<PAGE>
Lord Abbett
U.S. Government
Securities Fund
1995 ANNUAL REPORT
A portfolio designed
to help you with your
current income needs
<PAGE>
Lord Abbett U.S.
U.S. Government securities--among all income-producing
investments available--have the top investment grade and
thus carry the least credit risk. Lord Abbett U.S.
Government Securities Fund, with $3.3 billion in assets,
is actively managed in an effort to maintain its long-
standing record of high dividends for shareholders and to
produce attractive total returns over the long term.
INVESTMENT STRATEGY The Fund invests in obligations issued or guaranteed by
the U.S. Government, its Agencies and Instrumentalities.
HONORABLE MENTION Here is what Mutual Funds Magazine had to say about the
Fund in its December 1995 issue: "...[The Fund's]
conservative mid-maturity strategy enables the portfolio
to offer a high current yield (for a Government bond
fund) with reasonably low risk..." "...Lord Abbett U.S.
Government Securities Fund has either matched or slightly
outperformed its peers each year over the last decade
[10/85-10/95]."
AVERAGE ANNUAL The Fund's long-term record outpaced other high-quality,
RATES OF TOTAL RETURN fixed-income investments and inflation
Average annual compound returns for the periods ended 12/31/95 at the 4.75%
maximum sales charge, with all distributions reinvested:
SEC RETURNS
1 YEAR: 10.10%
5 YEARS: 7.63%
10 YEARS: 8.38%
The Fund's SEC yield for the 30 days
ended 12/31/95 was 4.91%.
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.
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.
(1) At net asset value
<PAGE>
[PHOTO OF RONALD P. LYNCH]
Ronald P. Lynch
Chairman
[PHOTO OF ROBERT S. DOW]
Robert S. Dow
President
December 12, 1995
Report to Shareholders
For the Fiscal Year Ended November 30, 1995
Lord Abbett U.S. Government Securities Fund ended fiscal 1995 on November 30
with net assets of $3.3 billion. The Fund's distribution rate was 8.35% based
on the November 30 per-share net asset value of $2.73, and 7.94% based on that
same day's maximum offering price of $2.87 (these rates are based on the
monthly dividend of $.019 per share, annualized). The Fund's total return (the
percent change in net asset value assuming the reinvestment of all
distributions) was 14.9% for the fiscal year.
After a surge last fall that heightened inflation concerns, the economy
slowed during the winter in response to credit restraints by the Federal
Reserve. Since December, the economy grew at an annual rate of 2 1/2%, excluding
the effects of inflation. Inflation, as measured by the Consumer Price Index,
averaged under 3% annually and slowed to 2% more recently. It appears that the
Federal Reserve was successful in its mission to moderate economic growth and
contain inflation, creating a favorable environment for the fixed-income
markets (and your Fund). The yield on the 30-year Treasury bond fell to
approximately 6% from more than 8% last November.
Despite the U.S. economy's continued expansion over the last five years,
inflation remained well behaved. Several factors helped keep inflation in
check. Labor cost increases, the largest component in the inflation pricing
mechanism, have been moderate as corporations cut the fat and used more
efficient capital equipment. Additionally, consumers resisted price increases,
thereby forcing companies to hold prices down.
We believe the Federal Reserve will continue to be vigilant in keeping
inflation from becoming imbedded in the economy. We are optimistic that
inflation will remain low in 1996, especially if there is real progress made
toward reducing the U.S. deficit. Reducing deficit spending on a national level
significantly reduces competition for capital. If more capital is available for
the private sector, interest rates are kept low, promoting low inflation.
Your Fund benefited from a favorable inflation and interest-rate environment
this year. The Fund continued to invest in mortgage-related securities, because
they offered additional yield over other fixed-income securities. In
particular, low prepayment securities were emphasized to reduce the
reinvestment risk. (Certain mortgage-backed securities have been negatively
impacted by this high prepayment environment, which forced investors to
reinvest proceeds at lower rates.) The average life of the Fund was increased
to take advantage of the move to lower interest rates.
"Your Fund benefited from a favorable inflation and interest-rate
environment this year."
