LORD ABBETT
TAX-FREE INCOME FUND, INC.
THE GENERAL MOTORS BUILDING
767 FIFTH AVENUE
NEW YORK, NY 10153-0203
800-426-1130
OUR FUND, LORD ABBETT TAX-FREE INCOME FUND, INC., IS AN OPEN-END MANAGEMENT
INVESTMENT COMPANY CURRENTLY CONSISTING OF NINE SEPARATE SERIES THE NATIONAL
SERIES, THE CONNECTICUT SERIES, THE HAWAII SERIES, THE MINNESOTA SERIES, THE
MISSOURI SERIES, THE NEW JERSEY SERIES, THE NEW YORK SERIES, THE TEXAS SERIES
AND THE WASHINGTON SERIES. UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE ACT),
THE NATIONAL SERIES IS DIVERSIFIED; EACH OF THE OTHER SERIES IS NONDIVERSIFIED.
HOWEVER, ALL THE SERIES INTEND TO MEET THE DIVERSIFICATION RULES UNDER
SUBCHAPTER M OF THE INTERNAL REVENUE CODE. EACH SERIES SEEKS AS HIGH A LEVEL OF
INTEREST INCOME EXEMPT FROM FEDERAL INCOME TAX AS IS CONSISTENT WITH
PRESERVATION OF CAPITAL. EACH SERIES INVESTS IN INTERMEDIATE AND LONG-TERM
MUNICIPAL BONDS WHICH CAN FLUCTUATE IN VALUE AS INTEREST RATES CHANGE. EXCEPT
FOR THE NATIONAL, TEXAS AND WASHINGTON SERIES, EACH SERIES ALSO SEEKS AS HIGH A
LEVEL OF INTEREST INCOME EXEMPT FROM ITS RESPECTIVE STATES PERSONAL INCOME TAX
AND, IN THE CASE OF THE NEW YORK SERIES, FROM NEW YORK CITY PERSONAL INCOME TAX,
AS IS CONSISTENT WITH PRESERVATION OF CAPITAL. AT PRESENT, NEITHER TEXAS NOR
WASHINGTON IMPOSES A PERSONAL INCOME TAX. THERE CAN BE NO ASSURANCE THAT EACH
SERIES WILL ATTAIN ITS OBJECTIVE. THIS PROSPECTUS SETS FORTH CONCISELY THE
INFORMATION ABOUT THE FUND THAT A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE
INVESTING. ADDITIONAL INFORMATION ABOUT THE FUND HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE UPON REQUEST WITHOUT CHARGE.
THE STATEMENT OF ADDITIONAL INFORMATION IS INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS AND MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING TO THE FUND OR BY
CALLING 800-874-3733 ASK FOR PART B OF THE PROSPECTUS THE STATEMENT OF
ADDITIONAL INFORMATION. THE DATE OF THIS PROSPECTUS, AND THE DATE OF THE
STATEMENT OF ADDITIONAL INFORMATION, IS FEBRUARY 1, 1996.
PROSPECTUS
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS. SHAREHOLDER INQUIRIES SHOULD
BE MADE IN WRITING TO THE FUND OR BY CALLING 800-821-5129. YOU ALSO CAN MAKE
INQUIRIES THROUGH YOUR BROKER-DEALER.
SHARES OF THE SERIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
AN INVESTMENT IN THE SERIES INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
CONTENTS PAGE
1 Investment Objectives 2
2 Fee Table 2
3 Financial Highlights 3
4 How We Invest 6
5 Purchases 10
6 Shareholder Services 12
7 Our Management 13
8 Dividends, Capital Gains
Distributions and Taxes 14
9 Redemptions 16
10 Performance 16
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE SERIES ARE NOT AVAILABLE IN CERTAIN STATES. PLEASE REFER TO JURISDICTIONS
UNDER THE HEADING PURCHASES FOR AVAILABILITY.
<PAGE>
1 INVESTMENT OBJECTIVES
Our investment objective for each Series is to seek as high a level of interest
income exempt from federal income tax as is consistent with preservation of
capital. Each Series invests in intermediate and long-term municipal bonds
(initially investment-grade or equivalent) and, therefore, each Series shares
can fluctuate in value as interest rates change more than shares of a short-term
municipal bond fund, but consistent with an investment-grade, longer term
municipal bond fund. Under normal circumstances, we intend to maintain the
average weighted stated maturity of each Series at between ten and thirty-five
years. Except for the National, Texas and Washington Series, each Series also
seeks as high a level of interest income exempt from its states personal income
tax and, in the case of the New York Series, from New York City personal income
tax, as is consistent with preservation of capital. At present, neither Texas
nor Washington imposes a personal income tax.
