<PAGE>
Tax-Free
Lord Abbett
Income Fund
o National o New York o Texas o New Jersey o Connecticut
o Missouri o Hawaii o Washington o Minnesota o California
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED MARCH 31, 1997
[GRAPHIC OF KITE}
Portfolios with the
objective of providing
you with high
tax-free income
[LOGO]
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth Funds Growth & Balanced Income Tax-Free Money
Income Funds Fund Funds Income Funds Market Fund
Developing Global Fund- Affiliated Fund Balanced Series Bond-Debenture o National U.S. Government
Growth Fund Equity Series Fund o California Securities
Growth & o Connecticut Money Market
International Mid-Cap Income Series Global Fund- o Florida Fund*+
Series Value Fund Income Series o Georgia
Research Fund- o Hawaii
Research Fund- Large-Cap Limited Duration o Michigan
Small-Cap Series U.S. Government o Minnesota
Series Securities Series* o Missouri
o New Jersey
U.S. Government o New York
Securities Series* o Pennsylvania
o Texas
o Washington
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your financial adviser provides value in helping you identify and
understand your investment objectives and, ultimately, offering fund
recommendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only if
preceded or accompanied by a current prospectus for Lord Abbett Tax-Free Income
Fund.
For more complete information about any Lord Abbett fund, including charges and
expenses, call your financial adviser or Lord Abbett Distributor LLC at
800-874-3733 for a prospectus. Read it carefully before investing.
When you invest in a family of funds, you benefit from:
Diversification. You and your financial adviser can diversify your investments
between equity and income funds.
Flexibility. As your investment goals change, your financial adviser can help
you reallocate your portfolio.
As an investor in the Lord Abbett Family of Funds, you have access to 28
portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking with
your financial adviser to help you customize your investment plan.
Numbers to Keep Handy
For Shareholder Account or
Statement Inquiries:
800-821-5129
For Literature:
800-874-3733
For More Information:
800-426-1130
Visit our Web site:
http://www.lordabbett.com
* An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ There can be no assurance that this Fund will be able to maintain a stable
net asset value of $1.00 per share. This Fund is managed to maintain, and
has maintained, its stable $1.00 per share price.
[LOGO] LORD, ABBETT & CO.
(R) Investment Management
A Tradition of Performance Through Disciplined Investing
LORD ABBETT DISTRIBUTOR LLC
- ------------------------------------------------------------ LATFI-3-397
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (5/97)
<PAGE>
[PHOTO]
/s/ROBERT S. DOW
- ------------------
ROBERT S. DOW
CHAIRMAN
APRIL 17, 1997
"...our focus on higher
yielding issues positions us
to benefit from the lower
interest-rate environment
we are anticipating."
Report to Shareholders
For the Six Months Ended March 31, 1997
Lord Abbett Tax-Free Income Fund completed the first half of its fiscal
year on March 31, 1997 with aggregate net assets of $1.9 billion. (See
inside front cover for net assets and performance of each Series.)
The past six months have been volatile for the bond market, as yields on
long-term, high-quality municipal bonds ranged between 5-1/2%-6%.
Throughout the period, your Fund continued to stress high-coupon,
high-quality bonds. In mid-February, however, we reduced the Fund's
long-term municipal bond holdings by roughly 5%-6%. At the close of the
period, approximately 30% of the portfolio was invested in prerefunded and
higher coupon, shorter term bonds. By shifting to more defensive
portfolios, we were able to better weather the market's volatility and end
the period with slight gains. We expect the Federal Reserve Board's
decision to raise short-term interest rates to 5-1/2% from 5-1/4% will
encourage the continuation of a moderate growth environment.
We focus on undervalued bonds offering good total return potential. (Total
return measures the percent change in value, including income and change in
principal.) As a result, we believe our focus on higher yielding issues
positions us to benefit from the lower interest-rate environment we are
anticipating. (The movement of bonds' prices and yields is inversely
related. Therefore, as rates decline -- as we expect -- prices increase.)
As always, your Fund is invested in high-quality bonds with an emphasis on
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 supply of municipal bonds. Essential
service revenue bonds, which finance services that typically are in
constant demand, remain an important part of your Fund.
Our outlook through 1997 is for the economy to grow at a rate averaging
less than 2-1/2%, with faster growth occurring in the first six months of
the year. Inflation should average about 3% or less. In addition, progress
toward a balanced budget, together with the recent strength of the U.S.
dollar, are constructive influences on the fixed-income markets. We
continue to believe that long-term interest rates will trend downward;
however, we do not anticipate that this will result in a flood of new
municipal bond issues, since most eligible higher coupon issues have
already been prerefunded. The steady demand for municipal bonds, along with
the relatively scarce supply, is cause for optimism that, in the near term,
the municipal market should perform well. Our research leads us to believe
that the Bond Buyer 40 Index (an index that measures municipal bond yields)
will remain at its current 5.95% yield for the near term, and may dip as
low as 5.5%, over the next twelve months.
Thank you for your continued confidence in Lord Abbett Tax-Free Income
Fund. We look forward to helping you achieve your financial goals in the
years ahead.
<PAGE>
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Missouri Series
AAA 72.9%
AA 18.9%
A 3.7%
BBB(1) 4.5%
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Hawaii Series
AAA 70.4%
AA 12.2%
A 16.9%
BBB 0.5%
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Washington Series
AAA 73.8%
AA 17.2%
A 8.0%
BBB 1.0%
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Minnesota Series
AAA 59.7%
AA 33.6%
A 6.7%
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
California Series
AAA 75.5%
AA 14.5%
A 6.6%
BBB 3.4%
- --------------------------------------------------------------------------------
Missouri Hawaii Washington Minnesota California
Series Series Series Series Series(2)
5/31/91 10/28/91 4/15/92 12/27/94 7/15/96(3)
- --------------------------------------------------------------------------------
$136.3 $77.2 $68.7 $8.6 $273.6
- --------------------------------------------------------------------------------
5.25% 5.42% 5.55% 5.67% 5.41%
- --------------------------------------------------------------------------------
4.64% 4.42% 6.55% 5.55% 4.64%
- --------------------------------------------------------------------------------
7.18%(5) 6.60%(5) 7.14%(5) 7.45%(5) 6.66%
- --------------------------------------------------------------------------------
4.65% 4.87% 5.47% 4.87% 4.52%
- --------------------------------------------------------------------------------
(.30)% (.60)% 1.40% .60% (.40)%
- --------------------------------------------------------------------------------
5.29% 5.52% -- -- 4.95%
- --------------------------------------------------------------------------------
6.29%(5) 5.64%(5) 6.08%(5) 5.13%(5) 6.14%
- --------------------------------------------------------------------------------
The results quoted in this summary represent Class A share 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 Class A share maximum sales charge of 4.75%.
See Important Information on page 1.
<PAGE>
Lord, Abbett & Co.
A Tradition of Performance Through
Disciplined
Investing
[PHOTO]
(standing, left to right)
Lisa D'Emic, portfolio manager
Richard Smola, portfolio manager
Philip Fang, portfolio manager
(seated, left to right)
Zane E. Brown, partner in charge of
fixed income and portfolio manager
John R. Mousseau, director of municipal
bond management and portfolio manager
A successful long-term track record is evidence of a successful investment
strategy. For decades we, at Lord, Abbett & Co., have believed that investing
with a disciplined, value approach is the best way to achieve competitive
returns and reduce portfolio risk. This commitment and the dedication of our
team of 50 investment professionals have helped us earn the trust of financial
professionals and investors for over 65 years.
About Your
Fund's
Board of
Directors
The Securities and Exchange Commission (SEC) views the role of the independent
Board of Directors as one of the most important components in overseeing a
mutual fund. The Board of Directors watches over your Fund's general operations
and represents your interests. Board members review and approve every contract
between your Fund and Lord, Abbett & Co. (the Fund's investment manager) and
Lord Abbett Distributor LLC (the Fund's underwriter). 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, Hansel B. Millican, Jr.
Hansel B. Millican, Jr.
Director--Lord Abbett
Tax-Free Income Fund
[PHOTO]
An alumnus of North Carolina State University (Raleigh), Mr. Millican has over
45 years of corporate management experience. He is currently the President and
CEO of Rochester Button Company.
Mr. Millican serves as Chairman of the Board of the Central Florida Autism
Institute, Inc. He has been an independent director for all of Lord Abbett's
funds since 1982.
<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 3/31/97.
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
National Series
AAA 68.7%
AA 17.2%
A 9.0%
BBB(1) 5.1%
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
New York Series
AAA 53.4%
AA 11.0%
A 13.7%
BBB(1) 21.9%
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Texas Series
AAA 45.2%
AA 37.0%
A 14.4%
BBB 3.4%
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
New Jersey Series
AAA 80.5%
AA 7.0%
A 6.4%
BBB(1) 6.1%
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Connecticut Series
AAA 53.4%
AA 18.8%
A 20.2%
BBB 7.6%
<TABLE>
<CAPTION>
Lord Abbett's Tax-Free Record and SEC-Required Information as of 3/31/97
----------------------------------------------------------------------------------------------------------------
National New York Texas New Jersey Connecticut
Series(2) Series(2) Series Series Series
Date of Inception 4/2/84 4/2/84 1/20/87 1/2/91 4/1/91
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets (in millions) $648.6 $301.6 $90.9 $181.0 $118.1
- ------------------------------------------------------------------------------------------------------------------------------
Distribution Rate at Net Asset Value 5.45% 5.51% 5.53% 5.37% 5.49%
- ------------------------------------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return(4) at Net Asset Value:
1 Year 5.35% 4.80% 5.17% 5.26% 5.26%
- ------------------------------------------------------------------------------------------------------------------------------
10 Years or Life of Series 7.16% 6.79% 7.61% 7.85%(5) 7.36%(5)
- ------------------------------------------------------------------------------------------------------------------------------
30-Day SEC Yield 4.93% 4.91% 4.67% 4.59% 4.90%
- ------------------------------------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return at the Class A Share Maximum Offering Price:
1 Year .40% (.20)% .20% .20% .30%
- ------------------------------------------------------------------------------------------------------------------------------
5 Years 5.45% 4.86% 5.77% 6.06% 5.74%
- ------------------------------------------------------------------------------------------------------------------------------
10 Years or Life of Series 6.65% 6.28% 7.08% 7.01%(5) 6.50%(5)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes holdings which are not rated by independent ratings services but
are, in Lord Abbett's opinion, of comparable quality.
(2) For specific Class share performance, please see each Series' Financial
Highlights (pages 29, 30 and 35).
(3) Predecessor established 9/3/85.
(4) 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.
(5) Since inception.
<PAGE>
Important Information
As of 3/31/97, no Series of the Fund had more than 9% 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.
See prospectus for a discussion of fees waived and expenses assumed by Lord,
Abbett & Co.