At the close of the year, long-term, mortgage-related U.S. Government
securities comprised 61% of the Fund s portfolio. The balance was invested in
U.S. Treasury and Agency notes and bonds. The average maturity of the portfolio
was 7 years, 9 months.
We are pleased to announce that the Fund's Board of Directors elected Robert
S. Dow as President of the Fund. Mr. Dow, who has been a partner of Lord,
Abbett & Co. for nine years, is the Firm's Chief Investment Officer. Zane E.
Brown, the director of our fixed-income department, has assumed portfolio
management responsibilities of your Fund from Mr. Dow.
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. We are pleased that the Fund is a part
of your investment portfolio and remain committed to helping you achieve your
financial goals in 1996 and beyond.
1
<PAGE>
Total Return is Important to Fixed-Income Investors
Over the last 10 years, an investment in the Fund provided relatively stable
dividend income and, assuming the reinvestment of all distributions, grew by
128.6%. The Fund surpassed the increase in inflation (as measured by the
Consumer Price Index) over the last 10 years.
How the Fund(1) Compares Against Inflation
Growth of $100,000: 12/1/85--11/30/95
Date The Fund Inflation
12/01/85 $ 96119 $100000
11/30/86 113430 101284
11/30/87 113832 105872
11/30/88 124806 110367
11/30/89 139347 115505
11/30/90 150238 122752
11/30/91 171802 126422
11/30/92 187683 130275
11/30/93 207756 133761
11/30/94 198941 137339
11/30/95 228567 140917
Annual Total Returns(1) Based on Calendar Year
<TABLE>
<CAPTION>
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Total Return(1) +15.0% +1.6% +7.8% +12.7% +9.3% +16.9% +7.1% +9.2% -4.3% +15.7%
</TABLE>
(1) Total return shown reflects the percent change in value with both
dividends and capital gains distributions reinvested. In How the Fund Compares
Against Inflation, results reflect the deduction of the 3.75% sales charge for
investments of $100,000. 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
<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
12/31/85-12/31/95 Total Return Deviation
<S> <C> <C>
. Lord Abbett U.S. Government
Securities Fund(1) 8.92% 5.84%
. Lehman Brothers Long
Government Bond Index(2) 11.75% 10.75%
. Average of U.S. Government Funds(3) 8.18% 5.16%
</TABLE>
(1) Based on net asset value.
(2) Unmanaged.
(3) Source: Lipper Analytical Services.
See SEC-required information on inside front cover.
Who Owns the Fund?
<TABLE>
<CAPTION>
Investor Profile of Lord Abbett U.S. Government Securities Fund
<S> <C>
Fiduciaries Pension & profit-sharing plans 6,512
Trusts 5,818
Custodians for minors 3,136
Estates 229
Institutions Corporate organizations 519
Religious, charitable & welfare organizations 296
Banks, credit unions & insurance companies 175
Cemeteries & hospitals 59
Government agencies 44
Colleges & universities 26
Individuals Single & joint accounts & IRAs 64,865
Other 58,054
Total Accounts in the Fund on 11/30/95 139,733
</TABLE>
3
<PAGE>
Important Information
The SEC yield is calculated on the maximum offering price of $2.89 on
12/31/95, 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 3/31/96, this report must be
accompanied by Lord Abbett's Performance Quarterly for the most recently
completed calendar quarter.
