<PAGE>
Lord Abbett Tax-Free
Income Fund
o National o New York o Texas o New Jersey o Connecticut
o Missouri o Hawaii o Washington o Minnesota
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED MARCH 31, 1996
[HOTO- FEDERAL TAX RETURN FORM]
Portfolios with the
objective of providing
you with high
tax-free income
<PAGE>
Fund Facts
Lord Abbett's Focus on Quality
-------------------------------------------------------
All series managed by
Lord Abbett emphasize
high quality, call
protection and total
return potential.
Portfolio quality
shown as of 3/31/96.
[THE FOLLOWING DATA IS REPRESENTED AS PIE CHARTS]
National Series Texas Series
AAA 64.4% AAA 57.1%
AA 20.0% AA 27.7%
BBB(1) 5.2% BBB 2.1%
A 10.4% A 13.1%
New York Series New Jersey Series
AAA 55.8% AAA 62.1%
AA 16.7% BBB 15.7%
AA 9.9% A 18.1%
A 17.6% BBB(1) 4.1%
<TABLE>
<CAPTION>
Lord Abbett's Tax-Free Record and SEC-Required Information as of 3/31/96
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
National New York Texas New Jersey
Series Series Series Series
Date of Inception 4/2/84 4/2/84 1/20/87 1/2/91
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (in millions) $642.1 $322.7 $98.2 $190.4
- - ------------------------------------------------------------------------------------------------------------------------------------
Distribution Rate at Net Asset Value 5.44% 5.46% 5.47% 5.36%
- - ------------------------------------------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return(2) at Net Asset Value:
1 Year 7.41% 6.54% 8.01% 7.51%
- - ------------------------------------------------------------------------------------------------------------------------------------
10 Years or Life of Series 7.88% 7.48% 7.95%(3) 8.35%(3)
- - ------------------------------------------------------------------------------------------------------------------------------------
30-Day SEC Yield 5.10% 4.77% 4.86% 4.67%
- - ------------------------------------------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return at Maximum Offering Price:
1 Year 2.30% 1.50% 2.90% 2.50%
- - ------------------------------------------------------------------------------------------------------------------------------------
5 Years 6.45% 6.08% 6.88% 7.14%
- - ------------------------------------------------------------------------------------------------------------------------------------
10 Years or Life of Series 7.36% 6.96% 7.37%(3) 7.35%(3)
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes holdings which are not rated by independent ratings services but
are, in Lord Abbett's opinion, of comparable quality.
(2) Total return is the percent change in value with dividends and capital
gains reinvested. In the event a portfolio invests in private activity
bonds, the interest income derived therefrom may increase the alternative
minimum tax liability only for shareholders subject to that tax. In the
event a portfolio does not invest entirely in municipal bonds, federal,
state and/or local taxes (as applicable) may be applicable to interest
income of such Series.
(3) Since inception.
<PAGE>
[THE FOLLOWING WERE REPRESENTED AS PIE CHARTS]
- - --------------------------------------------------------------------------------
Connecticut Series Hawaii Series Minnesota Series
AAA 61.6% AAA 65.1% AAA 70.0%
AA 16.0% AA 19.9% AA 21.9%
A 18.4% A 15.0% A 8.1%
BBB 4.0%
Missouri Series Washington Series
AAA 70.2% AAA 75.6%
AA 16.2% AA 13.2%
A 9.0% A 10.0%
BBB(1) 4.6% BBB 1.2%
- - --------------------------------------------------------------------------
Connecticut Missouri Hawaii Washington Minnesota
Series Series Series Series Series
4/1/91 5/31/91 10/28/91 4/15/92 12/27/94
- - --------------------------------------------------------------------------
$117.3 $132.9 $85.8 $73.8 $7.0
- - --------------------------------------------------------------------------
5.47% 5.44% 5.37% 5.60% 5.66%
- - --------------------------------------------------------------------------
7.45% 7.30% 7.83% 8.54% 6.33%
- - --------------------------------------------------------------------------
7.78%(3) 7.71%(3) 7.10%(3) 7.28%(3) 8.97%(3)
- - --------------------------------------------------------------------------
4.93% 4.50% 4.74% 5.19% 5.23%
- - --------------------------------------------------------------------------
2.30% 2.20% 2.70% 3.40% 1.40%
- - --------------------------------------------------------------------------
6.75% -- -- -- --
- - --------------------------------------------------------------------------
6.75%(3) 6.63%(3) 5.92%(3) 5.94%(3) 4.80%(3)
- - --------------------------------------------------------------------------
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 Series will fluctuate so that shares, on any given day or when redeemed, may
be worth more or less than their original cost.
The respective SEC-required uniformly computed average annual rates of total
return are at the maximum sales charge of 4.75%.
See Important Information on page 1.
<PAGE>
Report to Shareholders
For the Six Months Ended March 31, 1996
Lord Abbett Tax-Free Income Fund completed the first half of fiscal year 1996 on
March 31 with aggregate net assets of $1.7 billion. (See inside cover for net
assets and performance of each Series.)
As we mentioned in our last report to you, on October 11, 1995, the Federal
Reserve Bank lowered the Federal Funds Rate for the first time in nearly three
years from 6% to 53/4%. Since that time, economic growth remained at a modest
annual rate of 21/2%, while inflation averaged just under 3%. The combination of
these factors enabled the Federal Reserve to gradually lower rates in a series
of one-quarter point increments, to the current 51/4% level. Despite this
favorable backdrop, market volatility surfaced due to a number of factors.
Investor disappointment set in over the dim prospects for a balanced budget
(which seemed bright in the summer). And, more recently, hopes of a near-term
easing of the Federal Funds Rate were dashed when higher than expected
employment figures were released. This release radically altered the prevailing
sentiment of expected higher bond prices in U.S. bond markets and the reaction
was a spike up in both taxable and tax-exempt long bond rates in March.
Talk of tax reform continues to be a major influence on the municipal bond
market. Although investors have reacted to the uncertain impact of tax reform on
the market, these concerns have actually increased the attractiveness
(cheapness) of municipal bonds relative to other securities. At present,
municipal bonds yield in excess of 90% of the taxable yield on the 30-year
Treasury (historically, 83%-85% is typical in the current federal tax
structure). Additionally, the supply of municipal bonds has decreased steadily;
new issuance in 1995 was down 5% from 1994's level, and it is anticipated that
1996's level will be 5% lower than 1995's. The outstanding supply of municipal
bonds also continues to decline, as many of the bonds issued during the
1982-1986 period have been called away or prerefunded.
Given this environment, your Fund continues to emphasize high-quality, long-term
municipal bonds with good call protection. Call protection (assurance by the
issuer that a bond will not be redeemed before a specific date) has become
increasingly important given the continued decrease in the supply of municipal
bonds coupled with the declining interest-rate environment. Essential service
revenue bonds still are significantly represented in your Fund because they
finance services that tend to remain in constant demand regardless of the
economic climate, such as: sewers, water, pollution control and telephone.
"...we believe the overall outlook for the fixed-
income markets is quite positive and particularly
good for municipal bonds."
Going forward, we believe that Gross Domestic Product will grow at an
annual rate of about 2%, with inflation remaining at about 3%. Overall, we think
the Federal Reserve will be "market friendly", that is, concerned with growth
but mindful to keep inflation low. Market volatility along the way is likely to
come from several sources, namely, concerns over economic growth and inflation;
the Presidential election; budget negotiations; the possibility of tax reform;
and the decreasing supply of bonds. While net asset values may fluctuate along
the way, we believe the overall outlook for the fixed-income markets is quite
positive and particularly good for municipal bonds.
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, serves as the Firm's Chief Investment Officer.
We continue to manage the portfolios' risk from a total return perspective and
believe that investors will benefit from our well-diversified, high-quality
portfolios. As always, we welcome any questions or comments you may have
regarding your Fund.
{photo}
RONALD P. LYNCH
Chairman
{photo}
ROBERT S. DOW
President
April 15, 1996
<PAGE>
Important Information
As of 3/31/96, no Series of the Fund had more than 8.1% of its net assets
invested in residual interest bonds ("RIBs"), although each portfolio may invest
up to 20% of its net assets in such securities. ARIB, sometimes referred to as
an inverse floater, is a debt instrument with a floating or variable interest
rate that moves in the opposite direction of the interest rate on another
security or the value of an index. Changes in the interest rate on the other
security or index inversely affect the residual interest paid on the RIB, with
the result that when interest rates rise, RIBs give lower interest payments and
their values fall faster than other similar fixed-rate bonds. But when interest
rates fall, not only do RIBs give higher interest payments, their values also
rise faster than other similar fixed-rate bonds.The market for RIBs is
relatively new.
It is the intent of the Fund (pending shareholder approval) to issue additional
classes of shares, with distinct pricing options, in August 1996. For a full
discussion of the differences in pricing alternatives, please call 800-874-3733
and ask for the Fund's July 15, 1996 prospectus.
If used as sales material after 6/30/96, this report must be accompanied by Lord
Abbett's Performance Quarterly for the most rececompleted calendar quarter.
See prospectus for a discussion of fees waived and expenses assumed by Lord,
Abbett & Co.
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded Austin TX Wtr Sewer & Elec Ref Rev 141/4% 11/15/2006 AAA $ 4,810M $ 5,351,125
17.01% Brainerd MN Health Care Facs/Benedictine Hlth/St Joseph Prjt
83/8% 2/15/2020 AAA 2,250M 2,590,313
Bristol TN Health & Ed FGIC+ 7% 9/1/2021 AAA 1,390M 1,556,800
Camden Co NJ Muni Util Auth FGIC+ 81/4% 12/1/2017 AAA 10,000M 10,900,000
Chatman Co GA Sch Dist MBIA+ 63/4% 8/1/2020 AAA 710M 806,738
Chattanooga-Hamilton Co TN Hosp Auth Rev Erlanger Ser B
RIBS FSA+ 10.281% 5/25/2021++ AAA 2,000M 2,460,000
Clark Co NV Arpt Imp Rev/McCarran Intl Arpt Ser C 131/4% 7/1/2002 AAA 415M 461,169
Clermont Co OH Hosp Facs Ser A 71/2% 9/1/2019 AAA 285M 324,900
Clermont Co OH Hosp Facs Ser A AMBAC+ 71/2% 9/1/2019 AAA 965M 1,080,800
Colorado Health Fac Auth 71/2% 10/1/2020 AAA 2,845M 3,218,406
Fulton Co GA Hosp Auth Rev Ser B MBIA+ 6.60% 10/1/2011 AAA 3,000M 3,360,000
Greene Co PA Gen Facs Auth Ser A 7% 7/1/2011 AAA 5,825M 6,531,280
Harris Co TX Ser A 7.70% 5/1/2003 AAA 415M 453,906
Illinois St 11% 11/1/2004 AAA 1,600M 1,681,712
Indiana Univ Bldg Auth Ser N 101/8% 7/1/2010 AAA 710M 884,837
Intermountain UT Pwr Agy Pwr Supply Rev 1986 Ser B 77/8% 7/1/2014 AAA 1,750M 1,800,943
Intermountain UT Pwr Auth Ser A 73/4% 7/1/2020 AAA 225M 246,094
King Co WA Sch Dist Ser A 63/4% 12/1/2008 AAA 1,150M 1,252,062
Los Angeles Co CA Flood 77/8% 7/15/2017 AAA 3,000M 3,210,000
Los Angeles CA Harbor Rev 7.60% 10/1/2018 AAA 5,000M 5,512,500
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys 8% 8/15/2019 AAA 2,000M 2,302,500
New York St Dorm Auth Rev City Univ Sys Ser F 77/8% 7/1/2017 AAA 11,320M 13,018,000
Ohio St Higher Ed Fac Ser A 7.70% 10/1/2018 AAA 2,650M 2,845,437
Oregon St 12.40% 9/1/2000 AAA 2,000M 2,111,680
Port Auth NY & NJ 7.35% 10/1/2027 AAA 2,000M 2,307,500
Puerto Rico Commonwealth 8% 7/1/2007 AAA 250M 275,625
Puerto Rico Commonwealth 8% 7/1/2007 AAA 375M 406,405
Puerto Rico Ind Med & Environmental/Catholic Univ 93/8% 12/1/2007 AAA 2,000M 2,217,500
Sikeston MO Elec Rev MBIA+ 61/4% 6/1/2022 AAA 10,540M 11,620,350
Uintah Co UT Poll Ctrl Rev 84-F-2 101/2% 6/15/2014 AAA 1,000M 1,262,500
Washington St Pub Pwr Supply Ser B 71/4% 7/1/2015 AAA 1,250M 1,385,938
Washington St Pub Pwr Supply Ser C 101/4% 7/1/2015 AAA 500M 517,915
Washington St Pub Pwr Supply Sys Nuclear Prjt No 2 Ser A 71/2% 7/1/2004 AAA 1,400M 1,580,250
West Virginia St Wtr Dev Auth Wtr Dev Rev Loan Prog II Ser A
7.70% 11/1/2029 AAA 12,000M 13,710,000
Total 109,245,185
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
General Obligation Chicago IL AMBAC+ 61/4% 1/1/2015 AAA $ 2,000M $ 2,112,500
State Louisiana St AMBAC+ 61/2% 5/1/2011 AAA 1,000M 1,073,750
1.71% Pennsylvania St 61/2% 11/1/2009 AA 4,000M 4,340,000
Puerto Rico Commonwealth 51/4% 7/1/2018 A 1,500M 1,372,500
Texas St AMT+++ 6.30% 6/1/2014 AA 455M 461,256
Texas St Wtr Dev Bd 7.15% 8/1/2035 AA 1,415M 1,590,106
Total 10,950,112
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Anne Arundel Co MD 5% 9/1/2020 AA 705M 634,500
Local Anne Arundel Co MD 5% 9/1/2022 AA 690M 618,413
4.33% Anne Arundel Co MD 6.30% 8/1/2023 AA 505M 532,775
Anne Arundel Co MD 5% 9/1/2023 AA 765M 684,675
Anne Arundel Co MD 5% 9/1/2024 AA 310M 276,675
Anne Arundel Co MD 5% 9/1/2025 AA 760M 677,350
Conroe TX Indpt Sch Dist 61/8% 8/15/2021 Aaa 2,000M 2,167,500
Decatur TX Indpt Sch Dist 61/8% 8/1/2025 Aaa 2,325M 2,400,562
Detroit MI City Sch Dist Ser A AMBAC+ 5.70% 5/1/2025 AAA 5,000M 4,887,500
Harris Co TX 61/8% 8/15/2020 AA 6,500M 6,776,250
Minneapolis MN 51/8% 10/1/2020 Aaa 2,500M 2,321,875
Plymouth-Canton MI Community Sch Dist Ser C 61/2% 5/1/2016 AA 1,000M 1,065,000
Ringgold PA Sch Dist FSA+ 61/4% 2/1/2022 AAA 1,550M 1,625,562
University City MO Sch Dist MBIA+ 10% 2/15/2008 AAA 2,250M 3,144,375
Total 27,813,012
- - ------------------------------------------------------------------------------------------------------------------------------------
Education Alabama Agric & Mechanical Univ Rev MBIA+ 61/2% 11/1/2025 AAA 4,065M 4,329,225
10.00% Arkansas St Student Loan Auth Rev Ser B AMT+++ 71/4% 6/1/2009 A 3,500M 3,832,500
Connecticut St Higher Ed Ser A AMT+++ 73/8% 11/15/2005 A 95M 99,987
District of Columbia Rev MBIA+ 7.15% 4/1/2021 AAA 1,000M 1,073,750
District of Columbia Rev RIBS 8.719% 4/25/2022++ A 4,000M 4,315,000
District of Columbia Rev/Howard Univ MBIA+ 71/4% 10/1/2020 AA 4,890M 5,220,075
Glendale AZ Ind Dev Auth Ed Facs Rev CNLA+ 71/8% 7/1/2020 AAA 1,000M 1,115,000
Indiana St Ed Facs Auth Rev 6.65% 3/1/2019 Aaa 11,600M 12,658,500
Indiana Univ 6.80% 8/1/2004 AA 3,100M 3,429,375
Marietta GA Dev Auth Rev CGIC+ 61/4% 9/1/2025 AAA 4,090M 4,243,375
Montgomery Co PA Higher Ed Health Auth Rev 63/8% 1/1/2026 BBB 2,750M 2,619,375
Ohio St Higher Ed Fac Community Rev Unrefunded
Balance 7.70% 10/1/2018 Aa 100M 107,000
Oklahoma St Student Loan Auth Rev Student Loan Sub Ser B-2
AMT+++ 6.35% 9/1/2025 A 2,000M 2,012,500
Oregon Health Sciences Univ Rev Ser A MBIA+ 51/4% 7/1/2025 AAA 1,250M 1,148,437
Pennsylvania St Higher Ed RIBS AMBAC+ AMT+++ 8.471% 3/1/2022++ AAA 3,000M 2,970,000
Rhode Island St Health & Ed Bldg Corp 6% 9/1/2025 Aa 7,515M 7,674,694
Texas St Higher Ed Coord AMT+++ 7.70% 10/1/2025 A 740M 763,125
Tulsa OK Tulsa Ind Auth Rev Ref/Univ Tulsa Ser A
MBIA+ 6% 10/1/2016 AAA 750M 782,812
University NM Tech Dev Corp Lease Rev/Univ Ctr Res Pk Prjt Ser A
MBIA+ 6.55% 8/15/2025 AAA 1,410M 1,540,425
Volusia Co FL Ed Fac Auth Rev 61/8% 10/15/2026 Baa 1,000M 983,750
Western MI Univ Rev Ser B AMBAC+ 63/4% 7/15/2011 AAA 3,000M 3,285,000
Total 64,203,905
- - ------------------------------------------------------------------------------------------------------------------------------------
Finance Cumberland Co NC Ctf Civic Ctr AMBAC+ 6.40% 12/1/2019 AAA 2,800M 2,954,000
2.87% East Chicago IN Elem School Bldg Corp 61/4% 1/5/2016 A 1,000M 1,032,500
Indiana Bd Bk Rev Guarantee/St Revolving Fd PG Ser A
63/4% 2/1/2017 A 500M 535,000
Indianapolis IN Loc Pub Imp Ser D 61/2% 2/1/2022 A 1,350M 1,373,625
Iowa St Fin Auth Rev 61/4% 5/1/2024 A 1,500M 1,543,120
Municipal Assistance Corp NY Ser 67 7.60% 7/1/2004 Aa 6,000M 6,652,500
</TABLE>
2
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Vincennes IN Co Sch Bldg FSA+ 5% 7/1/2015 AAA $ 1,000M $ 910,000
Weber Co UT Muni Bldg Auth Lease Rev 71/2% 12/15/2019 AA 3,000M 3,431,250
Total 18,431,995
- - ------------------------------------------------------------------------------------------------------------------------------------
Health and Hospital Alton IL Hosp Fac Rev & Ref/St Anthonys Health Ctr 6% 9/1/2014 BBB 750M 687,188
11.41% Armstrong Co PA Hosp Auth Health Ctr Rev MBIA+ 61/2% 12/1/2021 AAA 2,795M 2,931,256
Augusta Co VA Ind Dev Auth Hosp Rev AMBAC+ 65/8% 9/1/2012 AAA 925M 987,438
Connecticut St Health & Ed/Day Kimball Ser A FSA+
53/8% 7/1/2016 AAA 2,000M 1,902,500
Connecticut St Health & Ed/Greenwich Hosp MBIA+ 5.80% 7/1/2026 AAA 2,750M 2,691,563
Connecticut St Health & Ed/Waterbury Hosp Ser B FSA+
7% 7/1/2020 AAA 1,000M 1,077,500
Fairfax Co VA Ind Dev Auth Rev Health Care 6% 8/15/2026 AA 1,310M 1,301,813
Greenville SC Hosp Sys Hosp Facs Rev Ser B 51/4% 5/1/2023 Aa 4,750M 4,269,063
Illinois Health Facs Auth Rev/Alexian Brothers Med Ctr Proj
FSA+ 71/8% 1/1/2021 Aaa 3,860M 4,149,500
Louisiana Pub Fin Auth Hosp RIBS FSA+ 6.929% 7/22/2024++ AAA 3,000M 2,497,500
Maryland St Health & Higher Ed Facs Auth Rev AMBAC+
51/2% 7/1/2026 AAA 4,250M 4,064,063
Massachusetts St Health & Ed Facs Auth Rev Ser D/Brigham
& Womens MBIA+ 63/4% 7/1/2024 AAA 3,450M 3,730,313
McKeesport PA Hosp Auth Rev 61/2% 7/1/2008 Baa 4,000M 3,870,000
Minneapolis & St Paul MN MBIA+ 63/4% 8/15/2014 AAA 1,300M 1,395,875
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys
6.90% 12/1/2022 A 700M 744,625
