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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number: 811-02924
LORD ABBETT U.S. GOVERNMENT & GOVERNMENT SPONSORED
ENTERPRISES MONEY MARKET FUND, INC.
(Exact name of Registrant as specified in charter)
90 Hudson Street, Jersey City, NJ 07302
(Address of principal executive offices) (zip code)
Christina T. Simmons, Vice President & Assistant Secretary
90 Hudson Street, Jersey City, NJ 07302
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 201-6984
Date of fiscal year end: 6/30
Date of reporting period: 6/30/06
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ITEM 1: REPORT TO SHAREHOLDERS.
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[LORD ABBETT LOGO]
2006
ANNUAL
REPORT
LORD ABBETT
U.S. GOVERNMENT & GOVERNMENT
SPONSORED ENTERPRISES
MONEY MARKET FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
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- --------------------------------------------------------------------------------
LORD ABBETT U.S. GOVERNMENT & GOVERNMENT
SPONSORED ENTERPRISES MONEY MARKET FUND
ANNUAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
DEAR SHAREHOLDERS: We are pleased to provide you with this overview of the Lord
Abbett U.S. Government and Government Sponsored Enterprises Money Market Fund's
performance for the year ended June 30, 2006. On this and the following pages,
we discuss the major factors that influenced performance. For detailed and more
timely information about the Fund, please visit our Website at
www.LordAbbett.com, where you also can access the quarterly commentaries of the
Fund's portfolio managers.
General information about Lord Abbett mutual funds, as well as in-depth
discussion of market trends and investment strategies, is also provided in LORD
ABBETT INSIGHTS, a newsletter accompanying your quarterly account statements. We
also encourage you to call Lord Abbett at 800-821-5129 and speak to one of our
professionals if you would like more information.
Thank you for investing in Lord Abbett mutual funds. We value the trust
that you place in us and look forward to serving your investment needs in the
years to come.
BEST REGARDS,
/s/ Robert S. Dow
- -------------------------------------
ROBERT S. DOW
CHAIRMAN
- --------------------------------------------------------------------------------
Q. WHAT WERE THE OVERALL MARKET CONDITIONS OF THE REPORTING PERIOD?
A. Continued interest rate hikes by the Federal Reserve Board (the Fed) and
worries about economic growth and inflation were the dominant factors affecting
the bond markets' performance.
The Fed raised the fed funds rate eight times in the period. From a
starting level of 3.25%, the fed funds rate increased to 5.25% by June 30, 2006.
At the start, Fed policy was accommodative - that is, rates were low enough to
stimulate demand. But by the end of the period, policymakers indicated that the
lagged effect of the increases in interest rates was moderating economic growth.
The change in policy stance was indicated by the trends in economic growth
and inflation pressures. Real gross domestic product (GDP) grew at an annual
rate of 2.9% in second half 2005, followed by a strong 5.6% increase in first
quarter 2006. The yearly inflation rate, as measured by the 12-month percent
change in the Consumer Price Index for all goods and services, rose from 2.5% in
June 2005 to 4.3% a year later. Core inflation, which excludes food and energy
costs, also accelerated.
Because of the continued Fed tightening and higher inflation worries,
interest rates rose along the entire yield spectrum during the period. However,
1
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rates on securities maturing in two years or less increased more than did
longer-term securities. As a result, in February, March, and June, the average
yield on a two-year Treasury note was higher than the yield on a 10-year note,
resulting in an inverted yield curve.
Q. HOW DID THE FUND PERFORM IN THE YEAR ENDED JUNE 30, 2006?
A. The Fund (Class A shares) finished the year ended June 30, 2006, with total
net assets of $337.0 million and a seven-day current yield of 4.4%. The 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 one-year total return
quotation. For the year ended June 30, 2006, the Fund returned 3.5%, reflecting
performance at the net asset value (NAV) of Class A shares with all
distributions reinvested, compared with its peer group, the Lipper U.S.
Government Money Market Funds Average,(1) which returned 3.4% in the same
period. AVERAGE ANNUAL RETURNS, WHICH INCLUDE THE REINVESTMENT OF ALL
DISTRIBUTIONS AS OF JUNE 30, 2006, ARE 1 YEAR: 3.51%, 5 YEARS: 1.41%, AND 10
YEARS: 3.06%.
AN INVESTMENT IN MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED BY
THE FEDERAL DEPOSIT INSURANCE CORP. 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.
PERFORMANCE DATA QUOTED REFLECT PAST PERFORMANCE AND ARE NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE
QUOTED. 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. YOU CAN OBTAIN PERFORMANCE DATA CURRENT
TO THE MOST RECENT MONTH END BY CALLING LORD ABBETT AT 800-821-5129 OR REFERRING
TO OUR WEBSITE AT www.LordAbbett.com.
Q. WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
A. In general, Fund yield kept pace with short-term interest rates. Consistent
with its goal of providing current income with minimum credit risk, the
portfolio remained invested in high-quality, short-term securities issued by the
U.S. Treasury and certain U.S. government agency securities.
THE FUND'S PORTFOLIO IS ACTIVELY MANAGED AND, THEREFORE, ITS HOLDINGS AND
WEIGHTINGS OF A PARTICULAR ISSUER OR PARTICULAR SECTOR AS A PERCENTAGE OF
PORTFOLIO ASSETS ARE SUBJECT TO CHANGE.
2
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NOTE: Class A shares purchased subject to a front-end sales charge have no
contingent deferred sales charge (CDSC). However, certain purchases of Class A
shares made without a front-end sales charge may be subject to a CDSC. Please
see section "Your Investment -- Purchases" in the propspectus for more
information on redemptions that may be subject to a CDSC.
A PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT A FUND, INCLUDING ITS
INVESTMENT OBJECTIVES, RISKS, CHARGES, AND ONGOING EXPENSES, WHICH AN INVESTOR
SHOULD CAREFULLY CONSIDER BEFORE INVESTING. TO OBTAIN A PROSPECTUS ON ANY LORD
ABBETT MUTUAL FUND, PLEASE CONTACT YOUR INVESTMENT PROFESSIONAL OR LORD ABBETT
DISTRIBUTOR LLC AT 800-874-3733 OR VISIT www.LordAbbett.com. READ THE PROSPECTUS
CAREFULLY BEFORE INVESTING.
