett U.S. Government Securities Fund, Inc., is to be distributed only if
preceded or accompanied by a current prospectus which includes information
concerning the Fund's investment objective and policies, sales charges and other
matters.
All rights reserved. Printed in the U.S.A.
8
<PAGE>
Successful investing
requires an experienced,
professional team.
"Given the current low-inflation environment,
we believe mortgage-related securities offer
particularly good value."
Robert S. Dow
Partner and Portfolio Manager
Identifying value and reducing risk require a
disciplined approach and a talented and
experienced investment team. At Lord, Abbett
& Co., a staff of 42 investment
professionals, aver-aging 19 years of
industry experience and 9 years of tenure
with the Firm, performs research to determine
an overall view of the economy and discover
opportunities with the potential for high
total return.
Searching for Value By:
. Anticipating economic changes and their
impact on fixed-income securities;
. Taking advantage of security combinations
that result from the interaction of credit
markets; and
. Understanding the historical yield
relationship among securities.
[PHOTO APPEARS HERE OF THE PERSONNEL DESCRIBED BELOW]
(from left to right)
Michelle C. Katovitz joined Lord, Abbett & Co. in
1991, as part of the fixed-income management group,
and has 7 years of industry experience. Ms.
Katovitz earned her B.S. at Alfred University.
Zane E. Brown is director of Lord, Abbett & Co.'s
fixed-income area and also serves as a portfolio
manager. Mr. Brown earned his MBA in investment
management at Colorado State University. He has
over 18 years of investment experience.
Robert S. Dow (seated), portfolio manager and
partner in charge of the fixed-income group, has 23
years of investment experience. In addition to
portfolio management of Lord Abbett U.S. Government
Securities Fund, Mr. Dow is a member of Lord
Abbett's Executive Office of Investments. He earned
his MBA at Columbia Graduate School of Business
Administration.
David Seto serves as a portfolio manager for the
fixed-income group and brings 9 years of industry
experience to Lord, Abbett & Co. He earned his MBA
at Michigan State University.
<PAGE>
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The Lord Abbett Family Meeting Investor Needs Since 1929
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Lord, Abbett & Co. manages a spectrum of mutual funds to meet the investment
goals of its shareholders. Assets may be allocated or transferred among these
funds as described in the relevant prospectus. The exchange privilege may be
modified or terminated. For more information about a Lord Abbett fund, including
charges and expenses, please call us at 800-874-3733 for a prospectus. Please
read the prospectus carefully before investing.
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Equity Portfolios
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Affiliated Fund
Established 1934
Seeks long-term growth of capital and income without excessive fluctuations in
market value. Portfolio emphasis: The stocks of large, well-seasoned companies.
Lord Abbett Developing Growth Fund
Established 1973
Seeks aggressive, long-term capital appreciation. Price volatility is not
uncommon. Portfolio emphasis: The stocks of small growth companies mostly traded
over the counter.
Lord Abbett Fundamental Value Fund
Established 1986
Seeks growth of capital and growth of income consistent with reasonable risk.
Portfolio emphasis: The stocks of large and midsized companies with strong
underlying fundamentals.
Lord Abbett Global Fund
Equity Series
Established 1988
Seeks long-term growth of capital and, secondarily, production of current
income. Portfolio: A diversified portfolio of stocks from around the world.
Lord Abbett Value Appreciation Fund
Established 1983
Seeks capital appreciation. Portfolio emphasis: The stocks of midsized
companies.
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Balanced Portfolio
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Lord Abbett Balanced Series
Established 1994
Seeks current income and capital growth. Portfolio: A blend of stocks and fixed-
income securities.
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Fixed-Income Portfolios
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Lord Abbett Bond-Debenture Fund
Established 1971
Seeks high current income and capital growth to produce a high total return.
Portfolio emphasis: Convertible issues and lower rated debt.
Lord Abbett Global Fund
Income Series
Established 1988
Seeks high current income and, secondarily, capital appreciation. Portfolio:
High-quality international and U.S. debt.
Lord Abbett Limited Duration U.S. Government Securities Series
Established 1993
Seeks a high level of income, relative to money market instruments, with less
fluctuations in principal than long-term U.S. Government securities. Portfolio
emphasis: Limited duration fixed-income securities (primarily U.S. Government
securities).
Lord Abbett U.S. Government Securities Fund
Established 1932
Seeks high current income. Portfolio: Since 1985, U.S. Government securities
exclusively.
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Tax-Free Portfolios
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Lord Abbett Tax-Free Income Funds
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National and New York Series Established 1984
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California Fund Established 1985
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Texas Series Established 1987
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New Jersey, Connecticut, Missouri, Hawaii, Florida and Pennsylvania Series
Established 1991
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Washington and Michigan Series Established 1992
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Georgia and Minnesota Series Established 1994
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Seek high tax-free income. Portfolios' emphasis: High-quality municipal bonds.
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Money Market Portfolio
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Lord Abbett U.S. Government Securities Money Market Fund
Established 1979
Seeks high current income and preservation of capital. Portfolio: U.S.
Government money market instruments.
An investment in this Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that this Fund will be able to maintain
a stable net asset value of $1.00 per share. This Fund is managed to maintain,
and has maintained, its stable $1.00 per share price.
[PHOTO APPEARS HERE]
[LOGO APPEARS HERE] Lord, Abbett & Co.
Investment Management
A Tradition of Performance Through Disciplined Investing
The GM Building * 767 Fifth Avenue * New York, NY 10153-0203 LAUSGS-3-595