2 FEE TABLE
A summary of each Series expenses is set forth in the table below. The example
should not be considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE) NATIONAL CONNECTICUT HAWAII MINNESOTA MISSOURI NEW JERSEY NEW YORK TEXAS WASHINGTON
-------- ----------- ------ --------- -------- ---------- -------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Load(1) on Purchases
(See "Purchases") 4.75% 4.75% 4.75% 4.75% 4.75% 4.75% 4.75% 4.75% 4.75%
Deferred Sales Load(1) (See "Purchases") None(2) None(2) None(2) None(2) None(2) None(2) None(2) None(2) None(2)
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ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS
AFTER MANAGEMENT FEE WAIVERS AND EXPENSE
SUBSIDIES)
Management Fees (See "Our Management") .49% .06%(3) .20%(3) .00% .35%(3) .35%(3) .50% .25%(3) .35%(3)
12b-1 Fees (See "Purchases") .24% .25% .27% None(4) .24% .26% .23% .25% None(4)
Other Expenses (See "Our Management") .09% .10% .11% .00%(3) .15% .11% .09% .12% .18%
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Total Operating Expense Ratios .82% .41% .58% .00%(3) .74% .72% .82% .62% .53%
<FN>
Example:
Assume each Series' annual return is 5% and there is no change in the level of
expenses described above. For every $1,000 invested with reinvestment of all
dividends and distributions you would pay the following total expenses if you
closed your account after the number of years indicated:
1 year(5) 3 years(5) 5 years(5) 10 years(5)
National Series $55 $72 $91 $101
Connecticut Series $51 $60 $69 $74
Hawaii Series $53 $65 $78 $85
Minnesota Series $48 $48 $48 $48
Missouri Series $55 $70 $87 $96
New Jersey Series $55 $69 $86 $94
New York Series $55 $72 $91 $101
Texas Series $54 $66 $80 $88
Washington Series $53 $64 $76 $82
(1) Sales "load" is referred to as sales "charge" and "deferred sales load" is
referred to as "contingent deferred reimbursement charge" throughout the
Prospectus.
(2) Redemptions of shares on which a Series' 1% Rule 12b-1 sales distribution
fee for purchases of $1 million or more has been paid are subject to a 1%
contingent deferred reimbursement charge, if the redemption occurs within
24 months after the month of purchase.
(3) Although not obligated to, Lord, Abbett & Co. ("Lord Abbett") may waive a
portion of its management fee and assume other expenses with respect to the
Series. It has waived portions of the management fee with respect to the
Connecticut, Hawaii, Missouri, New Jersey, Texas and Washington Series
during the past year (and continues to do so). The management fee would
have been .50% for each Series. Without such management fee waiver, these
expense ratios would have been .86%, .87%, .89%, .87%, .87% and .68%,
respectively. Lord Abbett waived management fees and subsidized expenses
with respect to the Minnesota Series. Without this waiver and subsidy the
expense ratio for the Minnesota Series would have been .64% (not
annualized). Subsequently, Lord Abbett may charge these fees and not
subsidize these expenses on a partial or complete basis.
(4) For the Minnesota and Washington Series, these figures omit the Rule 12b-1
fees because the Fund cannot predict when the net assets of each Series
will reach the required level for effectiveness of its Plan. The Rule 12b-1
fees are (1) for service (a) with respect to the National, Hawaii,
Minnesota, New Jersey, New York, Texas and Washington Series, equal to .15%
of the average daily net asset value of each Series' shares sold by dealers
prior to the effective date of each Series' Plan and .25% of the average
daily net asset value of such shares sold on or after that date or (b) with
respect to the Connecticut and Missouri Series, .25% of the average daily
net asset value of shares sold by dealers from commencement of each Series'
public offering (and payable beginning after the effective date of each
Series' Plan) 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.
(5) Based on total operating expenses shown in the table above.
The foregoing is provided to give investors a better understanding of the
expenses that are incurred by an investment in each Series.
</FN>
</TABLE>
<PAGE>
3 FINANCIAL HIGHLIGHTS
The following tables have been audited by Deloitte & Touche LLP, independent
accountants, in connection with their annual audits of the Funds Financial
Statements, whose report thereon is incorporated by reference in the Statement
of Additional Information and may be obtained on request, and have been included
herein in reliance upon their authority as experts in auditing and accounting.