Montgomery AL Med Clinic 7% 3/1/2015 A 1,750M 1,822,188
New Jersey Health Care Facs Fin Auth Rev/St Peters Med Ctr
MBIA+ 8.60% 7/1/2017 AAA 400M 430,500
New Jersey Health Care Facs Ser A MBIA+ 65/8% 7/1/2010 AAA 250M 267,813
New York St Med Care Facs Fin Agy Rev Ser A 87/8% 8/15/2007 BBB 2,905M 3,119,244
North Carolina Med Care Comm FSA+ 63/8% 8/15/2020 AAA 750M 784,688
Peninsula Ports Auth VA Healthcare Facs Rev 67/8% 8/1/2010 BBB 500M 515,000
Peninsula Ports Auth VA Healthcare Facs Rev 7% 8/1/2017 BBB 1,000M 1,036,250
Roanoke VA Ind Dev Auth Hosp Rev Ser A MBIA+ 51/4% 7/1/2025 AAA 1,800M 1,640,250
Rochester MN Health Care Reg Fixed ARS LINK 6.026% 11/15/2015 AA 5,000M 5,087,500
Rochester MN Health Care Ser H RIBS 8.312% 11/15/2015++ AA 9,450M 9,698,063
St Paul MN Hsg & Redev Auth Hosp Rev Ser B 95/8% 11/1/2008 Baa 1,000M 1,073,750
Washington St Health Care Facs Auth Rev/Yakima Valley Mem Hosp
CNLA+ 51/4% 12/1/2020 AAA 780M 697,125
West Virginia St Hosp Fin Auth Hosp Rev Linked Bears & Bulls
MBIA+ 6.10% 1/1/2018 AAA 4,000M 4,060,000
Winchester VA Ind Dev Auth Hosp Rev LINK AMBAC+
8.947% 1/21/2014 AAA 4,900M 5,506,375
Wisconsin Health & Ed Facs Auth Rev MBIA+ 61/2% 8/15/2011 AAA 1,140M 1,216,950
Total 73,255,893
- - ------------------------------------------------------------------------------------------------------------------------------------
Housing Alaska St Hsg Fin Corp Ser B-2 GNMA+ 77/8% 6/1/2024 AAA 210M 219,713
9.49% Arlington Co VA Ind Dev Auth Multi-Fam Rev Hsg Mtge 8% 7/1/2015 BBB* 890M 879,988
Bexar Co TX Hsg Fin Corp GNMA+ AMT+++ 8.20% 4/1/2022 AAA 1,000M 1,073,750
Colorado Hsg & Fin Auth Ser A AMT+++ 6.65% 10/1/2028 AA 2,620M 2,678,950
Colorado Hsg & Fin Auth Ser A AMT+++ 6.80% 10/1/2037 AA 2,515M 2,571,588
Colorado Hsg & Fin Auth Ser C FHA+ 83/4% 9/1/2017 AA 180M 186,525
Connecticut St Hsg Fin Auth Ser A Sub Ser A-2 FHA+ AMT+++
7.20% 11/15/2008 AA 800M 844,000
De Kalb Co GA Hsg Auth FSA+ AMT+++ 7.15% 1/1/2025 AAA 1,430M 1,506,863
Fulton Co GA Hsg Auth Sing Fam Rev GNMA+ AMT+++ 6.20% 3/1/2013 AAA 1,000M 1,002,500
Georgia St Hsg & Fin Auth Rev Sing Fam Mtge B Sub Ser B-2
FHA+ AMT+++ 6.55% 12/1/2027 AA 2,000M 2,040,000
Georgia St Hsg & Fin Auth Rev Sub Ser A-2 AMT+++
6.40% 12/1/2015 AA 3,295M 3,352,663
Hamilton Co TN Ind Dev Bd Multi-Fam Hsg Rev/Patten
AMT+++ 71/8% 2/1/2009 BBB 405M 396,900
Hamilton Co TN Ind Dev Bd Multi-Fam Hsg Rev/Twrs
Ser A 63/8% 8/1/2026 A 1,285M 1,260,906
Idaho Hsg Agy Ser A AMT+++ 6.70% 7/1/2027 AAA 3,000M 3,060,000
</TABLE>
3
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Idaho Hsg Agy Ser F AMT+++ 7.45% 7/1/2015 Aaa $ 1,250M $ 1,331,250
Illinois Hsg Dev Auth FHA+ AMT+++ 7.10% 12/1/2034 AAA 1,500M 1,561,875
Illinois Hsg Dev Auth Multi-Fam Hsg/Lawndale FHA+ AMT+++
6.80% 12/1/2016 AAA 1,000M 1,037,500
Indiana St Hsg Fin Auth GNMA+ 7.80% 1/1/2022 Aaa 1,000M 1,030,000
Jefferson Co KY Multi-Fam Rev 81/4% 5/1/2010 BBB* 400M 396,500
Kentucky Hsg Corp Hsg Rev Ser D-1 FHA+ AMT+++ 6.80% 1/1/2024 AAA 1,280M 1,326,400
Marion Co OR Hsg Auth Rev Sr Hsg/Elliott Residence
GNMA+ AMT+++ 71/2% 10/20/2037 AAA 2,170M 2,311,050
Maryland Sing Fam Mtge FHA/VA+ AMT+++ 7.85% 4/1/2029 Aa 1,290M 1,360,950
Maryland St Comm Dev Admin Dept Hsg & Co Dev FHA+ AMT+++
6.70% 5/15/2036 Aa 2,500M 2,543,750
Maryland St Comm Dev Admin Sing Fam 7th Ser AMT+++
7.30% 4/1/2025 Aa 500M 526,250
Massachusetts Hsg Fin Auth AMT+++ 8.10% 6/1/2020 Aa 1,300M 1,363,375
Massachusetts St Hsg Fin Agy Hsg Rev Rental Mtge Ser A
AMBAC/FHA+ AMT+++ 7.35% 1/1/2035 AAA 1,475M 1,600,375
Massachusetts St Hsg Fin Agy Hsg Ser 29 AMT+++ 63/4% 6/1/2026 Aa 1,425M 1,462,406
Missouri St Hsg Dev Comm GNMA+ AMT+++ 73/8% 8/1/2023 AAA 645M 685,312
Missouri St Hsg Dev Comm Mtge Rev GNMA+ AMT+++ 71/4% 9/1/2026 AAA 1,000M 1,071,250
New Jersey St Hsg & Mtge Fin Agy Ser B MBIA+ AMT+++
7.90% 10/1/2022 AAA 720M 753,300
New York St Hsg Fin Agy Rev Ref Health Facs NY City
Ser A 6% 11/1/2008 BBB 750M 740,625
North Carolina Hsg Fin Agy Sing Fam Rev Ser BB AMT+++
61/4% 3/1/2012 Aa 1,300M 1,334,125
Ohio Hsg Fin Auth Ser C GNMA+ AMT+++ 7.85% 9/1/2021 AAA 605M 639,030
Oklahoma Hsg Fin Agy Sing Fam Rev AMT+++ 75/8% 9/1/2026 Aaa 3,000M 3,243,750
Radcliff KY Hsg Auth 81/4% 5/1/2010 BBB* 330M 327,112
Seattle WA Hsg Auth Low Income Hsg Assistance Rev GNMA+
7.40% 11/20/2036 AAA 4,000M 4,255,000
Tennessee Hsg Dev Agy Mtge Ser A AMT+++ 71/8% 7/1/2026 A 500M 528,125
Utah St Hsg Fin Agy Sing Fam Ser A-2 FHA+ AMT+++ 73/4% 1/1/2023 AA 435M 460,012
Vermont Hsg Fin Auth Ser B FHA/VA+ AMT+++ 8.10% 6/1/2022 A 1,890M 1,970,325
Virginia St Hsg Dev Auth Commonwealth Mtge 61/8% 1/1/2019 AA 6,000M 5,977,500
Total 60,911,493
- - ------------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue Butler AL Ind Bd Solid Waste Disp Rev/James River Corp
Bonds AMT+++ 8% 9/1/2028 BBB 1,500M 1,668,750
6.36% Cartersville GA Dev Auth Rev AMT+++ 63/4% 2/1/2012 AA 1,800M 1,935,000
Connecticut St Dev Auth Solid Waste Disp Facs Rev AMT+++
7% 7/1/2025 AAA 2,000M 2,202,500
Delaware Economic Dev Auth Ser A MBIA+ AMT+++
7.60% 3/1/2020 AAA 2,600M 2,853,500
Henrico Co VA Ind Dev Auth Rev 71/8% 8/1/2021 AA 1,070M 1,206,425
Kentucky Economic Dev Fin Auth Hosp Facs Rev MBIA+
5% 8/15/2024 AAA 2,250M 1,971,562
Maryland St Ind Dev Fin Auth Economic Dev Rev LINK
FSA+ 5.929% 8/26/2022 AAA 10,100M 10,213,625
Mississippi Business Fin Corp MS Port Gulfport Rev
Ser B AMT+++ 7.15% 5/1/2016 AA 1,000M 1,086,250
Puerto Rico Ind Med & Environmental/Upjohn 71/2% 12/1/2023 AA 7,000M 7,603,750
Texas City TX Ind Dev Corp Marine Term Rev/ARCO 73/8% 10/1/2020 A 8,500M 10,115,000
Total 40,856,362
- - ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Cobb-Marietta GA Coliseum & Exhibit Hall Auth Rev MBIA+
2.22% 55/8% 10/1/2026 AAA 400M 397,000
St Louis Co MO Ind Dev Rev Arena Prjt AMT+++ 77/8% 12/1/2024 BBB* 3,500M 3,696,875
St Louis MO Land Clearance Rev 73/4% 7/1/2021 BBB* 7,275M 7,647,844
St Lucie Co FL Spcl Assmt 6% 11/1/2015 AA 1,000M 1,007,500
St Lucie Co FL Spcl Assmt 6.10% 11/1/2020 AA 500M 505,625
St Lucie Co FL Spcl Assmt 6.20% 11/1/2025 AA 1,000M 1,015,000
Total 14,269,844
- - ------------------------------------------------------------------------------------------------------------------------------------
Pollution Control Burke Co GA Dev Auth Poll Ctrl Rev MBIA+ 6.60% 7/1/2024 AAA 450M 475,875
Revenue Connecticut St Resource Recovery Auth Mid-CT Sys Ser A
2.89% MBIA+ 51/2% 11/15/2012 AAA 1,500M 1,426,875
Indianapolis IN Resource Recovery Rev Ref/Ogden Martin System
AMBAC+ 6% 12/1/1997 AAA 2,000M 2,047,500
Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev
Ser B 7.20% 7/1/2016 Aa 3,250M 3,713,125
</TABLE>
4
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Monroe Co MI Poll Ctrl Rev AMBAC+ AMT+++ 7.30% 9/1/2019 AAA $ 3,630M $ 3,983,925
Ohio St Air Quality Dev Auth Rev FGIC+ 8% 12/1/2013 AAA 4,545M 5,391,506
Salem Co NJ Ind Poll Ctrl Rev Fin Auth/PSE&G MBIA+
6.20% 8/1/2030 AAA 1,500M 1,528,125
Total 18,566,931
- - ------------------------------------------------------------------------------------------------------------------------------------
Power Brazos River Auth TX Rev FGIC+ 7.20% 12/1/2018 AAA 1,870M 2,042,975
14.73% Effingham Co GA Dev Auth MBIA+ 63/4% 2/1/2022 AAA 2,200M 2,285,470
Hamilton City OH Elec Ser A FGIC+ 6% 10/15/2012 AAA 1,725M 1,791,844
Hamilton City OH Elec Ser B FGIC+ 6.30% 10/15/2025 AAA 7,500M 7,940,625
Hawaii St Dept of Bdg & Fin AMT+++ 75/8% 12/1/2018 Baa 1,750M 1,885,625
Hawaii St Dept of Bdg & Fin RIBS 7.09% 12/15/2023++ AAA 2,000M 1,722,500
Intermountain UT Pwr Agy Pwr Supply Rev Reg Linked Pars TCRS
LINK AMBAC+ 5.60% 7/1/2021 AAA 6,400M 6,160,000
Kansas City KS Util Sys Rev FGIC+ 63/8% 9/1/2023 AAA 22,815M 24,297,975
Lakeland FL Elec & Wtr Rev FGIC+ 6% 10/1/2014 AAA 2,000M 2,032,500
New York St Energy Res & Dev RIBS 8.953% 4/1/2020++ A 750M 801,563
New York St Energy Res & Dev/Con Edison AMT+++ 91/4% 9/15/2022 A 1,000M 1,076,250
North Carolina Eastern Muni Pwr 6% 1/1/2022 A 7,500M 7,340,625
North Carolina Eastern Muni Pwr Agy Pwr Sys Rev
Ser C 5% 1/1/2021 AA 12,250M 10,795,313
North Carolina Eastern Muni Pwr Ref Ser B 6% 1/1/2026 A 5,255M 5,143,331
North Carolina Eastern Muni Pwr Ser A 6.40% 1/1/2021 A 1,000M 1,005,000
Puerto Rico Elec Pwr Auth 71/8% 7/1/2014 A 1,335M 1,438,463
Shelby NC Comb Enterprise Sys Rev Ser B 55/8% 5/1/2014 A 750M 734,063
Southern MN Muni Pwr Agy Supply Sys Rev MBIA+ 5% 1/1/2017 AAA 4,710M 4,162,463
Tacoma WA Elec Sys Rev RIBS AMBAC+ 9.134% 1/2/2015++ AAA 4,900M 5,365,500
Western Generation Agy OR Cogeneration Prjt Rev Ser B
AMT+++ 7.40% 1/1/2016 BBB* 1,500M 1,593,750
Wisconsin St Pub Pwr Supply Sys Rev RIBS AMBAC+
7.12% 7/1/2014++ AAA 5,500M 4,998,125
Total 94,613,960
- - ------------------------------------------------------------------------------------------------------------------------------------
Solid Waste Broward Co FL Wtr & Sewer Solid Waste 7.95% 12/1/2008 A 2M 2,218
2.28% Cobb Co GA Solid Waste Mgmt Auth AMT+++ 6.40% 1/1/2015 Aaa 900M 947,250
Henrico Co VA Ind Dev Auth Rev 5.45% 1/1/2014 A 1,000M 952,500
Palm Beach Co FL Solid Waste 83/4% 7/1/2010 A 5,845M 6,283,375
Regional Waste Sys ME Ser A-C 7.95% 7/1/2010 AA 3,900M 4,270,500
York PA Solid Waste Ser B 8.10% 12/1/2007 A 2,000M 2,172,500
Total 14,628,343
- - ------------------------------------------------------------------------------------------------------------------------------------
Transportation Albuquerque NM Arpt Rev Ref AMBAC+ AMT+++ 6.70% 7/1/2018 AAA 4,000M 4,080,000
9.69% Albuquerque NM Arpt Rev Ser A AMBAC+ AMT+++ 6.60% 7/1/2016 AAA 1,900M 2,018,750
Capital Regional Arpt Rev Comm VA Arpt Rev/Richmond Intl
Ser A AMBAC+ 55/8% 7/1/2025 AAA 1,000M 963,750
Capital Regional Arpt Rev Comm VA Arpt Rev Ser B
AMBAC+ 81/8% 7/1/2014 AAA 14,000M 17,027,500
Hawaii St Arpt Sys Rev Second Ser MBIA+ 6.90% 7/1/2012 AAA 1,000M 1,128,750
Hillsborough Co FL Aviation FGIC+ 6.90% 10/1/2011 AAA 500M 540,000
Houston TX Arpt Sys Rev MBIA+ AMT+++ 8.20% 7/1/2017 AAA 1,500M 1,633,125
Kansas City MO Arpt Rev Ser B CGIC+ 67/8% 9/1/2014 AAA 2,400M 2,625,000
Louisville & Jefferson Co KY Regional Arpt Auth Arpt Ser A
MBIA+ AMT+++ 61/2% 7/1/2017 AAA 5,000M 4,968,750
Massachusetts Bay Trans Auth Mass Gen Trans Sys Ser A
55/8% 3/1/2026 A 2,000M 1,915,000
Massachusetts St Tnpk Auth Tnpk Rev Ser A FGIC+
51/8% 1/1/2023 AAA 6,500M 5,817,500
Metropolitan Atlanta Rapid Trans Auth GA Sales Tax Rev Ser P
AMBAC+ 61/4% 7/1/2020 AAA 910M 972,563
Port Auth NY & NJ 67/8% 1/1/2025 AA 4,250M 4,536,875
Port Auth NY & NJ 70th Ser AMT+++ 71/4% 8/1/2025 AA 1,000M 1,076,250
Port Kalama WA Rev Ser B 55/8% 12/1/2015 Baa 1,475M 1,392,031
Port Seattle WA Rev 6% 12/1/2014 AA 1,250M 1,253,125
</TABLE>
5
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Puerto Rico Commonwealth Hwy 65/8% 7/1/2018 AAA $ 372M $ 417,435
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y
51/2% 7/1/2036 A 3,500M 3,204,425
Regional Trans Auth IL Ser A AMBAC+ 61/8% 6/1/2022 AAA 2,750M 2,767,188
Texas St Tnpk Auth Dallas Northwy Rev FGIC+ 53/4% 1/1/2011 AAA 4,020M 3,859,200
Total 62,197,217
- - ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer Cherokee Co GA Wtr & Sewer Auth Rev MBIA+ 5.20% 8/1/2025 AAA 1,470M 1,368,938
8.02% De Kalb Co GA Wtr & Sewer 51/4% 10/1/2023 AA 500M 456,875
Fairfax Co Va Wtr Auth 6% 4/1/2022 Aa 5,400M 5,460,750
Fairfax Co VA Wtr Auth 53/4% 4/1/2029 Aa 6,550M 6,427,188
Hamilton OH Wtrwks Rev Ser A MBIA+ 6.30% 10/15/2021 AAA 1,000M 1,041,250
Kirkland WA Wtr & Sewer Rev 53/4% 6/1/2014 A 1,000M 1,021,250
Metropolitan Govt Nashville Wtr & Sewer RIBS
AMBAC+ 8.418% 1/7/2022++ AAA 12,000M 12,195,000
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev
RIBS MBIA+ 6.92% 6/15/2013++ AAA 4,850M 4,377,125
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev
AMBAC+ 6.20% 6/15/2021 AAA 1,000M 1,038,750
North Penn PA Wtr Auth FGIC+ 53/4% 11/1/2018 AAA 4,000M 3,925,440
Ohio Wtr Rev AMBAC+ 91/4% 12/1/2012 AAA 35M 36,327
Seattle WA Muni Metro Ser U FGIC+ 6.60% 1/1/2032 AAA 6,150M 6,557,438
St Johns Co FL Wtr & Sewer Rev Ref MBIA+ 51/2% 6/1/2026 AAA 1,000M 953,750
Sussex Co DE Wastewtr Rev/West Rehoboth Expansion
MBIA+ 51/2% 6/15/2020 AAA 4,495M 4,326,438
Sussex Co DE Wastewtr Rev/West Rehoboth Expansion
MBIA+ 51/2% 6/15/2025 AAA 200M 190,500
Texas Wtr Resource Fin Auth 75/8% 8/15/2008 A 1,965M 2,129,569
Total 51,506,588
--------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 103.01% (Cost $653,108,920) 661,450,840
- - ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES (3.01)%
- - ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Securities Maine St Tax Anticipation Notes 41/2% 6/28/1996 MIG1 1,000M 1,002,260
Michigan St 4% 9/30/1996 MIG1 1,000M 1,003,040
Texas St Tax & Rev Anticipation Notes Ser A 43/4% 8/30/1996 MIG1 2,000M 2,010,660
University of MO Prjt Notes Ser FY 43/4% 6/28/1996 MIG1 1,400M 1,404,214
Wisconsin St 41/2% 6/17/1996 MIG1 2,800M 2,805,992
Total (Cost $8,232,403) 8,226,166
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (27,533,415)
--------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities (19,307,249)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $11.02 a share on 58,270,601 shares of $.001
100.00% par value capital stock outstanding; authorized, 80,000,000 shares) $642,143,591
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* This security has not been rated by an independent ratings service but is,
in Lord Abbett's opinion, of comparable quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
March 31, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NEW YORK SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Battery Pk City NY Auth Rev 7.70% 5/1/2015 AAA $ 1,450M $ 1,620,375
New York St Dorm Auth Rev 7.70% 5/15/2012 AAA 6,000M 6,840,000
New York St Dorm Auth Rev Ser A 7 5/8% 7/1/2020 AAA 1,150M 1,311,000
New York St Med Care Facs Fin Agy Rev Ser A 7 1/2% 2/15/2021 AAA 2,150M 2,464,438
</TABLE>
6
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NEW YORK SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York St Med Care Facs Fin Agy Rev Ser A FHA+ 8% 2/15/2028 AAA $ 2,240M $ 2,455,600
New York St Med Care Facs Fin Agy Rev Ser C 7.30% 2/15/2021 AAA 1,000M 1,147,500
New York St Pwr Auth Ser V 8% 1/1/2017 AAA 8,370M 9,081,450
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 850M 973,250
Puerto Rico Commonwealth Aqu & Sewer Auth Rev 101/4% 7/1/2009 AAA 2,495M 3,439,981
Puerto Rico Commonwealth Aqu & Sewer Auth Rev Ser A
77/8% 7/1/2017 AAA 900M 990,000
Puerto Rico Commonwealth Hwy Ser O 8% 7/1/2005 AAA 550M 606,375
Puerto Rico Commonwealth Hwy Ser Q 73/4% 7/1/2016 AAA 1,100M 1,262,250
Puerto Rico Elec Pwr Auth Ser K 91/4% 7/1/2006 AAA 2,050M 2,226,813
Puerto Rico Elec Pwr Auth Ser L 83/8% 7/1/2007 AAA 2,500M 2,690,625
Puerto Rico Elec Pwr Auth Ser M 8% 7/1/2008 AAA 6,900M 7,607,250
Puerto Rico Ind Med & Environmental/Catholic Univ
93/8% 12/1/2007 AAA 2,000M 2,217,500
Triborough Brdg & Tunl Auth Ser O 71/2% 1/1/2011 AAA 2,300M 2,527,125
Total 49,461,532
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Puerto Rico Commonwealth 51/2% 7/1/2017 A 4,150M 3,932,125
State Puerto Rico Commonwealth RIBS FSA+ 7.832% 7/1/2020++ AAA 12,000M 12,030,000
4.95% Total 15,962,125
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Local
.38% Bethlehem New York MBIA+ 7.20% 3/1/2022 AAA 1,080M 1,229,850
- - ------------------------------------------------------------------------------------------------------------------------------------
Education New York St Dorm Auth Rev 6.20% 7/1/2015 Baa 1,000M 1,010,000
11.31% New York St Dorm Auth Rev 6% 5/15/2016 BBB 5,000M 4,893,750
New York St Dorm Auth Rev FGIC+ 5% 7/1/2020 AAA 5,000M 4,487,500
New York St Dorm Auth Rev Ser F 5% 7/1/2020 Baa 1,000M 851,250
New York St Dorm Auth Rev/City Univ Ser C FGIC+ 7% 7/1/2014 AAA 4,425M 4,950,469
New York St Dorm Auth Rev/City Univ 2nd Ser MBIA+
67/8% 7/1/2014 AAA 5,400M 5,926,500
New York St Dorm Auth Rev/Colgate Univ MBIA+ 6% 7/1/2016 AAA 1,000M 1,036,250
New York St Dorm Auth Rev/Cornell Univ Ser A 73/8% 7/1/2020 AA 5,075M 5,639,594
New York St Dorm Auth Rev/St Univ Ed Fac Ser B 71/2% 5/15/2011 BBB 4,800M 5,532,000
New York St Dorm Auth Rev/Univ Rochester Ser A 6.40% 7/1/2013 A 2,030M 2,159,412
Total 36,486,725
- - ------------------------------------------------------------------------------------------------------------------------------------
Finance Municipal Assistance Corp NY Ser 58 73/8% 7/1/2008 AA 850M 874,914
8.23% Municipal Assistance Corp NY Ser 66 73/4% 7/1/2008 Aa 265M 294,480
Municipal Assistance Corp NY Ser 67 75/8% 7/1/2008 Aa 2,515M 2,785,363
New York St Loc Govt Assistance Corp Ser A 67/8% 4/1/2019 A 7,050M 7,658,062
New York St Loc Govt Assistance Corp Ser A 61/2% 4/1/2020 A 9,280M 9,697,600
New York St Loc Govt Assistance Corp Ser C 61/2% 4/1/2015 A 5,075M 5,246,281
Total 26,556,700
- - ------------------------------------------------------------------------------------------------------------------------------------
Health and Hospital New York City Health & Hosp Corp LINK AMBAC+ 5.70% 2/15/2023 AAA 500M 481,250
15.00% New York City Health & Hosp Corp RIBS AMBAC+ 7.38% 2/15/2023++ AAA 6,000M 5,490,000
New York St Dorm Auth Rev 55/8% 7/1/2012 Baa 2,000M 1,907,500
New York St Dorm Auth Rev 51/2% 7/1/2025 Baa 4,250M 3,840,938
New York St Dorm Auth Rev Mental Health Svcs Facs Imp B
6% 8/15/2012 BBB 1,460M 1,465,475
New York St Dorm Auth Rev Mental Health Svcs Facs Imp B
MBIA+ 5 1/8% 8/15/2021 AAA 6,000M 5,445,000
New York St Med Care Facs Fin Agy Rev 6% 2/15/2035 AAA 4,665M 4,670,831
New York St Med Care Facs Fin/Beth Israel MBIA+ 7 1/2%
11/1/2010 AAA 1,250M 1,407,813
New York St Med Care Facs Fin/Mental Health Ser A
7 1/2% 2/15/2021 BBB 10,585M 11,749,350
New York St Med Care Facs Fin/North Shore Univ Hosp Ser A
MBIA+ 7.20% 11/1/2020 AAA 7,140M 7,854,000
New York St Med Care Facs Fin/St Francis Hosp Ser A FGIC+
7.60% 11/1/2008 AAA 1,000M 1,087,500
</TABLE>
7
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NEW YORK SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York St Med Care Facs Fin/St Francis Hosp Ser A