(1) The Lipper U.S. Government Money Market Funds Average aims at investments
in financial instruments issued or guaranteed by the U.S. government, its
agencies or its instrumentalities, with dollar-weighted average maturities
of less than 90 days. Peer averages are based on universes of funds with
similar investment objectives. Peer group averages include reinvested
dividends and capital gains, if any, and exclude sales charges. Source:
Lipper, Inc. Copyright (C)2006 by Reuters. All rights reserved. Any
copying, republication, or redistribution of Lipper content is expressly
prohibited without the prior written consent of Lipper.
IMPORTANT PERFORMANCE AND OTHER INFORMATION
The views of the Fund's management and the portfolio holdings described in this
report are as of June 30, 2006; these views and portfolio holdings may have
changed subsequent to this date and they do not guarantee the future performance
of the markets or the Fund. Information provided in this report should not be
considered a recommendation to purchase or sell securities.
A NOTE ABOUT RISK: See Notes to Financial Statements for a discussion of
investment risks. For a more detailed discussion of the risks associated with
the Fund, please see the Fund's prospectus.
PERFORMANCE: BECAUSE OF ONGOING MARKET VOLATILITY, FUND PERFORMANCE MAY BE
SUBJECT TO SUBSTANTIAL FLUCTUATION. Except where noted, comparative fund
performance does not account for the deduction of sales charges and would be
different if sales charges were included. The Fund offers additional classes of
shares with distinct pricing options. For a full description of the differences
in pricing alternatives, please see the Fund's prospectus.
MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS
OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
3
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EXPENSE EXAMPLE
As a shareholder of the Fund you incur ongoing costs, including management
fees; distribution and service (12b-1) fees (currently only Class B shares have
an active 12b-1 Plan); and other Fund expenses. This example is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning
of the period and held for the entire period (January 1, 2006 through June 30,
2006).
ACTUAL EXPENSES
For each class of the Fund, the first line of the applicable table on the
following pages provides information about actual account values and actual
expenses. You may use the information in this line, together with the amount you
invested, to estimate the expenses that you paid over the period. Simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), then multiply the result by the number in the first line under
the heading entitled "Expenses Paid During the Period 1/1/06 - 6/30/06" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
For each class of the Fund, the second line of the applicable table on the
following pages provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to estimate
the actual ending account balance or expenses you paid for the period. You may
use this information to compare the ongoing costs of investing in the Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
4
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Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs, such as
sales charges. Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE ENDING PERIOD+
--------- --------- -----------
1/1/06 -
1/1/06 6/30/06 6/30/06
--------- --------- -----------
CLASS A
Actual $1,000.00 $1,035.10 $3.53
Hypothetical (5% Return Before Expenses) $1,000.00 $1,021.33 $3.51
CLASS B
Actual $1,000.00 $1,027.30 $7.29
Hypothetical (5% Return Before Expenses) $1,000.00 $1,017.62 $7.25
CLASS C
Actual $1,000.00 $1,035.10 $3.53
Hypothetical (5% Return Before Expenses) $1,000.00 $1,021.34 $3.51
CLASS Y
Actual $1,000.00 $1,035.10 $3.53
Hypothetical (5% Return Before Expenses) $1,000.00 $1,021.34 $3.51
+ For each class of the Fund, expenses are equal to the annualized expense
ratio for such class (0.70% for Class A, 1.45% for Class B, and 0.70% for
Classes C & Y) multiplied by the average account value over the period,
multiplied by 181/365 (to reflect one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY CREDIT RATING
JUNE 30, 2006
CREDIT RATING %*
A-1+ 83.42%
Repurchase Agreements 16.58%
Total 100.00%
* Represents percent of total investments.
5
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SCHEDULE OF INVESTMENTS
JUNE 30, 2006
<Table>
<Caption>
PRINCIPAL
INTEREST MATURITY AMOUNT AMORTIZED
INVESTMENTS RATE DATE RATING+ (000) COST
- --------------------------------------------------------------------------------------------
GOVERNMENT SPONSORED ENTERPRISES SECURITIES 83.90%
FEDERAL HOME LOAN BANK 5.00% 7/3/2006 A-1+ $62,173 $ 62,155,730
FEDERAL HOME LOAN BANK 5.08% 7/5/2006 A-1+ 90,000 89,949,200
FEDERAL HOME LOAN BANK 5.10% 7/5/2006 A-1+ 10,000 9,994,333
FEDERAL HOME LOAN BANK 5.10% 7/7/2006 A-1+ 5,427 5,422,387
FEDERAL HOME LOAN BANK 5.11% 7/10/2006 A-1+ 270 269,655
FEDERAL HOME LOAN BANK 5.13% 7/12/2006 A-1+ 942 940,523
FEDERAL HOME LOAN BANK 5.13% 7/14/2006 A-1+ 706 704,692
FEDERAL HOME LOAN BANK 5.14% 7/10/2006 A-1+ 925 923,811
FEDERAL HOME LOAN MORTGAGE CORP. 4.95% 7/5/2006 A-1+ 30,000 29,983,500
FEDERAL HOME LOAN MORTGAGE CORP. 5.10% 7/5/2006 A-1+ 796 795,549
FEDERAL HOME LOAN MORTGAGE CORP. 5.14% 7/11/2006 A-1+ 100 99,857
FEDERAL HOME LOAN MORTGAGE CORP. 5.17% 7/18/2006 A-1+ 600 598,535
FEDERAL HOME LOAN MORTGAGE CORP. 5.17% 7/31/2006 A-1+ 6,500 6,471,996
FEDERAL HOME LOAN MORTGAGE CORP. 5.20% 7/25/2006 A-1+ 5,419 5,400,214
FEDERAL HOME LOAN MORTGAGE CORP. 5.20% 8/1/2006 A-1+ 2,421 2,410,159
FEDERAL NATIONAL MORTGAGE ASSOC. 4.95% 7/5/2006 A-1+ 150 149,918
FEDERAL NATIONAL MORTGAGE ASSOC. 5.13% 7/12/2006 A-1+ 1,597 1,594,497
FEDERAL NATIONAL MORTGAGE ASSOC. 5.13% 7/13/2006 A-1+ 84 83,856
FEDERAL NATIONAL MORTGAGE ASSOC. 5.14% 7/12/2006 A-1+ 1,184 1,182,141
FEDERAL NATIONAL MORTGAGE ASSOC. 5.14% 7/18/2006 A-1+ 640 638,447
FEDERAL NATIONAL MORTGAGE ASSOC. 5.15% 7/17/2006 A-1+ 105 104,760
FEDERAL NATIONAL MORTGAGE ASSOC. 5.15% 8/1/2006 A-1+ 50,000 49,778,264
FEDERAL NATIONAL MORTGAGE ASSOC. 5.16% 7/20/2006 A-1+ 2,500 2,493,192
FEDERAL NATIONAL MORTGAGE ASSOC. 5.17% 8/9/2006 A-1+ 50,000 49,719,958
------------
TOTAL 321,865,174
------------
</Table>
6 SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
JUNE 30, 2006
PRINCIPAL
AMOUNT AMORTIZED
INVESTMENTS (000) COST
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS 16.67%
REPURCHASE AGREEMENT DATED
6/30/2006, 5.00% DUE 7/3/2006
WITH J.P. MORGAN CHASE & CO.