<TABLE>
<CAPTION>
National Series
Year Ended Six Months
PER SHARE OPERATING SEPTEMBER 30, ENDED YEAR ENDED MARCH 31,
PERFORMANCE: 1995 1994 1993 1992 SEPT. 30, 1991* 1991 1990 1989 1988 1987 1986
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NET ASSET VALUE, BEGINNING OF PERIOD $10.62 $12.37 $11.72 $11.31 $11.05 $10.86 $10.66 $10.47 $11.32 $10.92 $9.54
INCOME FROM INVESTMENT OPERATIONS
Net investment income .626 .657 .695 .700 .359+ .743 .769 .772 .781 .811 .861
Net realized and unrealized
gain (loss) on securities .382 (1.3124) .9255 .4795 .293 .2255 .206 .172 (.692) .493 1.511
TOTAL FROM INVESTMENT OPERATIONS 1.008 (.6554) 1.6205 1.1795 .652 .9655 .975 .944 .081 1.304 2.372
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DISTRIBUTIONS
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Dividends from net investment income (.628) (.6596) (.693) (.717) (.362) (.738) (.775) (.754) (.784) (.834) (.862)
Distributions from net realized gain -- (.435) (.2775) (.0525) (.03) (.0375) -- -- (.155) (.07) (.13)
NET ASSET VALUE, END OF PERIOD $11.00 $10.62 $12.37 $11.72 $11.31 $11.05 $10.86 $10.66 $10.47 $11.32 $10.92
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TOTAL RETURN** 9.84% (5.64)% 14.57% 10.78% 6.01%+ 9.21% 9.30% 9.27% 1.30% 12.58% 26.31%
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $650,699 $662,380 $709,413 $546,768 $396,221 $340,476 $317,660 $286,195 $263,689 $266,604 $112,087
RATIOS TO AVERAGE NET ASSETS:
Expenses, including waiver 0.82% 0.86% 0.87% 0.83% 0.43%+ 0.75% 0.61% 0.66% 0.62% 0.60% 0.66%
Net investment income 5.92% 5.76% 5.79% 6.00% 3.20%+ 6.79% 7.00% 7.26% 7.51% 7.10% 8.20%
PORTFOLIO TURNOVER RATE 225.39% 184.07% 138.06% 87.56% 18.77% 57.71% 42.60% 81.39% 93.15% 46.56% 124.00%
NEW YORK SERIES
YEAR ENDED SIX MONTHS
PER SHARE OPERATING SEPTEMBER 30, ENDED YEAR ENDED MARCH 31,
PERFORMANCE: 1995 1994 1993 1992 SEPT. 30, 1991* 1991 1990 1989 1988 1987 1986
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.54 $12.27 $11.60 $11.26 $10.89 $10.78 $10.71 $10.53 $11.38 $11.07 $9.63
Income from investment operations
Net investment income .610 .649 .682 .691 .366+ .741 .777 .785 .787 .814 .849
Net realized and unrealized
gain (loss) on securities .316 (1.3665) .874 .458 .407 .179 .18 .161 (.755) .419 1.477
TOTAL FROM INVESTMENT OPERATIONS .926 (.7175) 1.556 1.149 .773 .92 .957 .946 .032 1.233 2.326
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DISTRIBUTIONS
Dividends from net investment income (.616) (.6475) (.681) (.709) (.368) (.750) (.787) (.766) (.792) (.818) (.851)
Distributions from net realized gain -- (.365) (.205) (.10) (.035) (.06) (.10) -- (.09) (.105) (.035)
NET ASSET VALUE, END OF PERIOD $10.85 $10.54 $12.27 $11.60 $11.26 $10.89 $10.78 $10.71 $10.53 $11.38 $11.07
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TOTAL RETURN** 9.12% (6.21)% 13.95% 10.69% 7.24%+ 8.87% 9.08% 9.22% 0.67% 11.74% 25.24%
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $331,618 $338,539 $376,456 $306,447 $230,014 $201,132 $176,280 $145,541 $122,553 $119,046 $75,918
Ratios to Average Net Assets:
Expenses, including waiver 0.82% 0.83% 0.85% 0.81% 0.37%+ 0.76% 0.60% 0.64% 0.66% 0.64% 0.74%
</TABLE>