FGIC+ 7 5/8% 11/1/2021 AAA $ 1,775M $ 1,932,531
Puerto Rico Pub Bldg Auth Rev GTD AMBAC+ 5 1/2% 7/1/2021 AAA 1,105M 1,062,181
Total 48,394,369
- - ------------------------------------------------------------------------------------------------------------------------------------
Housing New York St Mtge Agy Rev FHA+ AMT+++ 7 1/2% 4/1/2026 Aa 2,500M 2,665,625
1.68% New York St Mtge Agy Rev Ser 41-A MBIA+ 6.45% 10/1/2014 AAA 2,665M 2,734,955
New York St Mtge Agy Rev Ser 5 FHA+ 9 3/4% 10/1/2010 Aa 10M 10,360
Total 5,410,940
- - ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous New York St Urban Dev Corp Rev 51/4% 4/1/2012 Baa 1,765M 1,632,625
12.96% New York St Urban Dev Corp Rev 53/8% 4/1/2017 Baa 2,615M 2,395,994
New York St Urban Dev Corp Rev 5.70% 4/1/2020 Baa 4,150M 3,942,500
New York St Urban Dev Corp Rev Correctional Cap Facs Ser 5
MBIA+ 5 1/2% 1/1/2025 AAA 9,700M 9,202,875
New York St Urban Dev Corp Rev Correctional Cap Facs Ser 6
5 1/4% 1/1/2009 Baa 3,000M 2,775,000
New York St Urban Dev Corp Rev Ref Correctional Cap Facs A
5 1/4% 1/1/2021 Baa 7,270M 6,379,425
New York St Urban Dev Corp Rev Ser A MBIA+ 5 1/2% 4/1/2016 AAA 4,000M 3,865,000
New York St Urban Dev Corp Rev Ser A MBIA+ 5 1/2% 4/1/2019 AAA 1,000M 963,750
New York St Urban Dev Corp Rev Ser 6 5 3/8% 1/1/2025 Baa 3,950M 3,485,875
United Nations Dev Corp 6% 7/1/2026 A 4,200M 4,152,750
United Nations Dev Corp 6 1/4% 7/1/2026 A 3,000M 3,033,750
Total 41,829,544
- - ------------------------------------------------------------------------------------------------------------------------------------
Pollution Control New York St Environmental Fac Poll Ctrl Rev St Wtr Ser A
7 1/2% 6/15/2012 Aa 7,000M 7,761,250
Revenue 4.04% New York St Environmental Fac Poll Ctrl Rev St Wtr Ser E
6 7/8% 6/15/2014 Aa 4,780M 5,275,925
Total 13,037,175
- - ------------------------------------------------------------------------------------------------------------------------------------
Power New York St Energy Res & Dev Gas Facs Rev/Bklyn Union Gas
17.48% Ser II MBIA+ 7% 12/1/2020 AAA 2,500M 2,584,250
New York St Energy Res & Dev Poll Ctrl Rev/Niagara Mohawk
Ser A FGIC+ 7.20% 7/1/2029 AAA 11,600M 13,006,500
New York St Energy Res & Dev/Bklyn Union Gas MBIA+
AMT+++ 63/4% 2/1/2024 AAA 12,800M 13,760,000
New York St Energy Res & Dev/Bklyn Union Gas Ser B
RIBS AMT+++ 10.03% 7/1/2026++ A 4,000M 4,740,000
New York St Energy Res & Dev/Bklyn Union Gas 1st Ser
7 1/8% 12/1/2020 A 950M 982,462
New York St Energy Res & Dev/Central Hudson Gas & Elec
MBIA+ AMT+++ 83/8% 12/1/2028 AAA 1,965M 2,188,519
New York St Energy Res & Dev/Con Edison Ser A
AMT+++ 7 1/2% 7/1/2025 A 1,700M 1,829,625
New York St Energy Res & Dev/Con Edison Ser A
MBIA+ AMT+++ 71/8% 12/1/2029 AAA 2,350M 2,573,250
New York St Energy Res & Dev/Con Edison Ser B AMT+++
7 3/8% 7/1/2024 A 1,465M 1,547,406
Puerto Rico Elec Pwr Auth 51/2% 7/1/2014 A 1,970M 1,878,888
Puerto Rico Elec Pwr Auth Ser T RIBS FSA+ 8.742% 7/1/2018++ AAA 3,500M 3,780,000
Puerto Rico Elec Pwr Auth Ser X 51/2% 7/1/2025 A 6,190M 5,748,963
Puerto Rico Elec Pwr Auth Ser Z 51/4% 7/1/2021 A 2,000M 1,800,000
Total 56,419,863
- - ------------------------------------------------------------------------------------------------------------------------------------
Solid Waste
.75% Dutchess Co Resource Recovery Ser A FGIC+ 71/2% 1/1/2009 AAA 2,200M 2,406,250
- - ------------------------------------------------------------------------------------------------------------------------------------
Transportation Metropolitan Trans Auth NY Commuter Facs Rev Sub Grand Ser 1
4.80% FSA+ 5.70% 7/1/2024 AAA 5,550M 5,328,000
Metropolitan Trans Auth NY Ser L AMBAC+ 71/2% 7/1/2017 AAA 2,310M 2,489,025
Metropolitan Trans Auth NY Svc Contract Trans Facs Ser O
5 3/4% 7/1/2008 Baa 1,475M 1,462,094
Port Auth NY & NJ 6 7/8% 1/1/2025 AA 1,000M 1,067,500
Port Auth NY & NJ Cons Ninety-Second Ser 4 3/4% 1/15/2029 AA 1,000M 850,000
Triborough Brdg & Tunl Auth Ser L 8 1/8% 1/1/2012 Aa 4,000M 4,310,000
Total 15,506,619
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NEW YORK SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Water and Sewer New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev
2.22% 5 1/2% 6/15/2020 A $ 2,000M $ 1,827,500
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev Ser A
FGIC+ 6% 6/15/2019 AAA 1,750M 1,765,312
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev Ser A
FGIC+ 61/4% 6/15/2021 AAA 3,500M 3,565,625
Total 7,158,437
--------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 99.13% (Cost $311,845,123) 319,860,129
- - ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES .87%
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 2,819,222
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $10.76 a share on 29,980,589 shares of $.001
100.00% par value capital stock outstanding; authorized, 80,000,000 shares) $322,679,351
--------------------------------------------------------------------------------------------------------------
</TABLE>
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
March 31, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
TEXAS SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded Austin TX Util Sys Rev 103/4% 5/15/2015 AAA $ 5,450M $ 6,683,062
22.43% Board of Regents TX A&M Univ Rev 7.80% 8/15/2009 AAA 900M 970,875
Conroe TX Indpt Sch Dist 6.60% 8/15/2018 AAA 1,500M 1,678,125
Dallas Co TX Util & Reclamation Dist MBIA+ 8.30% 2/15/2016 AAA 700M 751,625
Harris Co TX Health Facs Dev Corp Rev/Hermann Trust
9% 10/1/2017 AAA 2,500M 2,728,125
Harris Co TX Detention MBIA+ 7.80% 12/15/2011 AAA 1,110M 1,229,325
Houston TX Wtr & Sewer Sys Rev Prior Lien MBIA+
7.40% 12/1/2018 AAA 1,000M 1,135,000
Lower CO River Auth TX MBIA+ 7 5/8% 1/1/2016 AAA 925M 996,687
North Central TX Health MBIA+ 7 7/8% 7/1/2018 AAA 750M 800,625
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 1,250M 1,431,250
Puerto Rico Commonwealth G.O. 7.30% 7/1/2020 AAA 500M 565,000
Puerto Rico Commonwealth Hwy Ser T 6 5/8% 7/1/2018 AAA 433M 477,515
San Antonio TX Elec & Gas Rev Ser A 10 1/2% 2/1/2013 AAA 1,000M 1,128,750
Texas St G.O. Ser B 8.10% 6/1/2007 AAA 1,090M 1,175,838
Texas St Tnpk Auth Dallas Northwy Rev AMBAC+ 7 1/8% 1/1/2015 AAA 250M 272,500
Total 22,024,302
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Texas St AMT+++ 6.30% 6/1/2014 AA 605M 613,319
State Texas St Ser A-1 RIBS 7.32% 12/1/2023++ AA 6,000M 5,520,000
20.19% Texas St Ser B-1 & B-2 LINK 6.20% 9/30/2011 AA 11,000M 11,893,750
Texas St Wtr Dev Bd 7.15% 8/1/2035 AA 1,600M 1,798,000
Total 19,825,069
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Decatur TX Indpt Sch Dist 6 1/8% 8/1/2025 Aaa 1,500M 1,548,750
Local Grapevine-Colleyville Indpt Sch Dist TX Ref 5 1/8% 8/15/2022 AAA 3,450M 3,109,313
16.84% Harleton TX Indpt Sch Dist 5 1/2% 2/15/2026 Aaa 1,280M 1,222,400
Harris Co TX 6 1/8% 8/15/2020 AA 4,475M 4,665,187
Harris Co TX Toll Rd Sub Lien Ser A 6.10% 8/15/2016 AA 2,640M 2,758,800
Keller TX Indpt Sch Dist 5 1/8% 8/15/2025 AAA 3,600M 3,231,000
Total 16,535,450
--------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
TEXAS SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Education
.97% Texas St Higher Ed Coord AMT+++ 7.70% 10/1/2025 A $ 920M $ 948,750
- - ------------------------------------------------------------------------------------------------------------------------------------
Health and Hospital Amarillo TX Health Facs Corp LINK FSA+ 6.562% 1/1/2022 AAA 3,600M 3,829,500
12.21% Amarillo TX Health Facs Corp RIBS FSA+ 9.19% 1/1/2022++ AAA 2,250M 2,548,125
Bexar Co TX Health Facs MBIA+ 7 1/2% 8/15/2010 AAA 750M 823,125
Bexar Co TX Health Facs Dev Corp Rev/Incarnate Word RMK
FSA+ 6.10% 11/15/2023 AAA 4,000M 4,100,000
Lubbock TX Health Facs Dev Corp Rev/St Joseph Health Sys
5 1/2% 7/1/2023 AA 750M 693,750
Total 11,994,500
- - ------------------------------------------------------------------------------------------------------------------------------------
Housing Dallas TX Hsg Corp Cap Prjt/Estell Vlg Apts Ser A
.69% 7 7/8% 12/1/2009 BBB 530M 546,562
Texas Hsg Agy Ser D AMT+++ 8.40% 1/1/2021 Aa 125M 130,625
Total 677,187
- - ------------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue Brazos River Auth TX MBIA+ 8.10% 5/1/2019 AAA 750M 813,750
Bonds Brazos River Auth TX 81/4% 5/1/2019 A 1,000M 1,081,250
13.44% Harris Co TX Ind Dev Corp Marine Term & Wtr Poll Ctrl
Rev 65/8% 2/1/2024 BBB 1,500M 1,548,750
Matagorda Co TX Nav Dist No 1 Poll Ctrl Rev Ref/Central Pwr
FGIC+ 7.70% 2/1/2019 AAA 240M 256,500
Matagorda Co TX Nav Dist No 1 Poll Ctrl Rev Ref/Central Pwr
MBIA+ 6.10% 7/1/2028 AAA 1,000M 1,008,750
Puerto Rico Ind Med & Environmental Ctrl/Baxter Lab Ser A
8% 9/1/2012 A 2,315M 2,543,606
Texas City TX Ind Dev Corp Marine Term Rev/ARCO
7 3/8% 10/1/2020 A 5,000M 5,950,000
Total 13,202,606
- - ------------------------------------------------------------------------------------------------------------------------------------
Pollution Control
Revenue Trinity River Auth TX Poll Ctrl Rev/Texas Instruments
1.02% AMT+++ 6.20% 3/1/2020 A 1,000M 1,000,000
- - ------------------------------------------------------------------------------------------------------------------------------------
Power Austin TX Util Sys Ser B 7.80% 11/15/2012 A 640M 696,800
5.04% Lower CO River Auth Rev Ser B AMBAC+ 6% 1/1/2015 AAA 1,500M 1,531,875
Texas Muni Pwr Agy Rev Ser A AMBAC+ 6 3/4% 9/1/2012 AAA 2,500M 2,718,750
Total 4,947,425
- - ------------------------------------------------------------------------------------------------------------------------------------
Transportation Houston TX Arpt Sys Rev MBIA+ AMT+++ 8.20% 7/1/2017 AAA 1,500M 1,633,125
6.52% Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Z
MBIA+ 6 1/4% 7/1/2015 AAA 1,750M 1,893,483
Texas St Tnpk Auth Dallas Northwy Rev FGIC+ 5 3/4% 1/1/2011 AAA 3,000M 2,880,000
Total 6,406,608
- - ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer Houston TX Wtr Swr Sys Rev Ser A FGIC+ 51/4% 12/1/2025 AAA 3,000M 2,752,500
3.74% Texas Wtr Resource Fin Auth 7 5/8% 8/15/2008 A 500M 541,875
Texas Wtr Resource Fin Auth AMBAC+ 7 1/2% 8/15/2013 AAA 350M 376,250
Total 3,670,625
--------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 103.09% (Cost $99,259,050) 101,232,522
- - ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES (3.09)%
- - ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Securities Texas St Tax & Rev Anticipation Notes Ser A 43/4% 8/30/1996 MIG1 1,050M 1,055,597
Wisconsin St 41/2% 6/17/1996 MIG1 1,400M 1,402,996
Total (Cost $2,462,270) 2,458,593
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (5,488,983)
--------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities (3,030,390)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $10.09 a share on 9,733,513 shares of $.001
100.00% par value capital stock outstanding; authorized, 40,000,000 shares) $98,202,132
--------------------------------------------------------------------------------------------------------------
</TABLE>
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
March 31, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
10
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NEW JERSEY SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded Camden Co NJ Muni Util Auth FGIC+ 8 1/4% 12/1/2017 AAA $5,580M $ 6,082,200
21.19% Essex Co NJ Imp Auth Lease/Jail & Youth Hse Prjts
AMBAC+ 7% 12/1/2024 AAA 2,875M 3,345,781
Hudson Co NJ Ctf Correctional Fac MBIA+ 7.60% 12/1/2021 AAA 5,155M 5,683,388
Hudson Co NJ Util Auth Util Sys Rev 10% 7/1/2011 AAA 1,000M 1,277,500
Middlesex Co NJ Util Ser A FGIC+ 6 1/2% 9/15/2011 AAA 1,000M 1,101,250
Monmouth Co NJ MBIA+ 6 7/8% 8/1/2012 AAA 500M 554,375
New Jersey Health Care Facs Fin Auth Rev/St Peters Med Ser C
MBIA+ 8.60% 7/1/2017 AAA 2,100M 2,260,125
Northeast Monmouth Co NJ MBIA+ 6.70% 11/1/2016 AAA 1,340M 1,472,325
Port Auth NY & NJ 7.35% 10/1/2027 AAA 3,500M 4,038,125
Puerto Rico Commonwealth MBIA+ 6.60% 7/1/2013 AAA 475M 532,594
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 3,750M 4,293,750
Puerto Rico Commonwealth G.O. 7.30% 7/1/2020 AAA 250M 282,500
Puerto Rico Pub Bldg Auth Ser L 6 7/8% 7/1/2021 AAA 200M 227,250
Rutgers St Univ NJ Rev Ser O 7.90% 5/1/2010 AAA 400M 437,000
Rutgers St Univ NJ Univ Ser O 8% 5/1/2018 AAA 3,255M 3,560,156
Stony Brook Regional Sewer Auth NJ Rev Ser A 7.40% 12/1/2009 AAA 1,000M 1,115,000
Tinton Falls NJ Sch Bd Ed FSA+ 6 1/2% 6/15/2017 AAA 1,000M 1,096,250
Union Co NJ Ser L 6 1/2% 2/1/2011 AAA 1,000M 1,097,500
University of Puerto Rico Ser L 6 1/2% 6/1/2013 AAA 25M 26,281
Virgin Islands Pub Fin Auth Ser A 7.30% 10/1/2018 AAA 1,650M 1,856,250
Total 40,339,600
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Puerto Rico Commonwealth RIBS MBIA+ 7.714% 7/1/2008++ AAA 5,000M 5,356,250
State Puerto Rico Commonwealth 5 1/4% 7/1/2018 A 1,500M 1,372,500
6.91% Puerto Rico Commonwealth 5.40% 7/1/2025 A 7,000M 6,431,250
Total 13,160,000
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Cranbury Township NJ Bd Ed Middlesex Co FSA+ 5.10% 1/15/2016 AAA 415M 385,430
Local Essex Co NJ Imp Auth Lease Ref/Co Jail & Youth House Prjts
9.56% AMBAC+ 5.15% 12/1/2011 AAA 1,500M 1,440,000
Essex Co NJ Imp Auth Lease Ref/Co Jail & Youth House Prjts
AMBAC+ 5.35% 12/1/2024 AAA 2,000M 1,867,500
High Bridge NJ Bd Ed FSA+ 5.40% 2/15/2025 AAA 500M 466,250
Keansburg NJ 6.80% 12/1/2010 A 1,000M 1,083,750
Millburn Township NJ Sch Dist 5.35% 7/15/2018 Aaa 1,150M 1,104,000
Millburn Township NJ Sch Dist 5.35% 7/15/2019 Aaa 1,100M 1,054,625
Morristown NJ FSA+ 6 1/2% 8/1/2019 AAA 3,440M 3,728,100
Paterson NJ FSA+ 9.30% 2/15/2004 AAA 4,200M 5,386,500
South Brunswick Township NJ Bd Ed FGIC+ 6.40% 8/1/2024 AAA 1,600M 1,690,000
Total 18,206,155
- - ------------------------------------------------------------------------------------------------------------------------------------
Education Essex Co NJ Imp Auth Rev GTD Coll AMBAC+ 7% 12/1/2024 AAA 1,750M 2,036,562
6.72% New Jersey Economic Dev Auth Sch Rev/Blair Academy Ser A
5.85% 9/1/2016 A 500M 498,125
New Jersey St Ed Facs Auth MBIA+ 6.85% 7/1/2019 AAA 1,150M 1,237,688
New Jersey St Ed Facs Auth 6 3/8% 7/1/2022 AA 5,000M 5,193,750
New Jersey St Ed Facs Auth/Princeton Univ Ser A
5 7/8% 7/1/2020 AAA 2,940M 2,962,050
Rutgers St Univ NJ Ser P 6.85% 5/1/2021 AA 800M 869,000
Total 12,797,175
- - ------------------------------------------------------------------------------------------------------------------------------------
Finance
.55% Hamilton Township NJ Bd Ed Ser B FSA+ 7% 12/15/2015 AAA 970M 1,048,813
- - ------------------------------------------------------------------------------------------------------------------------------------
Health and Hospital New Jersey Health Care Facs Fin Auth Rev/Bayonne Hosp
FSA+ 6 1/4% 7/1/2012 AAA 1,600M 1,672,000
3.40% New Jersey Health Care Facs Ser A FHA+ 7 1/4% 2/15/2021 AA 1,485M 1,587,094
New Jersey Health Care Facs Ser B FHA+ 6 1/2% 2/1/2022 AAA 955M 990,813
New Jersey Health Care Facs Ser C FSA+ 6 3/4% 7/1/2020 AAA 735M 797,475
</TABLE>
11
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NEW JERSEY SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl
Facs Ser A FHA+ 61/4% 8/1/2032 AAA $ 500M $ 504,375
Puerto Rico Pub Bldg Auth Ser M 5 1/2% 7/1/2021 A 1,000M 927,500
Total 6,479,257
- - ------------------------------------------------------------------------------------------------------------------------------------
Housing New Jersey St Hsg & Mtge Fin MBIA+ 7.70% 10/1/2029 AAA 1,700M 1,776,500
2.09% New Jersey St Hsg & Mtge Fin Ser 1 6.70% 11/1/2028 A 1,000M 1,035,000
Puerto Rico Hsg Fin Corp Mtge Rev Ser B GNMA+
7.65% 10/15/2022 AAA 540M 567,675
Virgin Islands Hsg Fin Auth Sing Fam Rev Ser A
GNMA+ AMT+++ 6 1/2% 3/1/2025 AAA 600M 604,500
Total 3,983,675
- - ------------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue New Jersey Economic Dev Auth AMT+++ 7 1/4% 3/1/2021 A 1,500M 1,575,000
Bonds Puerto Rico Ind Med & Environmental/Upjohn 7 1/2% 12/1/2023 AA 1,500M 1,629,375
3.21% Puerto Rico Tel Auth Rev LINK MBIA+ 5.51% 1/16/2015 AAA 3,000M 2,898,750
Total 6,103,125
- - ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Monmouth Co NJ Imp Auth Rev Govt Loan MBIA+ 6.40% 12/1/2009 AAA 1,075M 1,169,063
3.04% New Jersey Economic Dev Auth 6 3/4% 6/15/2012 A 2,375M 2,514,531
New Jersey Economic Dev Auth 7% 10/1/2014 BBB* 1,000M 1,001,250
New Jersey Sports & Expo Auth Rev Ser A 8% 1/1/2025 BBB* 1,000M 1,092,500
Total 5,777,344
- - ------------------------------------------------------------------------------------------------------------------------------------
Pollution Control Cape May Co NJ Ind Poll Ctrl Rev Fin Auth Ser B MBIA+
Revenue 3.84% 7% 11/1/2029 AAA 500M 552,500
Salem Co NJ Ind Poll Ctrl Rev Fin Auth/PSE&G MBIA+
6.20% 8/1/2030 AAA 1,000M 1,018,750
Salem Co NJ Poll Ctrl Auth Ser A AMT+++ 6 1/2% 11/15/2021 AA 5,500M 5,733,750
Total 7,305,000
- - ------------------------------------------------------------------------------------------------------------------------------------
Power Essex Co NJ Imp Auth Rev Orange Muni Util & Lease MBIA+
14.07% 6.80% 7/1/2014 AAA 1,710M 1,893,825
Puerto Rico Elec Pwr Auth 7 1/8% 7/1/2014 A 715M 770,413
Puerto Rico Elec Pwr Auth LINK 6.30% 7/1/2018 AAA 6,000M 6,240,000
Puerto Rico Elec Pwr Auth LINK FSA+ 5.929% 7/1/2023 AAA 1,000M 1,017,500
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.267% 7/1/2023++ AAA 4,500M 4,556,250
Puerto Rico Elec Pwr Auth Ser T RIBS FSA+ 8.742% 7/1/2018++ AAA 4,700M 5,076,000
Puerto Rico Elec Pwr Auth Ser X 5 1/2% 7/1/2025 A 6,440M 5,981,150
Raritan Township NJ Muni Util Auth 6.45% 5/1/2012 A 1,180M 1,240,475
Total 26,775,613
- - ------------------------------------------------------------------------------------------------------------------------------------
Transportation Delaware River Port Auth PA & NJ Rev 5.40% 1/1/2015 AAA 5,000M 4,793,750
19.98% Delaware River Port Auth PA & NJ Rev FGIC+ 5 1/2% 1/1/2026 AAA 5,000M 4,750,000
New Jersey Economic Dev Auth 7% 7/1/2016 BBB* 5,545M 5,808,387