COLLATERALIZED BY $31,000,000 OF
FEDERAL FARM CREDIT BANK AT 4.875%
DUE 2/18/2011 AND $9,450,000 OF
FEDERAL HOME LOAN BANK AT
4.875% DUE 3/11/2016 AND
$24,000,000 OF FEDERAL NATIONAL
MORTGAGE ASSOC. AT 5.55% DUE
7/16/2007; VALUE: $63,867,705;
PROCEEDS: $62,726,125 $62,700 $ 62,700,000
REPURCHASE AGREEMENT DATED
6/30/2006, 4.62% DUE 7/3/2006
WITH STATE STREET BANK & TRUST CO.
COLLATERALIZED BY $1,325,000 OF
FEDERAL HOME LOAN MORTGAGE CORP. AT
5.50% DUE 11/16/2015; VALUE: $1,291,875;
PROCEEDS: $1,265,621 1,265 1,265,134
------------
TOTAL 63,965,134
------------
TOTAL INVESTMENTS 100.57% 385,830,308*
------------
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS (0.57%) (2,189,981)
------------
NET ASSETS 100.00% $383,640,327
============
+ Ratings shown are unaudited.
* Cost for Federal income tax purposes is $385,830,308. Average maturity of
investments: 13 days.
SEE NOTES TO FINANCIAL STATEMENTS. 7
<Page>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2006
<Table>
ASSETS:
Investment in securities, at amortized cost $321,865,174
Repurchase agreements, at cost 63,965,134
Cash 106,537
Receivables:
Capital shares sold 6,394,950
From advisor 96,259
Interest 8,871
Prepaid expenses and other assets 46,362
- ----------------------------------------------------------------------------------------------
TOTAL ASSETS 392,483,287
==============================================================================================
LIABILITIES:
Payables:
Capital shares reacquired 7,127,133
Management fees 156,687
Directors' fees 151,888
12b-1 distribution fees-Class B 15,964
Fund administration 8,643
Distributions payable 1,129,132
Accrued expenses and other liabilities 253,513
- ----------------------------------------------------------------------------------------------
TOTAL LIABILITIES 8,842,960
==============================================================================================
NET ASSETS $383,640,327
==============================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $383,640,068
Undistributed net investment income 259
- ----------------------------------------------------------------------------------------------
NET ASSETS $383,640,327
==============================================================================================
NET ASSETS BY CLASS:
Class A shares $337,018,511
Class B shares $ 26,533,850
Class C shares $ 13,063,825
Class Y shares $ 7,024,141
OUTSTANDING SHARES BY CLASS:
Class A shares (700 million shares of common stock authorized, $.001 par value) 337,018,290
Class B shares (400 million shares of common stock authorized, $.001 par value) 26,533,831
Class C shares (300 million shares of common stock authorized, $.001 par value) 13,063,813
Class Y shares (100 million shares of common stock authorized, $.001 par value) 7,024,141
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A shares-Net asset value $ 1.00
Class B shares-Net asset value $ 1.00
Class C shares-Net asset value $ 1.00
Class Y shares-Net asset value $ 1.00
- ----------------------------------------------------------------------------------------------
</Table>
8 SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2006
INVESTMENT INCOME:
Interest $14,435,977
EXPENSES:
Management fees 1,681,565
Shareholder servicing 1,367,198
12b-1 distribution plan-Class B 170,045
Fund administration 138,362
Registration 96,930
Reports to shareholders 91,731
Professional 58,007
Custody 20,700
Directors' fees 14,109
Other 13,550
- -------------------------------------------------------------------------------
Gross expenses 3,652,197
Expense reductions (See Note 6) (18,898)
Expenses assumed by advisor (See Note 3) (1,040,314)
- -------------------------------------------------------------------------------
NET EXPENSES 2,592,985
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME $11,842,992
===============================================================================
SEE NOTES TO FINANCIAL STATEMENTS. 9
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
INCREASE (DECREASE) IN NET ASSETS JUNE 30, 2006 JUNE 30, 2005
OPERATIONS:
Net investment income $ 11,842,992 $ 4,304,535
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (10,631,657) (3,832,401)
Class B (605,575) (211,850)
Class C (404,083) (204,405)
Class Y (201,677) (55,879)
- -----------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (11,842,992) (4,304,535)
=========================================================================================
CAPITAL SHARE TRANSACTIONS (SEE NOTE 9):
Net proceeds from sales of shares 798,420,634 713,008,953
Reinvestment of distributions 10,725,131 3,568,179
Cost of shares redeemed (742,542,608) (763,610,233)
- -----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS 66,603,157 (47,033,101)
=========================================================================================
NET INCREASE (DECREASE) IN NET ASSETS 66,603,157 (47,033,101)
=========================================================================================
NET ASSETS:
Beginning of year 317,037,170 364,070,271
- -----------------------------------------------------------------------------------------
END OF YEAR $ 383,640,327 $ 317,037,170
=========================================================================================
UNDISTRIBUTED NET INVESTMENT INCOME $ 259 $ 259
=========================================================================================
</Table>
10 SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
YEAR ENDED 6/30
----------------------------------------
2006 2005 2004 2003 2002
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Investment operations:
Net investment income(b) .03 .01 --(d) .01 .01
----- ----- ----- ----- -----
Distributions to shareholders from:
Net investment income (.03) (.01) --(d) (.01) (.01)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return(c) 3.51% 1.35% .21% .55% 1.48%
RATIOS TO AVERAGE NET ASSETS:
Expenses, including reductions and
expenses assumed .70% .81% .83% .88% .86%
Expenses, excluding reductions and
expenses assumed 1.01% .94% .97% .98% .87%
Net investment income 3.47% 1.32% .21% .56%+ 1.46%+
</Table>
<Table>
<Caption>
YEAR ENDED 6/30
----------------------------------------------------
SUPPLEMENTAL DATA: 2006 2005 2004 2003 2002
- -------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $337,018 $271,720 $289,336 $266,528 $227,169
=======================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS. 11
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
YEAR ENDED 6/30
-----------------------------------------
2006 2005 2004 2003 2002
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Investment operations:
Net investment income(b) .03 .01 --(d) --(d) .01
----- ----- ----- ----- -----
Distributions to shareholders from:
Net investment income (.03) (.01) --(d) --(d) (.01)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return(c) 2.73% .72% .20% .29% .80%
RATIOS TO AVERAGE NET ASSETS:
Expenses, including reductions and
expenses assumed 1.45% 1.41% .83% 1.15% 1.53%
Expenses, excluding reductions and
expenses assumed 1.76% 1.69% 1.72% 1.73% 1.62%
Net investment income 2.67% .62% .21% .29%+ .71%+
</Table>
<Table>
<Caption>
YEAR ENDED 6/30
-----------------------------------------------
SUPPLEMENTAL DATA: 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------
Net assets, end of year (000) $26,534 $26,388 $47,789 $39,609 $26,000
==================================================================================================
</Table>
12 SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
<Table>
<Caption>
YEAR ENDED 6/30
----------------------------------------
2006 2005 2004 2003 2002
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Investment operations:
Net investment income(b) .03 .01 --(d) .01 .01
----- ----- ----- ----- -----
Distributions to shareholders from:
Net investment income (.03) (.01) --(d) (.01) (.01)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return(c) 3.51% 1.35% .21% .55% 1.48%
RATIOS TO AVERAGE NET ASSETS:
Expenses, including reductions and
expenses assumed .70% .83% .83% .88% .86%
Expenses, excluding reductions and
expenses assumed 1.01% .94% .97% .98% .87%
Net investment income 3.42% 1.19% .21% .56%+ 1.46%+
</Table>
<Table>
<Caption>
YEAR ENDED 6/30
-----------------------------------------------
SUPPLEMENTAL DATA: 2006 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------
Net assets, end of year (000) $13,064 $13,872 $26,945 $14,720 $10,769
==================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS. 13
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
<Table>
<Caption>
10/20/2004(a)
YEAR ENDED TO
6/30/2006 6/30/2005
PER SHARE OPERATING PERFORMANCE (CLASS Y SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
===== =====
Investment operations:
Net investment income(b) .03 .01
----- -----
Distributions to shareholders from:
Net investment income (.03) (.01)
----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
===== =====
Total Return(c) 3.51% 1.18%(e)
RATIOS TO AVERAGE NET ASSETS:
Expenses, including reductions and expenses assumed .70% .53%(e)
Expenses, excluding reductions and expenses assumed 1.01% .67%(e)
Net investment income 3.50% 1.21%(e)
</Table>
<Table>
<Caption>
10/20/2004(a)
YEAR ENDED TO
SUPPLEMENTAL DATA: 6/30/2006 6/30/2005
- -----------------------------------------------------------------------------------
Net assets, end of period (000) $7,024 $5,057
===================================================================================
</Table>
+ The ratios have been determined on a fund basis.
(a) Commencement of offering of class shares.
(b) Calculated using average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(d) Amount is less than $.01.
(e) Not annualized.
14 SEE NOTES TO FINANCIAL STATEMENTS.
<Page>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market
Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940
(the "Act") as a diversified, open-end management investment company. The Fund
was incorporated under Maryland law on May 9, 1979.
The investment objective of the Fund is to seek high current income and
preservation of capital through investments in high-quality, short-term, liquid
securities.
The Fund offers four classes of shares: Classes A, B, C and Y. There are no
front end sales charges on shares of each class, although there may be a
contingent deferred sales charge ("CDSC") applied to each class of shares as
follows: Class A shares acquired through an exchange and redeemed within 24
months (12 months if shares were purchased on or after November 1, 2004)
following certain purchases made without a sales charge; Class B shares redeemed
before the sixth anniversary of purchase; and Class C shares redeemed before the
first anniversary of purchase.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) INVESTMENT VALUATION-The Fund values securities utilizing the amortized
cost method, which approximates market value. Under this method, all
investments purchased at a discount or premium 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) SECURITY TRANSACTIONS-Security transactions are recorded as of the date
that the securities are purchased or sold (trade date). Realized gains and
losses on sales of portfolio securities are calculated using the
identified-cost method.
(c) INVESTMENT INCOME-Interest income is recorded on the accrual basis.
Investment income is allocated to each class of shares based upon the
relative proportion of net assets at the beginning of the day.
(d) FEDERAL TAXES-It is the policy of the Fund to meet the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all taxable net income
to its shareholders. Therefore, no Federal income tax provision is
required.
(e) EXPENSES-Expenses, excluding class specific expenses, are allocated to each
class of shares based upon the relative proportion of net assets at the
beginning of the day. Class B shares bear all expenses and fees related to
the Class B 12b-1 distribution plan.
(f) REPURCHASE AGREEMENTS-The Fund may enter into repurchase agreements with
respect to securities. A repurchase agreement is a transaction in which the
Fund acquires a security and simultaneously commits to resell that security
to the seller (a bank or securities dealer) at an
15
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
agreed-upon price on an agreed-upon date. The Fund requires at all times
that the repurchase agreement be collateralized by cash, or by securities
of the U.S. Government, its agencies, its instrumentalities, or U.S.
Government sponsored enterprises having a value equal to, or in excess of,
the value of the repurchase agreement (including accrued interest). If the
seller of the agreement defaults on its obligation to repurchase the
underlying securities at a time when the value of those securities has
declined, the Fund may incur a loss upon disposition of the securities.
3. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE
The Fund has a management agreement with Lord, Abbett & Co. LLC ("Lord Abbett")
pursuant to which Lord Abbett supplies the Fund with investment management
services and executive and other personnel, pays the remuneration of officers,
provides office space and pays for ordinary and necessary office and clerical
expenses relating to research and statistical work and supervision of the Fund's
investment portfolio.