Statement of Net Assets November 30, 1995
<TABLE>
<CAPTION>
Principal Market Value
Security Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES 99.21%
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury U.S. Treasury Strips due 5/15/2003 $210,000M $ 137,779,688
36.76% U.S. Treasury Bonds 71/2% due 11/15/2024 70,000M 81,856,250
U.S. Treasury Bonds 75/8% due 11/15/2022 125,000M 147,285,156
U.S. Treasury Notes 63/8% due 1/15/2000 75,000M 77,343,750
U.S. Treasury Notes 71/8% due 10/15/1998 182,000M 190,190,000
U.S. Treasury Notes 71/4% due 8/15/2004 200,000M 219,875,000
U.S. Treasury Notes 103/4% due 8/15/2005 76,000M 103,395,625
U.S. Treasury Notes 115/8% due 11/15/2004 175,000M 245,464,844
Total 1,203,190,313
===============
- -----------------------------------------------------------------------------------------------------------------
U.S. Government Federal Home Loan Mortgage Corp. 7.215% due 7/27/2005 25,000M 25,828,125
Agencies Federal National Mortgage Association 7.65% due 3/10/2005 23,000M 25,490,469
1.57% Total 51,318,594
===============
- -----------------------------------------------------------------------------------------------------------------
Federal Home Loan 5% due 1998 to 1999 12,260M 12,011,100
Mortgage Corporation 5 1/2% due 10/1/1998 64,861M 64,070,663
Pass-Through Securities 8 1/2% due 1/1/2020 50,718M 52,738,792
4.53% 10% due 2/1/2017 17,800M 19,469,208
Total 148,289,763
===============
- -----------------------------------------------------------------------------------------------------------------
Federal National 6 1/2% due on an announced basis 100,000M 99,687,500
Mortgage Association 7% due on an announced basis 726,200M 728,796,783
Pass-Through Securities 7 1/2% due on an announced basis 375,000M 382,572,656
40.68% 8% due on an announced basis 100,000M 102,984,375
8% due 5/1/2023 16,902M 17,450,847
Total 1,331,492,161
===============
- -----------------------------------------------------------------------------------------------------------------
Government National 8% due on an announced basis 231,000M 239,048,906
Mortgage Association 8% due 2024 25,008M 25,898,494
Pass-Through Securities 8 1/4% due 2029 21,482M 21,867,935
15.67% 8 1/2% due 2028 to 2034 21,823M 22,266,270
8 3/4% due 2026 to 2031 10,153M 10,436,765
9% due 2010 to 2029 87,774M 92,883,561
9 1/4% due 2023 to 2026 46,149M 48,507,171
9 3/4% due 9/15/2023 8,936M 9,025,181
10% due 2016 to 2020 37,094M 40,765,215
10 1/4% due 6/15/2023 2,083M 2,104,249
Total 512,803,747
===============
- -----------------------------------------------------------------------------------------------------------------
Total Investments in Securities (Cost $3,182,003,819) $3,247,094,578
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
Statement of Net Assets November 30, 1995
<TABLE>
<CAPTION>
Principal Market Value
Security Amount (Note 1a)
- ------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES .79%
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Other Short-Term Federal Home Loan Banks 12% due 3/18/1996 $ 50,000M $ 50,671,875
Assets Securities, Federal Home Loan Banks 12 1/2% due 4/18/1996 50,000M 51,031,250
at Market Federal Home Loan Banks 13% due 11/15/1996 150,000M 160,406,250
Federal Home Loan Banks 13 1/2% due 1996 349,000M 366,972,813
Federal Home Loan Mortgage Corp. 12% due 3/13/1996 50,000M 50,765,625
Federal Home Loan Mortgage Corp. 12 3/4% due 3/15/1996 50,000M 51,007,813
Federal Home Loan Mortgage Corp. 13 1/2% due 1996 250,000M 263,262,500
Federal National Mortgage Association 12% due 3/11/1996 50,000M 50,671,875
Federal National Mortgage Association 13 1/2% due 9/11/1996 150,000M 158,578,125
Federal National Mortgage Association 14% due 11/22/1996 50,000M 54,031,250
U.S. Treasury Notes 9 3/8% due 4/15/1996 249,830M 253,304,198
Total (Cost $1,550,734,493) 1,510,703,574
- ------------------------------------------------------------------------------------------------------------------
Receivable for: Securities sold 512,293,431
Other 60,773,237
Total Other Assets 2,083,770,242
- ------------------------------------------------------------------------------------------------------------------
Liabilities Payable for: Securities purchased 2,029,983,891
Other 28,015,621
- ------------------------------------------------------------------------------------------------------------------
Total Liabilities 2,057,999,512
- ------------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 25,770,730
- ------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $2.73 a share on 1,200,734,492 shares of
100.00% $1.00 par value capital stock outstanding; authorized,
1,700,000,000 shares) $3,272,865,308
- ------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
<CAPTION>
Statement of Operations For the Year Ended November 30, 1995
<S> <C> <C>
Investment Income
- ------------------------------------------------------------------------------------------------------------------
Income Interest $ 318,231,289
- ---------------------------------------------------------------------------------------------------- -------------
Expenses Management fee (Note 5) $ 16,286,000
- ----------------------------------------------------------------------------------- ---------------- -------------