New Jersey St Tnpk Auth AMBAC+ 5 3/4% 1/1/2011 AAA 2,500M 2,540,625
Port Auth NY & NJ 63rd Ser AMT+++ 7 7/8% 3/1/2024 AA 2,990M 3,055,690
Port Auth NY & NJ 93rd Ser 6 1/8% 6/1/2094 AA 9,000M 9,247,500
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser C
5% 7/1/2036 A 5,000M 4,178,250
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev
Ser Y 5 1/2% 7/1/2036 A 4,000M 3,662,200
Total 38,036,402
- - ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer New Jersey Economic Dev Auth Ser B 6.70% 8/1/2021 A 1,250M 1,315,625
4.09% New Jersey Economic Dev Auth Ser D 7% 10/1/2017 A 1,250M 1,284,588
New Jersey Economic Dev Auth Wtr Facs Rev FGIC+ AMT+++
6 7/8% 11/1/2034 AAA 2,350M 2,543,875
New Jersey Wastewtr 6 7/8% 6/15/2009 AA 1,905M 2,093,119
New Jersey Wastewtr Ser A MBIA+ 7% 5/15/2006 AAA 500M 539,375
Total 7,776,582
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 98.65% (Cost $182,615,360) 187,788,741
--------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
NEW JERSEY SERIES
Market Value
(Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS, LESS LIABILITIES 1.35%
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities $ 2,570,909
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $5.15 a share on 36,932,395 shares of $.001 par
100.00% value capital stock outstanding; authorized, 80,000,000 shares) $190,359,650
---------------------------------------------------------------------------------------------------------------
</TABLE>
* This security has not been rated by an independent ratings service but is,
in Lord Abbett's opinion, of comparable quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
March 31, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
CONNECTICUT SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded Connecticut St Health & Ed/St Raphael Hosp Ser C AMBAC+
17.28% 7 1/2% 7/1/2014 AAA $1,000M $ 1,088,750
Connecticut St Ser A 6 3/4% 3/1/2011 AAA 100M 110,750
Connecticut St Spcl Tax Oblig Rev Ser A 71/8% 6/1/2007 AAA 5,000M 5,612,500
Connecticut St Spcl Tax Oblig Rev Ser A 7.20% 2/1/2009 AAA 1,400M 1,533,000
Puerto Rico Commonwealth 7 3/4% 7/1/2006 AAA 3,000M 3,292,500
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 1,800M 2,061,000
Puerto Rico Commonwealth Aqu & Sewer Auth Rev Ser A
7 7/8% 7/1/2017 AAA 2,250M 2,475,000
Puerto Rico Commonwealth G.O. 7.30% 7/1/2020 AAA 800M 904,000
Puerto Rico Commonwealth Hwy Auth Rev Ser P 8 1/8% 7/1/2013 AAA 2,150M 2,375,750
Puerto Rico Commonwealth Hwy Ser Q 7 3/4% 7/1/2016 AAA 650M 745,875
Puerto Rico Commonwealth Hwy Ser T 6 5/8% 7/1/2018 AAA 67M 73,735
Total 20,272,860
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Puerto Rico Commonwealth 5 1/2% 7/1/2017 A 750M 710,625
State Puerto Rico Commonwealth 6.45% 7/1/2017 A 2,000M 2,102,500
2.40% Total 2,813,125
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Hartford CT 6 1/2% 12/15/2005 AA 730M 811,213
Local Killingly CT 7 1/4% 12/15/2004 A 250M 266,250
2.58% Monroe CT 6.60% 4/15/2005 A 100M 110,500
Montville CT 6.70% 6/15/2009 Aa 550M 627,688
Montville CT 6.70% 6/15/2010 Aa 575M 654,063
Portland CT 7.10% 12/15/2000 A 100M 110,000
Redding CT 6.60% 4/15/2010 Aa 100M 112,375
Voluntown CT 6 3/4% 10/1/2002 A 100M 109,625
Watertown CT 6 1/2% 6/15/2003 A 100M 108,000
West Haven CT MBIA+ 6 1/2% 6/15/2006 AAA 100M 111,750
Total 3,021,464
- - ------------------------------------------------------------------------------------------------------------------------------------
Education Connecticut St Health & Ed Fac/Fairfield Univ Ser F
9.48% 6.90% 7/1/2014 BBB 1,500M 1,590,000
Connecticut St Health & Ed Fac/Kent Sch Ser B MBIA+
5.40% 7/1/2023 AAA 1,500M 1,411,875
Connecticut St Health & Ed/Yale Univ RIBS 8.075% 6/10/2030++ AAA 6,800M 6,834,000
Connecticut St Higher Ed Ser A AMT+++ 7 3/8% 11/15/2005 A 785M 826,213
Connecticut St Higher Ed Supplemental Loan Auth Rev Ser A
AMT+++ 7.20% 11/15/2010 A 435M 460,013
Total 11,122,101
- - ------------------------------------------------------------------------------------------------------------------------------------
Finance
.82% Puerto Rico Pub Bldg Auth Rev GTD Ref Ser L 5 3/4% 7/1/2016 A 1,000M 967,500
--------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Health and Hospital Connecticut St Health & Ed Facs Auth Rev MBIA+ 5 3/4% 7/1/2016 AAA $ 3,895M $ 3,831,705
22.17% Connecticut St Health & Ed Facs Auth Rev/Yale-New Haven
Hosp Ser F MBIA+ 7% 7/1/2010 AAA 75M 82,219
Connecticut St Health & Ed/Bridgeport Hosp MBIA+
6 5/8% 7/1/2018 AAA 1,250M 1,323,438
Connecticut St Health & Ed/Bridgeport Hosp Ser C CNLA+
5 3/8% 7/1/2025 AAA 1,000M 913,750
Connecticut St Health & Ed/Greenwich Hosp MBIA+ 5.80% 7/1/2026 AAA 10,450M 10,227,937
Connecticut St Health & Ed/St Marys Hosp Ser C 7 3/8% 7/1/2020 Baa 3,250M 3,388,125
Connecticut St Health & Ed/Waterbury Hosp Ser B FSA+
7% 7/1/2020 AAA 100M 107,750
Connecticut St Health & Ed/William Backus Hosp 6 3/8% 7/1/2022 A 850M 853,188
Connecticut St Health & Ed/Yale-New Haven Hosp Ser F MBIA+
7.10% 7/1/2025 AAA 3,105M 3,349,519
Puerto Rico Pub Bldg Auth Rev GTD AMBAC+ 5 1/2% 7/1/2021 AAA 2,000M 1,922,500
Total 26,000,131
- - ------------------------------------------------------------------------------------------------------------------------------------
Housing Connecticut St Hsg Fin Auth Ser A Sub Ser A-2 FHA+ AMT+++
9.69% 7.20% 11/15/2008 AA 845M 891,475
Connecticut St Hsg Fin Auth Ser A-1 5.95% 5/15/2017 AA 2,000M 2,007,500
Connecticut St Hsg Fin Auth Ser A-2 AMT+++ 6.45% 5/15/2022 AA 1,100M 1,112,375
Connecticut St Hsg Fin Auth Ser B 6 3/4% 11/15/2023 AA 3,000M 3,120,000
Connecticut St Hsg Fin Auth Ser D-2 6.90% 5/15/2020 AA 1,000M 1,020,000
Puerto Rico Pub Bldg Auth Ser H 7 7/8% 7/1/2007 AAA 3,000M 3,210,000
Total 11,361,350
- - ------------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue Connecticut St Dev Auth Solid Waste Disp Facs Rev AMT+++
Bonds 7% 7/1/2025 AAA 2,500M 2,753,125
9.32% Eastern CT Resource Recovery/Wheelabrator Lisbon Prjt Ser A
AMT+++ 5 1/2% 1/1/2020 A 4,000M 3,480,000
Puerto Rico Ind Med & Environmental/American Home Products
5.10% 12/1/2018 A 2,000M 1,795,000
Puerto Rico Ind Med & Environmental/Upjohn 7 1/2% 12/1/2023 AA 1,000M 1,086,250
Puerto Rico Ind Med & Environmental/Warner Lambert
7.60% 5/1/2014 Aa 1,650M 1,817,063
Total 10,931,438
- - ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Connecticut Middletown Courthouse MBIA+ 6 1/4% 12/15/2010 AAA 575M 611,656
9.66% Connecticut St Dev Govt Lease Rev MBIA+ 6.60% 6/15/2014 AAA 500M 540,000
New Haven CT Air Rights Pkg MBIA+ 6 1/2% 12/1/2015 AAA 9,475M 10,173,781
Total 11,325,437
- - ------------------------------------------------------------------------------------------------------------------------------------
Pollution Control
Revenue 3.19% Connecticut St Dev Auth/Pfizer Inc 6.55% 2/15/2013 AAA 3,470M 3,743,262
- - ------------------------------------------------------------------------------------------------------------------------------------
Power Connecticut St Dev Auth/New England Pwr Co 7 1/4% 10/15/2015 A 760M 814,150
7.57% Puerto Rico Elec Pwr Auth Rev Ser X 6 1/8% 7/1/2021 A 750M 756,562
Puerto Rico Elec Pwr Auth Ser T RIBS FSA+ 8.742% 7/1/2018++ AAA 1,500M 1,620,000
Puerto Rico Elec Pwr Auth Ser X 6% 7/1/2015 AAA 1,500M 1,503,750
Puerto Rico Elec Pwr Auth Ser X 5 1/2% 7/1/2025 A 4,500M 4,179,375
Total 8,873,837
- - ------------------------------------------------------------------------------------------------------------------------------------
Solid Waste Connecticut St Resource Recovery/American Ref Fuel Ser A
5.33% AMT+++ 8% 11/15/2015 AA 1,100M 1,194,875
Connecticut St Resource Recovery/American Ref Fuel Ser A
AMT+++ 6.45% 11/15/2022 A 4,985M 5,066,006
Total 6,260,881
- - ------------------------------------------------------------------------------------------------------------------------------------
Transportation Connecticut St Spcl Tax Oblig Rev Ser B 10% 10/1/2000 AA 4,000M 4,895,000
5.50% Connecticut St Spcl Tax Oblig Rev Ser B FGIC+ 6.10% 10/1/2011 AAA 1,000M 1,045,000
Puerto Rico Commonwealth Hwy 6 5/8% 7/1/2018 AAA 453M 508,626
Total 6,448,626
- - ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer Connecticut St Clean Wtr Fd 7% 1/1/2011 AA 400M 442,000
.58% Connecticut St Dev Auth Wtr Fac Rev Ref-Conn Wtr Ser A
AMBAC+ AMT+++ 5 3/4% 7/1/2028 AAA 250M 243,750
Total 685,750
--------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 105.57% (Cost $122,648,691) 123,827,762
--------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Statement of Net Assets March 31, 1996
<TABLE>
<CAPTION>
CONNECTICUT SERIES
Market Value
(Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS, LESS LIABILITIES (5.57)%
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities $ (6,536,078)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $10.09 a share on 11,629,223 shares of $.001
100.00% par value capital stock outstanding; authorized, 40,000,000 shares) $ 117,291,684
--------------------------------------------------------------------------------------------------------------
</TABLE>
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
March 31, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
<TABLE>
<CAPTION>
MISSOURI SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded Cape Girardeau MO Wtrwks Sys Rev FGIC+ 6.40% 3/1/2012 AAA $1,150M $ 1,256,375
23.60% Central MO St Univ MBIA+ 7% 7/1/2014 AAA 150M 169,313
Kansas City MO Muni Assistance Corp Rev AMBAC+
6 5/8% 4/15/2015 AAA 5,225M 5,806,280
Kansas City MO Muni Assistance Corp Rev AMBAC+
7 1/8% 4/15/2016 AAA 805M 898,581
Kansas City MO Muni Assistance Corp Rev AMBAC+ 6% 4/15/2020 AAA 1,030M 1,098,238
Missouri St Health & Ed Facs Rev/Christian Health FGIC+
6 7/8% 2/15/2013 AAA 2,100M 2,344,125
Missouri St Health & Ed Facs Rev/St Lukes MBIA+ 7% 11/15/2013 AAA 1,030M 1,170,338
Missouri St Regional Convention Ser A 6.90% 8/15/2021 AAA 9,750M 11,041,875
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 1,570M 1,797,650
Puerto Rico Commonwealth Aqu & Sewer Auth Rev
Ser A 7 7/8% 7/1/2017 AAA 2,500M 2,750,000
Sikeston MO Elec Rev MBIA+ 6 1/4% 6/1/2022 AAA 1,535M 1,692,338
Springfield MO Sch Dist No 12 Ser A FGIC+ 6 3/4% 3/1/2011 AAA 1,225M 1,342,906
Total 31,368,019
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Puerto Rico Commonwealth RIBS MBIA+ 7.714% 7/1/2008++ AAA 1,000M 1,071,250
State Puerto Rico Commonwealth RIBS FSA+ 7.832% 7/1/2020++ AAA 4,000M 4,010,000
3.82% Total 5,081,250
- - ------------------------------------------------------------------------------------------------------------------------------------
Education Kansas City MO Sch Dist Bldg FGIC+ 5% 2/1/2014 AAA 1,950M 1,806,188
7.24% Missouri Sch Bd Assistance Ctfs Ser A-5 MBIA+ 7 3/8% 3/1/2006 AAA 980M 1,035,125
Missouri St Health & Ed Facs Rev/St Louis Univ AMBAC+
5.20% 10/1/2026 AAA 725M 664,280
Missouri St Health & Ed Facs Rev/St Louis Univ HS
6.35% 10/1/2014 A 1,600M 1,652,000
Platte Co MO Reorg Sch Dist Ctfs 7 1/8% 1/1/2011 A 500M 530,625
St Louis MO Sch Dist FGIC+ 6% 4/1/2012 AAA 1,275M 1,316,438
University of MO Rev 5 1/2% 11/1/2023 AA 500M 473,750
University of MO Rev Ser A AMBAC+ 6 1/2% 11/1/2011 AAA 2,000M 2,150,000
Total 9,628,406
- - ------------------------------------------------------------------------------------------------------------------------------------
Finance Blue Spring MO Pub Bldg Auth Leasehold Rev Ser A FGIC+
15.84% 5 1/8% 9/1/2016 AAA 1,630M 1,507,750
Kansas City MO Muni Assistance Corp Rev MBIA+ 5 1/8% 4/15/2015 AAA 9,000M 8,437,500
Kansas City MO Muni Assistance Corp Rev MBIA+ 5 3/8% 4/15/2016 AAA 7,000M 6,720,000
Poplar Bluff MO Pub Bldg Leasehold Rev Ser A MBIA+
5 1/2% 9/1/2012 AAA 1,500M 1,485,000
Puerto Rico Pub Bldg Auth Rev GTD Ref Ser L 5 3/4% 7/1/2016 A 3,000M 2,902,500
Total 21,052,750
- - ------------------------------------------------------------------------------------------------------------------------------------
Health and Hospital Jackson Co MO Ind Dev Rev/St Joseph Health Ctr 7% 7/1/2022 Baa 1,500M 1,565,625
11.49% Missouri St Health & Ed Facs Rev/BJC Health Ser A
6 1/2% 5/15/2020 AA 4,650M 4,981,312
Missouri St Health & Ed Facs Rev/Health Midwest MBIA+
6 1/4% 6/1/2014 AAA 1,000M 1,050,000
Missouri St Health & Ed Facs Rev/Health Midwest Ser B
MBIA+ 6 1/4% 2/15/2022 AAA 800M 828,000
</TABLE>
15
<PAGE>
STATEMENT OF NET ASSETS March 31, 1996
<TABLE>
<CAPTION>
MISSOURI SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Missouri St Health & Ed Facs Rev/Heartland Health Sys
AMBAC+ 6.35% 11/15/2017 AAA $2,600M $ 2,717,000
Missouri St Health & Ed Facs Rev/Ssm Health Care Ser AA
MBIA+ 6 1/4% 6/1/2016 AAA 3,500M 3,626,875
Missouri St Health & Ed Facs Rev/SE Hosp MBIA+ 6 5/8% 6/1/2011 AAA 475M 503,500
Total 15,272,312
- - ------------------------------------------------------------------------------------------------------------------------------------
Housing Missouri St Hsg Dev Comm Mtge Rev Ser A GNMA+ AMT+++
5.81% 6 3/4% 6/1/2024 AAA 350M 361,813
Missouri St Hsg Dev Comm Mtge Rev Ser A GNMA+ AMT+++
6.22% 3/1/2026 AAA 5,000M 5,025,000
Missouri St Hsg Dev Comm Mtge Rev Ser B GNMA+ AMT+++
6.40% 12/1/2024 AAA 2,135M 2,161,688
Puerto Rico Hsg Fin Corp Mtge Rev Ser A GNMA+ 7.80% 10/15/2021 AAA 15M 15,656
Puerto Rico Hsg Fin Corp Mtge Rev Ser B GNMA+ 7.65% 10/15/2022 AAA 150M 157,688
Total 7,721,845
- - ------------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue Missouri St Environmental Imp & Energy Rev/Union Elec Ser A
Bonds 7.40% 5/1/2020 AA 550M 600,875
2.28% Puerto Rico Tel Auth Rev RIBS MBIA+ 6.748% 1/25/2007++ AAA 1,500M 1,511,250
Puerto Rico Tel Auth Rev RIBS MBIA+ 7.063% 1/16/2015++ AAA 1,000M 925,000
Total 3,037,125
- - ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Clay Co MO Pub Bldg Auth Leasehold Rev FGIC+ 7% 5/15/2014 AAA 1,000M 1,106,250
6.24% Missouri St Regional Convention & Sports Complex Auth Rev
5 1/2% 8/15/2021 A 2,950M 2,728,750
St Louis Co MO Ind Dev Rev Arena Prjt AMT+++ 7 7/8% 12/1/2024 BBB* 2,000M 2,112,500
St Louis MO Land Clearance Rev 7 3/4% 7/1/2021 BBB* 2,235M 2,349,544
Total 8,297,044
- - ------------------------------------------------------------------------------------------------------------------------------------
Pollution Control Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev
Revenue 6.55% 7/1/2014 Aa 3,000M 3,183,750
5.70% Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev
5.40% 7/1/2015 Aa 1,000M 950,000
Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev
7.20% 7/1/2016 Aa 2,250M 2,570,625
Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev
Ser E 55/8% 7/1/2016 Aa 900M 877,500
Total 7,581,875
- - ------------------------------------------------------------------------------------------------------------------------------------
Power Puerto Rico Elec Pwr Auth Rev RIBS FSA+ 8.267% 7/1/2023++ AAA 2,500M 2,531,250
6.42% Puerto Rico Elec Pwr Auth Rev Ser X 6% 7/1/2012 A 2,000M 2,030,000
Sikeston MO Elec Rev Ref MBIA+ 5% 6/1/2012 AAA 3,000M 2,801,250
Sikeston MO Elec Rev Ref MBIA+ 5% 6/1/2022 AAA 1,315M 1,168,705
Total 8,531,205
- - ------------------------------------------------------------------------------------------------------------------------------------
Transportation Kansas City MO Arpt Rev Ser B CGIC+ 67/8% 9/1/2014 AAA 1,490M 1,629,687
2.75% Puerto Rico Commonwealth Hwy Rev Ser Q 6% 7/1/2020 A 2,000M 2,025,000
Total 3,654,687
- - ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer Kansas City MO Sewer Rev Ser C 6.40% 3/1/2012 AA 4,425M 4,640,719
7.92% Kansas City MO Wtr Rev Ser D 7th Issue 6.65% 12/1/2013 AA 2,800M 3,059,000
St Louis MO Wtr Rev FGIC+ 6% 7/1/2014 AAA 2,750M 2,832,500
Total 10,532,219
--------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 99.11% (Cost $127,947,051) 131,758,737
- - ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES .89%
- - ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Securities University of MO Prjt Notes Ser FY 43/4% 6/28/1996
(Cost $1,656,035) MIG1 1,650M 1,654,967
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (471,296)
--------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 1,183,671
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $5.07 a share on 26,225,418 shares of $.001 par
100.00% value capital stock outstanding; authorized, 40,000,000 shares) $132,942,408
--------------------------------------------------------------------------------------------------------------
</TABLE>
* This security has not been rated by an independent ratings service but is,
in Lord Abbett's opinion, of comparable quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
March 31, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
16
<PAGE>
STATEMENT OF NET ASSETS March 31, 1996
<TABLE>
<CAPTION>
HAWAII SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded Hawaii St Dept of Bdg & Fin/Pali Moni Med Ctr 7.60% 7/1/2010 AAA $ 200M $ 231,250
21.62% Hawaii St Dept of Bdg & Fin/Pali Moni Med Ctr 7.65% 7/1/2019 AAA 1,000M 1,158,750
Hawaii St G.O. Ser B-R 7% 6/1/2009 AAA 1,000M 1,096,250
Hawaii St G.O. Ser B-R 7% 6/1/2010 AAA 2,430M 2,663,888
Hawaii St G.O. Ser B-S 7% 9/1/2003 AAA 500M 554,375
Hawaii St G.O. Ser B-S 7 1/8% 9/1/2009 AAA 700M 779,625
Honolulu HI City & Co 7.10% 6/1/2006 AAA 1,000M 1,106,250
Honolulu HI City & Co G.O. Ser C 7.15% 6/1/2008 AAA 500M 555,000
Honolulu HI City & Co G.O. Ser C 7.15% 6/1/2010 AAA 1,000M 1,110,000
Honolulu HI City & Co G.O. Ser D 6.90% 12/1/2010 AAA 400M 444,000
Puerto Rico Commonwealth 7 5/8% 7/1/2010 AAA 375M 428,438
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 1,950M 2,232,750
Puerto Rico Commonwealth Aqu & Sewer Auth Rev Ser A
7 7/8% 7/1/2017 AAA 2,200M 2,420,000
Puerto Rico Commonwealth G.O. 7.30% 7/1/2020 AAA 200M 226,000
Puerto Rico Commonwealth Hwy Ser Q 7 3/4% 7/1/2010 AAA 525M 602,438
Puerto Rico Commonwealth Hwy Ser R 6 3/4% 7/1/2005 AAA 1,000M 1,090,000
Puerto Rico Commonwealth Pub Imp Ser A 7.70% 7/1/2008 AAA 1,200M 1,342,500
Puerto Rico Pub Bldg Auth Ser K 6 7/8% 7/1/2012 AAA 450M 511,312
Total 18,552,826
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Hawaii St 5 1/4% 3/1/2013 AA 5,555M 5,305,025