Statement of Net Assets
NATIONAL SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Prerefunded 17.91% Austin TX Combined Util Sys 10-3/4% 5/15/2010 AAA $ 1,290M $ 1,510,913
Austin TX Sys Rev Ser A 9-1/2% 5/15/2015 AAA 2,500M 2,840,625
Austin TX Util Sys Rev 10-3/4% 5/15/2015 AAA 2,500M 2,928,125
Austin TX Wtr Sewer & Elec Ref Rev 14-1/4% 11/15/2006 AAA 4,310M 4,360,556
Brainerd MN Health Care Facs/Benedictine Hlth/St Joseph Prjt
8-3/8% 2/15/2020 AAA 2,250M 2,508,750
Chattanooga-Hamilton Co TN Hosp Auth Rev Erlanger Ser B RIBS
FSA+ 10.367% 5/25/2021++ AAA 2,000M 2,370,000
Clark Co NV Arpt Imp Rev/McCarran Intl Arpt Ser C
13-1/4% 7/1/2002 AAA 415M 424,122
Clermont Co OH Hosp Facs Ser A 7-1/2% 9/1/2019 AAA 285M 316,706
Clermont Co OH Hosp Facs Ser A AMBAC+ 7-1/2% 9/1/2019 AAA 965M 1,050,644
Colorado Springs Util Sys 9-7/8% 11/15/2012 AAA 2,000M 2,362,500
Connecticut St Health & Ed/Yale-New Haven Hosp Ser F
MBIA+ 7.10% 7/1/2025 AAA 1,000M 1,091,250
Detroit MI Sewer Disp Rev FGIC+ 6-5/8% 7/1/2021 AAA 2,500M 2,721,875
District of Columbia Rev MBIA+ 7.15% 4/1/2021 AAA 1,000M 1,058,750
Franklin Co OH 6-3/8% 12/1/2020 AAA 5,000M 5,418,750
Fulton Co GA Hosp Auth Rev Ser B MBIA+ 6.60% 10/1/2011 AAA 3,000M 3,300,000
Glendale AZ Ind Dev Auth Ed Facs Rev CNLA 7-1/8% 7/1/2020 AAA 1,000M 1,146,250
Greene Co PA Gen Facs Auth Ser A 7% 7/1/2011 AAA 5,825M 6,400,219
Harris Co TX Ser A 7.70% 5/1/2003 AAA 415M 440,938
Indiana Univ Bldg Auth Ser N 10-1/8% 7/1/2010 AAA 710M 851,113
Intermountain UT Pwr Auth Ser A 7-3/4% 7/1/2020 AAA 225M 239,063
Kansas City MO Arpt Rev Ser B CGIC 6-7/8% 9/1/2014 AAA 2,400M 2,703,000
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys
8% 8/15/2019 AAA 2,000M 2,237,500
Montgomery AL Med Clinic Bd 7% 3/1/2015 AAA 445M 478,931
New Jersey Health Care Facs Fin Auth Ser B 8-1/4% 7/1/2020 AAA 1,085M 1,219,269
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev
FGIC+ 6-3/4% 6/15/2014 AAA 390M 414,375
New York St Dorm Auth Rev 8-1/8% 7/1/2008 AAA 1,500M 1,599,375
New York St Dorm Auth Rev City Univ Sys Ser F 7-7/8% 7/1/2017 AAA 10,000M 11,137,500
New York St Dorm Auth Rev Cons Ser D 8-1/8% 7/1/2008 AAA 2,500M 2,650,000
New York St Loc Govt Assistance Corp Ser A 6-7/8% 4/1/2019 AAA 500M 552,500
New York St Med Care Facs Fin Agy Rev Ser A 8% 2/15/2027 AAA 5,000M 5,172,300
Norman OK Regl Hosp Auth Hosp Rev MBIA+ 6-3/4% 9/1/2011 AAA 1,000M 1,096,250
Ohio St Higher Ed Fac Ser A 7.70% 10/1/2018 AAA 2,650M 2,745,480
Palm Beach Co FL Solid Waste 8-3/4% 7/1/2010 AAA 5,140M 5,356,651
Pennsylvania St Ser A 6-1/2% 11/15/2011 AAA 5,000M 5,400,000
</TABLE>
1
<PAGE>
Statement of Net Assets
NATIONAL SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Plano TX Indpt Sch Dist FGIC+ 8-5/8% 2/15/2002 AAA $ 1,000M $ 1,132,500
Poway CA Redev Agy Tax Allocation 7-3/4% 12/15/2021 AAA 3,325M 3,811,281
Puerto Rico Commonwealth 8% 7/1/2007 AAA 375M 396,094
Puerto Rico Commonwealth Hwy 6-5/8% 7/1/2018 AAA 372M 408,603
Puerto Rico Commonwealth Hwy Auth Rev Ser S 6-1/2% 7/1/2022 AAA 150M 163,875
Puerto Rico Ind Med & Environmental/Catholic Univ 9-3/8%
12/1/2007 AAA 2,000M 2,111,200
Tacoma WA Elec Sys Rev LINK AMBAC+ 6.514% 1/2/2015 AAA 4,000M 4,325,000
Tacoma WA Elec Sys Rev RIBS AMBAC+ 9.144% 1/2/2015++ AAA 4,900M 5,677,875
Texas St 8.30% 12/1/2016 AAA 2,275M 2,485,438
Uintah Co UT Poll Ctrl Rev 84-F-2 10-1/2% 6/15/2014 AAA 1,000M 1,211,250
Washington St Pub Pwr Supply Ser B 7-1/4% 7/1/2015 AAA 1,250M 1,353,125
Washington St Pub Pwr Supply Sys Nuclear Prjt No 2 Ser A
7-1/2% 7/1/2004 AAA 3,175M 3,496,469
Weber Co UT Muni Bldg Auth Lease Rev 7-1/2% 12/15/2019 AAA 3,000M 3,510,000
Total 116,186,990
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation State 1.46% Georgia St Ser C 6-1/4% 8/1/2013 Aaa 300M 323,625
Louisiana St Ser A AMBAC+ 6-1/2% 5/1/2011 AAA 1,000M 1,075,000
Nevada St Muni Bd Bk Prjt No 52 Ser A 6% 5/15/2021 AA 700M 710,500
New York St Ser B 6% 8/15/2018 A 200M 201,250
Ohio St 6.20% 8/1/2013 AA 750M 794,063
Puerto Rico Commonwealth 6% 7/1/2026 A 1,000M 1,010,000
Texas St Ser A AMT+++ 6.30% 6/1/2014 AA 385M 389,813
Texas St Wtr Dev Bd 7.15% 8/1/2035 AA 1,915M 2,118,469
West Virginia St Ser D FGIC+ 6-1/2% 11/1/2026 AAA 2,600M 2,840,500
Total 9,463,220
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation Local 6.10% Anne Arundel Co MD 6.30% 8/1/2014 AA 2,510M 2,679,400
Anne Arundel Co MD 6.30% 8/1/2015 AA 2,510M 2,679,425
Anne Arundel Co MD 6.30% 8/1/2023 AA 505M 534,038
Atlanta GA Ser A 6.10% 12/1/2019 AA 2,230M 2,294,113
Chippewa Valley MI Sch Dist FGIC+ 5% 5/1/2021 AAA 4,000M 3,520,000
Dripping Springs TX Indpt Sch Dist 6% 8/15/2021 AAA 3,000M 3,037,500
El Paso Co CO Sch Dist No 11 Colorado Springs 7.10% 12/1/2017 Aa 3,000M 3,495,000
El Paso Co CO Sch Dist No 11 Colorado Springs 7.10% 12/1/2018 Aa 1,200M 1,402,500
Finneytown OH Loc Sch Dist FGIC+ 6.20% 12/1/2017 AAA 375M 397,541
Harris Co TX 6-1/8% 8/15/2020 AA 8,500M 8,808,125
Highlands Ranch Met Dist No 1 Co AMBAC+ 5-3/4% 9/1/2012 AAA 1,255M 1,269,119
Kilmarnock VA 6-1/4% 3/1/2027 BBB* 1,430M 1,431,788
Lucas Co OH FGIC+ 6-1/2% 12/1/2016 AAA 750M 800,625
North Providence RI MBIA+ 6-1/8% 7/1/2016 AAA 1,410M 1,476,975
Plymouth-Canton MI Comm Sch Dist Ser C 6-1/2% 5/1/2016 AA 1,000M 1,058,750
Ringgold PA Sch Dist FSA+ 6-1/4% 2/1/2022 AAA 1,550M 1,617,813
University City MO Sch Dist MBIA+ 10% 2/15/2008 AAA 2,250M 3,082,500
Total 39,585,212
- -------------------------------------------------------------------------------------------------------------------------===========
Education 11.32% Arkansas St Student Loan Auth Rev Ser B AMT+++ 7-1/4% 6/1/2009 A 3,500M 3,801,875
Colorado St Bd Agrig Rev FGIC+ 6-1/2% 10/1/2012 AAA 1,000M 1,056,250
Connecticut St Health & Ed Facs/CT College C-1 MBIA+ 5-1/2%
7/1/2027 AAA 1,750M 1,662,500
Connecticut St Higher Ed Supplemental Loan Auth Ser A
AMT+++ 7-3/8% 11/15/2005 A 85M 88,400
District of Columbia Rev RIBS 8.719% 4/25/2022++ A 4,000M 4,265,000
District of Columbia Rev/Georgetown Univ A MBIA+ 6% 4/1/2018 AAA 1,000M 980,000
District of Columbia Rev/Howard Univ Ser F MBIA+ 7-1/4% 10/1/2020 A 4,890M 5,226,188
</TABLE>
2
<PAGE>
Statement of Net Assets
NATIONAL SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Ferris St Univ MI Rev AMBAC+ 5.90% 10/1/2026 AAA $ 1,000M $ 992,500
Georgetown Univ DC Ser A Exchanged 8-1/4% 4/1/2018 A 1,500M 1,581,435
Illinois Ed Facs Auth Rev MBIA+ 5.65% 9/1/2026 AAA 2,900M 2,758,625
Indiana St Ed Facs Auth Rev 6.65% 3/1/2019 Aaa 11,600M 12,368,500
Louisiana St Univ & Agrig Mechanical College Univ Rev Ser A
MBIA+ 5.65% 5/1/2026 AAA 1,495M 1,450,150
Marietta GA Dev Auth Rev Ser B CGIC 6-1/4% 9/1/2025 AAA 1,090M 1,133,600
Massachusetts St Health & Ed Facs Rev Ser F 5-3/4% 7/1/2019 Aa 3,000M 2,951,250
New Hampshire Higher Ed & Health Fac Auth Rev 5.70% 6/1/2027 Aaa 8,600M 8,288,250
Ohio St Higher Ed Fac Comm Rev Unrefunded Balance Ser A
7.70% 10/1/2018 Aa 100M 103,603
Pennsylvania St Higher Ed RIBS AMBAC+ AMT+++ 8.513% 3/1/2022++ AAA 3,000M 2,955,000
Private Colleges & Univ Facs Auth GA Rev 6.40% 10/1/2023 Aa 310M 326,663
Rhode Island St Health & Ed Bldg Corp 6% 9/1/2025 Aa 7,465M 7,530,319
Rhode Island St Health & Ed Bldg Corp Rev CNLA 5.35% 11/15/2024 AAA 3,225M 2,934,750
Texas St Higher Ed Coord AMT+++ 7.70% 10/1/2025 A 675M 702,000
University MS Ed Bldg Corp Rev AMBAC+ 5-1/2% 12/1/2027 AAA 1,800M 1,685,250
University NM Tech Dev Corp Lease Rev/Univ Ctr Res Pk Prjt
MBIA+ 6.55% 8/15/2025 AAA 1,410M 1,540,425
Vermont Ed & Health Bldgs Fin Agy Rev 7.05% 10/1/2016 A 2,000M 2,167,500
Virginia St Pub Sch Auth Ser A 6.20% 8/1/2014 AA 1,500M 1,575,000
Western MI Univ Rev Ser B AMBAC+ 6-3/4% 7/15/2011 AAA 3,000M 3,266,250
Total 73,391,283
- ------------------------------------------------------------------------------------------------------------------------===========
Finance 3.90% Anaheim CA Pub Fin Auth Ser A FSA+ 6% 9/1/2024 AAA 3,450M 3,566,438
Cumberland Co NC Ctf Civic Ctr Ser A AMBAC+ 6.40% 12/1/2019 AAA 2,800M 2,954,000
Cumberland Co NC Ctf Ser A AMBAC+ 6.40% 12/1/2024 AAA 500M 527,500
Indiana Bd Bk Rev Guarantee/St Revolving Fd PG Ser A 6-3/4%
2/1/2017 A 500M 533,750
Indianapolis IN Loc Pub Imp Ser D 6-1/2% 2/1/2022 A 3,250M 3,286,368
Iowa St Fin Auth Rev 6-1/4% 5/1/2024 A 1,750M 1,809,063
Raleigh NC Pkg Fac Lease Ctfs Part Rpda Prjt 6-3/4% 1/1/2012 AA 6,095M 6,460,700
St Louis MO Fin Corp Leasehold Rev Ser A AMBAC+ 6% 2/15/2021 AAA 3,500M 3,526,250
Vincennes IN Co Sch Bldg FSA+ 5% 7/1/2015 AAA 1,000M 908,750
Weber Co UT Mun Bldg Auth Lease MBIA+ 5-3/4% 12/15/2019 Aaa 1,750M 1,695,313
Total 25,268,132
- ------------------------------------------------------------------------------------------------------------------------===========
Health and Hospital 11.31% Armstrong Co PA Hosp Auth Health Ctr Rev MBIA+ 6-1/2% 12/1/2021 AAA 2,795M 2,924,269
Augusta Co VA Ind Dev Auth Hosp Rev AMBAC+ 6-5/8% 9/1/2012 AAA 925M 997,844
California Health Facs Fin Auth Rev Pomona Valley Hosp Med Ctr
7-3/8% 1/1/2014 A 2,000M 2,137,500
Camden Co NJ Imp Auth Rev 5-7/8% 2/15/2015 Baa 2,500M 2,400,000
Connecticut St Health & Ed/Waterbury Hosp Ser B FSA+ 7% 7/1/2020 AAA 1,000M 1,066,250
Dalton GA Dev Auth Rev MBIA+ 5-1/2% 8/15/2026 AAA 10,000M 9,650,000
Delaware Co PA Auth Rev CNLA 5-1/2% 6/1/2020 AAA 900M 855,000
Glynn-Brunswick Mem Hosp Auth GA Rev Antic Ctfs Southeast GA
MBIA+ 6% 8/1/2016 AAA 500M 508,750
Illinois Health Facs Auth Rev CNLA 6% 2/15/2026 AAA 2,000M 2,000,000
Illinois Health Facs Auth Rev/Alexian Brothers Med Ctr Prjt
FSA+ 7-1/8% 1/1/2021 Aaa 4,860M 5,242,725
Indiana Co PA Hosp Auth Rev 7-1/8% 7/1/2023 A 1,500M 1,616,250
Kentucky Economic Dev Fin Auth CNLA 5.70% 2/1/2028 AAA 2,000M 1,915,000
Kershaw Co SC Hosp Facs Rev 8% 9/15/2017 Baa 1,435M 1,537,244
Louisiana Pub Fin Auth Hosp RIBS FSA+ 7% 7/22/2024++ AAA 4,900M 4,060,875
Maryland St Health & Higher Ed Facs Auth Rev AMBAC+ 5-1/4%
7/1/2027 AAA 500M 458,750
3
</TABLE>
<PAGE>
Statement of Net Assets
NATIONAL SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Massachusetts St Health & Ed Facs Auth Rev Brigham & Women's Ser D
MBIA+ 6-3/4% 7/1/2024 AAA $ 3,450M $ 3,691,500
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys
6-3/4% 12/1/2013 A 1,000M 1,070,000
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys MBIA
6-3/4% 8/15/2014 AAA 1,300M 1,384,500
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys
6.90% 12/1/2022 A 700M 753,375
Mississippi Hosp Equip & Facs Auth Ser A 8-3/4% 1/1/2016 Baa 1,000M 1,128,750
Montgomery AL Med Clinic Bd Unrefunded Balance 7% 3/1/2015 A 1,305M 1,355,569
New Jersey Health Care Facs Fin Auth Rev/St Peters Med Ctr
MBIA+ 8.60% 7/1/2017 AAA 400M 412,472
New Jersey Health Care Facs Ser A 6-5/8% 7/1/2010 AAA 250M 264,375
New York St Dorm Auth Rev Ser B 5-1/2% 8/15/2017 BBB 2,000M 1,847,500
New York St Med Care Facs Fin Agy Rev Ser A 8-7/8% 8/15/2007 BBB 2,905M 3,005,339
New York St Mtge Agy Rev Zero Coupon 10/1/2014 Aa 6,070M 1,236,763
Norfolk VA Ind Dev Auth Rev Hosp/Childrens Hosp Kings Grp
AMBAC+ 6-1/2% 6/1/2021 AAA 1,150M 1,216,125
North Carolina Med Care Comm FSA+ 6-3/8% 8/15/2020 AAA 750M 784,688
North Cent TX Health Fac Dev Corp Rev Ref Hosp Baylor Health
6-1/4% 5/15/2010 AA 150M 160,500
Peninsula Ports Auth VA Healthcare Facs Rev 6-7/8%
8/1/2010 BBB 1,100M 1,155,000
Peninsula Ports Auth VA Healthcare Facs Rev 7% 8/1/2017 BBB 1,000M 1,052,500
Rhode Island St Health & Ed Bldg Corp Rev 6-1/4% 8/15/2022 BBB* 1,000M 985,000
Rhode Island St Health & Ed Bldg Corp Rev 5-3/4% 11/15/2026 A 3,000M 2,775,000
Rochester MN Health Care Ser H RIBS 8-1/4% 11/15/2015++ AA 9,350M 9,525,313
St Paul MN Hsg & Redev Auth Hosp Rev Ser B 9-5/8% 11/1/2008 Baa 960M 1,004,803
Wisconsin Health & Ed Facs Auth Rev MBIA+ 6-1/2% 8/15/2011 AAA 1,140M 1,206,975
Total 73,386,504
- ------------------------------------------------------------------------------------------------------------------------===========
Housing 8.11% Alaska St Hsg Fin Corp Ser A MBIA+ 6% 12/1/2036 AAA 3,000M 2,970,000
Alaska St Hsg Fin Corp Ser B-2 GNMA 7-7/8% 6/1/2024 AAA 50M 52,313
Arlington Co VA Ind Dev Auth Multi-Fam Rev Hsg Mtge 8% 7/1/2015 BBB* 890M 890,000
Arlington Co VA Ind Dev Auth Multi-Fam Rev Hsg Mtge 6.30% 7/1/2016 A 500M 513,125
Bexar Co TX Hsg Fin Corp GNMA AMT+++ 8.20% 4/1/2022 AAA 890M 936,725
Colorado Hsg & Fin Auth Ser A AMT+++ 6.65% 10/1/2028 AA 2,620M 2,705,150
Colorado Hsg & Fin Auth Ser A AMT+++ 6.80% 10/1/2037 AA 2,515M 2,596,738
Colorado Hsg & Fin Auth Ser C FHA+ 8-3/4% 9/1/2017 AA 115M 118,309
Connecticut St Hsg Fin Auth Ser A Sub Ser A-2 FHA+ AMT+++
7.20% 11/15/2008 AA 560M 590,800