The management fee is based on the Fund's average daily net assets at the
following annual rates:
..50% of the first $250 million of average daily net assets;
..45% of the next $250 million of average daily net assets;
..40% of average daily net assets over $500 million.
For the fiscal year ended June 30, 2006, the fee paid to Lord Abbett was at an
annual rate of .49% of average daily net assets.
For the fiscal year ended June 30, 2006, Lord Abbett contractually agreed to
reimburse the Fund to the extent necessary so that each class' total annual
operating expenses did not exceed the following annual rates:
% OF AVERAGE DAILY
CLASS NET ASSETS
- -----------------------------
A .70%
B 1.45%
C .70%
Y .70%
Lord Abbett provides certain administrative services to the Fund pursuant to an
Administrative Services Agreement at an annual rate of .04% of the Fund's
average daily net assets.
12b-1 DISTRIBUTION PLANS
The Fund has adopted a distribution plan (the "Plan") with respect to one or
more classes of shares pursuant to Rule 12b-1 of the Act, which provides for the
payment of ongoing distribution and service fees to Lord Abbett Distributor LLC
("Distributor"), an affiliate of Lord Abbett. The fees are accrued daily at
annual rates based upon average daily net assets as follows:
FEE CLASS A(1) CLASS B CLASS C(1)
- --------------------------------------------------------------------------------
Service and distribution fee .15% .75% .25%
(1) The Fund has not activated its Class A and Class C Plans, and therefore, no
payments are currently authorized under the Plans.
Class Y does not have a distribution plan.
One Director and certain of the Fund's officers have an interest in Lord Abbett.
16
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. DISTRIBUTIONS
Dividends from net investment income are declared daily and paid monthly.
5. DIRECTORS' REMUNERATION
The Fund's officers and the one Director, who are associated with Lord Abbett,
do not receive any compensation from the Fund for serving in such capacities.
Outside Directors' fees are allocated among all Lord Abbett-sponsored funds
based on the net assets of each fund. There is an equity based plan available to
all outside Directors under which outside Directors must defer receipt of a
portion of, and may elect to defer receipt of an additional portion of
Directors' fees. The deferred amounts are treated as though equivalent dollar
amounts have been invested proportionately in the funds. Such amounts and
earnings accrued thereon are included in Directors' Fees on the Statement of
Operations and in Directors' Fees Payable on the Statement of Assets and
Liabilities and are not deductible for U.S. Federal income tax purposes until
such amounts are paid.
6. EXPENSE REDUCTIONS
The Fund has entered into arrangements with its transfer agent and custodian,
whereby credits realized as a result of uninvested cash balances are used to
reduce a portion of the Fund's expenses.
7. CUSTODIAN AND ACCOUNTING AGENT
State Street Bank & Trust Company ("SSB") is the Fund's custodian and accounting
agent. SSB performs custodial, accounting and recordkeeping functions, relating
to portfolio transactions and calculating the Fund's NAV.
8. INVESTMENT RISKS
The Fund's yield may vary in response to changes in interest rates and other
market factors.
The Fund generally invests a substantial portion of its assets in money market
securities issued by various government sponsored enterprises such as Federal
Home Loan Mortgage Corporation and Federal National Mortgage Association. Such
securities are not guaranteed by the U.S. Government, but are supported only by
the credit of the particular government sponsored enterprises involved, and the
discretionary authority of the U.S. Treasury to purchase the enterprise
obligations. There is no assurance that the U.S. Government will provide
financial support to such enterprises.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of an investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
These factors can affect the Fund's performance.
17
<Page>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
9. SUMMARY OF CAPITAL TRANSACTIONS
Transactions in shares of capital stock are as follows:
<Table>
<Caption>
YEAR ENDED YEAR ENDED
JUNE 30, 2006 JUNE 30, 2005
- -------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------
Shares sold 755,784,943 $ 755,784,953 659,364,057 $ 659,364,057
Reinvestment of distributions 9,675,318 9,675,318 3,197,663 3,197,663
Shares reacquired (700,161,375) (700,161,380) (680,178,549) (680,178,553)
- -------------------------------------------------------------------------------------------
Increase (decrease) 65,298,886 $ 65,298,891 (17,616,829) $ (17,616,833)
- -------------------------------------------------------------------------------------------
CLASS B SHARES
- -------------------------------------------------------------------------------------------
Shares sold 23,172,101 $ 23,172,101 22,107,897 $ 22,107,897
Reinvestment of distributions 507,584 507,584 166,799 166,799
Shares reacquired (23,533,931) (23,533,932) (43,675,373) (43,675,373)
- -------------------------------------------------------------------------------------------
Increase (decrease) 145,754 $ 145,753 (21,400,677) $ (21,400,677)
- -------------------------------------------------------------------------------------------
CLASS C SHARES
- -------------------------------------------------------------------------------------------
Shares sold 14,885,062 $ 14,885,061 24,478,510 $ 24,478,510
Reinvestment of distributions 352,434 352,434 157,444 157,444
Shares reacquired (16,046,000) (16,046,000) (37,708,669) (37,708,669)
- -------------------------------------------------------------------------------------------
Decrease (808,504) $ (808,505) (13,072,715) $ (13,072,715)
- -------------------------------------------------------------------------------------------
FOR THE PERIOD ENDED
CLASS Y SHARES JUNE 30, 2005*
- -------------------------------------------------------------------------------------------
Shares sold 4,578,519 $ 4,578,519 7,058,489 $ 7,058,489
Reinvestment of distributions 189,794 189,795 46,273 46,273
Shares reacquired (2,801,296) (2,801,296) (2,047,638) (2,047,638)
- -------------------------------------------------------------------------------------------
Increase 1,967,017 $ 1,967,018 5,057,124 $ 5,057,124
- -------------------------------------------------------------------------------------------
</Table>
* For the period October 20, 2004 (commencement of offering of class shares)
to June 30, 2005.
10. RECENT ACCOUNTING PRONOUNCEMENT
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting
for income taxes by prescribing the minimum recognition threshold a tax position
must meet before being recognized in the financial statements. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The Fund will
adopt FIN 48 during 2007 and the impact to the fund's financial statements, if
any, is currently being assessed.