State Hawaii St 5 1/4% 3/2/2014 AA 2,700M 2,558,250
29.55% Hawaii St 5 1/4% 3/1/2015 AAA 1,805M 1,696,700
Hawaii St 5 1/4% 3/1/2016 AA 2,030M 1,905,663
Hawaii St Ser B-Z 6% 10/1/2010 AA 500M 531,875
Hawaii St Ser B-Z 6% 10/1/2012 AA 500M 529,375
Hawaii St Ser C-J 6 1/4% 1/1/2015 AA 2,500M 2,603,125
Puerto Rico Commonwealth 5 1/2% 7/1/2017 A 500M 473,750
Puerto Rico Commonwealth 6.45% 7/1/2017 A 2,050M 2,155,063
Puerto Rico Commonwealth RIBS FSA+ 7.832% 7/1/2020++ AAA 3,000M 3,007,500
Puerto Rico Commonwealth 5.40% 7/1/2025 A 5,000M 4,593,750
Total 25,360,076
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Hawaii Co HI Ser A FGIC+ 5.60% 5/1/2013 AAA 1,780M 1,802,250
Local Honolulu HI City & Co MBIA+ 5% 11/1/2015 AAA 500M 459,375
3.86% Honolulu HI City & Co FGIC+ 6% 12/1/2015 AAA 1,000M 1,053,750
Total 3,315,375
- - ------------------------------------------------------------------------------------------------------------------------------------
Education
.33% University of HI Sys Rev Ser G AMBAC+ 5.45% 10/1/2006 AAA 275M 280,844
- - ------------------------------------------------------------------------------------------------------------------------------------
Health and Hospital Hawaii St Dept of Bdg & Fin/Queens Med Hosp FGIC+
7.05% 6 1/2% 7/1/2012 AAA 250M 256,875
Hawaii St Dept of Bdg & Fin/St Francis Hosp CGIC+
6 1/2% 7/1/2022 AAA 2,200M 2,318,250
Puerto Rico Ind Med & Environmental/St Luke Hosp
6 1/4% 6/1/2010 A 1,390M 1,395,212
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Facs Ser A
MBIA+ 6 1/4% 7/1/2024 AAA 150M 154,875
Puerto Rico Pub Bldg Auth Rev GTD AMBAC+ 51/2% 7/1/2021 AAA 2,000M 1,922,500
Total 6,047,712
- - ------------------------------------------------------------------------------------------------------------------------------------
Housing Hawaii St Hsg Fin & Dev Corp Ser A FNMA+ AMT+++ 7.10% 7/1/2024 Aa 905M 932,150
3.48% Hawaii St Hsg Fin & Dev Corp/Univ of HI Faculty Hsg Prjt
AMBAC+ 5.65% 10/1/2016 AAA 1,500M 1,477,500
Puerto Rico Hsg Fin Corp Mtge Rev Ser B GNMA+ 7.65% 10/15/2022 AAA 65M 68,330
Puerto Rico Pub Bldg Auth Rev GTD Ser A AMBAC+ 5 3/4% 7/1/2022 AAA 515M 512,425
Total 2,990,405
---------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
STATEMENT OF NET ASSETS March 31, 1996
<TABLE>
<CAPTION>
HAWAII SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial Revenue Puerto Rico Ind Med & Environmental Ctrl/Baxter Lab Ser A
Bonds 8% 9/1/2012 A $1,000M $ 1,098,750
4.07% Puerto Rico Ind Med & Environmental/Warner Lambert
7.60% 5/1/2014 Aa 1,500M 1,651,875
Puerto Rico Tel Auth Rev RIBS MBIA+ 7.063% 1/16/2015++ AAA 800M 740,000
Total 3,490,625
- - ------------------------------------------------------------------------------------------------------------------------------------
Power Hawaii St Dept of Bdg & Fin RIBS 7.09% 12/15/2023++ AAA 1,500M 1,291,875
20.51% Hawaii St Dept of Bdg & Fin Spcl Purp Mtge Rev Reg Linked
Savers LINK 5.60% 12/15/2023 AAA 7,000M 6,571,250
Hawaii St Dept of Bdg & Fin/HI Elec Ser A MBIA+ AMT+++
6.60% 1/1/2025 AAA 2,750M 2,904,687
Hawaii St Dept of Bdg & Fin/HI Elec Ser C MBIA+ AMT+++
7 3/8% 12/1/2020 AAA 2,500M 2,759,375
Puerto Rico Elec Pwr Auth 71/8% 7/1/2014 A 365M 393,288
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.267% 7/1/2023++ AAA 1,500M 1,518,750
Puerto Rico Elec Pwr Auth Ser X 6% 7/1/2015 AAA 1,000M 1,002,500
Puerto Rico Elec Pwr Auth Ser X 5 1/2% 7/1/2025 A 1,250M 1,160,937
Total 17,602,662
- - ------------------------------------------------------------------------------------------------------------------------------------
Transportation Hawaii St Arpt Sys Rev Ser M MBIA+ AMT+++ 7% 7/1/2018 AAA 2,125M 2,316,250
8.27% Hawaii St Arpt Sys Rev 2nd Ser FGIC+ AMT+++ 7 1/2% 7/1/2020 AAA 250M 275,938
Hawaii St Arpt Sys Rev 2nd Ser MBIA+ AMT+++ 6 3/4% 7/1/2021 AAA 2,745M 2,930,288
Hawaii St Harbor Cap Imp Rev FGIC+ AMT+++ 6 1/4% 7/1/2015 AAA 500M 518,125
Hawaii St Harbor Cap Imp Rev FGIC+ AMT+++ 6 3/8% 7/1/2024 AAA 500M 520,625
Puerto Rico Commonwealth Hwy Ser V 6 5/8% 7/1/2012 A 500M 535,000
Total 7,096,226
- - ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer Honolulu HI City & Co Bd Wtr Supply Wtr Sys Rev 5.80% 7/1/2016 AA 600M 600,000
1.28% Honolulu HI City & Co Bd Wtr Supply Wtr Sys Rev 5.80% 7/1/2021 AA 500M 496,875
Total 1,096,875
---------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 100.02% (Cost $84,583,636) 85,833,626
- - ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES (.02)%
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (15,388)
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $4.92 a share on 17,452,261 shares of $.001 par
100.00% value capital stock outstanding; authorized, 40,000,000 shares) $85,818,238
---------------------------------------------------------------------------------------------------------------
</TABLE>
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
March 31, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
STATEMENT OF NET ASSETS March 31, 1996
<TABLE>
<CAPTION>
WASHINGTON SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded Douglas Co WA Pub Util Dist No 1 Wells Hydroelec Ser A
14.24% 8 3/4% 9/1/2018 AAA $ 150M $ 197,625
King Co WA Sch Dist Ser A 6 3/4% 12/1/2008 AAA 2,415M 2,629,331
Lewis Co WA Pub Util Dist No 1 Cowlitz Falls Hydroelec 7%
10/1/2022 AAA 500M 564,375
Seattle WA Muni Metro Ser T 6 7/8% 1/1/2014 AAA 500M 548,125
Seattle WA Muni Metro Ser T 6 7/8% 1/1/2031 AAA 500M 548,125
Tacoma WA Elec Sys Rev FGIC+ 7 3/8% 1/1/2009 AAA 500M 548,125
Washington St Pub Pwr Supply Ser A 7 3/8% 7/1/2012 AAA 1,790M 2,011,513
Washington St Pub Pwr Supply Ser B 7 1/4% 7/1/2015 AAA 1,460M 1,618,775
Washington St Pub Pwr Supply Ser C 10 1/4% 7/1/2015 AAA 600M 621,498
Washington St Pub Pwr Supply Ser C 8% 7/1/2017 AAA 475M 544,469
Washington St Pub Pwr Supply Sys Nuclear Prjt No 2 Ser A
7 1/2% 7/1/2004 AAA 600M 677,250
Total 10,509,211
---------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
STATEMENTS OF NET ASSETS March 31, 1996
<TABLE>
<CAPTION>
WASHINGTON SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
General Obligation Mount Vernon WA AMBAC+ 6.85% 12/1/2014 AAA $1,285M $ 1,405,469
Local Whatcom Co WA 5 3/4% 12/1/2012 A 115M 115,000
2.06% Total 1,520,469
- - ------------------------------------------------------------------------------------------------------------------------------------
Education University WA Univ Rev MBIA+ 5 1/8% 12/1/2015 AAA 500M 455,625
.99% Washington St Higher Ed Facs Auth Rev CNLA+ 7% 10/1/2015 AAA 250M 272,188
Total 727,813
- - ------------------------------------------------------------------------------------------------------------------------------------
Health and Hospital Puerto Rico Pub Bldg Auth Ser M 5 1/2% 7/1/2021 A 1,000M 927,500
3.88% Washington St Health Care Facs Auth Rev/Peace Health
MBIA+ 5 5/8% 11/15/2015 AAA 1,550M 1,491,875
Washington St Health Care Facs Auth Rev/Yakima Valley Mem Hosp
CNLA+ 5 1/4% 12/1/2020 AAA 500M 446,875
Total 2,866,250
- - ------------------------------------------------------------------------------------------------------------------------------------
Housing Skagit Co WA Hsg Auth Low Income Hsg Assistance Coll
7.35% GNMA+ 7% 6/20/2035 AAA 750M 792,187
Snohomish Co WA Hsg Auth Hsg AMT+++ 6 1/2% 9/1/2015 A 1,520M 1,521,900
Washington St Hsg Fin Comm Sing Fam Mtge Rev
GNMA+ AMT+++ 6.65% 7/1/2016 AAA 995M 1,008,680
Washington St Hsg Fin Comm Sing Fam Mtge Rev
GNMA+ AMT+++ 7.05% 7/1/2022 AAA 2,000M 2,102,500
Total 5,425,267
- - ------------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue Port Longview WA Ind Dev Corp Solid Waste Disp Rev
Bonds AMT+++ 6 7/8% 10/1/2008 A 500M 550,000
1.37% Puerto Rico Tel Auth Rev RIBS MBIA+ 7.063% 1/16/2015++ AAA 500M 462,500
Total 1,012,500
- - ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous
2.85% Pike Place Mkt Preservation Ser A 6.60% 12/1/2021 AA 2,000M 2,105,000
- - ------------------------------------------------------------------------------------------------------------------------------------
Power Douglas Co WA Pub Util Dist No 1 Wells Hydroelec AMBAC+
39.91% 8 3/4% 9/1/2006 AAA 6,230M 7,452,638
Douglas Co WA Pub Util Dist No 1 Wells Hydroelec
8 3/4% 9/1/2018 A 350M 439,250
Grant Co WA Pub Util Dist No 2 Wanapum Hydroelec Ser A
6 3/8% 1/1/2023 A 630M 648,113
Lewis Co WA Pub Util Dist No 1 Cowlitz Falls Hydroelec
5 1/2% 10/1/2022 AA 1,000M 922,500
Mason Co WA Pub Util Dist 6.35% 1/1/2013 A 1,040M 1,072,500
Puerto Rico Elec Pwr Auth LINK FSA+ 5.929% 7/1/2023 AAA 1,000M 1,017,500
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.267% 7/1/2023++ AAA 3,000M 3,037,500
Tacoma WA Elec Sys Rev LINK AMBAC+ 6.514% 1/2/2015 AAA 4,400M 4,636,500
Tacoma WA Elec Sys Rev RIBS AMBAC+ 9.134% 1/2/2015++ AAA 2,300M 2,518,500
Washington St Pub Pwr Supply Sys Nuclear Prjt No 2 Rev Reg
FSA+ 5.40% 7/1/2012 AAA 8,000M 7,700,000
Total 29,445,001
- - ------------------------------------------------------------------------------------------------------------------------------------
Solid Waste
.53% Snohomish Co WA MBIA+ 7% 12/1/2010 AAA 360M 387,000
- - ------------------------------------------------------------------------------------------------------------------------------------
Transportation Port Kalama WA Rev Ser B 5 5/8% 12/1/2015 Baa 1,000M 943,750
8.58% Port Seattle WA Rev Ser B AMT+++ 7.60% 12/1/2009 AA 750M 843,750
Port Seattle WA Rev Ser B AMT+++ 6.70% 11/1/2010 AA 250M 264,375
Port Seattle WA Rev Ser B AMBAC+ AMT+++ 7.70% 12/1/2011 AAA 3,000M 3,363,750
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y
5 1/2% 7/1/2036 A 1,000M 915,550
Total 6,331,175
- - ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer Pasco WA Wtr & Sewer Rev MBIA+ 6.40% 6/1/2014 AAA 865M 912,575
16.87% Renton WA Wtr & Sewer Rev 6.55% 11/1/2013 A 1,000M 1,058,750
Seattle WA Drain & Wtr Sewer Util 7% 12/1/2011 AA 950M 1,043,813
Seattle WA Muni Metro Ser U FGIC+ 6.60% 1/1/2032 AAA 3,250M 3,465,312
Seattle WA Wtr Sys Rev 5 1/4% 12/1/2023 AA 4,070M 3,668,088
Tacoma WA Wtr Rev 5 1/2% 12/1/2013 Aa 750M 735,937
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
WASHINGTON SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tukwila WA Wtr & Sewer Rev MBIA+ 6 5/8% 2/1/2015 AAA $1,370M $ 1,565,225
Total 12,449,700
---------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 98.63% (Cost $70,034,120) 72,779,386
- - ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES 1.37%
- - ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Texas St Tax & Rev Anticipation Notes Ser A
Securities 4 3/4% 8/30/1996 (Cost $1,307,421) MIG1 1,300M 1,306,929
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (297,894)
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 1,009,035
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $4.93 a share on 14,958,550 shares of $.001 par
100.00% value capital stock outstanding; authorized, 40,000,000 shares) $73,788,421
---------------------------------------------------------------------------------------------------------------
</TABLE>
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
March 31, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
STATEMENT OF NET ASSETS March 31, 1996
<TABLE>
<CAPTION>
MINNESOTA SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded Brainerd MN Health Care Facs/Benedictine Health/St Joseph Prjt
19.73% 8 3/8% 2/15/2020 AAA $775M $ 892,219
Breckenridge MN Hosp Facs/Franciscan Sisters Healthcare Ser B
9 3/8% 9/1/2017 AAA 350M 382,813
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 100M 114,500
Total 1,389,532
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation
State 3.61% Minnesota St Hsg Fin Agy 5 1/4% 8/1/2014 AA 265M 254,400
- - ------------------------------------------------------------------------------------------------------------------------------------
General Obligation Burnsville MN Indpt School Dist No 191 Ser A 5 1/8% 2/1/2017 AA 250M 232,500
Local Fairbault MN Indpt Sch Dist No 656 CGIC+ 5 3/4% 6/1/2015 AAA 100M 100,500
21.31% Lakeville MN Indpt Sch Dist MBIA+ 5 1/8% 2/1/2013 AAA 250M 233,750
Minneapolis MN 5 1/8% 10/1/2020 Aaa 500M 464,375
Minneapolis MN Spcl Sch Dist FGIC+ 5 3/8% 2/1/2014 AAA 250M 240,000
North St Paul Maple Wood MN Indpt Sch Dist No 622 Ser A
5 1/8% 2/1/2025 Aa 250M 229,063
Total 1,500,188
- - ------------------------------------------------------------------------------------------------------------------------------------
Education Frazee MN Indpt Sch Dist Ser A 5% 2/1/2016 Aaa 250M 228,750
8.04% Minnesota St Higher Ed Facs Auth Rev/MacAlester Coll Ser
4-C 5.55% 3/1/2016 Aa 100M 96,500
Minnesota St Higher Ed Facs Auth Rev/Univ St Thomas Ser
4-A1 5 5/8% 10/1/2016 A 250M 240,625
Total 565,875
- - ------------------------------------------------------------------------------------------------------------------------------------
Health and Hospital Minneapolis & St Paul MN MBIA+ 6 3/4% 8/15/2014 AAA 245M 263,068
28.09% Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys
AMBAC+ 5% 11/15/2013 AAA 255M 233,643
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys
6.90% 12/1/2022 A 300M 319,125
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys Ser A
CGIC+ 5.70% 8/15/2016 AAA 150M 148,688
Rochester MN Health Care Ser H RIBS 8.312% 11/15/2015++ AA 550M 564,437
St Cloud MN Hosp Facs Rev Ref St Cloud Ser B AMBAC+ 5% 7/1/2020 AAA 250M 222,813
St Louis Park MN Health Care AMBAC+ 5.20% 7/1/2023 AAA 250M 226,250
Total 1,978,024
---------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA SERIES
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Housing Dakota Co MN AMBAC+ 5 1/8% 1/1/2017 AAA $250M $ 238,125
13.32% Minnesota St Hsg Fin Agy AMT+++ 6 3/4% 1/1/2026 AA 95M 97,850
Minnesota St Hsg Fin Agy Ser D AMT+++ 6.40% 7/1/2015 AA 250M 254,063
Minnesota St Hsg Fin Agy Sing Fam Mtge RMK 5.90% 7/1/2025 AA 250M 246,875
St Louis Park MN Multi-Fam FHA+ 6.15% 12/1/2016 Aa 100M 101,000
Total 937,913
- - ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer Marshall MN Elec & Wtr Util 6.45% 7/1/2011 AAA 150M 159,938
3.77% Minnesota Pub Facs Auth Wtr Poll Ctrl Rev Ser A 6 1/4% 3/1/2016 AAA 100M 105,375
Total 265,313
---------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 97.87% (Cost $6,977,266) 6,891,245
- - ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES 2.13%
- - ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 150,137
- - ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (equivalent to $4.88 a share on 1,443,463 shares of $.001 par
100.00% value capital stock outstanding; authorized, 80,000,000 shares) $7,041,382
---------------------------------------------------------------------------------------------------------------
</TABLE>
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
March 31, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
21
<PAGE>
Statements of Operations For the Six Months Ended March 31, 1996
<TABLE>
<CAPTION>
National New York Texas New Jersey Connecticut
Investment Income Series Series Series Series Series
- - ------------------------------------------------------------------------------------------------------------------------------------
Income
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest $21,014,307 $10,526,712 $ 3,129,042 $ 5,865,583 $ 3,463,462
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Expenses (Note 2)
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Management fee 1,687,672 835,216 256,270 484,116 290,874
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Management fee waived -- -- (101,306) (96,696) (261,627)
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
12b-1 distribution plan (Note 2) 833,923 370,030 123,882 218,601 120,132
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Shareholder servicing 210,000 90,000 36,000 78,000 31,000
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Registration 18,000 3,000 8,000 3,000 1,750
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Reports to shareholders 27,000 9,000 3,000 9,000 3,000
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Audit and tax 34,500 18,000 7,500 13,500 8,500
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Legal 10,500 2,600 600 4,500 900
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Directors' fees 7,200 -- 300 2,700 1,500
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Organization (Note 1e) -- -- -- 1,824 1,584
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Other 55,320 16,366 7,750 12,376 10,955
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Expenses assumed by
Lord, Abbett & Co. -- -- -- -- --
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Total expenses 2,884,115 1,344,212 341,996 730,921 208,568
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
Net investment income 18,130,192 9,182,500 2,787,046 5,134,662 3,254,894
- - ---------------------------------------------- -------------- -------------- -------------- --------------- --------------
<CAPTION>
Missouri Hawaii Washington Minnesota
Investment Income Series Series Series Series
- - ------------------------------------------------------------------------------------------------------------------------------------
Income
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest $ 4,033,428 $ 2,587,362 $ 2,261,764 $ 166,496
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Expenses (Note 2)
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Management fee 337,712 217,168 188,420 14,505
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Management fee waived (101,454) (130,196) (37,619) (14,505)
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
12b-1 distribution plan (Note 2) 183,946 110,863 -- --
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Shareholder servicing 72,000 18,000 36,000 2,630
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Registration -- -- 3,000 1,482
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Reports to shareholders 4,250 3,000 4,250 1,132
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Audit and tax 10,850 8,100 8,850 4,864