De Kalb Co Hsg Auth FSA+ AMT+++ 7.15% 1/1/2025 AAA 1,430M 1,512,225
Fulton Co GA Hsg Auth Multi-Fam Hsg Rev 6-3/8% 1/1/2027 A 2,900M 2,885,500
Georgia St Hsg & Fin Auth Rev Sing Fam Mtge Ser A-Sub Ser A-2
6.45% 12/1/2027 AA 250M 255,313
Georgia St Hsg & Fin Auth Rev Sing Fam Mtge Ser B-Sub Ser B-2 FHA
AMT+++ 6.55% 12/1/2027 AA 2,000M 2,065,000
Georgia St Hsg & Fin Auth Rev Sing Fam Mtge Ser A-Sub Ser A-2
AMT+++ 6.40% 12/1/2015 AA 2,000M 2,055,000
Idaho Hsg Agy Ser F AMT+++ 7.45% 7/1/2015 Aaa 1,220M 1,293,200
Illinois Hsg Dev Auth FHA+ AMT+++ 7.10% 12/1/2034 AAA 1,500M 1,569,375
Illinois Hsg Dev Auth Multi-Fam Hsg/Lawndale FHA
AMT+++ 6.80% 12/1/2016 AAA 1,000M 1,047,500
Indiana St Hsg Fin Auth Ser D 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 400,000
Jefferson Parish LA Home Mtge Rev AMT+++ 6.15% 6/1/2028 AAA 380M 375,250
</TABLE>
4
<PAGE>
Statement of Net Assets
NATIONAL SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Kentucky Hsg Corp Hsg Rev Ser D-1 FHA+ AMT+++ 6.80% 1/1/2024 AAA $ 865M $ 888,788
Maine St Hsg Auth Mtge Pur Ser A-2 AMT+++ 6-3/4% 11/15/2035 AA 980M 1,013,075
Maricopa Co AZ Ind Dev Auth Multi-Fam Hsg Rev 6.05% 7/1/2017 A 1,000M 991,250
Marion Co OR Hsg Auth Rev Sr Hsg/Elliott Residence GNMA
AMT+++ 7-1/2% 10/20/2037 AAA 2,170M 2,324,613
Maryland Sing Fam Mtge FHA/VA AMT+++ 7.85% 4/1/2029 Aa 1,045M 1,095,944
Maryland St Comm Dev Admin Sing Fam 7th Ser AMT+++ 7.30% 4/1/2025 Aa 495M 522,844
Massachusetts Hsg Fin Auth AMT+++ 8.10% 6/1/2020 Aa 1,300M 1,353,625
Massachusetts St Hsg Fin Agy Hsg Rev Rental-Mtge Ser A AMBAC+/FHA+
AMT+++ 7.35% 1/1/2035 AAA 1,465M 1,591,356
Massachusetts St Hsg Fin Agy Hsg Ser 29 AMT+++ 6-3/4% 6/1/2026 Aa 1,425M 1,474,875
Missouri St Hsg Dev Comm GNMA AMT+++ 7-3/8% 8/1/2023 AAA 645M 682,088
New Jersey St Hsg & Mtge Fin Agy Ser B MBIA+ AMT+++ 7.90%
10/1/2022 AAA 2,455M 2,593,094
North Carolina Hsg Fin Agy Sing Fam Rev Ser BB
AMT+++ 6-1/4% 3/1/2012 Aa 1,290M 1,317,413
Ohio Hsg Fin Auth Ser C GNMA AMT+++ 7.85% 9/1/2021 AAA 530M 564,450
Radcliff KY Hsg Auth 8-1/4% 5/1/2010 BBB* 330M 330,000
Seattle WA Hsg Auth Low Income Hsg Assistance Rev
GNMA 7.40% 11/20/2036 AAA 3,900M 4,270,500
Tennessee Hsg Dev Agy Mtge Ser A AMT+++ 7-1/8% 7/1/2026 A 3,500M 3,710,000
Utah St Hsg Fin Agy Sing Fam Ser A-2 FHA+ AMT+++ 7-3/4% 1/1/2023 AA 295M 310,856
Vermont Hsg Fin Auth Ser B FHA/VA AMT+++ 8.10% 6/1/2022 A 1,645M 1,708,744
Total 52,605,038
- -------------------------------------------------------------------------------------------------------------------------===========
Industrial Revenue Bonds 3.32% Brazos River Auth TX MBIA+ 8.10% 5/1/2019 AAA 3,000M 3,167,430
Butler AL Ind Bd Solid Waste Disp Rev/James River Corp
AMT+++ 8% 9/1/2028 BBB 1,500M 1,680,000
Connecticut St Dev Auth/Pfizer Inc Prjt AMT+++ 7% 7/1/2025 AAA 2,500M 2,756,250
Delaware Economic Dev Auth Ser A MBIA+ AMT+++ 7.60% 3/1/2020 AAA 2,000M 2,162,500
Henrico Co VA Ind Dev Auth Rev 7=1/8% 8/1/2021 AA 3,095M 3,474,138
Hillsborough Co FL Ind Dev Auth Rev 8% 5/1/2022 Aa 2,955M 3,401,944
Lower Neches Valley Auth TX AMT+++ 6.40% 3/1/2030 AA 4,000M 4,085,000
Texas City TX Ind Dev Corp Marine Term Rev/ARCO 7=3/8% 10/1/2020 A 650M 782,438
Total 21,509,700
- ------------------------------------------------------------------------------------------------------------------------===========
Miscellaneous 6.44% Cobb-Marietta GA Coliseum & Exhibit Hall Auth Rev MBIA+
5=5/8% 10/1/2026 AAA 11,250M 11,179,688
Convention Ctr Auth RI Rev Ser C MBIA+ 5% 5/15/2023 AAA 5,230M 4,576,250
Retama TX Dev Corp Spcl Facs Rev 10% 12/15/2019 AAA 3,880M 5,790,900
Richmond VA Ind Dev Auth Museum Facs Rev 6=1/4% 9/1/2016 BBB* 235M 232,356
Santa Fe Co NM Correctional Sys Rev FSA+ 6% 2/1/2027 AAA 4,300M 4,402,125
Southeast WI Professional Baseball Pk Dist Sales Tax Rev MBIA
5.80% 12/15/2026 AAA 3,000M 2,928,750
St Louis Co MO Ind Dev Rev Arena Prjt AMT+++ 7=7/8% 12/1/2024 BBB* 3,500M 3,749,375
St Louis MO Land Clearance Rev 7=3/4% 7/1/2021 BBB* 7,200M 7,596,000
Tampa FL Sports Auth Rev Sales Tax/Tampa Bay Arena MBIA
5=3/4% 10/1/2025 AAA 1,335M 1,331,663
Total 41,787,107
- ------------------------------------------------------------------------------------------------------------------------===========
Pollution Control Revenue 1.91% Burke Co GA Dev Auth Poll Ctrl Rev MBIA+ 6.60% 7/1/2024 AAA 450M 471,938
La Crosse WI Res Recovery Rev MBIA+ AMT+++ 6% 11/1/2021 AAA 7,000M 7,131,250
Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev
7.20% 7/1/2016 Aa 3,250M 3,635,938
Rhode Island Clean Wtr Protection Fin Agy Wtr Poll Ctrl Rev MBIA
5.40% 10/1/2015 AAA 1,150M 1,111,188
Total 12,350,314
- ------------------------------------------------------------------------------------------------------------------------============
</TABLE>
5
<PAGE>
Statement of Net Assets
NATIONAL SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Power 12.19% Camden Co NJ Muni Util Auth Sys FGIC+ 8=1/4% 12/1/2017 AAA $ 3,920M $ 4,098,595
Chelan Co WA Pub Util Dist No 1 Columbia Riv Rock MBIA+
Zero Coupon 6/1/2025 AAA 13,985M 2,517,300
Chelan Co WA Pub Util Dist Ser B MBIA+ AMT+++ 6.35% 7/1/2026 AAA 1,595M 1,642,850
Colorado Springs CO Util Rev 6.10% 11/15/2024 AA 4,500M 4,573,125
Effingham Co GA Dev Auth MBIA+ 6=3/4% 2/1/2022 AAA 1,800M 1,845,540
Florida St Muni Pwr Agy Rev AMBAC+ 4=1/2% 10/1/2027 AAA 2,000M 1,602,500
Hamilton City OH Elec Ser A FGIC+ 6% 10/15/2012 AAA 1,250M 1,295,313
Hamilton City OH Elec Ser B FGIC+ 6.30% 10/15/2025 AAA 7,555M 7,876,088
Hawaii St Dept Bdgt & Fin RIBS AMT+++ 7.192% 12/15/2023++ AA 2,000M 1,720,000
Intermountain Pwr Agy UT Pwr Supply Rev Reg Lkd Pars TCRS
LINK AMBAC+ 5.60% 7/1/2021 AAA 6,400M 6,064,000
Intermountain Pwr Agy UT Pwr Supply Rev Ser B 5% 7/1/2016 A 1,870M 1,654,950
Kansas City KS Util Sys Rev FGIC+ 6=3/8% 9/1/2023 AAA 10,000M 10,600,000
Lewis Co WA Pub Util Dist No 1 Cowlitz Falls
Hydroelec 5=1/2% 10/1/2022 AA 6,265M 5,936,088
Milwaukee WI Loc Dist AMT+++ 6.85% 10/1/2021 AA 500M 532,500
New York St Energy Res & Dev/Con Edison AMT+++ 9=1/4% 9/15/2022 A 1,100M 1,142,372
North Carolina Eastern Muni Pwr Ser A FSA+ 5% 1/1/2021 AAA 12,150M 10,798,313
Philadelphia PA Gas Wks Rev 14th Ser FSA+ 6=3/8% 7/1/2026 AAA 2,650M 2,752,688
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.328% 7/1/2023++ AAA 2,500M 2,506,250
Puerto Rico Elec Pwr Auth Ser D 7=1/8% 7/1/2014 BBB 2,255M 2,395,938
Seattle WA Muni Lt & Pwr Rev MBIA+ 5=5/8% 10/1/2021 AAA 1,000M 956,250
Western Generation Agy OR Cogeneration Prjt Rev Ser B
AMT+++ 7.40% 1/1/2016 BBB* 1,500M 1,576,875
Wisconsin St Pub Pwr Supply Sys Rev RIBS AMBAC+ 6.90% 7/1/2014++ AAA 5,500M 4,991,250
Total 79,078,785
- ------------------------------------------------------------------------------------------------------------------------============
Solid Waste .90% Braxton Co WV Solid Waste Disp Rev Var-Weyerhaeusen Co Prjt
AMT+++ 6-1/8% 4/1/2026 A 2,500M 2,503,125
Broward Co FL Res Recovery Rev 7.95% 12/1/2008 A 1,705M 1,854,188
Broward Co FL Wtr & Sewer Solid Waste 7.95% 12/1/2008 A 2M 2,175
Cobb Co GA Solid Waste Mgmt Auth AMT+++ 6.40% 1/1/2015 Aaa 900M 952,875
Henrico Co VA Ind Dev Auth Rev 5.45% 1/1/2014 A 500M 483,750
Total 5,796,113
- ------------------------------------------------------------------------------------------------------------------------===========
Transportation 3.76% Albuquerque NM Arpt Rev Ref 7.60% 7/1/2008 A 1,000M 1,026,680
Albuquerque NM Arpt Rev Ser A AMBAC+ AMT+++ 6.60% 7/1/2016 AAA 2,400M 2,556,000
Atlanta GA Arpt Facs Rev Ser B AMBAC+ AMT+++ 6% 1/1/2021 Aaa 450M 451,688
Delaware River Port Auth PA & NJ Rev FGIC+ 5-1/2% 1/1/2026 AAA 1,500M 1,440,000
Hawaii St Hbr Cap Imp Rev MBIA+ AMT+++ 5-1/2% 7/1/2027 AAA 5,000M 4,581,250
Hillsborough Co FL Aviation FGIC+ 6.90% 10/1/2011 AAA 500M 532,500
Louisville & Jefferson Co KY Regional Arpt Auth Arpt Ser A
MBIA+ AMT+++ 6-1/2% 7/1/2017 AAA 1,500M 1,580,625
Massachusetts Bay Trans Auth Ser A MBIA+ 5-1/2% 3/1/2022 AAA 5,000M 4,681,250
Port Auth NY & NJ 6-7/8% 1/1/2025 AA 5,740M 6,055,700
Port Auth NY & NJ 70th Ser AMT+++ 7-1/4% 8/1/2025 AA 500M 535,000
Port Kalama WA Rev Ser B 5-5/8% 12/1/2015 Baa 1,025M 959,656
Total 24,400,349
- ------------------------------------------------------------------------------------------------------------------------============
Water and Sewer 10.99% Baltimore MD Prjt Rev Ser A FGIC+ 5% 7/1/2024 AAA 4,000M 3,600,000
Cherokee Co GA Wtr & Sewer Auth Rev MBIA+ 5.20% 8/1/2025 AAA 17,980M 16,766,350
Dauphin Co PA Ind Dev Auth Wtr Dev Ser A AMT+++ 6.90% 6/1/2024 A 1,500M 1,693,125
Hamilton OH Wtr Wks Rev Ser A MBIA+ 6.30% 10/15/2021 AAA 1,000M 1,042,500
Knox Co TN 1st Util Dist Wtr & Sewer Rev Ser A MBIA+
5-5/8% 12/1/2019 Aaa 1,000M 977,500
</TABLE>
6
<PAGE>
Statement of Net Assets
NATIONAL SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Louisville & Jefferson Co KY Met Sewer Dist Sewer & Drain Sys
AMBAC+ 6-3/4% 5/15/2016 AAA $ 5,010M $ 5,435,850
Metropolitan Govt Nashville & Davidson Co TN Wtr & Sewer
RIBS AMBAC+ 6.075% 1/1/2022++ AAA 5,500M 5,520,625
Metropolitan Govt Nashville Wtr & Sewer RIBS AMBAC+
8.429% 1/7/2022++ AAA 12,000M 12,120,000
Milledgeville GA Wtr & Sewer Rev FSA+ 6% 12/1/2021 AAA 500M 516,250
New Jersey Economic Dev Auth Wtr Facs Rev FGIC+ 6-1/2% 4/1/2022 AAA 2,000M 2,097,500
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev AMBAC+
6.20% 6/15/2021 AAA 1,000M 1,037,500
Phoenix AZ Civic Imp Corp Wastewtr Sys Lease MBIA+ 4-3/4%
7/1/2023 AAA 4,595M 3,894,263
Richland WA Wtr & Sewer Rev MBIA+ 5.60% 11/1/2016 AAA 250M 243,125
Richmond Co GA Wtr & Sewer Rev Ser A FGIC+ 5-1/4% 10/1/2028 AAA 250M 226,563
Seattle WA Wtr Sys Rev FGIC+ 5-5/8% 8/1/2026 AAA 2,500M 2,387,500
Spartanburg SC San Sewer Dist Sewer Sys Rev MBIA+ 5-1/2% 6/1/2027 AAA 1,500M 1,425,000
Spartanburg SC Wtr Wks Rev FGIC+ 6-1/8% 6/1/2026 AAA 5,000M 5,125,000
Springfield IL Wtr Rev 6-1/2% 3/1/2015 AA 1,500M 1,561,875
Texas Wtr Res Fin Auth 7-5/8% 8/15/2008 A 1,955M 2,074,744
Virginia St Res Auth Wtr & Sewer 5-1/2% 10/1/2027 AA 900M 855,000
Virginia St Res Auth Wtr & Sewer Sys Rev 5-1/2% 10/1/2022 AA 690M 662,400
West Virginia St Wtr Dev Auth Dev Rev Ref-LN Prog II Ser B
FSA+ 5-1/4% 11/1/2035 AAA 2,260M 2,036,825
Total 71,299,495
------------------------------------------------------------------------------------============
Total Municipal Bonds 99.62% (Cost $643,632,355) 646,108,242
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities .38%
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Securities Texas St Tax & Rev Anticipation Notes 4-3/4% 8/29/1997
(Cost $3,415,980) MIG1 3,400M 3,412,580
- ------------------------------------------------------------------------------------------------------------------------============
Cash and Receivables, Net of Liabilities (916,404)
------------------------------------------------------------------------------------============
Total Other Assets, Less Liabilities 2,496,176
- ------------------------------------------------------------------------------------------------------------------------============
Net Assets 100.00% $648,604,418
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares-Net asset value ($605,953,455 / 55,096,381 shares outstanding) $11.00
Class B Shares-Net asset value ($1,682,254 / 152,998 shares outstanding) $11.00
Class C Shares-Net asset value ($40,968,709 / 3,724,121 shares outstanding) $11.00
</TABLE>
* This investment 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, 1997.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
Statement of Net Assets
NEW YORK SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prerefunded 16.38% New York NY Ser A 7-3/4% 8/15/2012 AAA $ 310M $ 350,300
New York NY Ser A 7-3/4% 8/15/2016 AAA 1,380M 1,559,400
New York St City Univ 7-7/8% 7/1/2007 AAA 1,000M 1,113,750
New York St Dorm Auth Rev 7.70% 5/15/2012 AAA 6,000M 6,630,000
New York St Loc Govt Assistance Corp Ser D Dorm Auth Rev Ser A
7-5/8% 7/1/2020 AAA 1,400M 1,548,750
New York St Dorm Auth Rev Ser B 7-1/4% 5/15/2015 AAA 1,500M 1,638,750
</TABLE>
7
<PAGE>
Statement of Net Assets
NEW YORK SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York St Dorm Auth Rev Ser C FGIC+ 7% 7/1/2014 AAA $ 4,600M $ 5,008,250
New York St Govt Assistance Ser D 7% 4/1/2018 AAA 1,400M 1,555,750
New York St Loc Govt Assistance Corp Ser B 7-1/2% 4/1/2020 AAA 7,200M 8,037,000
New York St Med Care Facs Fin Agy Rev Ser A 7-1/2% 2/15/2021 AAA 4,395M 4,894,931
New York St Urban Dev Corp Rev 7-1/2% 4/1/2011 AAA 1,975M 2,204,594
New York St Urban Dev Corp Rev Ser 1 7-3/4% 1/1/2014 AAA 275M 301,813