18
<Page>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
LORD ABBETT U.S. GOVERNMENT & GOVERNMENT
SPONSORED ENTERPRISES MONEY MARKET FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Lord Abbett U.S. Government & Government
Sponsored Enterprises Money Market Fund, Inc. (the "Fund") as of June 30, 2006,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). 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. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2006 by correspondence with the custodian. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Lord
Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund,
Inc. as of June 30, 2006, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
New York, New York
August 16, 2006
19
<Page>
BASIC INFORMATION ABOUT MANAGEMENT
The Board of Directors (the "Board") is responsible for the management of the
business and affairs of the Fund in accordance with the laws of the State of
Maryland. The Board appoints officers who are responsible for the day-to-day
operations of the Fund and who execute policies authorized by the Board. The
Board also approves an investment adviser to the Fund and continues to monitor
the cost and quality of the services provided by the investment adviser, and
annually considers whether to renew the contract with the adviser. Generally,
each Director holds office until his/her successor is elected and qualified or
until his/her earlier resignation or removal, as provided in the Company's
organizational documents.
Lord, Abbett & Co. LLC ("Lord Abbett"), a Delaware limited liability company, is
the Fund's investment adviser.
INTERESTED DIRECTOR
The following Director is the Managing Partner of Lord Abbett and is an
"interested person" as defined in the Act. Mr. Dow is also an officer, director,
or trustee of each of the fourteen Lord Abbett-sponsored funds, which consist of
55 portfolios or series.
<Table>
<Caption>
CURRENT POSITION
NAME, ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
YEAR OF BIRTH WITH FUND DURING PAST FIVE YEARS DIRECTORSHIPS
- --------------------------------------------------------------------------------------------------
ROBERT S. DOW Director since Managing Partner and Chief N/A
Lord, Abbett & Co. LLC 1989; Chairman Executive Officer of
90 Hudson Street since 1996 Lord Abbett since 1996.
Jersey City, NJ 07302
(1945)
</Table>
----------
INDEPENDENT DIRECTORS
The following independent or outside Directors are also directors or trustees of
each of the fourteen Lord Abbett-sponsored funds, which consist of 55 portfolios
or series.
<Table>
<Caption>
CURRENT POSITION
NAME,ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
YEAR OF BIRTH WITH FUND DURING PAST FIVE YEARS DIRECTORSHIPS
- --------------------------------------------------------------------------------------------------
E. THAYER BIGELOW Director since 1994 Managing General Partner, Currently serves as
Lord, Abbett & Co. LLC Bigelow Media, LLC (since director of Adelphia
c/o Legal Dept. 2000); Senior Adviser, Communications, Inc.,
90 Hudson Street Time Warner Inc. (1998 - Crane Co., and Huttig
Jersey City, NJ 07302 2000); Acting Chief Building Products Inc.
(1941) Executive Officer of
Courtroom Television
Network (1997 - 1998);
President and Chief
Executive Officer of Time
Warner Cable Programming,
Inc. (1991 - 1997).
WILLIAM H.T. BUSH Director since 1998 Co-founder and Chairman of Currently serves as
Lord, Abbett & Co. LLC the Board of the financial director of WellPoint,
c/o Legal Dept. advisory firm of Bush- Inc. (since 2002).
90 Hudson Street O'Donnell & Company (since
Jersey City, NJ 07302 1986).
(1938)
</Table>
20
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
<Table>
<Caption>
CURRENT POSITION
NAME,ADDRESS AND LENGTH OF SERVICE PRINCIPAL OCCUPATION OTHER
YEAR OF BIRTH WITH FUND DURING PAST FIVE YEARS DIRECTORSHIPS
- --------------------------------------------------------------------------------------------------
ROBERT B. CALHOUN, JR. Director since 1998 Managing Director of Currently serves as
Lord, Abbett & Co. LLC Monitor Clipper Partners director of Avondale,
c/o Legal Dept. (since 1997) and President Inc. and Interstate
90 Hudson Street of Clipper Asset Bakeries Corp.
Jersey City, NJ 07302 Management Corp. (since
(1942) 1991), both private equity
investment funds.
JULIE A. HILL Director since 2004 Owner and CEO of the Currently serves as
Lord, Abbett & Co. LLC Hillsdale Companies, a director of WellPoint,
c/o Legal Dept. business consulting firm Inc.; Resources
90 Hudson Street (since 1998); Founder, Connection Inc.;
Jersey City, NJ 07302 President and Owner of the Holcim (US) Inc. (a
(1946) Hiram-Hill and Hillsdale subsidiary of Holcim
Development Companies Ltd.); and Lend Lease
(1998 - 2000). Corporation Limited.
FRANKLIN W. HOBBS Director since 2000 Former Chief Executive Currently serves as
Lord, Abbett & Co. LLC Officer of Houlihan Lokey director of Adolph
c/o Legal Dept. Howard & Zukin, an Coors Company.
90 Hudson Street investment bank (January
Jersey City, NJ 07302 2002 - April 2003);
(1947) Chairman of Warburg Dillon
Read (1999 - 2001); Global
Head of Corporate Finance
of SBC Warburg Dillon Read
(1997 - 1999); Chief
Executive Officer of
Dillon, Read & Co. (1994 -
1997).
THOMAS J. NEFF Director since 1982 Chairman of Spencer Stuart Currently serves as
Lord, Abbett & Co. LLC (U.S.), an executive director of Ace, Ltd.
c/o Legal Dept. search consulting firm (since 1997) and
90 Hudson Street (since 1996); President of Hewitt Associates, Inc.
Jersey City, NJ 07302 Spencer Stuart
(1937) (1979-1996).
JAMES L.L. TULLIS* Director since 2006 CEO of Tullis-Dickerson Currently serves as
Lord, Abbett & Co. LLC and Co. Inc, a venture Director of Crane Co.
c/o Legal Dept. capital management firm (since 1998), and
90 Hudson Street (since 1990). Viacell Inc. (since
Jersey City, NJ 07302 2002).
(1947)
</Table>
- ----------
* Mr. Tullis is a director or trustee of thirteen of the fourteen Lord
Abbett-sponsored funds, consisting of 54 portfolios or series.
21
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
OFFICERS
None of the officers listed below have received compensation from the Fund. All
the officers of the Fund may also be officers of the other Lord Abbett-sponsored
funds and maintain offices at 90 Hudson Street, Jersey City, NJ 07302.
<Table>
<Caption>
NAME AND CURRENT POSITION LENGTH OF SERVICE PRINCIPAL OCCUPATION
YEAR OF BIRTH WITH FUND OF CURRENT POSITION DURING PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------
ROBERT S. DOW Chief Executive Elected in 1995 Managing Partner and Chief
(1945) Officer and President Executive Officer of Lord Abbett
(since 1996).