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Legal 1,400 1,500 1,800 242
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Directors' fees 3,700 1,200 900 210
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Organization (Note 1e) 846 450 2,862 634
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Other 11,846 10,219 10,472 1,326
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Expenses assumed by
Lord, Abbett & Co. -- -- -- (12,520)
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Total expenses 525,096 240,304 218,935 --
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
Net investment income 3,508,332 2,347,058 2,042,829 166,496
- - ------------------------------------------ ----------------------------- ------------------ ------------------ ------------
</TABLE>
<TABLE>
<CAPTION>
National New York Texas New Jersey Connecticut
Series Series Series Series Series
Realized and Unrealized
Gain (Loss) on
Investments (Note 6)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Realized gain (loss) from
security transactions
- - ---------------------------- ---------------------------- ---------------- -------------- ---------------- --------------
Proceeds from sales 677,586,592 132,129,490 81,810,256 136,157,371 32,662,509
- - ---------------------------- ---------------------------- ---------------- -------------- ---------------- --------------
Cost of securities sold 672,170,377 127,824,568 81,232,557 134,419,351 32,048,322
- - ---------------------------- ---------------------------- ---------------- -------------- ---------------- --------------
Net realized gain (loss) 5,416,215 4,304,922 577,699 1,738,020 614,187
- - ---------------------------- ---------------------------- ---------------- -------------- ---------------- --------------
Unrealized appreciation
(depreciation) of
investments
- - ---------------------------- ---------------------------- ---------------- -------------- ---------------- --------------
Beginning of period 12,675,003 14,905,951 2,212,397 6,416,754 2,439,516
- - ---------------------------- ---------------------------- ---------------- -------------- ---------------- --------------
End of period 8,335,683 8,015,006 1,969,795 5,173,381 1,179,071
- - ---------------------------- ---------------------------- ---------------- -------------- ---------------- --------------
Net unrealized appreciation
(depreciation) (4,339,320) (6,890,945) (242,602) (1,243,373) (1,260,445)
- - ---------------------------- ---------------------------- ---------------- -------------- ---------------- --------------
Net realized and unrealized
gain (loss) on investments 1,076,895 (2,586,023) 335,097 494,647 (646,258)
- - ---------------------------- ---------------------------- ---------------- -------------- ---------------- --------------
Net Increase (Decrease) in
Net Assets Resulting
from Operations $ 19,207,087 $ 6,596,477 $ 3,122,143 $ 5,629,309 $ 2,608,636
====================================================================================================================================
<CAPTION>
Missouri Hawaii Washington Minnesota
Series Series Series Series
Realized and Unrealized
Gain (Loss) on
Investments (Note 6)
====================================================================================================================================
<S> <C> <C> <C> <C>
Realized gain (loss) from
security transactions
- - --------------------------------------------------- ---------------- ------------------- ------------------ ----------------
Proceeds from sales 89,720,336 26,052,983 32,901,935 2,018,447
- - --------------------------------------------------- ---------------- ------------------- ------------------ ----------------
Cost of securities sold 88,312,689 25,376,292 32,683,789 2,060,120
- - --------------------------------------------------- ---------------- ------------------- ------------------ ----------------
Net realized gain (loss) 1,407,647 676,691 218,146 (41,673)
- - --------------------------------------------------- ---------------- ------------------- ------------------ ----------------
Unrealized appreciation
(depreciation) of
investments
- - --------------------------------------------------- ---------------- ------------------- ------------------ ----------------
Beginning of period 5,291,448 1,878,627 2,620,921 40,841
- - --------------------------------------------------- ---------------- ------------------- ------------------ ----------------
End of period 3,810,618 1,249,990 2,744,774 (86,021)
- - --------------------------------------------------- ---------------- ------------------- ------------------ ----------------
Net unrealized appreciation
(depreciation) (1,480,830) (628,637) 123,853 (126,862)
- - --------------------------------------------------- ---------------- ------------------- ------------------ ----------------
Net realized and unrealized
gain (loss) on investments (73,183) 48,054 341,999 (168,535)
- - --------------------------------------------------- ---------------- ------------------- ------------------ ----------------
Net Increase (Decrease) in
Net Assets Resulting
from Operations $ 3,435,149 $ 2,395,112 $ 2,384,828 $ (2,039)
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended March 31, 1996
-----------------------------------------------
<S> <C> <C> <C>
National New York Texas
Increase (Decrease) in Net Assets Series Series Series
- - --------------------------------------------------------------- ------------ -------------- --------------
Operations Net investment income $ 18,130,192 $9,182,500 $2,787,046
---------------------------------------------------- ------------ -------------- --------------
Net realized gain (loss) from securities transactions 5,416,215 4,304,922 577,699
---------------------------------------------------- ------------ -------------- --------------
Net unrealized appreciation (depreciation)
of investments (4,339,320) (6,890,945) (242,602)
---------------------------------------------------- ------------ -------------- --------------
Net increase in net assets resulting
from operations 19,207,087 6,596,477 3,122,143
- - --------------------------------------------------------------- ------------ -------------- --------------
Distributions to shareholders from
---------------------------------------------------- ------------ -------------- --------------
Net investment income (17,805,472) (8,986,701) (2,740,384)
---------------------------------------------------- ------------ -------------- --------------
Capital share transactions (Note 4)
---------------------------------------------------- ------------ -------------- --------------
Net proceeds from sales of shares 23,514,386 10,296,096 3,447,940
---------------------------------------------------- ------------ -------------- --------------
Net asset value of shares issued to shareholders
in reinvestment of net investment income 9,656,767 5,205,937 1,371,050
---------------------------------------------------- ------------ -------------- --------------
Total 33,171,153 15,502,033 4,818,990
---------------------------------------------------- ------------ -------------- --------------
Cost of shares reacquired (43,128,652) (22,050,107) (7,303,083)
---------------------------------------------------- ------------ -------------- --------------
Decrease in net assets derived from
capital share transactions (9,957,499) (6,548,074) (2,484,093)
- - --------------------------------------------------------------- ------------ -------------- --------------
Decrease in net assets (8,555,884) (8,938,298) (2,102,334)
- - --------------------------------------------------------------- ------------ -------------- --------------
Net Assets
- - --------------------------------------------------------------- ------------ -------------- --------------
Beginning of period 650,699,475 331,617,649 100,304,466
---------------------------------------------------- ------------ -------------- --------------
End of period+ $642,143,591 $322,679,351 $ 98,202,132
- - --------------------------------------------------------------- ------------ -------------- --------------
<CAPTION>
Year Ended September 30, 1995
---------------------------------------------------
National New York Texas
Increase (Decrease) in Net Assets Series Series Series
- - ---------------------------------------------------------------- --------------- --------------- -------------
<S> <C> <C> <C>
Operations Net investment income $38,131,494 $19,222,187 $5,907,664
----------------------------------------------------- --------------- --------------- -------------
Net realized gain (loss) from securities transactions (4,496,594) (6,847,163) 173,610
----------------------------------------------------- --------------- --------------- -------------
Net unrealized appreciation (depreciation)
of investments 26,432,040 15,971,156 4,297,137
----------------------------------------------------- --------------- --------------- -------------
Net increase in net assets resulting
from operations 60,066,940 28,346,180 10,378,411
- - ---------------------------------------------------------------- --------------- --------------- -------------
Distributions to shareholders from
----------------------------------------------------- --------------- --------------- -------------
Net investment income (38,145,154) (19,378,819) (5,809,683)
----------------------------------------------------- --------------- --------------- -------------
Capital share transactions (Note 4)
----------------------------------------------------- --------------- --------------- -------------
Net proceeds from sales of shares 70,991,645 34,159,185 7,991,552
----------------------------------------------------- --------------- --------------- -------------
Net asset value of shares issued to shareholders
in reinvestment of net investment income 20,425,516 11,332,845 2,885,936
----------------------------------------------------- --------------- --------------- -------------
Total 91,417,161 45,492,030 10,877,488
----------------------------------------------------- --------------- --------------- -------------
Cost of shares reacquired (125,019,799) (61,380,990) (18,977,324)
----------------------------------------------------- --------------- --------------- -------------
Decrease in net assets derived from
capital share transactions (33,602,638) (15,888,960) (8,099,836)
- - ---------------------------------------------------------------- --------------- --------------- -------------
Decrease in net assets (11,680,852) (6,921,599) (3,531,108)
- - ---------------------------------------------------------------- --------------- --------------- -------------
Net Assets
- - ---------------------------------------------------------------- --------------- --------------- -------------
Beginning of period 662,380,327 338,539,248 103,835,574
----------------------------------------------------- --------------- --------------- -------------
End of period+ $650,699,475 $331,617,649 $100,304,466
- - ---------------------------------------------------------------- --------------- --------------- -------------
</TABLE>
+ Includes overdistributed net investment income of $1,556,744, $873,097 and
$50,260, respectively, at March 31, 1996 and overdistributed net investment
income of $1,881,464, $1,068,896 and $96,922, respectively, at September
30, 1995. See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended March 31, 1996
------------------------------------------------------------
New Jersey Connecticut Missouri Hawaii
Increase (Decrease) in Net Assets Series Series Series Series
- - ------------------------------------------------------------------ ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Operations Net investment income $5,134,662 $3,254,894 $3,508,332 $2,347,058
------------------------------------------------------ ------------- ------------- ------------ ------------
Net realized gain (loss) from securities transactions 1,738,020 614,187 1,407,647 676,691
------------------------------------------------------ ------------- ------------- ------------ ------------
Net unrealized appreciation (depreciation)
of investments (1,243,373) (1,260,445) (1,480,830) (628,637)
------------------------------------------------------ ------------- ------------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations 5,629,309 2,608,636 3,435,149 2,395,112
- - ------------------------------------------------------------------ ------------- ------------- ------------ ------------
Distributions to shareholders from
------------------------------------------------------ ------------- ------------- ------------ ------------
Net investment income (5,175,359) (3,176,142) (3,631,728) (2,323,110)
------------------------------------------------------ ------------- ------------- ------------ ------------
Net realized gain from securities transactions -- -- -- --
------------------------------------------------------ ------------- ------------- ------------ ------------
Total distributions (5,175,359) (3,176,142) (3,631,728) (2,323,110)
------------------------------------------------------ ------------- ------------- ------------ ------------
Capital share transactions (Note 4)
------------------------------------------------------ ------------- ------------- ------------ ------------
Net proceeds from sales of shares 10,843,186 9,936,716 5,371,375 4,778,383
------------------------------------------------------ ------------- ------------- ------------ ------------
Net asset value of shares issued to shareholders
in reinvestment of net investment income and
realized gain from securities transactions 2,870,689 1,673,437 2,673,901 1,085,317
------------------------------------------------------ ------------- ------------- ------------ ------------
Total 13,713,875 11,610,153 8,045,276 5,863,700
------------------------------------------------------ ------------- ------------- ------------ ------------
Cost of shares reacquired (15,370,262) (7,187,159) (6,729,236) (6,222,577)
------------------------------------------------------ ------------- ------------- ------------ ------------
Increase (decrease) in net assets
derived from capital share transactions (1,656,387) 4,422,994 1,316,040 (358,877)
- - ------------------------------------------------------------------ ------------- ------------- ------------ ------------
Increase (decrease) in net assets (1,202,437) 3,855,488 1,119,461 (286,875)
- - ------------------------------------------------------------------ ------------- ------------- ------------ ------------
Net Assets
------------------------------------------------------ ------------- ------------- ------------ ------------
Beginning of period 191,562,087 113,436,196 131,822,947 86,105,113
------------------------------------------------------ ------------- ------------- ------------ ------------
End of period+ $190,359,650 $117,291,684 $132,942,408 $85,818,238
================================================================================================================================
<CAPTION>
Six Months Ended March 31, 1996
----------------------------------
Washington Minnesota
Increase (Decrease) in Net Assets Series Series
- - ------------------------------------------------------------------- ------------- -----------
<S> <C> <C>
Operations Net investment income $2,042,829 $166,496
------------------------------------------------------- ------------- -----------
Net realized gain (loss) from securities transactions 218,146 (41,673)
------------------------------------------------------- ------------- -----------
Net unrealized appreciation (depreciation)
of investments 123,853 (126,862)
------------------------------------------------------- ------------- -----------
Net increase (decrease) in net assets
resulting from operations 2,384,828 (2,039)
- - ------------------------------------------------------------------- ------------- -----------
Distributions to shareholders from
------------------------------------------------------- ------------- -----------
Net investment income (2,104,663) (169,347)
------------------------------------------------------- ------------- -----------
Net realized gain from securities transactions -- (44,188)
------------------------------------------------------- ------------- -----------
Total distributions (2,104,663) (213,535)
------------------------------------------------------- ------------- -----------
Capital share transactions (Note 4)
------------------------------------------------------- ------------- -----------
Net proceeds from sales of shares 2,744,186 3,032,916
------------------------------------------------------- ------------- -----------
Net asset value of shares issued to shareholders
in reinvestment of net investment income and
realized gain from securities transactions 1,221,318 144,859
------------------------------------------------------- ------------- -----------
Total 3,965,504 3,177,775
------------------------------------------------------- ------------- -----------
Cost of shares reacquired (4,816,555) (235,968)
------------------------------------------------------- ------------- -----------
Increase (decrease) in net assets
derived from capital share transactions (851,051) 2,941,807
------------------------------------------------------- ------------- -----------
Increase (decrease) in net assets (570,886) 2,726,233
------------------------------------------------------- ------------- -----------
Net Assets
------------------------------------------------------- ------------- -----------
Beginning of period 74,359,307 4,315,149
------------------------------------------------------- ------------- -----------
End of period+ $73,788,421 $7,041,382
====================================================================================================
</TABLE>
+ Includes overdistributed net investment income of $257,532, $189,779,
$448,783, $280,291, $171,604 and $1,880, respectively, at March 31, 1996.