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 700M 777,875
Puerto Rico Commonwealth 7.30% 7/1/2020 AAA 300M 330,000
Puerto Rico Commonwealth Aqu & Sewer Auth Rev 10-1/4% 7/1/2009 AAA 1,565M 2,128,400
Puerto Rico Commonwealth Aqu & Sewer Auth Rev Ser A
7-7/8% 7/1/2017 AAA 400M 426,500
Puerto Rico Commonwealth Hwy Ser P 8-1/8% 7/1/2013 AAA 250M 267,188
Puerto Rico Elec Pwr Auth Rev Ser M 8% 7/1/2008 AAA 6,200M 6,618,500
Puerto Rico G.O. Ser A 7-3/4% 7/1/2017 AAA 1,750M 1,900,937
Puerto Rico Ind Med & Environmental/Catholic Univ 9-3/8%
12/1/2007 AAA 2,000M 2,111,200
Total 49,403,888
- ------------------------------------------------------------------------------------------------------------------------===========
General Obligation State 3.95% Puerto Rico Commonwealth RIBS FSA+ 8.382% 7/1/2020++ AAA 12,000M 11,925,000
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation Local 1.38% Bethlehem NY MBIA+ 7.20% 3/1/2022 AAA 1,080M 1,215,000
New York NY Ser G MBIA+ IBC 5-3/4% 2/1/2014 AAA 3,000M 2,958,750
Total 4,173,750
- ------------------------------------------------------------------------------------------------------------------------============
Education 9.82% Hempstead Town NY Ind Dev Agy/Hofstra Univ MBIA+ 5.80% 7/1/2015 AAA 750M 752,812
New York City Ind Dev Agy/New Sch For Social Research MBIA+
5-3/4% 9/1/2015 AAA 230M 225,975
New York St Dorm Auth Rev/City Univ Ser U MBIA+-LBC 6.45%
7/1/2005 AAA 300M 328,125
New York St Dorm Auth Rev/City Univ 2nd Ser MBIA+ 6-7/8%
7/1/2014 AAA 5,650M 6,193,813
New York St Dorm Auth Rev/Colgate Univ MBIA+ 6% 7/1/2016 AAA 1,000M 1,037,500
New York St Dorm Auth Rev/Cornell Univ Ser A 7-3/8% 7/1/2020 AA 5,075M 5,512,719
New York St Dorm Auth Rev/Spcl Act Sch Dists MBIA+ 6% 7/1/2016 AAA 1,400M 1,421,000
New York St Dorm Auth Rev/St Univ Ed Facs Ser A 6% 5/15/2016 BBB 4,300M 4,224,750
New York St Dorm Auth Rev/St Univ Ed Facs Ser A 5-1/4% 5/15/2021 BBB 1,025M 923,781
New York St Dorm Auth Rev/St Univ Ed Facs Ser A 5-1/2% 5/15/2026 BBB 75M 68,250
New York St Dorm Auth Rev/St Univ Ed Facs Ser B 7-1/2% 5/15/2011 BBB 5,000M 5,787,500
New York St Dorm Auth Rev/Univ Rochester Ser A 6.40% 7/1/2013 A 2,030M 2,136,575
New York St Dorm Auth Rev/Upstate Cmnty Colleges 6.20% 7/1/2015 Baa 1,000M 997,500
Total 29,610,300
- ------------------------------------------------------------------------------------------------------------------------============
Finance 6.23% Municipal Assistance Corp NY Ser 66 7-3/4% 7/1/2008 Aa 265M 287,856
Municipal Assistance Corp NY Ser 67 7-5/8% 7/1/2008 Aa 2,515M 2,725,631
New York St Loc Govt Assistance Corp Ser A 6-1/2% 4/1/2020 A 9,360M 9,874,800
New York St Loc Govt Assistance Corp Ser C 6-1/2% 4/1/2015 A 5,675M 5,894,905
Total 18,783,192
- ------------------------------------------------------------------------------------------------------------------------============
Health and Hospital 14.94% New York City Health & Hosp Corp LINK AMBAC+ 5.70% 2/15/2023 AAA 600M 571,500
New York City Health & Hosp Corp RIBS AMBAC+ 7.54% 2/15/2023++ AAA 6,000M 5,437,500
New York St Dorm Auth Rev Dept of Health 5-5/8% 7/1/2012 Baa 2,000M 1,910,000
New York St Dorm Auth Rev Mental Health Svcs Facs Ser B 5-3/4%
2/15/2010 BBB 1,500M 1,462,500
New York St Dorm Auth Rev Mental Health Svcs Facs Ser B 5-3/4%
2/15/2011 BBB 1,385M 1,346,913
New York St Dorm Auth Rev Mental Health Svcs Facs Ser B 6%
8/15/2012 BBB 1,460M 1,470,950
New York St Dorm Auth Rev Mental Health Svcs Facs Ser B
MBIA+ 5-1/8% 8/15/2021 AAA 250M 226,875
New York St Dorm Auth Rev Mental Health Svcs Facs Ser D 6%
8/15/2021 BBB 1,000M 973,750
New York St Dorm Auth Rev Mental Health Svcs Facs Ser E
AMBAC+ 5-1/4% 2/15/2018 AAA 2,000M 1,855,000
New York St Dorm Auth Rev Mental Health Svcs Facs Ser B 5-5/8%
2/15/2021 BBB 2,000M 1,845,000
</TABLE>
8
<PAGE>
Statement of Net Assets
NEW YORK SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York St Dorm Auth Rev Ser B 5-3/4% 2/15/2012 BBB $ 1,155M $ 1,117,463
New York St Dorm Auth Rev Ser B 5-1/2% 8/15/2017 BBB 3,450M 3,186,938
New York St Dorm Auth Rev/United Cerebral Palsy MBIA+ 5-1/2%
7/1/2024 AAA 1,000M 945,000
New York St Dorm Auth Rev/Veterans Home 5-1/2% 7/1/2021 Baa 980M 894,250
New York St Med Care Facs Agy Rev Unrefunded Balance 7.80%
2/15/2019 BBB 615M 657,281
New York St Med Care Facs Fin/Beth Israel MBIA+ 7-1/2% 11/1/2010 AAA 1,250M 1,387,500
New York St Med Care Facs Fin/Mental Health Ser A 7-1/2% 2/15/2021 BBB 10,775M 11,798,625
New York St Med Care Facs Fin/North Shore Univ Hosp
MBIA+ 7.20% 11/1/2020 AAA 7,340M 7,982,250
Total 45,069,295
- ------------------------------------------------------------------------------------------------------------------------============
Housing 1.90% New York St Mtge Agy Rev Ser 41 MBIA+ 6.45% 10/1/2014 AAA 2,990M 3,072,225
New York St Mtge Agy Rev Ser 44 FHA+ AMT+++ 7-1/2% 4/1/2026 Aa 2,495M 2,666,531
Total 5,738,756
- ------------------------------------------------------------------------------------------------------------------------============
Industrial Revenue Bonds .22% Puerto Rico Tel Auth Rev RIBS MBIA+ 6.976% 1/16/2015++ AAA 700M 651,875
- ------------------------------------------------------------------------------------------------------------------------============
Miscellaneous 5.05% New York St Urban Dev Corp Rev 5-1/4% 4/1/2012 Baa 1,765M 1,634,831
New York St Urban Dev Corp Rev 53/8% 4/1/2017 Baa 2,615M 2,373,112
New York St Urban Dev Corp Rev 5.70% 4/1/2020 Baa 4,150M 3,994,375
United Nations Dev Corp Ser A 6% 7/1/2026 A 4,300M 4,214,000
United Nations Dev Corp Ser B 6-1/4% 7/1/2026 A 3,000M 3,018,750
Total 15,235,068
- ------------------------------------------------------------------------------------------------------------------------===========
Pollution Control Revenue 4.27% New York St Environmental Facs Poll Ctrl Rev St Wtr Ser A 7-1/2%
6/15/2012 Aa 7,000M 7,638,750
New York St Environmental Facs Poll Ctrl Rev St Wtr Ser E 6-7/8%
6/15/2014 Aa 4,780M 5,228,125
Total 12,866,875
- ------------------------------------------------------------------------------------------------------------------------============
Power 21.64% New York St Energy Res & Dev Poll Ctrl Rev/Niagara Mohawk
FGIC+ 7.20% 7/1/2029 AAA 11,750M 13,174,688
New York St Energy Res & Dev/Bklyn Union Gas Ser A
MBIA+ AMT+++ 6-3/4% 2/1/2024 AAA 13,000M 13,975,000
New York St Energy Res & Dev/Bklyn Union Gas Ser B RIBS
AMT+++ 9.868% 7/1/2026++ A 4,000M 4,690,000
New York St Energy Res & Dev/Central Hudson Gas & Elec
MBIA+ AMT+++ 8-3/8% 12/1/2028 AAA 2,215M 2,394,969
New York St Energy Res & Dev/Con Edison Ser A MBIA
AMT+++ 7-1/8% 12/1/2029 AAA 2,500M 2,768,750
New York St Energy Res & Dev/Con Edison Ser B AMT+++
7-3/8% 7/1/2024 A 1,465M 1,525,431
New York St Energy Res & Dev/Con Edison Ser A AMBAC+
6.10% 8/15/2020 AAA 4,000M 4,075,000
New York St Pwr Auth 6-1/2% 1/1/2019 Aa 1,410M 1,513,988
Port Auth NY & NJ Spcl Oblig Rev 5th Install-SPL PJ-KIAC-4
6-3/4% 10/1/2019 Baa* 2,945M 3,022,306
Puerto Rico Elec Pwr Auth Ser T RIBS FSA+ 9.016% 7/1/2018++ AAA 3,500M 3,731,875
Puerto Rico Elec Pwr Auth Ser Z 5-1/2% 7/1/2014 BBB 1,970M 1,893,663
Puerto Rico Elec Pwr Auth Ser Z 5-1/4% 7/1/2021 BBB 13,855M 12,504,138
Total 65,269,808
- ------------------------------------------------------------------------------------------------------------------------============
Solid Waste .79% Dutchess Co Resource Recovery Ser A FGIC+ 71/2% 1/1/2009 AAA 2,200M 2,370,500
- ------------------------------------------------------------------------------------------------------------------------============
Transportation 5.38% Metropolitan Trans Auth NY Svc Contract Trans Facs Ser O 5-3/4%
7/1/2008 Baa 1,000M 1,001,250
Metropolitan Trans Auth NY Commuter Facs Rev Ser A FGIC+ 6%
7/1/2016 AAA 2,000M 2,040,000
Metropolitan Trans Auth NY Commuter Facs Rev Ser A FGIC+ 6%
7/1/2021 AAA 4,000M 4,065,000
Metropolitan Trans Auth NY Commuter Facs Rev Ser A
FGIC+ 6.10% 7/1/2026 AAA 2,000M 2,040,000
Port Auth NY & NJ AMT+++ 6% 7/1/2015 AA 350M 351,750
Port Auth NY & NJ 6-7/8% 1/1/2025 AA 1,000M 1,055,000
Port Auth NY & NJ Cons Ninety-Second Ser 4-3/4% 1/15/2029 AA 520M 434,200
Triborough Brdg & Tunl Auth Ser L 8-1/8% 1/1/2012 Aa 4,000M 4,177,080
</TABLE>
9
<PAGE>
Statement of Net Assets
NEW YORK SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Triborough Brdg & Tunl Auth Ser X 6-1/2% 1/1/2019 Aa $1,000M $ 1,052,500
Total 16,216,780
- ------------------------------------------------------------------------------------------------------------------------============
Water and Sewer 6.80% Buffalo NY Muni Wtr & Sewer Sys Rev FGIC+ 5-3/4% 7/1/2021 AAA 500M 492,500
New York City Muni Wtr Fin Auth Ser A FGIC+ 6% 6/15/2019 AAA 2,000M 2,012,500
New York City Muni Wtr Fin Auth Ser A FGIC+ 6-1/4% 6/15/2021 AAA 3,500M 3,556,875
New York City Muni Wtr Fin Auth Ser A 5-1/2% 6/15/2024 A 8,000M 7,430,000
New York City Muni Wtr Fin Auth Ser A MBIA+ 6% 6/15/2025 AAA 5,000M 5,050,000
New York City Muni Wtr & Sewer Sys Rev Ser A 6% 6/15/2025 A 2,000M 1,980,000
Total 20,521,875
------------------------------------------------------------------------------------============
Total Municipal Bonds 98.75% (Cost $293,490,355) 297,836,962
- ------------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities 1.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 3,773,041
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% $301,610,003
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares-Net asset value ($295,051,231 / 27,635,236 shares outstanding) $10.68
Class C Shares-Net asset value ($6,558,772 / 614,536 shares outstanding) $10.67
</TABLE>
* This investment 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, 1997.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
Statement of Net Assets
TEXAS SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded 16.81% Austin TX Util Sys 8% 11/15/2016 AAA $ 1,000M $ 1,117,500
Austin TX Util Sys Rev 11-1/8% 11/15/2009 AAA 1,000M 1,158,750
Austin TX Util Sys Rev 10-3/4% 5/15/2015 AAA 2,950M 3,455,188
Austin TX Wtr Sewer & Elec Ref Rev 14-1/4% 11/15/2006 AAA 500M 505,865
Board of Regents TX A&M Univ Rev 7.80% 8/15/2009 AAA 900M 943,875
Dallas Co TX Flood Ctrl Dist No 1 9-1/4% 4/1/2010 AAA 1,460M 1,814,050
Dallas Co TX Util & Reclamation Dist MBIA+ 8.30% 2/15/2016 AAA 700M 725,452
Houston TX Wtr & Sewer Sys Rev AMBAC+ 6-1/2% 12/1/2021 AAA 305M 331,688
Houston TX Wtr & Sewer Sys Rev Prior Lien MBIA+ 7.40% 12/1/2018 AAA 1,000M 1,107,500
Lower CO River Auth TX Rev MBIA+ 7-5/8% 1/1/2016 AAA 925M 967,717
Lower CO River Auth TX Rev AMBAC+ 6% 1/1/2017 AAA 1,000M 1,035,000
North Central TX Health MBIA+ 7-7/8% 7/1/2018 AAA 750M 772,065
San Antonio TX Elec & Gas Rev Ser A 10-1/2% 2/1/2013 AAA 1,000M 1,071,390
Texas St Tnpk Auth Dallas Northwy Rev AMBAC+ 7-1/8% 1/1/2015 AAA 250M 265,937
Total 15,271,977
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation State 22.33% Texas St 5-1/4% 8/1/2020 AA 1,000M 922,500
Texas St Ser A AMT+++ 6.30% 6/1/2014 AA 485M 491,062
Texas St Ser A-1 RIBS 7.321% 12/1/2023++ AA 6,000M 5,475,000
Texas St Ser B-1 & B-2 LINK 6.20% 9/30/2011 AA 11,000M 11,632,500
Texas St Wtr Dev Bd 7.15% 8/1/2035 AA 1,600M 1,770,000
Total 20,291,062
- ------------------------------------------------------------------------------------------------------------------------============
</TABLE>
10
<PAGE>
Statement of Net Assets
TEXAS SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
General Obligation Local 12.95% College Station TX Indpt Sch 4-1/2% 8/15/2019 AAA $1,590M $ 1,319,700
Dripping Springs TX Indpt Sch Dist 6% 8/15/2021 AAA 2,000M 2,025,000
Harris Co TX 6-1/8% 8/15/2020 AA 4,475M 4,637,219
Harris Co TX Toll Rd Sub Lien Ser A 6.10% 8/15/2016 AA 2,640M 2,742,300
San Antonio TX Indpt Sch Dist Pub Facs Corp Lease Rev
AMBAC+ 5.85% 10/15/2020 AAA 1,000M 1,037,500
Total 11,761,719
- ------------------------------------------------------------------------------------------------------------------------============
Education .92% Texas St Higher Ed Coord AMT+++ 7.70% 10/1/2025 A 800M 832,000
- ------------------------------------------------------------------------------------------------------------------------============
Health and Hospital 13.27% Amarillo TX Health Facs Corp LINK FSA+ 5.9327% 1/1/2022 AAA 3,600M 3,762,000
Amarillo TX Health Facs Corp RIBS FSA+ 9.271% 1/1/2022++ AAA 2,250M 2,460,938
Bexar Co TX Health Facs MBIA+ 7-1/2% 8/15/2010 AAA 750M 814,687
Denison TX Hosp Auth Rev 6-1/8% 8/15/2027 BBB 1,000M 956,250
Harris Co TX Health Facs MBIA+ 6% 5/15/2026 AAA 1,080M 1,080,000