12b-1 distribution plan (Note 5) 8,311,589
- ----------------------------------------------------------------------------------- ---------------- -------------
Shareholder servicing 4,000,000
- ----------------------------------------------------------------------------------- ---------------- -------------
Reports to shareholders 310,000
- ----------------------------------------------------------------------------------- ---------------- -------------
Audit and legal 185,000
- ----------------------------------------------------------------------------------- ---------------- -------------
Registration 25,000
- ----------------------------------------------------------------------------------- ---------------- -------------
Other 358,735
- ----------------------------------------------------------------------------------- ---------------- -------------
Total expenses 29,476,324
- ----------------------------------------------------------------------------------- ---------------- -------------
Net investment income 288,754,965
- ----------------------------------------------------------------------------------- ---------------- -------------
Realized and Unrealized Gain (Loss) on Investments (Note 4)
- ----------------------------------------------------------------------------------- ---------------- -------------
Realized loss from security transactions
- ----------------------------------------------------------------------------------- ---------------- -------------
Proceeds from sales 26,994,318,569
- ----------------------------------------------------------------------------------- ---------------- -------------
Cost of securities sold 27,025,466,127
- ----------------------------------------------------------------------------------- ---------------- -------------
Net realized loss (31,147,558)
- ----------------------------------------------------------------------------------- ---------------- -------------
Unrealized appreciation (depreciation) of investments
- ----------------------------------------------------------------------------------- ---------------- -------------
Beginning of year (173,585,976)
- ----------------------------------------------------------------------------------- ---------------- -------------
End of year 25,059,840
- ----------------------------------------------------------------------------------- ---------------- -------------
Net unrealized appreciation of investments 198,645,816
- ----------------------------------------------------------------------------------- ---------------- -------------
Net realized and unrealized gain on investments 167,498,258
- ----------------------------------------------------------------------------------- ---------------- -------------
Net Increase in Net Assets Resulting from Operations $456,253,223
- ----------------------------------------------------------------------------------- ------------------------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended November 30,
Increase (Decrease) in Net Assets 1995 1994
- ----------------------------------------------------------------------------------- ------------------------------
<S> <C> <C>
Operations Net investment income $ 288,754,965 $ 320,699,269
- ----------------------------------------------------------------------------------- ---------------- -------------
Net realized loss from securities transactions (31,147,558) (349,270,920)
- ----------------------------------------------------------------------------------- ---------------- -------------
Net unrealized appreciation (depreciation) of investments 198,645,816 (134,045,232)
- ----------------------------------------------------------------------------------- ---------------- -------------
Net increase (decrease) in net assets resulting from
operations 456,253,223 (162,616,883)
- ----------------------------------------------------------------------------------- ---------------- -------------
Distributions to shareholders
- ----------------------------------------------------------------------------------- ---------------- -------------
Net investment income (285,314,674) (320,169,990)
- ----------------------------------------------------------------------------------- ---------------- -------------
Net realized gain from security transactions - (55,523,286)
- ----------------------------------------------------------------------------------- ---------------- -------------
Total distributions (285,314,674) (375,693,276)
- ----------------------------------------------------------------------------------- ---------------- -------------
Capital share transactions
- ----------------------------------------------------------------------------------- ---------------- -------------
Net proceeds from sales of 105,218,789 and 153,323,760
shares, respectively 280,447,588 431,760,453
- ----------------------------------------------------------------------------------- ---------------- -------------
Net asset value of 48,162,712 and 61,959,642 shares,
respectively, issued to shareholders in reinvestment of
net investment income and realized gains from security
transactions 128,344,564 173,697,048