ROBERT I. GERBER Executive Vice Elected in 1997 Partner and Director of Taxable
(1954) President Fixed Income Management, joined
Lord Abbett in 1997.
JAMES BERNAICHE Chief Compliance Elected in 2004 Chief Compliance Officer, joined
(1956) Officer Lord Abbett in 2001; formerly Vice
President and Chief Compliance
Officer with Credit Suisse Asset
Management.
JOAN A. BINSTOCK Chief Financial Elected in 1999 Partner and Chief Operations
(1954) Officer and Vice Officer, joined Lord Abbett in
President 1999.
JOHN K. FORST Vice President and Elected in 2005 Deputy General Counsel, joined Lord
(1960) Assistant Secretary Abbett in 2004; prior thereto
Managing Director and Associate
General Counsel at New York Life
Investment Management LLC
(2002-2003); formerly Attorney at
Dechert LLP (2000-2002).
LAWRENCE H. KAPLAN Vice President and Elected in 1997 Partner and General Counsel, joined
(1957) Secretary Lord Abbett in 1997.
ROBERT A. LEE Vice President Elected in 2000 Partner and Fixed Income Investment
(1969) Manager-Mortgage and Asset Backed
Securities, joined Lord Abbett in
1997.
ROBERT G. MORRIS Vice President Elected in 1995 Partner and Chief Investment
(1944) Officer, joined Lord Abbett in
1991.
A. EDWARD OBERHAUS, III Vice President Elected in 1996 Partner and Manager of Equity
(1959) Trading, joined Lord Abbett in
1983.
</Table>
22
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONCLUDED)
<Table>
<Caption>
NAME AND CURRENT POSITION LENGTH OF SERVICE PRINCIPAL OCCUPATION
YEAR OF BIRTH WITH FUND OF CURRENT POSITION DURING PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------
CHRISTINA T. SIMMONS Vice President and Elected in 2000 Assistant General Counsel, joined
(1957) Assistant Secretary Lord Abbett in 1999.
BERNARD J. GRZELAK Treasurer Elected in 2003 Director of Fund Administration,
(1971) joined Lord Abbett in 2003;
formerly Vice President, Lazard
Asset Management LLC (2000-2003).
</Table>
Please call 888-522-2388 for a copy of the Statement of Additional Information
(SAI), which contains further information about the Fund's Directors. It is
available free upon request.
23
<Page>
HOUSEHOLDING
The Fund has adopted a policy that allows it to send only one copy of the Fund's
Prospectus, proxy material, annual report and semiannual report to certain
shareholders residing at the same "household." This reduces Fund expenses, which
benefits you and other shareholders. If you need additional copies or do not
want your mailings to be "householded," please call Lord Abbett at 800-821-5129
or send a written request with your name, the name of your fund or funds and
your account number or numbers to Lord Abbett Family of Funds, P.O. Box 219336,
Kansas City, MO 64121.
PROXY VOTING POLICIES, PROCEDURES AND RECORD
A description of the policies and procedures that Lord Abbett uses to vote
proxies related to the Fund's portfolio securities, and information on how Lord
Abbett voted the Fund's proxies during the twelve month period ended June 30,
2006 are available without charge, upon request, (i) by calling 888-522-2388;
(ii) on Lord Abbett's web site at www.LordAbbett.com; and (iii) on the
Securities and Exchange Commission's ("SEC") website at www.sec.gov.
SHAREHOLDER REPORTS AND QUARTERLY PORTFOLIO DISCLOSURE
The Fund is required to file its complete schedule of portfolio holdings with
the SEC for its first and third fiscal quarters on Form N-Q. Copies of the
filings will be available without charge, upon request on the SEC's website at
www.sec.gov and may be available by calling Lord Abbett at 800-821-5129. You can
also obtain copies of Form N-Q by (i) visiting the SEC's Public Reference Room
in Washington, DC (information on the operation of the Public Reference Room may
be obtained by calling 800-SEC-0330); (ii) sending your request and a
duplicating fee to the SEC's Public Reference Room, Washington, DC 20549-0102;
or (iii) sending your request electronically to publicinfo@sec.gov.
- --------------------------------------------------------------------------------
TAX INFORMATION
For foreign shareholders, all of the distributions paid by the Fund to
shareholders during the fiscal year ending June 30, 2006 represents interest
related dividends.
- --------------------------------------------------------------------------------
24
<Page>
[LORD ABBETT(R) LOGO]
<Table>
This report when not used for the general
information of shareholders of the Fund is to
be distributed only if preceded or accompanied Lord Abbett U.S. Government & Government Sponsored
by a current Fund Prospectus. Enterprises Money Market Fund, Inc.
Lord Abbett Mutual Fund shares are distributed by LAMM-2-0606
LORD ABBETT DISTRIBUTOR LLC (08/06)
</Table>
<Page>
ITEM 2: CODE OF ETHICS.
(a) In accordance with applicable requirements, the Registrant adopted a
Sarbanes-Oxley Code of Ethics on June 19, 2003 that applies to the
principal executive officer and senior financial officers of the
Registrant ("Code of Ethics"). The Code of Ethics was in effect during
the fiscal year ended June 30, 2006 (the "Period").
(b) Not applicable.
(c) The Registrant has not amended the Code of Ethics as described in Form
N-CSR during the Period.
(d) The Registrant has not granted any waiver, including an implicit
waiver, from a provision of the Code of Ethics as described in Form
N-CSR during the Period.
(e) Not applicable.
(f) See Item 12(a)(1) concerning the filing of the Code of Ethics. The
Registrant will provide a copy of the Code of Ethics to any person
without charge, upon request. To obtain a copy, please call Lord
Abbett at 800-821-5129.
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT.
The Registrant's Board of Directors has determined that each of the
following independent Directors who are members of the audit committee
are audit committee financial experts: E. Thayer Bigelow, Robert B.
Calhoun, and Franklin W. Hobbs. Each of these persons is independent
within the meaning of the Form N-CSR.
ITEM 4: PRINCIPAL ACCOUNTANT FEES AND SERVICES.