Harris Co TX Health Facs Dev Ser A MBIA+ 6% 6/1/2013 AAA 2,200M 2,274,250
Lubbock TX Health Facs Dev Corp Rev/St Joseph Health Sys 5-1/2%
7/1/2023 AA 750M 703,125
Total 12,051,250
- ------------------------------------------------------------------------------------------------------------------------============
Housing .72% Dallas TX Hsg Corp Cap Prjt/Estell Village Apts Ser A 7-7/8%
12/1/2009 BBB 530M 545,900
Texas Hsg Agy Ser D AMT+++ 8.40% 1/1/2021 Aa 105M 109,200
Total 655,100
- ------------------------------------------------------------------------------------------------------------------------============
Industrial Revenue Bonds 19.10% Brazos River Auth TX MBIA+ 8.10% 5/1/2019 AAA 950M 1,003,020
Brazos River Auth TX 8-1/4% 5/1/2019 A 1,000M 1,053,890
Harris Co TX Ind Dev Corp Marine Term & Wtr Poll Ctrl Rev 6-5/8%
2/1/2024 BBB 1,500M 1,558,125
Lower Neches Valley Auth TX AMT+++ 6.40% 3/1/2030 AA 1,850M 1,889,312
Matagorda Co TX Nav Dist No 1 Poll Ctrl Rev Ref/Cent Power
FGIC+ 7.70% 2/1/2019 AAA 240M 250,574
Orange Co TX Nav & Port Dist Ind Dev Corp Rev Ref-North 6-3/8%
2/1/2017 AA 2,400M 2,493,000
Puerto Rico Ind Med & Environmental Ctrl/Baxter Lab Ser A 8%
9/1/2012 A 2,315M 2,482,837
Texas City TX Ind Dev Corp Marine Term Rev/ARCO 7-3/8% 10/1/2020 A 5,500M 6,620,625
Total 17,351,383
- ------------------------------------------------------------------------------------------------------------------------============
Miscellaneous 1.64% Retama TX Dev Corp Spcl Facs Rev 10% 12/15/2019 AAA 1,000M 1,492,500
- ------------------------------------------------------------------------------------------------------------------------============
Pollution Control Revenue .67% Trinity River Auth TX Poll Ctrl Rev/Texas Instruments AMT+++
6.20% 3/1/2020 A 605M 611,050
- ------------------------------------------------------------------------------------------------------------------------============
Power 1.31% Austin TX Util Sys Ser B 7.80% 11/15/2012 A 640M 687,200
Lower CO River Auth Rev Ser B AMBAC+ 6% 1/1/2015 AAA 500M 505,000
Total 1,192,200
- ------------------------------------------------------------------------------------------------------------------------============
Transportation 3.96% Houston TX Arpt Sys Rev MBIA+ AMT+++ 8.20% 7/1/2017 AAA 1,500M 1,593,750
San Antonio TX Arpt Sys Rev FGIC+ 5.70% 7/1/2011 AAA 2,000M 2,007,500
Total 3,601,250
- ------------------------------------------------------------------------------------------------------------------------============
Water and Sewer 4.17% Houston TX Wtr & Sewer Sys Rev AMBAC+ 6-1/2% 12/1/2021 AAA 2,695M 2,883,650
Texas Wtr Res Fin Auth 75/8% 8/15/2008 A 500M 530,625
Texas Wtr Res Fin Auth AMBAC+ 71/2% 8/15/2013 AAA 350M 369,688
Total 3,783,963
------------------------------------------------------------------------------------===========
Total Municipal Bonds 97.85% (Cost $88,164,938) 88,895,454
- ------------------------------------------------------------------------------------------------------------------------============
Other Assets, Less Liabilities 2.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Securities Texas St Tax & Rev Anticipation Notes 4-3/4% 8/29/1997
(Cost $602,274) MIG1 600M 602,220
------------------------------------------------------------------------------------============
</TABLE>
11
<PAGE>
Statement of Net Assets
TEXAS SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and Receivables, Net of Liabilities $ 1,352,375
------------------------------------------------------------------------------------============
Total Other Assets, Less Liabilities 1,954,595
- ------------------------------------------------------------------------------------------------------------------------============
Net Assets 100.00% $90,850,049
- ------------------------------------------------------------------------------------------------------------------------============
Net asset value ($90,850,049 / 9,105,142 shares outstanding) $9.98
</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, 1997.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
Statement of Net Assets
NEW JERSEY SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded 17.85% Essex Co NJ Imp Auth Lease/Jail & Youth Hse Prjts AMBAC+ 7%
12/1/2024 AAA $5,175M $ 5,925,375
Hudson Co NJ Ctfs Correctional Fac AMBAC+ 7.60% 12/1/2021 AAA 5,155M 5,535,181
Hudson Co NJ Util Auth Util Sys Rev 10% 7/1/2011 AAA 1,000M 1,231,250
Monmouth Co NJ MBIA+ 6-7/8% 8/1/2012 AAA 500M 542,500
New Jersey Economic Dev Auth 6-3/4% 6/15/2012 AAA 2,275M 2,485,438
New Jersey Health Care Facs Fin Auth Rev/St Peters Med Ser C
MBIA+ 8.60% 7/1/2017 AAA 2,100M 2,165,436
New Jersey Health Care Facs Fin Auth Ser B 8-1/4% 7/1/2020 AAA 1,435M 1,612,581
New Jersey St Ed Facs Auth Rev BIG 6.85% 7/1/2019 AAA 610M 651,938
New Jersey Waste Treatment Trust 6-7/8% 6/15/2009 AAA 1,750M 1,892,188
New Jersey Wastewtr Treatment Trust 7% 5/15/2006 AAA 425M 453,688
Port Auth NY & NJ 7.35% 10/1/2027 AAA 2,500M 2,812,500
Puerto Rico Commonwealth 8% 7/1/2007 AAA 750M 800,625
Puerto Rico Commonwealth Aqua & Sewer Auth Rev 10-1/4% 7/1/2009 AAA 450M 612,000
Puerto Rico Commonwealth Hwy Ser T 6-5/8% 7/1/2018 AAA 1,533M 1,684,516
Puerto Rico Pub Bldg Auth Ser L 6-7/8% 7/1/2021 AAA 200M 222,000
Rutgers St Univ NJ Rev Ser O 7.90% 5/1/2010 AAA 400M 423,808
Stony Brook Reg Sewer Auth NJ Rev Ser A 7.40% 12/1/2009 AAA 1,000M 1,088,750
Tinton Falls NJ Sch Bd Ed FSA+ 6-1/2% 6/15/2017 AAA 1,000M 1,076,250
Union Co NJ Ser L 6-1/2% 2/1/2011 AAA 1,000M 1,077,500
University of Puerto Rico Ser L 6-1/2% 6/1/2013 AAA 25M 25,719
Total 32,319,243
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation State 8.28% Puerto Rico Commonwealth RIBS MBIA+ 8.284% 7/1/2008++ AAA 5,000M 5,300,000
Puerto Rico Commonwealth 6-1/2% 7/1/2023 A 1,000M 1,071,250
Puerto Rico Commonwealth MBIA+ 5-3/8% 7/1/2021 AAA 9,050M 8,620,125
Total 14,991,375
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation Local 11.08% Jersey City NJ Ser A 5-1/4% 10/1/2016 AA 3,800M 3,591,000
Keansburg NJ 6.80% 12/1/2010 A 1,000M 1,095,000
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 3,745,300
North Brunswick Township NJ Bd Ed 6.30% 2/1/2014 AA 1,000M 1,052,500
Paterson NJ FSA+ 9.30% 2/15/2004 AAA 4,200M 5,229,000
Pohatcong Township NJ Sch Dist FSA+ 5.95% 7/15/2023 AAA 650M 657,313
Pohatcong Township NJ Sch Dist FSA+ 5.95% 7/15/2026 AAA 250M 252,812
</TABLE>
12
<PAGE>
Statement of Net Assets
NEW JERSEY SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
South Brunswick Township NJ Bd Ed FGIC+ 6.40% 8/1/2024 AAA $1,600M $ 1,680,000
Sparta Township NJ Sch Dist MBIA+ 5.80% 9/1/2022 AAA 600M 601,500
Total 20,063,050
- ------------------------------------------------------------------------------------------------------------------------============
Education 3.56% Lodi NJ Bd Ed Ctfs Part MBIA+ 5.70% 9/15/2021 AAA 2,225M 2,197,188
New Jersey Economic Dev Auth Rev Ser B MBIA+ 6-1/4% 5/15/2025 AAA 2,700M 2,808,000
New Jersey St Ed Facs Rev MBIA+ 6.85% 7/1/2019 Aaa 540M 573,750
Rutgers St Univ NJ Ser P 6.85% 5/1/2021 AA 800M 857,000
Total 6,435,938
- ------------------------------------------------------------------------------------------------------------------------============
Finance .58% Hamilton Township NJ Bd Ed Ser B FSA+ 7% 12/15/2015 AAA 970M 1,043,963
- ------------------------------------------------------------------------------------------------------------------------============
Health and Hospital 10.15% Camden Co NJ Imp Auth Rev 5-7/8% 2/15/2015 Baa 2,000M 1,920,000
New Jersey Health Care Facs Fin Auth Rev AMBAC+ 5-1/4% 7/1/2020 AAA 2,560M 2,368,000
New Jersey Health Care Facs Fin Auth Rev/Bayonne Hosp FSA+ 6-1/4%
7/1/2012 AAA 1,600M 1,672,000
New Jersey Health Care Facs Fin Auth Rev/St Elizabeth Hosp 6%
7/1/2014 BBB 1,200M 1,168,500
New Jersey Health Care Facs Fin Auth Rev Ser A AMBAC+ 7% 7/1/2020 AAA 5,000M 5,331,250
New Jersey Health Care Facs Ser A FHA+ 7-1/4% 2/15/2021 AA 1,485M 1,585,238
New Jersey Health Care Facs Ser B FHA+ 6-1/2% 2/1/2022 AAA 940M 977,600
New Jersey Health Care Facs Ser C FSA+ 6-3/4% 7/1/2020 AAA 2,665M 2,834,893
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Facs
FHA+ 6-1/4% 8/1/2032 AAA 500M 509,375
Total 18,366,856
- ------------------------------------------------------------------------------------------------------------------------============
Housing 5.36% New Jersey St Hsg & Mtge Fin MBIA+ AMT+++ 7.70% 10/1/2029 AAA 1,000M 1,041,250
New Jersey St Hsg & Mtge Fin Agy Ser B MBIA+ AMT+++ 7.90%
10/1/2022 AAA 7,140M 7,541,625
Puerto Rico Hsg Fin Corp Mtge Rev Ser B GNMA 7.65% 10/15/2022 AAA 480M 503,400
Virgin Islands Hsg Fin Auth Sing Fam Rev Ser A
GNMA AMT+++ 6-1/2% 3/1/2025 AAA 600M 610,500
Total 9,696,775
- ------------------------------------------------------------------------------------------------------------------------============
Industrial Revenue Bonds 3.34% New Jersey Economic Dev Auth AMT+++ 7-1/4% 3/1/2021 A 1,500M 1,553,640
Puerto Rico Ind Med & Environmental/Upjohn 7-1/2% 12/1/2023 AA 1,500M 1,614,375
Puerto Rico Tel Auth Rev LINK MBIA+ 5.51% 1/16/2015 AAA 3,000M 2,883,750
Total 6,051,765
- ------------------------------------------------------------------------------------------------------------------------============
Miscellaneous 4.45% Atlantic Co NJ Imp Auth Luxury MBIA+ 7.40% 7/1/2016 AAA 1,000M 1,198,750
Monmouth Co NJ Imp Auth Rev Govt Loan MBIA+ 6.40% 12/1/2009 AAA 1,075M 1,165,030
New Jersey Economic Dev Auth Rev Ser A MBIA+ 6% 5/15/2025 AAA 4,500M 4,578,750
New Jersey Sports & Expo Auth Rev Ser A 8% 1/1/2025 BBB* 1,000M 1,106,250
Total 8,048,780
- ------------------------------------------------------------------------------------------------------------------------============
Pollution Control Revenue 1.17% Cape May Co NJ Ind Poll Ctrl Rev Fin Auth Ser B MBIA+ 7%
11/1/2029 AAA 500M 553,125
Salem Co NJ Poll Ctrl Auth Ser A AMT+++ 6-1/2% 11/15/2021 AA 1,500M 1,569,375
Total 2,122,500
- ------------------------------------------------------------------------------------------------------------------------============
Power 12.53% Camden Co NJ Muni Util Auth Sys FGIC+ 8-1/4% 12/1/2017 AAA 2,185M 2,284,548
Essex Co NJ Imp Auth Rev Orange Muni Util & Lease MBIA+ 6.80%
7/1/2014 AAA 1,710M 1,887,412
Puerto Rico Elec Pwr Auth LINK FSA+ 6.30% 7/1/2018 AAA 6,000M 6,210,000
Puerto Rico Elec Pwr Auth LINK FSA+ 5.929% 7/1/2023 AAA 1,000M 1,001,250
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.328% 7/1/2023++ AAA 4,500M 4,511,250
Puerto Rico Elec Pwr Auth Ser N 7-1/8% 7/1/2014 BBB 715M 757,900
Puerto Rico Elec Pwr Auth Ser T RIBS FSA+ 9.016% 7/1/2018++ AAA 4,500M 4,798,125
Raritan Township NJ Muni Util Auth 6.45% 5/1/2012 A 1,180M 1,234,575
Total 22,685,060
- ------------------------------------------------------------------------------------------------------------------------============
Solid Waste 1.10% Mercer Co NJ Imp Auth 5-3/4% 9/15/2016 Aa 2,000M 1,982,500
</TABLE>
13
<PAGE>
Statement of Net Assets
NEW JERSEY SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Transportation 15.66% Delaware River & Bay Auth DE MBIA+ 4-3/4% 1/1/2024 AAA $2,215M $ 1,888,288
Delaware River Port Auth PA & NJ Rev FGIC+ 5-1/2% 1/1/2026 AAA 8,600M 8,256,000
New Jersey Economic Dev Auth 7% 7/1/2016 BBB* 5,545M 5,808,387
New Jersey St Tnpk Auth FSA+ 6-1/2% 1/1/2016 AAA 5,500M 6,036,250
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev 5% 7/1/2022 A 700M 609,000
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser C 5%
7/1/2036 A 5,500M 4,695,625
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y
5-1/2% 7/1/2036 A 1,150M 1,070,937
Total 28,364,487
- ------------------------------------------------------------------------------------------------------------------------============
Water and Sewer 2.85% Gloucester Co NJ Util Auth Sewer Rev MBIA+ 5.45% 1/1/2024 AAA 750M 715,312
New Jersey Wastewtr Treatment Trust MBIA+ 7% 5/15/2006 AAA 75M 79,500
New Jersey Wastewtr Treatment Trust 6-7/8% 6/15/2009 AA 155M 167,013
New Jersey Wtr Supply Auth Rev MBIA+ AMT+++ 7-7/8%
11/1/2013 AAA 2,500M 2,656,250
Stafford NJ Muni Util Auth Ser A FGIC+ 6-1/8% 12/1/2022 AAA 1,500M 1,537,500
Total 5,155,575
------------------------------------------------------------------------------------============
Total Municipal Bonds 97.96% (Cost $174,626,315) 177,327,867
- ------------------------------------------------------------------------------------------------------------------------============
Other Assets, Less Liabilities 2.04%
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 3,696,077