- ----------------------------------------------------------------------------------- ---------------- -------------
Total 408,792,152 605,457,501
- ----------------------------------------------------------------------------------- ---------------- -------------
Cost of 202,386,336 and 269,024,754 shares reacquired,
respectively (538,877,858) (745,002,756)
- ----------------------------------------------------------------------------------- ---------------- -------------
Decrease in net assets derived from capital share
transactions (net decrease of 49,004,835 and 53,741,352
shares, respectively) (130,085,706) (139,545,255)
- ----------------------------------------------------------------------------------- ---------------- -------------
Increase (decrease) in net assets 40,852,843 (677,855,414)
- ----------------------------------------------------------------------------------- ---------------- -------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------
Beginning of year 3,232,012,465 3,909,867,879
- ----------------------------------------------------------------------------------- ---------------- -------------
End of year (including undistributed net investment income
of $21,354,857 and $17,914,566, respectively) $3,272,865,308 $3,232,012,465
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
Financial Highlights
<TABLE>
<CAPTION>
Year Ended November 30,
Per Share Operating Performance: 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 2.59 $ 3.00 $ 2.94 $ 2.94 $ 2.83
---------- ---------- ---------- ---------- ----------
Income from investment operations
Net investment income .235 .247 .239 .267 .282
---------- ---------- ---------- ---------- ----------
Net realized and unrealized gain (loss)
on investments .136 (.3685) .070 (.003) .105
---------- ---------- ---------- ---------- ----------
Total from investment operations .371 (.1215) .309 .264 .387
========== ========== ========== ========== ==========
Distributions
Dividends from net investment income (.231) (.246) (.249) (.264) (.277)
Distribution from net realized gain -- (.0425) -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 2.73 $ 2.59 $ 3.00 $ 2.94 $ 2.94
---------- ---------- ---------- ---------- ----------
Total Return* 14.89% (4.24)% 10.70% 9.24% 14.35%
---------- ---------- ---------- ---------- ----------
Ratios/Supplemental Data:
Net assets, end of year (000) $3,272,865 $3,232,012 $3,909,868 $3,275,052 $2,293,345
---------- ---------- ---------- ---------- ----------
Ratios to Average Net Assets:
Expenses .90% .90% .89% .87% .94%
---------- ---------- ---------- ---------- ----------
Net investment income 8.85% 8.92% 7.94% 9.18% 9.63%
---------- --------- ---------- ---------- ----------
Portfolio turnover rate 544.31% 790.57% 586.18% 458.70% 544.19%
========== ========= ========== ========== ==========
</TABLE>
*Total return does not consider the effects of sales loads.
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 November
30, 1995 for financial reporting purposes, which is substantially the same as
for federal income tax purposes, aggregated $380,418,478 which expires in 2002
and 2003.
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. These differences are primarily caused by
differences in the timing of recognition of certain components of income,
expenses or capital gains and losses. Where such differences
are permanent in nature, they are reclassified based upon their ultimate
characterization for federal income tax purposes. Any such reclassifications
will have no effect on net assets, results of operations or net asset value
of the Fund.
3. Capital Paid In
At November 30, 1995, capital paid in aggregated $3,606,869,089.
4. Portfolio Securities
The Company loans its portfolio securities to brokers. As of November 30,
1995, the market value of securities on loan to brokers was $393,689,819 for
which the Company has obtained collateral aggregating $395,273,625 consisting
of cash and U.S. Treasury securities.
Purchases and sales of investment securities (other than short-term
investments) aggregated $24,511,424,049 and $25,207,893,890, respectively.
Security gains and losses are computed on the identified cost basis.
As of November 30, 1995, net unrealized appreciation of investments
for federal income tax purposes aggregated $25,059,840 of which $65,957,904
related to appreciated securities and $40,898,064 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 $16,286,000 for which it supplied investment
management, research, statistical and advisory services and paid officer's
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
$1,206,955 representing payment of commissions on sales of capital stock of the
Company after deducting $7,684,528 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 $68,896 (exclusive of expenses), a portion of 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 November 30,
1995, the aggregate amount in Directors' accounts maintained under the plan was
$565,737. Retirement costs accrued during the period amounted to $38,189.
7
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders,
Lord Abbett U.S. Government Securities Fund, Inc.:
We have audited the accompanying statement of net assets of Lord Abbett U.S.