In response to sections (a), (b), (c) and (d) of Item 4, the aggregate fees
billed to the Registrant for the fiscal years ended June 30, 2006 and 2005 by
the Registrant's principal accounting firm, Deloitte & Touche LLP, the member
firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively,
"Deloitte") were as follows:
<Page>
FISCAL YEAR ENDED:
2006 2005
Audit Fees {a} $29,000 $37,000
Audit-Related Fees {b} 59 56
------- -------
Total audit and audit-related fees 29,059 37,056
------- -------
Tax Fees {c} 5,343 5,094
All Other Fees - 0 - - 0 -
------- -------
Total Fees $34,402 $42,150
------- -------
- ----------
{a} Consists of fees for audits of the Registrant's annual financial
statements.
{b} Consists of the Registrant's proportionate share of fees for
performing certain agreed-upon procedures regarding compliance with
the provisions of Rule 17a-7 of the Investment Company Act of 1940 and
related Board approved procedures.
{c} Fees for the fiscal year ended June 30, 2006 and 2005 consist of fees
for preparing the U.S. Income Tax Return for Regulated Investment
Companies, New Jersey Corporation Business Tax Return, New Jersey
Annual Report Form, U.S. Return of Excise Tax on Undistributed Income
of Investment Companies, IRS Forms 1099-MISC and 1096 Annual Summary
and Transmittal of U.S. Information Returns.
(e) (1) Pursuant to Rule 2-01(c) (7) of Regulation S-X, the Registrant's Audit
Committee has adopted pre-approval policies and procedures. Such policies and
procedures generally provide that the Audit Committee must pre-approve:
- any audit, audit-related, tax, and other services to be
provided to the Lord Abbett Funds, including the Registrant,
and
- any audit-related, tax, and other services to be provided to
the Registrant's investment adviser and any entity
controlling, controlled by or under common control with the
investment adviser that provides ongoing services to one or
more Funds comprising the Registrant if the engagement
relates directly to operations and financial reporting of a
Fund, by the independent auditor to assure that the
provision of such services does not impair the auditor's
independence.
The Audit Committee has delegated pre-approval authority to its Chairman,
subject to a fee limit of $10,000 per event, and not to exceed $25,000 annually.
The Chairman will report any pre-approval decisions to the Audit Committee at
its next scheduled meeting. Unless a type of service to be provided by the
independent auditor has received general pre-approval, it must be pre-approved
by the Audit Committee. Any proposed services exceeding pre-approved cost levels
will require specific pre-approval by the Audit Committee.
<Page>
(e) (2) The Registrant's Audit Committee has approved 100% of the services
described in this Item 4 (b) through (d).
(f) Not applicable.
(g) The aggregate non-audit fees billed by Deloitte for services rendered to the
Registrant are shown above in the response to Item 4 (a), (b), (c) and (d) as
"All Other Fees".
The aggregate non-audit fees billed by Deloitte for services rendered to the
Registrant's investment adviser, Lord, Abbett & Co. LLC ("Lord Abbett"), for the
fiscal years ended June 30, 2006 and 2005 were:
FISCAL YEAR ENDED:
2006 2005
All Other Fees {a} $55,500 $115,650
- ----------
{a} Consist of fees for Independent Services Auditors' Report on Controls
Placed in Operation and Tests of Operating Effectiveness related to Lord
Abbett's Asset Management Services ("SAS 70 Report").
The aggregate non-audit fees billed by Deloitte for services rendered to
entities under the common control of Lord Abbett (i.e., Lord Abbett Distributor
LLC, the Registrant's principal underwriter) for the fiscal years ended June 30,
2006 and 2005 were:
FISCAL YEAR ENDED:
2006 2005
All Other Fees - $0 - - $0 -
- ----------
(h) The Registrant's Audit Committee has considered the provision of non-audit
services that were rendered to the Registrant's investment adviser, and any
entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the Registrant, that
were not pre-approved pursuant to Rule 2-01 (c)(7)(ii) of Regulation S-X
and has determined that the provision of such services is compatible with
maintaining Deloitte's independence.
ITEM 5: AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
<Page>
ITEM 6: SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7: DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8: PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9: PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the June 22, 2006 meetings of the Nominating and Governance
Committees (the "Committee") of the Boards of each of the Lord Abbett
Funds, the Committee adopted policies and procedures for the
nomination of independent directors/trustees ("Procedures"). The
Procedures provide criteria for the nomination of independent
directors/trustees, as well as a process for identifying and
evaluating candidates. With respect to shareholder recommendations, it
is the Committee's policy to consider director/trustee nominations
recommended by shareholders using the same criteria the Committee uses
in considering potential director/trustee nominations from other
sources. The Committee believes that directors/trustees must represent
all shareholders and not just a limited set of shareholders. A copy of
the Procedures may be found at www.LordAbbett.com.
ITEM 11: CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the Registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940) as of a date within 90 days prior to the filing date of
this report, the Chief Executive Officer and Chief Financial Officer
of the Registrant have concluded that such disclosure controls and
procedures are reasonably designed and effective to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to them by others within
those entities.
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(b) There were no significant changes in the Registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under the
Investment Company Act of 1940) that occurred during the second fiscal
quarter of the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12: EXHIBITS.
(a)(1) Amendments to Code of Ethics - Not applicable.
(a)(2) Certification of each principal executive officer and principal
financial officer of the Registrant as required by Rule 30a-2 under
the Act (17 CFR 270.30a-2) is attached hereto as a part of EX-99.CERT.
(a)(3) Not applicable.
(b) Certification of each principal executive officer and principal
financial officer of the Registrant as required by Section 906 of the
Sarbanes-Oxley Act of 2002 is attached hereto as a part of
EX-99.906CERT.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LORD ABBETT U.S. GOVERNMENT & GOVERNMENT
SPONSORED ENTERPRISES MONEY MARKET FUND,
INC.
/s/ Robert S. Dow
----------------------------------------
Robert S. Dow
Chief Executive Officer,
Chairman and President
/s/ Joan A. Binstock
----------------------------------------
Joan A. Binstock
Chief Financial Officer and
Vice President
Date: August 22, 2006
<Page>
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
LORD ABBETT U.S. GOVERNMENT & GOVERNMENT
SPONSORED ENTERPRISES MONEY MARKET FUND,
INC.
/s/ Robert S. Dow
----------------------------------------
Robert S. Dow
Chief Executive Officer,
Chairman and President
/s/ Joan A. Binstock
----------------------------------------
Joan A. Binstock
Chief Financial Officer and
Vice President
Date: August 22, 2006