- -----------------------------------------------------------------------------------------------------------------------=============
Net Assets 100.00% $181,023,944
- -----------------------------------------------------------------------------------------------------------------------=============
Net asset value ($181,023,944 / 35,240,413 shares outstanding) $5.14
</TABLE>
* This investment 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, 1997.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
Statement of Net Assets
CONNECTICUT SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded 19.36% Connecticut St Clean Wtr Fd 7% 1/1/2011 AAA $ 400M $ 437,500
Connecticut St Health & Ed/St Raphael Hosp Ser C AMBAC+ 7-1/2%
7/1/2014 AAA 1,000M 1,061,250
Connecticut St Health & Ed/Yale-New Haven Hosp Ser F
MBIA+ 7% 7/1/2010 AAA 75M 81,563
Connecticut St Health & Ed/Yale-New Haven Hosp Ser F
MBIA+ 7.10% 7/1/2025 AAA 2,105M 2,297,081
Connecticut St Spcl Tax Oblig Rev 6-3/4% 6/1/2011 AAA 2,000M 2,197,500
Connecticut St Spcl Tax Oblig Rev Ser A 7-1/8% 6/1/2007 AAA 5,000M 5,487,500
Connecticut St Spcl Tax Oblig Rev Ser C 6.80% 12/1/2009 AAA 100M 107,500
Puerto Rico Commonwealth 7-3/4% 7/1/2006 AAA 3,000M 3,195,000
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 750M 833,438
Puerto Rico Commonwealth Aqua & Sewer Auth Rev Ser A 7-7/8%
7/1/2017 AAA 2,000M 2,132,500
Puerto Rico Commonwealth Hwy Ser T 6-5/8% 7/1/2018 AAA 453M 497,866
Puerto Rico Commonwealth Hwy Ser P 8-1/8% 7/1/2013 AAA 2,000M 2,137,500
Puerto Rico Commonwealth Hwy Ser T 6-5/8% 7/1/2018 AAA 67M 73,484
Puerto Rico G.O. Ser A 7-3/4% 7/1/2017 AAA 250M 271,563
Puerto Rico Pub Bldg Auth Ser H 7-7/8% 7/1/2007 AAA 2,000M 2,059,600
Total 22,870,845
- ------------------------------------------------------------------------------------------------------------------------============
</TABLE>
14
<PAGE>
Statementof Net Assets
CONNECTICUT SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
General Obligation State 5.18% Connecticut St Ser B 5-1/8% 8/15/2016 Aa $2,000M $ 1,855,000
Puerto Rico Commonwealth 6.45% 7/1/2017 A 2,000M 2,122,500
Puerto Rico Commonwealth 6-1/2% 7/1/2023 A 2,000M 2,142,500
Total 6,120,000
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation Local 2.93% Darien CT 5-1/2% 10/15/2015 Aaa 500M 490,625
Hartford CT 6-1/2% 12/15/2005 AA 730M 796,613
Killingly CT 7-1/4% 12/15/2004 A 250M 261,875
Monroe CT 6.60% 4/15/2005 A 100M 108,500
Montville CT 6.70% 6/15/2009 Aa 550M 619,438
Montville CT 6.70% 6/15/2010 Aa 575M 646,155
Portland CT 7.10% 12/15/2000 A 100M 107,750
Redding CT 6.60% 4/15/2010 Aa 100M 111,000
Voluntown CT 6-3/4% 10/1/2002 A 100M 107,375
Watertown CT 6-1/2% 6/15/2003 A 100M 106,250
West Haven CT MBIA+ 6-1/2% 6/15/2006 AAA 100M 110,250
Total 3,465,831
- ------------------------------------------------------------------------------------------------------------------------============
Education 13.30% Connecticut St Health & Ed Facs/CT College C-1 MBIA+ 5-1/2%
7/1/2027 AAA 1,000M 950,000
Connecticut St Health & Ed Facs/Fairfield Univ Ser F 6.90%
7/1/2014 BBB 1,500M 1,552,500
Connecticut St Health & Ed Facs/Kent Sch Ser B MBIA+ 5.40%
7/1/2023 AAA 1,000M 936,250
Connecticut St Health & Ed Facs/New Haven Ser D 6.70% 7/1/2026 BBB 1,000M 1,000,000
Connecticut St Health & Ed Facs/Sacred Heart Ser C 6-1/2% 7/1/2016 BBB 1,000M 1,005,000
Connecticut St Health & Ed Facs/Trinity College Ser E MBIA+
5-7/8% 7/1/2026 AAA 1,370M 1,359,725
Connecticut St Health & Ed Facs/Westminster Sch Ser A MBIA+
5-1/2% 7/1/2016 AAA 1,000M 960,000
Connecticut St Health & Ed Facs/Yale Univ RIBS 8.006%
6/10/2030++ AAA 6,800M 6,723,500
Connecticut St Higher Ed Supplemental Loan Auth Ser A
AMT+++ 7-3/8% 11/15/2005 A 755M 785,200
Connecticut St Higher Ed Supplemental Loan Auth Ser A
AMT+++ 7.20% 11/15/2010 A 415M 435,230
Total 15,707,405
- ------------------------------------------------------------------------------------------------------------------------============
Health and Hospital 10.89% Connecticut St Health & Ed/Greenwich Hosp Ser A MBIA+ 5-3/4%
7/1/2016 AAA 1,350M 1,344,938
Connecticut St Health & Ed/Windham Cmnty Mem Hosp Ser C
5-3/4% 7/1/2011 BBB 2,000M 1,902,500
Connecticut St Health & Ed/Bridgeport Hosp MBIA+ 65/8% 7/1/2018 AAA 1,250M 1,321,875
Connecticut St Health & Ed/Danbury Hosp Ser F AMBAC+ 5-3/8%
7/1/2017 AAAB 750M 710,625
Connecticut St Health & Ed/Greenwich Hosp MBIA+ 5.80% 7/1/2026 AAA 3,230M 3,193,663
Connecticut St Health & Ed/St Marys Hosp Ser C 7-3/8% 7/1/2020 Baa 3,250M 3,424,688
Connecticut St Health & Ed/Waterbury Hosp Ser B FSA+ 7% 7/1/2020 AAA 100M 106,625
Connecticut St Health & Ed/William Backus Hosp 6-3/8% 7/1/2022 A 850M 858,500
Total 12,863,414
- ------------------------------------------------------------------------------------------------------------------------============
Housing 7.61% Connecticut St Hsg Fin Auth Ser A Sub Ser A-2 FHA+ AMT+++ 7.20%
11/15/2008 AA 595M 627,725
Connecticut St Hsg Fin Auth Ser A-2 AMT+++ 6.45% 5/15/2022 AA 1,100M 1,119,250
Connecticut St Hsg Fin Auth Ser B 6-3/4% 11/15/2023 AA 2,870M 3,002,738
Connecticut St Hsg Fin Auth Ser D-2 AMT+++ 6.90% 5/15/2020 AA 1,000M 1,038,750
Connecticut St Hsg Fin Auth Sub Ser D-2 AMT+++ 6.20% 11/15/2027 AA 2,000M 1,972,500
Connecticut St Hsg Fin Auth Sub Ser E-2 AMT+++ 6.15% 11/15/2027 AA 1,250M 1,231,250
Total 8,992,213
- ------------------------------------------------------------------------------------------------------------------------============
Industrial Revenue Bonds 12.67% Connecticut St Dev Auth/Pfizer Inc Prjt 6.55% 2/15/2013 AAA 3,570M 3,842,212
Connecticut St Dev Auth/Pfizer Inc Prjt AMT+++ 7% 7/1/2025 AAA 2,500M 2,756,250
Eastern CT Res Recovery/Wheelabrator Lisbon Prjt Ser A
AMT+++ 5-1/2% 1/1/2020 A 4,000M 3,600,000
</TABLE>
15
<PAGE>
Statementof Net Assets
CONNECTICUT SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Puerto Rico Ind Med & Environmental/American Home Products
5.10% 12/1/2018 A $2,000M $ 1,805,000
Puerto Rico Ind Med & Environmental/Upjohn 7-1/2% 12/1/2023 AA 1,000M 1,076,250
Puerto Rico Ind Med & Environmental/Warner Lambert 7.60% 5/1/2014 Aa 1,750M 1,892,188
Total 14,971,900
- ------------------------------------------------------------------------------------------------------------------------============
Miscellaneous 9.48% Connecticut Middletown Courthouse MBIA+ 6-1/4% 12/15/2010 AAA 575M 608,063
Connecticut St Dev Govt Lease Rev MBIA+ 6.60% 6/15/2014 AAA 500M 541,250
New Haven CT Air Rights Pkg MBIA+ 6-1/2% 12/1/2015 AAA 9,475M 10,055,343
Total 11,204,656
- ------------------------------------------------------------------------------------------------------------------------============
Power 2.68% Connecticut St Dev Auth/New England Pwr Co 7-1/4% 10/15/201 A 760M 808,450
Puerto Rico Elec Pwr Auth Ser T RIBS FSA+ 9.016% 7/1/2018++ AAA 1,500M 1,599,375
Puerto Rico Elec Pwr Auth Ser X 6-1/8% 7/1/2021 A 750M 756,562
Total 3,164,387
- ------------------------------------------------------------------------------------------------------------------------============
Solid Waste 5.32% Connecticut St Res Recovery/American Ref Fuel Ser A
AMT+++ 8% 11/15/2015 AA 1,100M 1,179,750
Connecticut St Res Recovery/American Ref Fuel Ser A
AMT+++ 6.45% 11/15/2022 A 4,985M 5,103,393
Total 6,283,143
- ------------------------------------------------------------------------------------------------------------------------============
Transportation 5.77% Connecticut St Spcl Tax Oblig Rev Ser B 10% 10/1/2000 AA 4,000M 4,705,000
Connecticut St Spcl Tax Oblig Rev Ser B FGIC+ 6.10% 10/1/2011 AAA 1,000M 1,050,000
Connecticut St Spcl Tax Oblig Rev Ser B MBIA+ 5-3/8% 10/1/2015 AAA 500M 478,125
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev 5-1/2% 7/1/2015 A 600M 581,250
Total 6,814,375
- ------------------------------------------------------------------------------------------------------------------------============
Water and Sewer 3.42% Connecticut St Dev Auth Wtr Fac Rev AMT+++ 6.15% 4/1/2035 A 500M 495,000
Connecticut St Dev Auth Wtr Fac Rev Ser A AMBAC+ AMT+++ 5-3/4%
7/1/2028 AAA 250M 237,812
Puerto Rico Commonwealth Aqua & Sewer Auth Rev 5% 7/1/2019 A 2,000M 1,767,500
Puerto Rico Commonwealth Aqua & Sewer Auth Rev 5% 7/1/2015 A 1,700M 1,538,500
Total 4,038,812
------------------------------------------------------------------------------------============
Total Municipal Bonds 98.61% (Cost $115,694,664) 116,496,981
- ------------------------------------------------------------------------------------------------------------------------============
Other Assets, Less Liabilities 1.39%
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 1,640,874
- ------------------------------------------------------------------------------------------------------------------------============
Net Assets 100.00% $118,137,855
- -----------------------------------------------------------------------------------------------------------------------=============
Net asset value ($118,137,855 / 11,742,990 shares outstanding) $10.06
</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, 1997.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
Statement of Net Assets
MISSOURI SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded 24.99% Cape Girardeau MO Wtrwks Sys Rev FGIC+ 6.40% 3/1/2012 AAA $1,150M $ 1,233,375
Central MO St Univ MBIA+ 7% 7/1/2014 AAA 150M 165,750
Kansas City MO Arpt Rev Ser B CGIC 6-7/8% 9/1/2014 AAA 1,490M 1,678,113
Kansas City MO Muni Assistance Corp Rev AMBAC+ 6-5/8% 4/15/2015 AAA 6,225M 6,769,688
</TABLE>
16
<PAGE>
Statement of Net Assets
MISSOURI SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Kansas City MO Muni Assistance Corp Rev AMBAC+ 7-1/8% 4/15/2016 AAA $ 805M $ 877,450
Kansas City MO Muni Assistance Corp Rev AMBAC+ 6% 4/15/2020 AAA 1,030M 1,078,925
Missouri St Health & Ed Facs Rev/Christian Health FGIC
6-7/8% 2/15/2013 AAA 2,100M 2,296,875
Missouri St Health & Ed Facs Rev/St Lukes MBIA+ 7% 11/15/2013 AAA 1,030M 1,144,588
Missouri St Regional Convention Ser A 6.90% 8/15/2021 AAA 9,750M 10,846,875
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 4,420M 4,911,725
Puerto Rico Elec Pwr Auth Rev Ser M 8% 7/1/2008 AAA 300M 320,250
Puerto Rico Elec Pwr Auth Rev Ser P 7% 7/1/2021 AAA 300M 331,875
Sikeston MO Elec Rev MBIA+ 6-1/4% 6/1/2022 AAA 1,000M 1,082,500
Springfield MO Sch Dist No 12 Ser A FGIC+ 6-3/4% 3/1/2011 AAA 1,225M 1,315,344
Total 34,053,333
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation State 4.47% Puerto Rico Commonwealth RIBS MBIA+ 8.284% 7/1/2008++ AAA 1,000M 1,060,000
Puerto Rico Commonwealth 6.45% 7/1/2017 A 990M 1,050,638
Puerto Rico Commonwealth RIBS FSA+ 8.382% 7/1/2020++ AAA 4,000M 3,975,000
Total 6,085,638
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation Local 1.68% Columbia MO Spcl Oblig Cap Imp 5-1/2% 2/1/2016 A 500M 481,875
Greene Co MO Reorg Sch Dist Direct Dep 5-3/4% 3/1/2016 AA 1,785M 1,802,850
Total 2,284,725
- ------------------------------------------------------------------------------------------------------------------------============
Education 9.88% Missouri St Health & Ed Facs Rev/St Louis Univ AMBAC+ 5.20%
10/1/2026 AAA 4,000M 3,630,000
Missouri St Health & Ed Facs Rev/St Louis Univ HS 6.35% 10/1/2014 A 2,000M 2,077,500
Platte Co MO Reorg Sch Dist Ctfs 7-1/8% 1/1/2011 A 500M 531,875
St Louis MO Sch Dist FGIC+ 6% 4/1/2012 AAA 1,275M 1,319,625
University of MO Rev 5-1/2% 11/1/2017 AA 3,500M 3,381,875
University of MO Rev 5-1/2% 11/1/2023 AA 375M 358,593
University of MO Rev Ser A AMBAC+ 6-1/2% 11/1/2011 AAA 2,000M 2,160,000
Total 13,459,468
- ------------------------------------------------------------------------------------------------------------------------============
Finance 12.52% Blue Spring MO Pub Bldg Auth Leasehold Rev Ser A FGIC+ 5-1/8%
9/1/2016 AAA 1,630M 1,519,975
Kansas City MO Muni Assistance Corp Rev MBIA+ 5-1/8% 4/15/2015 AAA 9,000M 8,336,250
Kansas City MO Muni Assistance Corp Rev MBIA+ 5-3/8% 4/15/2016 AAA 6,000M 5,715,000
Poplar Bluff MO Pub Bldg Auth Leasehold Rev Ser A MBIA+ 5-1/2%
9/1/2012 AAA 1,500M 1,490,625
Total 17,061,850
- ------------------------------------------------------------------------------------------------------------------------============
Health and Hospital 15.02% Hannibal MO Ind Dev Auth Health Facs Rev Ser A FSA+ 5-5/8%
3/1/2012 AAA 2,170M 2,170,000
Hannibal MO Ind Dev Auth Health Facs Rev Ser A FSA+ 5-3/4%
3/1/2022 AAA 1,250M 1,234,375
Jackson Co MO Ind Dev Rev/St Joseph Health Ctr 7% 7/1/2022 Baa 1,500M 1,569,375