Government Securities Fund, Inc. as of November 30, 1995, 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 years in the five-year period then ended. These
financial statements and the financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at November
30, 1995 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. 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 Fund, Inc. at November 30, 1995, the results of its
operations, the changes in its net assets and the financial highlights for the
above-stated periods in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
New York, New York
January 5, 1996
This report to shareholders inaugurates a new procedure whereby a single
copy of the report is sent to an address to which more than one registered
shareholder of the Fund with the same last name has indicated mail is to be
delivered, unless additional reports are specifically requested in writing or
by telephone.
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
Robert S. Dow, President
Zane E. Brown, 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
Robert G. Morris, Vice President
E. Wayne Nordberg, Vice President
John J. Walsh, Vice President
John J. Gargana, Jr., Vice President
Paul A. Hilstad, Vice President
and Assistant Secretary
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
The Bank 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) 1996 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>
Lord, Abbett & Co.
A Tradition of Performance Through
Disciplined
Investing
[PHOTO APPEARS HERE]
(seated)
Robert S. Dow, partner, chief
investment officer and president
of all Lord Abbett's funds
(standing, left to right)
Michelle C. Katovitz, analyst
Zane E. Brown, director of fixed
income and portfolio manager--
Lord Abbett U.S. Government
Securities Fund
David Seto, portfolio manager
A successful long-term track record is evidence of a successful investment
strategy. For decades we, at Lord, Abbett & Co., have believed that investing
with a disciplined, value approach is the best way to achieve competitive
returns and reduce portfolio risk. This commitment and the dedication of our
team of 42 investment professionals have helped us earn the trust of financial
professionals and investors for over 65 years.
About Your Fund's
Board of
Directors
The Securities and Exchange Commission (SEC) views the role of the
independent Board of Directors as one of the most important components in
overseeing a mutual fund. The Board of Directors watches over your Fund's
general operations and represents your interests. Board members review and
approve every contract between your Fund and Lord, Abbett & Co. (the Fund's
investment manager). They meet regularly to review a wide variety
of information and issues regarding your Fund. Every member of the Board
possesses extensive business experience; Lord Abbett U.S. Government Securities
Fund's shareholders are indeed fortunate to have a group of independent
directors with diverse backgrounds to provide a variety of viewpoints in the
oversight of their Fund. Below, we feature one of our independent directors,
John C. Jansing.
John C. Jansing,
Director--Lord Abbett U.S.
Government Securities Fund
[PHOTO JOHN C. JANSING]
An alumnus of Dartmouth College, Mr. Jansing is the founder and retired
Chairman of Independent Election Corporation of America, a proxy tabulating
firm. His diversified business career has spanned 40 years and includes
extensive experience in the investment company industry.
Mr. Jansing has served on the American Stock Exchange Board of Governors as
well as on a Securities and Exchange Commission Special Advisory Committee on
Investment Advisors. He has been an independent director for all of Lord
Abbett's funds since 1978.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
Growth
Growth
Funds
Developing Growth Fund
Value Appreciation Fund
Global Fund--
Equity Series
Growth & Income Funds
Affiliated Fund
Fundamental Value Fund
Balanced
Fund
Investment Trust--
Balanced Series
Income
Funds
U.S. Government
Securities Fund*
Bond-Debenture
Fund
Global Fund--
Income Series
Investment
Trust--Limited
Duration U.S.
Government
Securities
Series*
Tax-Free Income Funds
. National
. California
. Connecticut
. Florida
. Georgia
. Hawaii
. Michigan
. Minnesota
. Missouri
. New Jersey
. New York
. Pennsylvania
. Texas
. Washington
Income
Money Market Fund
U.S. Government
Securities
Money Market
Fund+
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your financial adviser 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 Lord Abbett U.S. Government
Securities Fund.
For more complete information about any other Lord Abbett fund, including
charges and expenses, call your financial adviser or Lord, Abbett & Co. 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 financial adviser can diversify your
investments between equity and income funds.
Flexibility. As your investment goals change, your financial adviser can
help you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 25
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 financial adviser to help you customize your investment plan.
* An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ 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.