See Notes to Financial Statements.
23
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended September 30, 1995
---------------------------------------------------------------
New Jersey Connecticut Missouri Hawaii
Increase (Decrease) in Net Assets Series Series Series Series
- - ----------------------------------------------------------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operations Net investment income $10,695,466 $6,389,615 $7,008,245 $4,941,681
------------------------------------------------------ ------------- ------------ ------------ ------------
Net realized gain (loss) from securities transactions (750,270) (863,091) (2,665,301) (2,266,214)
------------------------------------------------------ ------------- ------------ ------------ ------------
Net unrealized appreciation of investments 7,864,384 5,530,910 7,820,219 5,533,332
------------------------------------------------------ ------------- ------------ ------------ ------------
Net increase in net assets resulting from operations 17,809,580 11,057,434 12,163,163 8,208,799
- - ----------------------------------------------------------------- ------------- ------------ ------------ ------------
Distributions to shareholders from
------------------------------------------------------ ------------- ------------ ------------ ------------
Net investment income (10,767,877) (6,378,895) (7,134,709) (5,058,302)
- - ----------------------------------------------------------------- ------------- ------------ ------------ ------------
Capital share transactions (Note 4)
------------------------------------------------------ ------------- ------------ ------------ ------------
Net proceeds from sales of shares 37,494,837 21,140,560 18,499,072 9,444,574
------------------------------------------------------ ------------- ------------ ------------ ------------
Net asset value of shares issued to shareholders
in reinvestment of net investment income 5,789,415 3,020,814 3,919,019 2,109,022
------------------------------------------------------ ------------- ------------ ------------ ------------
Total 43,284,252 24,161,374 22,418,091 11,553,596
------------------------------------------------------ ------------- ------------ ------------ ------------
Cost of shares reacquired (42,993,555) (17,022,919) (15,313,492) (21,570,981)
------------------------------------------------------ ------------- ------------ ------------ ------------
Increase (decrease) in net assets derived
from capital share transactions 290,697 7,138,455 7,104,599 (10,017,385)
- - ----------------------------------------------------------------- ------------- ------------ ------------ ------------
Increase (decrease) in net assets 7,332,400 11,816,994 12,133,053 (6,866,888)
- - ----------------------------------------------------------------- ------------- ------------ ------------ ------------
Net Assets
- - ----------------------------------------------------------------- ------------- ------------ ------------ ------------
Beginning of period 184,229,687 101,619,202 119,689,894 92,972,001
------------------------------------------------------ ------------- ------------ ------------ ------------
End of period+ $191,562,087 $113,436,196 $131,822,947 $86,105,113
===============================================================================================================================
<CAPTION>
For the Period
12/27/94
(Commencement
Year Ended of Operations)
September 30, 1995 to 9/30/95
------------------ -----------------
Washington Minnesota
Increase (Decrease) in Net Assets Series Series
- - ---------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Operations Net investment income $4,303,497 $112,411
----------------------------------------------------- ------------ ------------
Net realized gain (loss) from securities transactions (2,102,172) 41,390
----------------------------------------------------- ------------ ------------
Net unrealized appreciation of investments 4,845,905 40,841
----------------------------------------------------- ------------ ------------
Net increase in net assets resulting from operations 7,047,230 94,642
- - ---------------------------------------------------------------- ------------ ------------
Distributions to shareholders from
----------------------------------------------------- ------------ ------------
Net investment income (4,454,972) (111,440)
- - ---------------------------------------------------------------- ------------ ------------
Capital share transactions (Note 4)
----------------------------------------------------- ------------ ------------
Net proceeds from sales of shares 4,847,026 4,366,457
----------------------------------------------------- ------------ ------------
Net asset value of shares issued to shareholders
in reinvestment of net investment income 2,352,040 67,117
----------------------------------------------------- ------------ ------------
Total 7,199,066 4,433,574
----------------------------------------------------- ------------ ------------
Cost of shares reacquired (14,285,705) (202,627)
----------------------------------------------------- ------------ ------------
Increase (decrease) in net assets derived
from capital share transactions (7,086,639) 4,230,947
- - ---------------------------------------------------------------- ------------ ------------
Increase (decrease) in net assets (4,494,381) 4,314,149
- - ---------------------------------------------------------------- ------------ ------------
Net Assets
- - ---------------------------------------------------------------- ------------ ------------
Beginning of period 78,853,688 1,000
----------------------------------------------------- ------------ ------------
End of period+ $74,359,307 $4,315,149
=========================================================================================================
</TABLE>
+ Includes (overdistributed) undistributed net investment income of
$(216,835), $(268,531), $(325,387), $(304,239), $(109,770) and $971,
respectively, at September 30, 1995.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
National Series
<TABLE>
<CAPTION>
Six Months Six Months Year
Ended Year Ended September 30, Ended Ended
----------------------------------------------------------------- ---------- -------------
Per Share Operating Performance: 3/31/96 1995 1994 1993 1992 9/30/91 3/31/91
- - ------------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.00 $10.62 $12.37 $11.72 $11.31 $11.05 $10.86
--------------------------------- ------------- -------- ---------- ---------- ---------- ----------- ---------
Income (loss) from investment
operations
------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Net investment income .307 .626 .657 .695 .700 .359 .743
------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Net realized and unrealized
gain (loss) on investments .015 .382 (1.3124) .9255 .4795 .293 .2225
------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Total from investment
operations .322 1.008 (.6554) 1.6205 1.1795 .652 .9655
--------------------------------- ------------- -------- ---------- ---------- ---------- ----------- ---------
Distributions
------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Dividends from net
investment income (.302) (.628) (.6596) (.693) (.717) (.362) (.738)
------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Distributions from net
realized gain -- -- (.435) (.2775) (.0525) (.03) (.0375)
- - ------------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Net asset value, end of period $11.02 $11.00 $10.62 $12.37 $11.72 $11.31 $11.05
- - ------------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Total Return* 2.90%+ 9.84% (5.64)% 14.57% 10.78% 6.01%+ 9.21%
- - ------------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Ratios/Supplemental Data:
- - ------------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Net assets, end of
period (000) $642,144 $650,699 $662,380 $709,413 $546,768 $396,221 $340,476
------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Ratios to Average Net Assets:
--------------------------------- ------------- -------- ---------- ---------- ---------- ----------- ---------
Expenses 0.44%+ 0.82% 0.86% 0.87% 0.83% 0.43%+ 0.75%
------------------------------ ------------- -------- ---------- ---------- ---------- ----------- ---------
Net investment income 2.76%+ 5.92% 5.76% 5.79% 6.00% 3.20%+ 6.79%
--------------------------------- ------------- -------- ---------- ---------- ---------- ----------- ---------
Portfolio turnover rate 86.59% 225.39% 184.07% 138.06% 87.56% 18.77% 57.71%
==================================================================================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
24
<PAGE>
Financial Highlights
New York Series
<TABLE>
<CAPTION>
Six Months Year Ended September 30, Six Months Year
Ended ------------------------------------------------------ Ended Ended
Per Share Operating Performance: 3/31/96 1995 1994 1993 1992 9/30/91 3/31/91
- - ------------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.85 $10.54 $12.27 $11.60 $11.26 $10.89 $10.78
---------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Income (loss) from investment
operations
------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Net investment income .301 .610 .649 .682 .691 .366 .741
------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Net realized and unrealized
gain (loss) on investments (.095) .316 (1.3665) .874 .458 .407 .179
------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Total from investment
operations .206 .926 (.7175) 1.556 1.149 .773 .92
---------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Distributions
------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Dividends from net
investment income (.296) (.616) (.6475) (.681) (.709) (.368) (.750)
------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Distributions from net
realized gain -- -- (.365) (.205) (.10) (.035) (.06)
- - ------------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Net asset value, end of period $10.76 $10.85 $10.54 $12.27 $11.60 $11.26 $10.89
- - ------------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Total Return* 1.88%+ 9.12% (6.21)% 13.95% 10.69% 7.24%+ 8.87%
- - ------------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Ratios/Supplemental Data:
------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Net assets, end of
period (000) $322,679 $331,618 $338,539 $376,456 $306,447 $230,014 $201,132
------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Ratios to Average Net Assets:
---------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Expenses 0.40%+ 0.82% 0.83% 0.85% 0.81% 0.37%+ 0.76%
------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Net investment income 2.77%+ 5.83% 5.72% 5.72% 5.98% 3.29%+ 6.83%
---------------------------------- ----------- ------------ ------------ ----------- -------------- ---------- -----------
Portfolio turnover rate 39.02% 105.62% 149.13% 101.59% 146.68% 51.79% 39.84%
====================================================================================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
Financial Highlights
Texas Series
<TABLE>
<CAPTION>
Six Months Six Months Year
Ended Year Ended September 30, Ended Ended
---------------------------------------------------------------------------------------------
Per Share Operating Performance: 3/31/96 1995 1994 1993 1992 9/30/91 3/31/91
- - ------------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.05 $9.59 $10.82 $10.28 $9.94 $9.64 $9.41
---------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Income (loss) from investment
operations
------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Net investment income .283 .571 .604 .624 .611 .317 .658
------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Net realized and unrealized
gain (loss) on investments .035 .452 (1.0802) .7135 .4155 .309 .227
------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Total from investment
operations .318 1.023 (.4762) 1.3375 1.0265 .626 .885
---------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Distributions
------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Dividends from net
investment income (.278) (.563) (.6038) (.615) (.629) (.326) (.655)
------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Distributions from net
realized gain -- -- (.15) (.1825) (.0575) -- --
- - ------------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Net asset value, end of period $10.09 $10.05 $9.59 $10.82 $10.28 $9.94 $9.64
- - ------------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Total Return* 3.03%+ 11.14% (4.60)% 13.64% 10.68% 6.59%+ 9.74%
- - ------------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Ratios/Supplemental Data:
------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Net assets, end of
period (000) $98,202 $100,304 $103,836 $109,232 $90,205 $66,746 $30,529
------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Ratios to Average Net Assets:
---------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Expenses, including waiver 0.34%+ 0.62% 0.50% 0.57% 0.60% 0.25%+ 0.40%
------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Expenses, excluding waiver 0.44%+ 0.87% 0.87% 0.97% 1.00% 0.45%+ 0.84%
------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Net investment income 2.75%+ 5.90% 5.97% 5.96% 5.96% 3.09%+ 6.91%
---------------------------------- ------------ ----------- ---------- ------------- ------------ ------------ ---------
Portfolio turnover rate 56.08% 108.00% 96.79% 58.10% 123.33% 50.19% 50.52%
=================================================================================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
25
<PAGE>
Financial Highlights
New Jersey Series
<TABLE>
<CAPTION>
For the Period
1/2/91
Six Months Year Ended September 30, Six Months (Commencement
Ended ------------------------------------------------- Ended of Operations)
Per Share Operating Performance: 3/31/96 1995 1994 1993 1992 9/30/91 to 3/31/91
- - -------------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.14 $4.95 $5.55 $5.14 $4.97 $4.81 $4.76
----------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Income (loss) from investment operations
-------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Net investment income .139 .287 .300 .318 .320 .167 .083
-------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Net realized and unrealized
gain (loss) on investments .011 .192 (.507) .439 .185 .165 .051
-------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Total from investment operations .150 .479 (.207) .757 .505 .332 .134
----------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Distributions
-------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Dividends from net investment income (.140) (.289) (.303) (.307) (.325) (.172) (.084)
-------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Distributions from net realized gain -- -- (.09) (.04) (.01) -- --
- - -------------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Net asset value, end of period $5.15 $5.14 $4.95 $5.55 $5.14 $4.97 $4.81
- - -------------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Total Return* 2.90%+ 9.98% (3.91)% 15.26% 10.51% 7.01%+ 2.77%+
- - -------------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Ratios/Supplemental Data:
- - -------------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Net assets, end of period (000) $190,360 $191,562 $184,230 $178,767 $118,386 $59,463 $23,203
-------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Ratios to Average Net Assets:
----------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Expenses, including waiver 0.38%+ 0.72% 0.51% 0.35% 0.19% 0.00%+ 0.00%+
-------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Expenses, excluding waiver 0.43%+ 0.87% 0.83% 0.83% 0.73% 0.38%+ 0.28%+
-------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Net investment income 2.65%+ 5.73% 5.76% 5.88% 6.09% 3.23%+ 1.42%+
----------------------------------------- ------------ ---------- ---------- ---------- ---------- ----------- ---------
Portfolio turnover rate 69.56% 133.11% 75.62% 88.29% 54.63% 49.33% 6.51%
====================================================================================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
Financial Highlights
Connecticut Series
<TABLE>
<CAPTION>
For the Period
4/1/91
Six Months Year Ended September 30, (Commencement
Ended ------------------------------------------------------ of Operations)
Per Share Operating Performance: 3/31/96 1995 1994 1993 1992 to 9/30/91
- - ----------------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.12 $9.71 $11.01 $10.16 $9.86 $9.525
- - ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
-------------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Net investment income .288 .579 .585 .612 .617 .313
----------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Net realized and unrealized gain (loss)
on investments (.038) .407 (1.1287) .906 .311 .335
----------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Total from investment operations .250 .986 (.5437) 1.518 .928 .648
-------------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Distributions
----------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Dividends from net investment income (.280) (.576) (.6038) (.608) (.628) (.313)
----------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Distributions from net realized gain -- -- (.1525) (.06) -- --
- - ----------------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Net asset value, end of period $10.09 $10.12 $9.71 $11.01 $10.16 $9.860
- - ----------------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Total Return* 2.45%+ 10.52% (5.13)% 15.48% 9.69% 6.91%+
- - ----------------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Ratios/Supplemental Data:
- - ----------------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Net assets, end of period (000) $117,292 $113,436 $101,619 $93,020 $58,880 $21,895
----------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Ratios to Average Net Assets:
-------------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Expenses, including waiver 0.18%+ 0.41% 0.49% 0.44% 0.20% 0.00%+
----------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Expenses, excluding waiver 0.40%+ 0.86% 0.86% 0.91% 0.74% 0.40%+
----------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Net investment income 2.80%+ 5.89% 5.67% 5.60% 5.96% 3.00%+
-------------------------------------------- ------------- ------------ ------------- ------------ --------- -----------
Portfolio turnover rate 28.21% 54.19% 97.42% 45.81% 54.90% 2.15%
==================================================================================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
26
<PAGE>
Financial Highlights
Missouri Series
<TABLE>
<CAPTION>
For the Period
5/31/91
Six Months Year Ended September 30, (Commencement
Ended ------------------------------------------------------- of Operations)
Per Share Operating Performance: 3/31/96 1995 1994 1993 1992 to 9/30/91
- - ----------------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.08 $4.88 $5.51 $5.14 $4.91 $4.762
-------------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Income (loss) from investment operations
----------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Net investment income .134 .277 .2926 .305 .310 .106
----------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Net realized and unrealized gain (loss)
on investments (.005) .204 (.5681) .381 .236 .150
----------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Total from investment operations .129 .481 (.2755) .686 .546 .256
-------------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Distributions
----------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Dividends from net investment income (.139) (.281) (.297) (.301) (.316) (.108)
----------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Distributions from net realized gain -- -- (.0575) (.015) -- --
- - ----------------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Net asset value, end of period $5.07 $5.08 $4.88 $5.51 $5.14 $4.910
- - ----------------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Total Return* 2.51%+ 10.21% (5.22)% 13.80% 11.47% 5.46%+
- - ----------------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Ratios/Supplemental Data:
- - ----------------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Net assets, end of period (000) $132,942 $131,823 $119,690 $107,478 $65,812 $24,230
----------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Ratios to Average Net Assets:
-------------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Expenses, including waiver 0.39%+ 0.74% 0.60% 0.48% 0.26% 0.00%+
----------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Expenses, excluding waiver 0.46%+ 0.89% 0.91% 0.92% 0.79% 0.37%+
----------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Net investment income 2.59%+ 5.61% 5.60% 5.66% 5.94% 1.81%+
-------------------------------------------- ------------ ----------- ------------ ------------- ---------- ------------
Portfolio turnover rate 62.58% 58.17% 50.59% 56.20% 44.19% 0.00%
===================================================================================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
Financial Highlights
Hawaii Series
<TABLE>
<CAPTION>
For the Period
10/28/91
Six Months Year Ended September 30, (Commencement
Ended ------------------------------------------ of Operations)
Per Share Operating Performance: 3/31/96 1995 1994 1993 to 9/30/92
- - ------------------------------------------------------- -------------- --------------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.91 $4.72 $5.34 $4.89 $4.76
---------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Income (loss) from investment operations
------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Net investment income .135 .271 .2918 .297 .281
------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Net realized and unrealized gain (loss)
on investments .009 .198 (.578) .454 .138
------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Total from investment operations .144 .469 (.2862) .751 .419
---------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Distributions
------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Dividends from net investment income (.134) (.279) (.2888) (.301) (.289)
------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Distribution from net realized gain -- -- (.045) -- --
- - ------------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Net asset value, end of period $4.92 $4.91 $4.72 $5.34 $4.89
- - ------------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Total Return* 2.91%+ 10.30% (5.54)% 15.85% 9.06%+
- - ------------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Ratios/Supplemental Data:
- - ------------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Net assets, end of period (000) $85,818 $86,105 $92,972 $92,883 $47,031
------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Ratios to Average Net Assets:
---------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Expenses, including waiver 0.28%+ 0.58% 0.41% 0.40% 0.00%+
------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Expenses, excluding waiver 0.43%+ 0.87% 0.87% 0.90% 0.74%+
------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Net investment income 2.70%+ 5.74% 5.80% 5.62% 5.96%+
---------------------------------------------------- -------------- --------------- -------------- ---------- --------------
Portfolio turnover rate 30.42% 70.64% 66.04% 34.49% 53.24%
====================================================================================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
27
<PAGE>
Financial Highlights
Washington Series
<TABLE>
<CAPTION>
For the Period
4/15/92
Six Months Year Ended September 30, (Commencement
Ended ------------------------------------------ of Operations)
Per Share Operating Performance: 3/31/96 1995 1994 1993 to 9/30/92
- - ------------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.91 $4.72 $5.35 $4.92 $4.76
--------------------------------------------------- ------------------ ------------ ------------- ------------ -------------
Income (loss) from investment operations
------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Net investment income .136 .277 .2976 .304 .140
------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Net realized and unrealized gain (loss)
on investments .024 .200 (.5895) .427 .165
------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Total from investment operations .160 .477 (.2919) .731 .305
--------------------------------------------------- ------------------ ------------ ------------- ------------ -------------
Distributions
------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Dividends from net investment income (.140) (.287) (.2931) (.301) (.145)
------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Distribution from net realized gain -- -- (.045) -- --
- - ------------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Net asset value, end of period $4.93 $4.91 $4.72 $5.35 $4.92
- - ------------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Total Return* 3.23%+ 10.48% (5.65)% 15.32% 6.47%+
- - ------------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Ratios/Supplemental Data:
- - ------------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Net assets, end of period (000) $73,788 $74,359 $78,854 $77,324 $42,627
------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Ratios to Average Net Assets:
--------------------------------------------------- ------------------ ------------ ------------- ------------ -------------
Expenses, including waiver 0.29%+ 0.53% 0.29% 0.30% 0.00%+
------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Expenses, excluding waiver 0.34%+ 0.68% 0.67% 0.80% 0.38%+
------------------------------------------------ ------------------ ------------ ------------- ------------ -------------
Net investment income 2.71%+ 5.84% 5.93% 5.86% 2.58%+
--------------------------------------------------- ------------------ ------------ ------------- ------------ -------------
Portfolio turnover rate 28.63% 92.85% 137.74% 85.45% 37.23%
====================================================================================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
Financial Highlights
Minnesota Series
<TABLE>
<CAPTION>
For the Period
12/27/94
Six Months (Commencement
Ended of Operations)
Per Share Operating Performance: 3/31/96 to 9/30/95
- - ------------------------------------------------- ------------ --------------
<S> <C> <C>
Net asset value, beginning of period $5.01 $4.76
---------------------------------------------- ------------ --------------
Income (loss) from investment operations
------------------------------------------- ------------ --------------
Net investment income .147 .230
------------------------------------------- ------------ --------------
Net realized and unrealized gain (loss)
on investments (.088) .249
------------------------------------------- ------------ --------------
Total from investment operations .059 .479
---------------------------------------------- ------------ --------------
Distributions
------------------------------------------- ------------ --------------
Dividends from net investment income (.149) (.229)
------------------------------------------- ------------ --------------
Distribution from net realized gain (.04) --
- - ------------------------------------------------- ------------ --------------
Net asset value, end of period $4.88 $5.01
- - ------------------------------------------------- ------------ --------------
Total Return* 1.13%+ 10.22%+
- - ------------------------------------------------- ------------ --------------
Ratios/Supplemental Data:
- - ------------------------------------------------- ------------ --------------
Net assets, end of period (000) $7,041 $4,315
------------------------------------------- ------------ --------------
Ratios to Average Net Assets:
---------------------------------------------- ------------ --------------
Expenses, including waiver 0.00%+ 0.00%+
------------------------------------------- ------------ --------------
Expenses, excluding waiver 0.47%+ 0.64%+
------------------------------------------- ------------ --------------
Net investment income 2.87%+ 4.58%+
------------------------------------------- ------------ --------------
Portfolio turnover rate 32.92% 121.41%
================================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
28
<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. Effective December 22,
1994, the Minnesota Series was added to the Fund, and the Company received an
initial capital contribution of $1,000 and issued 210 shares to the partners of
Lord, Abbett & Co. The following is a sum mary 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: Securities are valued at latest
prices on the basis of valuations furnished by an independent pricing service
or, in their absence, fair value as determined 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 com panies and to distribute
substantially all net investment income and net realized gains. Therefore, there
is no provision for federal income tax.
(c) Security transactions are accounted for on the date that the securi ties are
purchased or sold (trade date). Interest income is recorded on the accrual
basis.
(d) Dividends from net investment income are declared daily and paid monthly.
(e) The organization expenses of the New Jersey, Connecticut, Missouri, Hawaii,
Washington and Minnesota Series are being amortized evenly over a period of five
years from their respective commencements of operations.
2. Management Fee and Other Transactions With Affiliates
The Company has a management agreement with Lord, Abbett & Co. Pursuant to the
agreement, Lord, Abbett & Co. supplies the Company 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, statistical work and the supervision of the
Company's investment portfolios. The management fee is based on average daily
net assets for each month at the annual rate of 1 1/42 of 1%. Lord, Abbett & Co.
may voluntarily pay or reimburse any Series for certain of its other expenses.
For the six months ended March 31, 1996, Lord, Abbett & Co. waived the Minnesota
Series' management fee of $14,505 and assumed $12,520 of other expenses. Lord,
Abbett & Co. received the following commissions on sales of capital stock of the
Company after concessions were paid to authorized distributors:
<TABLE>
<CAPTION>
Lord, Abbett & Co. Distributors'
Series Commissions Concessions
- - --------------------------------------------------------------------------------
<S> <C> <C>
National $ 73,323 $ 496,259
- - --------------------------------------------------------------------------------
New York 33,379 237,423
- - --------------------------------------------------------------------------------
Texas 11,520 80,085
- - --------------------------------------------------------------------------------
New Jersey 38,800 254,922
- - --------------------------------------------------------------------------------
Connecticut 22,020 145,256
- - --------------------------------------------------------------------------------
Missouri 29,401 193,486
- - --------------------------------------------------------------------------------
Hawaii 8,083 56,371
- - --------------------------------------------------------------------------------
Washington 12,273 81,583
- - --------------------------------------------------------------------------------
Minnesota 14,552 111,380
- - --------------------------------------------------------------------------------
</TABLE>
The Company adopted a separate Rule 12b-1 Plan which became effective June 1,
1990 for each of the National, New York and Texas Series, and which provides for
the payment of (1) an annual fee for services (payable quarterly) of .15% of the
average daily net asset value of the Company's shares sold by dealers prior to
that date and .25% of the average daily net asset value of such shares sold on
and after that date, and (2) a one-time 1% sales distribution fee, at the time
of sale, on such shares sold at net asset value of $1 million or more. Separate
Rule 12b-1 Plans have been approved for each of the New Jersey, Connecticut,
Missouri, Hawaii, Washington and Minnesota Series. Each Series' initial and
public shareholders approved its Plan, except for the Washington and Minnesota
Series' Plans which have initial shareholders' approval. Each Plan has become
effective except for the Washington and Minnesota Series which will go into
effect on the first day (the "effective date") of the calendar quarter
subsequent to each Series' net assets reaching $100 million. Each Plan fee
(payable quarterly) of (a) in the case of the Connecticut and Missouri Series,
.25% of the average daily net asset value of shares sold by broker-dealers from
commencement of each Series' public offering, and (b) in the case of the Hawaii,
New Jersey, Washington and Minnesota Series, .15% of the average daily net asset
value of such shares sold prior to each Series' effective date and .25% of the
average daily net asset value of such shares sold on or after that date, and (2)
a one-time 1% sales distribution fee, at the time of sale, on such shares sold
on or after the Plan's effective date at net asset value of $1 million or more.
Certain of the Company's officers and directors have an interest in Lord, Abbett
& Co.
29
<PAGE>
Notes to Financial Statements
3. Distributions
Dividends from net investment income are declared daily and paid monthly.
Taxable net realized gains from security transactions, if any, will be
distributed to shareholders in December 1996. At March 31, 1996, the accumulated
net realized gain (loss) for financial reporting purposes, which is
substantially the same as for federal income tax purposes, aggregated
$(14,378,076) for the National Series, $(14,450,758) for the New York Series,
$470,485 for the Texas Series, $(2,992,782) for the New Jersey Series,
$(1,936,820) for the Connecticut Series, $(4,195,367) for the Missouri Series,
$(2,425,398) for the Hawaii Series, $(4,166,865) for the Washington Series and
$(44,471) for the Minnesota Series. The losses incurred through the fiscal year
ended September 30, 1995 expire in 2003 and 2004. 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 reclas
sifications will have no effect on net assets, results of operations or net
asset values of the Fund.
4. Capital Share Transactions Transactions in shares of capital stock were as
follows:
<TABLE>
<CAPTION>
Six Months Ended March 31, 1996 Year Ended September 30, 1995
----------------------------------------------- -------------------------------------------------
National New York Texas New Jersey National New York Texas New Jersey
Series Series Series Series Series Series Series Series
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of shares 2,089,224 938,993 335,687 2,068,445 6,777,988 3,314,242 834,676 7,613,373
- - ----------------------------- ----------- ----------- --------- ------------ ----------- ------------ --------- -----------
Shares issued to shareholders
in reinvestment
of net investment income 860,729 473,876 133,473 547,116 1,917,292 1,077,774 297,890 1,161,742
- - ----------------------------- ----------- ----------- --------- ------------ ----------- ------------ --------- -----------
Total 2,949,953 1,412,869 469,160 2,615,561 8,695,280 4,392,016 1,132,566 8,775,115
- - ----------------------------- ----------- ----------- --------- ------------ ----------- ------------ --------- -----------
Shares reacquired (3,846,981) (2,008,832) (711,343) (2,934,481) (11,882,872) (5,937,848) (1,983,550) (8,753,334)
- - ----------------------------- ----------- ----------- --------- ------------ ----------- ------------ --------- -----------
Increase (decrease) in shares (897,028) (595,963) (242,183) (318,920) (3,187,592) (1,545,832) (850,984) 21,781
- - ----------------------------- ----------- ----------- --------- ------------ ----------- ------------ --------- -----------
</TABLE>
<TABLE>
<CAPTION>
For the
Period
12/27/94
(Commencement
of Operations)
Six Months Ended March 31, 1996 Year Ended September 30, 1995 to 9/30/95
----------------------------------------------------------------------------------------------------
Connecticut Missouri Hawaii Washington Minnesota Connecticut Missouri Hawaii Washington Minnesota
Series Series Series Series Series Series Series Series Series Series
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of shares 961,845 1,153,903 962,481 547,385 599,502 2,208,179 3,777,825 2,008,926 1,016,217 888,992
- - ---------------- --------- ----------- --------- --------- --------- ---------- ---------- ----------- --------- --------
Shares issued to
shareholders in
reinvestment of net
investment income
and realized gain
from securities
transactions 162,977 403,751 216,856 243,484 28,724 309,088 798,404 445,406 496,267 13,479
- - ---------------- --------- ----------- --------- --------- --------- ---------- ---------- ----------- --------- --------
Total 1,124,822 1,557,654 1,179,337 790,869 628,226 2,517,267 4,576,229 2,454,332 1,512,484 902,471
- - ---------------- --------- ----------- --------- --------- --------- ---------- ---------- ----------- --------- --------
Shares reacquired (701,660) (1,302,698) (1,246,470) (963,670) (46,911) (1,776,654) (3,138,331) (4,635,494) (3,072,443) (40,533)
- - ---------------- --------- ----------- --------- --------- --------- ---------- ---------- ----------- --------- --------
Increase
(decrease)
in shares 423,162 254,956 (67,133) (172,801) 581,315 740,613 1,437,898 (2,181,162) (1,559,959) 861,938
- - ---------------- --------- ----------- --------- --------- --------- ---------- ---------- ----------- --------- --------
</TABLE>
30
<PAGE>
Notes to Financial Statements
5. Capital Paid In
At March 31, 1996, capital paid in aggregated $649,742,728 for the National
Series, $329,988,400 for the New York Series, $95,812,113 for the Texas Series,
$188,436,584 for the New Jersey Series, $118,239,212 for the Connecticut Series,
$133,775,940 for the Missouri Series, $87,273,937 for the Hawaii Series,
$75,382,115 for the Washington Series and $7,173,754 for the Minnesota Series.
6. Purchases and Sales of Securities
Purchases and sales of investment securities (other than short-term investments)
were as follows:
<TABLE>
<CAPTION>
Series Purchases Sales
- - --------------------------------------------------------------------------------
<S> <C> <C>
National $587,568,338 $589,145,828
- - --------------------------------------------------------------------------------
New York 128,081,888 132,129,490
- - --------------------------------------------------------------------------------
Texas 58,120,131 56,567,888
- - --------------------------------------------------------------------------------
New Jersey 133,073,080 136,157,371
- - --------------------------------------------------------------------------------
Connecticut 45,264,710 32,662,509
- - --------------------------------------------------------------------------------
Missouri 85,725,021 83,493,878
- - --------------------------------------------------------------------------------
Hawaii 28,143,482 26,052,983
- - --------------------------------------------------------------------------------
Washington 21,105,695 22,396,336
- - --------------------------------------------------------------------------------
Minnesota 4,753,634 1,819,223
- - --------------------------------------------------------------------------------
</TABLE>
Security gains and losses are computed on the identified cost basis.
As of March 31, 1996, unrealized appreciation and depreciation of investments
based on cost for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
Unrealized Unrealized
Series Appreciation Depreciation
- - --------------------------------------------------------------------------------
<S> <C> <C>
National $16,110,500 $7,774,817
- - --------------------------------------------------------------------------------
New York 11,410,463 3,395,457
- - --------------------------------------------------------------------------------
Texas 3,321,013 1,351,218
- - --------------------------------------------------------------------------------
New Jersey 6,270,270 1,096,889
- - --------------------------------------------------------------------------------
Connecticut 3,018,369 1,839,298
- - --------------------------------------------------------------------------------
Missouri 4,939,803 1,129,185
- - --------------------------------------------------------------------------------
Hawaii 1,700,370 450,380
- - --------------------------------------------------------------------------------
Washington 2,968,786 224,012
- - --------------------------------------------------------------------------------
Minnesota 55,999 142,020
- - --------------------------------------------------------------------------------
</TABLE>
The cost of investments for federal income tax purposes is the same as that used
for financial reporting purposes.
7. 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 $15,953 (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 March 31, 1996,
the aggregate amount in Directors' accounts maintained under the plan was
$302,564. Retirement costs accrued during the period amounted to $9,976.
8. Change in Fiscal Year-End
The financial highlights cover a short year (six months ended September 30,
1991) because the fiscal year-end was changed from March 31 to September 30.
31
<PAGE>
- - --------------------------------------------------------------------------------
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.
- - --------------------------------------------------------------------------------
Copyright (C) 1996 by Lord Abbett Tax-Free Income Fund, Inc., 767 Fifth Avenue,
New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Tax-Free Income 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. There
is no guarantee that the forecasts contained within this publication will come
to pass.
All rights reserved. Printed in the U.S.A.
32
<PAGE>
AGE>
About Your
Fund's
Board of
Directors
Lord, Abbett & Co.
A Tradition of Performance Through
Disciplined
Investing
[PHOTO]
(from left to right)
Zane E. Brown, director of fixed income
and portfolio manager
Barbara A. Grummel, portfolio manager
John R. Mousseau, director of municipal
bond management and portfolio manager
Robert S. Dow, partner, chief investment
officer and president of all Lord Abbett funds
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 47 investment
professionals have helped us earn the
trust of financial professionals and
investors for over 65 years.
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
Tax-Free Income 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, Stewart S. Dixon.
[PHOTO]
Stewart S. Dixon,
Director--Lord Abbett
Tax-Free Income Fund
An alumnus of Yale University, Mr.
Dixon also holds a law degree from the
University of Michigan and has practiced
law for nearly 40 years. He was one of
the founding partners of the firm of
Wildman, Harrold, Allen & Dixon
(Chicago) in 1967, where he practices in
the areas of corporate/ securities;
anti-trust; and estate planning.
He serves as a director of Ortho
S.A. Sprague Memorial Institute and as a
trustee of the Chicago Historical
Society. He has served as a director of
Children's Memorial Hospital, the Infant
Welfare Society and the Chicago Zoological
Society. He has been an independent director
for all of Lord Abbett's funds since 1976.
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
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GROWTH
- - -----------------------------------------------------------------------------------------------------------------
INCOME
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth Growth & Balanced Income Tax-Free Money
Funds Income Funds Fund Funds Income Funds Market Fund
Developing Affiliated Fund Investment U.S. Government o National U.S. Government
Growth Fund Trust- Securities Fund* o California Securities
Fundamental Balanced Series o Connecticut Money Market
Mid-Cap Value Value Fund Bond-Debenture o Florida Fund*+
Fund Fund o Georgia
o Hawaii
Global Fund- Global Fund- o Michigan
Equity Series Income Series o Minnesota
o Missouri
Investment o New Jersey
Trust-Limited o New York
Duration U.S. o Pennsylvania
Government o Texas
Securities o Washington
Series*
</TABLE>
<TABLE>
<S> <C> <C>
Finding the right For more complete As an investor in the
mutual fund can be information about any Lord Abbett Family of
confusing. At Lord, other Lord Abbett Funds, you have access
Abbett & Co., we fund, including to 25 portfolios
believe your financial charges and expenses, designed to meet a
adviser provides value call your financial variety of investment
in helping you adviser or Lord, needs. While you may
identify and Abbett & Co. at reallocate your assets
understand your 800-874-3733 for a among our funds at any
investment objectives prospectus. Read it time, we recommend
and, ultimately, carefully before speaking with your
offering fund investing. financial adviser to
recommendations help you customize
suitable for your When you invest in a your investment plan.
individual needs. family of funds, you
benefit from: * An investment in this
This publication, when Fund is neither insured
used as sales Diversification. You and nor guaranteed by the
literature, is to be your financial adviser U.S. Government.
distributed only if can diversify your
preceded or investments between equity + There can be no
accompanied by a and income funds. assurance that this
current prospectus for Fund will be able to
Lord Abbett Flexibility. As your maintain a stable net
Tax-Free Income Fund. investment goals change, asset value of $1.00
your financial adviser per share. This Fund
can help you reallocate is managed to maintain,
your portfolio. and has maintained,
its stable $1.00 per
share price.
</TABLE>
[LOGO] LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203