Missouri St Health & Ed Facs Rev/BJC Health Ser A 6-1/2% 5/15/2020 AA 4,900M 5,298,125
Missouri St Health & Ed Facs Rev/Health Midwest Ser B
MBIA+ 6-1/4% 2/15/2022 AAA 5,000M 5,156,250
Missouri St Health & Ed Facs Rev/Heartland Health Sys
AMBAC+ 6.35% 11/15/2017 AAA 2,600M 2,710,500
Missouri St Health & Ed Facs Rev/SSMHealth Care Ser AA MBIA+
6-1/4% 6/1/2016 AAA 2,250M 2,328,750
Total 20,467,375
- ------------------------------------------------------------------------------------------------------------------------============
Housing 5.68% Missouri St Hsg Dev Comm Mtge Rev Ser A GNMA AMT+++ 6-3/4%
6/1/2024 AAA 350M 364,000
Missouri St Hsg Dev Comm Mtge Rev Ser A GNMA AMT+++ 6.22%
3/1/2026 AAA 5,000M 5,062,500
Missouri St Hsg Dev Comm Mtge Rev Ser B GNMA AMT+++ 6.40%
12/1/2024 AAA 2,135M 2,172,362
Puerto Rico Hsg Fin Corp Mtge Rev Ser A GNMA 7.80% 10/15/2021 AAA 10M 10,362
Puerto Rico Hsg Fin Corp Mtge Rev Ser B GNMA 7.65% 10/15/2022 AAA 125M 131,094
- ------------------------------------------------------------------------------------------------------------------------============
Total 7,740,318
</TABLE>
17
<PAGE>
Statement of Net Assets
MISSOURI SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial Revenue Bonds 2.60% Missouri St Environmental Imp & Energy Rev/Union
Elec Ser A 7.40% 5/1/2020 AA $ 550M $ 594,000
Puerto Rico Tel Auth Rev RIBS MBIA+ 6.758% 1/25/2007++ AAA 2,000M 2,020,000
Puerto Rico Tel Auth Rev RIBS MBIA+ 6.976% 1/16/2015++ AAA 1,000M 931,250
Total 3,545,250
- ------------------------------------------------------------------------------------------------------------------------============
Miscellaneous 4.09% Clay Co MO Pub Bldg Auth Leasehold Rev FGIC+ 7% 5/15/2014 AAA 1,000M 1,103,750
St Louis Co MO Ind Dev Rev Arena Prjt AMT+++ 7-7/8% 12/1/2024 BBB 2,000M 2,142,500
St Louis MO Land Clearance Rev 7-3/4% 7/1/2021 BBB* 2,210M 2,331,550
Total 5,577,800
- ------------------------------------------------------------------------------------------------------------------------============
Pollution Control Revenue 9.90% Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev 6.55%
7/1/2014 Aa 3,000M 3,195,000
Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev 5-3/4%
1/1/2016 Aa 2,400M 2,403,000
Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev 5-5/8%
7/1/2016 Aa 900M 888,750
Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev 7.20%
7/1/2016 Aa 2,250M 2,517,187
Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev 5.90%
1/1/2019 Aa 2,050M 2,052,562
Sikeston MO Elec Rev MBIA+ 6-1/4% 6/1/2012 AAA 2,250M 2,435,625
Total 13,492,124
- ------------------------------------------------------------------------------------------------------------------------============
Power 2.04% Puerto Rico Elec Pwr Auth RIBS FSA+ 8.328% 7/1/2023++ AAA 2,500M 2,506,250
Sikeston MO Elec Rev Ref MBIA+ 5% 6/1/2022 AAA 315M 280,350
Total 2,786,600
- ------------------------------------------------------------------------------------------------------------------------============
Water and Sewer 6.01% Kansas City MO Wtr Rev Ser D 7th Issue 6.65% 12/1/2013 AA 2,800M 3,024,000
Missouri St Environmental Imp Energy Res Auth Fac Rev
MBIA+ AMT+++ 5.95% 11/1/2019 AAA 1,500M 1,494,375
Puerto Rico Commonwealth Aqu & Sewer Auth Rev 5% 7/1/2019 A 1,000M 883,750
St Louis MO Pkg Facs Rev MBIA+ 5-3/8% 12/15/2021 AAA 510M 478,762
St Louis MO Wtr Rev FGIC+ 6% 7/1/2014 AAA 2,250M 2,306,250
Total 8,187,137
------------------------------------------------------------------------------------============
Total Municipal Bonds 98.88% (Cost $131,530,692) 134,741,618
- ------------------------------------------------------------------------------------------------------------------------============
Other Assets, Less Liabilities 1.12%
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 1,525,128
- -----------------------------------------------------------------------------------------------------------------------=============
Net Assets 100.00% $136,266,746
- -----------------------------------------------------------------------------------------------------------------------=============
Net asset value ($136,266,746 / 27,093,539 shares outstanding) $5.03
</TABLE>
* This investment 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, 1997.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
Statement of Net Assets
Hawaii series MARCH 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded 22.35% Hawaii St Dept Bdg & Fin/Pali Moni Med Ctr 7.60% 7/1/2010 AAA $ 200M $ 225,500
Hawaii St Dept Bdg & Fin/Pali Moni Med Ctr 7.65% 7/1/2019 AAA 1,000M 1,130,000
Hawaii St Dept Bdg & Fin/Queens Med Hosp FGIC+ 6-1/2% 7/1/2012 AAA 250M 257,500
Hawaii St G.O. Ser B-R 7% 6/1/2009 AAA 1,000M 1,070,000
Hawaii St G.O. Ser B-R 7% 6/1/2010 AAA 2,430M 2,600,100
</TABLE>
18
<PAGE>
Statement of Net Assets
Hawaii series MARCH 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hawaii St G.O. Ser B-S 7% 9/1/2003 AAA $ 500M $ 541,875
Hawaii St G.O. Ser B-S 7-1/8% 9/1/2009 AAA 700M 761,250
Honolulu HI City & Co G.O. 7.10% 6/1/2006 AAA 1,000M 1,080,000
Honolulu HI City & Co G.O. Ser C 7.15% 6/1/2008 AAA 500M 541,875
Honolulu HI City & Co G.O. Ser C 7.15% 6/1/2010 AAA 1,000M 1,083,750
Honolulu HI City & Co G.O. Ser D 6.90% 12/1/2010 AAA 400M 434,500
Honolulu HI City & Co Ser B 6.90% 10/1/2002 AAA 100M 105,500
Maui Co HI Ser A AMBAC+ 6.80% 12/1/2001 AAA 1,000M 1,082,500
Puerto Rico Commonwealth 7-5/8% 7/1/2010 AAA 500M 555,000
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 400M 444,500
Puerto Rico Commonwealth Aqu & Sewer Auth Rev Ser A 7-7/8%
7/1/2017 AAA 1,600M 1,706,000
Puerto Rico Commonwealth Hwy Ser Q 7-3/4% 7/1/2010 AAA 525M 584,719
Puerto Rico Commonwealth Pub Imp Ser A 7.70% 7/1/2008 AAA 1,700M 1,842,375
Puerto Rico Elec Pwr Auth Rev Ser M 8% 7/1/2008 AAA 150M 160,125
Puerto Rico Elec Pwr Auth Rev Ser P 7% 7/1/2021 AAA 500M 553,125
Puerto Rico Pub Bldg Auth Ser K 6-7/8% 7/1/2012 AAA 450M 499,500
Total 17,259,694
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation State 22.22% Hawaii St 8% 1/1/2013 AAA 2,000M 2,500,000
Hawaii St 5-1/4% 3/2/2014 AA 500M 473,750
Hawaii St 5-1/4% 3/1/2016 AA 2,030M 1,905,663
Hawaii St Hwy Rev 5-1/4% 7/1/2016 AA 2,550M 2,374,688
Hawaii St Ser B-Z 6% 10/1/2010 AA 500M 526,250
Hawaii St Ser B-Z 6% 10/1/2012 AA 500M 521,875
Puerto Rico Commonwealth 6.35% 7/1/2010 A 1,285M 1,352,462
Puerto Rico Commonwealth 6.45% 7/1/2017 A 2,050M 2,175,563
Puerto Rico Commonwealth RIBS FSA+ 8.382% 7/1/2020++ AAA 3,000M 2,981,250
Puerto Rico Commonwealth 6-1/2% 7/1/2023 A 1,250M 1,339,063
Puerto Rico Commonwealth 6% 7/1/2026 A 1,000M 1,010,000
Total 17,160,564
- -----------------------------------------------------------------------------------------------------------------------============
General Obligation Local 8.00% Hawaii Co HI Ser A FGIC+ 5.60% 5/1/2013 AAA 1,780M 1,773,325
Honolulu HI City & Co FGIC+ 6% 12/1/2015 AAA 1,000M 1,027,500
Honolulu HI City & Co Ser A MBIA+ 5% 11/1/2015 AAA 1,500M 1,376,250
Honolulu HI City & Co Ser A FGIC+ 5-1/2% 9/1/2016 AAA 1,000M 967,500
Maui Co HI Ser A MBIA+ 5-3/4% 6/1/2016 AAA 1,035M 1,031,118
Total 6,175,693
- ------------------------------------------------------------------------------------------------------------------------============
Education .36% University of HI AMBAC+ 5.45% 10/1/2006 AAA 275M 279,125
- ------------------------------------------------------------------------------------------------------------------------============
Health and Hospital 7.55% Hawaii St Dept Bdg & Fin Spcl Purp Rev Kapi'olani 6.20% 7/1/2016 A 1,000M 1,005,000
Hawaii St Dept Bdg & Fin Spcl Purp Rev Kapi'olani 6-1/4% 7/1/2021 A 2,000M 2,010,000
Hawaii St Dept Bdg & Fin/St Francis Hosp CGIC 6-1/2% 7/1/2022 AAA 1,200M 1,261,500
Puerto Rico Ind Med & Environmental/St Luke Hosp 6-1/4% 6/1/2010 A 1,390M 1,402,163
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Fac Ser A
MBIA+ 6-1/4% 7/1/2024 AAA 150M 155,625
Total 5,834,288
- ------------------------------------------------------------------------------------------------------------------------============
Housing 3.29% Hawaii St Hsg Fin & Dev Corp Rev Univ of HI Faculty Hsg Prjt
AMBAC+ 5.70% 10/1/2025 AAA 500M 491,875
Hawaii St Hsg Fin & Dev Corp Ser A FNMA AMT+++ 7.10% 7/1/2024 Aa 960M 1,000,800
Hawaii St Hsg Fin & Dev Corp/Univ of HI Faculty Hsg Prjt
AMBAC+ 5.65% 10/1/2016 AAA 1,000M 986,250
Puerto Rico Hsg Fin Corp Mtge Rev Ser B GNMA 7.65% 10/15/2022 AAA 60M 62,925
Total 2,541,850
- ------------------------------------------------------------------------------------------------------------------------============
</TABLE>
19
<PAGE>
Statement of Net Assets
Hawaii series MARCH 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial Revenue Bonds 4.45% Puerto Rico Ind Med & Environmental Ctrl/Baxter Lab Ser A 8%
9/1/2012 A $1,000M $ 1,072,500
Puerto Rico Ind Med & Environmental/Warner Lambert 7.60% 5/1/2014 Aa 1,500M 1,621,875
Puerto Rico Tel Auth Rev RIBS MBIA+ 6.976% 1/16/2015++ AAA 800M 745,000
Total 3,439,375
- ------------------------------------------------------------------------------------------------------------------------============
Power 19.65% Hawaii St Dept Bdg & Fin RIBS AMT+++ 7.192% 12/15/2023++ AAA 1,500M 1,290,000
Hawaii St Dept Bdg & Fin Linked Sav LINK 5.538% 12/15/2023 AAA 7,000M 6,431,250
Hawaii St Dept Bdg & Fin/HI Elec Ser A MBIA+ AMT+++ 6.60%
1/1/2025 AAA 2,750M 2,860,000
Hawaii St Dept Bdg & Fin/HI Elec Ser C MBIA+ AMT+++ 7-3/8%
12/1/2020 AAA 2,500M 2,709,375
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.328% 7/1/2023++ AAA 1,500M 1,503,750
Puerto Rico Elec Pwr Auth Ser N 7-1/8% 7/1/2014 BBB 365M 386,900
Total 15,181,275
- ------------------------------------------------------------------------------------------------------------------------============
Transportation 9.36% Hawaii St Arpt Sys Rev Ser M MBIA+ AMT+++ 7% 7/1/2018 AAA 2,125M 2,292,344
Hawaii St Arpt Sys Rev 2nd Ser FGIC+ AMT+++ 7-1/2% 7/1/2020 AAA 445M 484,493
Hawaii St Arpt Sys Rev 2nd Ser MBIA+ AMT+++ 6-3/4% 7/1/2021 AAA 2,745M 2,899,406
Hawaii St Hbr Cap Imp Rev FGIC+ AMT+++ 6-1/4% 7/1/2015 AAA 500M 512,500
Hawaii St Hbr Cap Imp Rev FGIC+ AMT+++ 6-3/8% 7/1/2024 AAA 500M 511,250
Puerto Rico Commonwealth Hwy Ser V 6-5/8% 7/1/2012 A 500M 533,750
Total 7,233,743
- ------------------------------------------------------------------------------------------------------------------------============
Water and Sewer 2.80% Honolulu HI City & Co Bd Wtr Supply Wtr Sys Rev 5.80% 7/1/2021 AA 1,000M 987,500
Puerto Rico Commonwealth Aqu & Sewer Auth Rev 5% 7/1/2015 A 130M 117,650
Puerto Rico Commonwealth Aqu & Sewer Auth Rev 5% 7/1/2019 A 1,200M 1,060,500
Total 2,165,650
------------------------------------------------------------------------------------============
Total Municipal Bonds 100.03% (Cost $76,930,965) 77,271,257
- ------------------------------------------------------------------------------------------------------------------------============
Other Assets, Less Liabilities (.03)%
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (25,273)
- ------------------------------------------------------------------------------------------------------------------------============
Net Assets 100.00% $77,245,984
- ------------------------------------------------------------------------------------------------------------------------============
Net asset value ($77,245,984 / 15,846,846 shares outstanding) $4.87
</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, 1997.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
Statement of Net Assets
WASHINGTON SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded 24.96% Douglas Co WA Pub Util Dist No 1 Wells Hydroelec Ser A 8-3/4%
9/1/2018 AAA $ 150M $ 193,688
Lewis Co WA Pub Util Dist No Cowlitz Falls Hydroelec 7%
10/1/2022 AAA 500M 552,500
Mount Vernon WA AMBAC+ 6.85% 12/1/2014 AAA 1,285M 1,421,531
Pike Place Mkt Preservation Ser A 6.60% 12/1/2021 AAA 2,000M 2,145,000
Puerto Rico Pub Bldg Auth Ser L 6-7/8% 7/1/2012 AAA 1,000M 1,110,000
Seattle WA Muni Metro Ser T 6-7/8% 1/1/2014 AAA 500M 536,875
Seattle WA Muni Metro Ser T 6-7/8% 1/1/2031 AAA 500M 536,875
Tacoma WA Elec Sys Rev FGIC+ 7-3/8% 1/1/2009 AAA 500M 534,375
Tacoma WA Elec Sys Rev LINK AMBAC+ 6.514% 1/2/2015 AAA 6,400M 6,920,000
Tacoma WA Elec Sys Rev RIBS AMBAC+ 9.144% 1/2/2015++ AAA 2,300M 2,665,125
</TABLE>
20
<PAGE>
Statement of Net Assets
WASHINGTON SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Washington St Pub Pwr Supply Ser C 8% 7/1/2017 AAA $ 475M $ 529,031
Total 17,145,000
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation State 10.29% Washington St 6-3/8% 2/1/2014 AA 2,000M 2,092,500
Washington St Ser B 5-3/4% 5/1/2016 AA 5,000M 4,975,000
Total 7,067,500
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation Local .55% King Co WA 4-1/2% 1/1/2024 AA 320M 263,600
Whatcom Co WA 5-3/4% 12/1/2012 A 115M 114,569
Total 378,169
- ------------------------------------------------------------------------------------------------------------------------============
Education .40% Washington St Higher Ed Facs Auth Rev CNLA 7% 10/1/2015 AAA 250M 271,875
- ------------------------------------------------------------------------------------------------------------------------============
Health and Hospital 2.41% King Co WA Pub Hosp Dist N AMBAC+ 5-1/4% 9/1/2015 AAA 750M 699,375
Washington St Health Care Facs Auth Rev Grays Harbor Comm
5.70% 7/1/2016 AA 1,000M 955,000
Total 1,654,375
- ------------------------------------------------------------------------------------------------------------------------============
Housing 4.64% Skagit Co WA Hsg Auth Low Income Hsg Assistance Coll
GNMA 7% 6/20/2035 AAA 750M 796,875
Washington St Hsg Fin Comm Sing Fam Mtge Rev
GNMA AMT+++ 6.65% 7/1/2016 AAA 750M 759,375
Washington St Hsg Fin Comm Sing Fam Mtge Rev
GNMA AMT+++ 7.05% 7/1/2022 AAA 1,550M 1,633,312
Total 3,189,562
- ------------------------------------------------------------------------------------------------------------------------============
Industrial Revenue Bonds .68% Puerto Rico Tel Auth Rev RIBS MBIA+ 6.976% 1/16/2015++ AAA 500M 465,625
- ------------------------------------------------------------------------------------------------------------------------============
Miscellaneous .38% Spokane WA Pub Facs Dist AMBAC+ 6-1/2% 1/1/2018 AAA 250M 261,562
- ------------------------------------------------------------------------------------------------------------------------============
Power 43.53% Chelan Co WA Pub Util Dist No 1 Columbia Riv Rock
MBIA+ Zero Coupon 6/1/2025 AAA 5,000M 900,000
Chelan Co WA Pub Util Dist Ser A MBIA+ AMT+++ 6.40% 7/1/2017 AAA 1,000M 1,038,750
Chelan Co WA Pub Util Ser D MBIA+ AMT+++ 6.35% 7/1/2028 AAA 5,755M 5,927,650
Douglas Co WA Pub Util Dist No 1 Wells Hydroelec AMBAC+ 8-3/4%
9/1/2006 AAA 5,860M 6,922,125
Douglas Co WA Pub Util Dist No 1 Wells Hydroelec 8-3/4% 9/1/2018 A 350M 433,563
Grant Co WA Pub Util Dist No 2 Wanapum Hydroelec Ser A 6-3/8%
1/1/2023 A 630M 641,812
Lewis Co WA Pub Util Dist No 1 Cowlitz Falls Hydroelec 5-1/2%
10/1/2022 AA 1,400M 1,326,500
Mason Co WA Pub Util Dist 6.35% 1/1/2013 A 1,040M 1,066,000
Puerto Rico Elec Pwr Auth LINK FSA+ 5.929% 7/1/2023 AAA 1,000M 1,001,250
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.328% 7/1/2023++ AAA 3,000M 3,007,500
Washington St Pub Pwr Supply Sys Nuclear Prjt No 2 Rev Reg
FSA+ 5.40% 7/1/2012 AAA 8,000M 7,640,000
Total 29,905,150
- ------------------------------------------------------------------------------------------------------------------------============
Transportation 6.41% Port Kalama WA Rev Ser B 5-5/8% 12/1/2015 Baa 800M 749,000
Port Seattle WA Rev Ser B AMT+++ 7.60% 12/1/2009 AA 750M 829,688
Port Seattle WA Rev Ser B AMT+++ 6.70% 11/1/2010 AA 250M 262,812
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser C 5%
7/1/2036 A 3,000M 2,561,250
Total 4,402,750
- ------------------------------------------------------------------------------------------------------------------------============
Water and Sewer 12.40% Pasco WA Wtr & Sewer Rev MBIA+ 6.40% 6/1/2014 AAA 865M 914,738
Renton WA Wtr & Sewer Rev 6.55% 11/1/2013 A 1,000M 1,048,750
Richland WA Wtr & Sewer Rev MBIA+ 6-1/4% 4/1/2012 AAA 250M 259,062
Richland WA Wtr & Sewer Rev MBIA+ 5.60% 11/1/2016 AAA 500M 486,250
+
Seattle WA Wtr Sys Rev 5-1/4% 12/1/2023 AA 2,040M 1,858,950
Seattle WA Wtr Sys Rev FGIC+ 5-5/8% 8/1/2026 AAA 2,500M 2,387,500
Tukwila WA Wtr & Sewer Rev MBIA+ 6-5/8% 2/1/2015 AAA 1,370M 1,560,088
Total 8,515,338
- ------------------------------------------------------------------------------------------------------------------------============
</TABLE>
21
<PAGE>
Statement of Net Assets
WASHINGTON SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Municipal Bonds 106.65% (Cost $70,693,449) $73,256,906
- ------------------------------------------------------------------------------------------------------------------------============
Other Assets, Less Liabilities (6.65)%
- ------------------------------------------------------------------------------------------------------------------------------------
Other Short-Term California St Ser A 4-1/2% 6/30/1997 MIG1 1,000M 1,001,590
Assets Securities
Texas St Tax & Rev Anticipation Notes 43/4%
8/29/1997 MIG1 2,000M 2,007,400
Total (Cost $3,413,543) 3,008,990
----------------------------------------------------------------------------------------------------============
Cash 2,926,106
----------------------------------------------------------------------------------------------------============
Receivable for: Securities sold 1,967,738
Other 1,047,333
Total Other Assets 8,950,167
---------------------------------------------------------------------------------------------------============
Liabilities Payable for: Securities purchased 13,106,598
Other 412,956
Total Liabilities 13,519,554
------------------------------------------------------------------------------------============
Total Other Assets, Less Liabilities (4,569,387)
- ------------------------------------------------------------------------------------------------------------------------============
Net Assets 100.00% $68,687,519
- ------------------------------------------------------------------------------------------------------------------------============
Net asset value ($68,687,519 / 13,892,477 shares outstanding) $4.94
</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, 1997.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
Statement of Net Assets
MINNESOTA SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded 28.64% Brainerd MN Health Care Facs/Benedictine Health/St Joseph Prjt
8-3/8% 2/15/2020 AAA $775M $ 864,125
Breckenridge MN Hosp Facs/Franciscan Sisters Healthcare Ser B
9-3/8% 9/1/2017 AAA 350M 364,627
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Ser B
8% 8/15/2014 AAA 250M 279,688
Minneapolis MN Hosp Rev MN Childrens Med Ctr Prjt Ser C
7.30% 12/1/2006 AAA 200M 222,500
Minneapolis MN Hosp Rev MN Childrens Med Ctr Prjt Ser C 7%
12/1/2020 AAA 200M 220,250
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 150M 166,687
St Louis Park MN Health Care Facs Rev 9-1/4% 1/1/2020 AAA 100M 113,250
Western MN Muni Pwr Agy 1977 Ser A 6-3/8% 1/1/2016 AAA 210M 221,813
Total 2,452,940
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation State 2.99% Minnesota St 5-1/4% 8/1/2014 AA 265M 256,056
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation Local 21.87% Burnsville MN Indpt Sch Dist No 191 Ser A 5-1/8% 2/1/2017 AA 250M 234,062
Champlin MN MBIA+ 5.60% 2/1/2021 Aaa 250M 243,750
Frazee MN Indpt Sch Dist Ser A 5% 2/1/2016 Aaa 250M 228,437
Lakeville MN Indpt Sch Dist MBIA+ 5-1/8% 2/1/2013 AAA 250M 234,687
Minneapolis MN 5-1/8% 10/1/2020 Aaa 500M 461,875
Minneapolis MN Spcl Sch Dist FGIC+ 5-3/8% 2/1/2014 AAA 250M 243,750
North St Paul Maple Wood MN Indpt Sch Dist No 622 Ser A 5-1/8%
2/1/2025 Aa 250M 226,562
Total 1,873,123
- ------------------------------------------------------------------------------------------------------------------------============
</TABLE>
22
<PAGE>
Statement of Net Assets
MINNESOTA SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Education 5.73% Minnesota St Higher Ed Facs Auth Rev/Univ St Thomas Ser 4-A1
5-5/8% 10/1/2016 A $250M $ 242,812
University of MN 53/4% 7/1/2018 AA 250M 247,813
Total 490,625
- ------------------------------------------------------------------------------------------------------------------------============
Health and Hospital 18.87% Minneapolis & St Paul MN Hsg & Redev Auth Health Care
Sys MBIA+ 6-3/4% 8/15/2014 AAA 245M 260,925
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys
CGIC 5.70% 8/15/2016 AAA 150M 148,312
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys
6.90% 12/1/2022 A 300M 322,875
Rochester MN Health Care Ser H RIBS 8-1/4% 11/15/2015++ AA 650M 662,188
St Cloud MN Hosp Facs Rev Ref St Cloud Ser B AMBAC+ 5% 7/1/2020 AAA 250M 221,563
Total 1,615,863
- ------------------------------------------------------------------------------------------------------------------------============
Housing 16.82% Dakota Co MN Hsg Dev AMBAC+ 5-1/8% 1/1/2017 AAA 250M 243,438
Minnesota St Hsg Fin Agy Sing Fam Mtge Ser B-1 RMK
AMT+++ 6-3/4% 1/1/2026 AA 95M 98,088
Minnesota St Hsg Fin Agy Sing Fam Mtge Ser D AMT+++ 6.40% 7/1/2015 AA 250M 254,375
Minnesota St Hsg Fin Agy Sing Fam Mtge Ser E RMK 5.90% 7/1/2025 AA 250M 250,937
Minnesota St Hsg Fin Agy Sing Fam Mtge Ser G AMT+++ 61/4% 7/1/2026 AA 250M 250,938
Minnesota St Hsg Fin Agy Sing Fam Mtge Ser B AMT+++ 5.65% 7/1/2022 AA 250M 240,625
St Louis Park MN Multi-Fam Hsg FHA+ 6.15% 12/1/2016 Aa 100M 101,750
Total 1,440,151
- ------------------------------------------------------------------------------------------------------------------------============
Water and Sewer 3.08% Marshall MN Elec & Wtr Util FSA+ 6.45% 7/1/2011 AAA 150M 159,750
Minnesota Pub Facs Auth Wtr Poll Ctrl Rev Ser A 6-1/4% 3/1/2016 AAA 100M 104,250
Total 264,000
------------------------------------------------------------------------------------============
Total Municipal Bonds 98.00% (Cost $8,512,540) 8,392,758
- ------------------------------------------------------------------------------------------------------------------------============
Other Assets, Less Liabilities 2.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 171,104
- ------------------------------------------------------------------------------------------------------------------------============
Net Assets 100.00% $8,563,862
- ------------------------------------------------------------------------------------------------------------------------============
Net asset value ($8,563,862 / 1,757,221 shares outstanding) $4.87
</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, 1997.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
Statement of Net Assets
CALIFORNIA SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prerefunded 29.25% California Health Fac Auth Rev/Robert F Kennedy Med Ctr
CA MTGE 7-3/4% 3/1/2014 AAA $ 1,000M $ 1,054,040
Capistrano CA Unified Sch Dist Co Fac Dist Spcl Tax 8-3/8%
10/1/2020 AAA 2,500M 2,846,875
Concord CA Redev Agy 3rd Ser MBIA+ 8% 7/1/2018 AAA 1,715M 1,830,763
East Bay CA Muni Util Dist Wtr Sys Rev AMBAC+ 6-1/2% 6/1/2017 AAA 9,935M 11,065,106
Local Govt Fin/Anaheim Redev 8.20% 9/1/2015 AAA 1,500M 1,612,500
Los Angeles CA Civic Ctr Ctfs 8% 6/1/2010 AAA 3,000M 3,191,250
Los Angeles CA Convention Ctfs Ser A 7-3/8% 8/15/2018 AAA 15,900M 17,191,875
North City West CA Sch Facs Fin Auth Spcl Tax Ser A 7.85%
9/1/2019 AAA 10,025M 11,002,437
</TABLE>
23
<PAGE>
Statement of Net Assets
CALIFORNIA SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Northern CA Transmission Rev Ser A MBIA+ 7% 5/1/2024 AAA $ 1,750M $ 1,896,563
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 2,000M 2,222,500
Puerto Rico Commonwealth Hwy Auth Rev Ser Q 7-3/4% 7/1/2016 AAA 2,250M 2,505,938
Puerto Rico Commonwealth Hwy Auth Rev Ser Q 8% 7/1/2018 AAA 3,500M 3,915,625
Sacramento CA Muni Util Dist Elec Rev Ser V 7-7/8%
8/15/2016 AAA 2,500M 2,678,125
San Francisco CA City & Co Pub Util Wtr Rev 6-1/2% 11/1/2017 AAA 7,000M 7,647,500
Santa Clara CA Redev FGIC+ 7-3/4% 6/1/2014 AAA 2,000M 2,125,000
Vallejo CA Rev Wtr Imp FGIC+ 6-1/2% 11/1/2014 AAA 6,565M 7,254,325
Total 80,040,422
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation State .37% Puerto Rico Commonwealth 6% 7/1/2026 A 1,000M 1,010,000
- ------------------------------------------------------------------------------------------------------------------------============
General Obligation Local 1.04% Palo Alto CA Unified Sch Dist Ser B 5-3/8% 8/1/2021 AA 3,000M 2,835,000
- ------------------------------------------------------------------------------------------------------------------------============
Education 10.31% California Ed Fac Auth Rev/Loyola Marymount Univ Ser B 6.60%
10/1/2022 A 1,900M 2,006,875
California Ed Fac Auth Rev/Univ of San Francisco MBIA+ 6%
10/1/2016 AAA 1,500M 1,524,375
California Ed Fac Auth Rev/Univ of San Francisco MBIA+ 6%
10/1/2026 AAA 6,000M 6,052,500
California St Univ Rev FGIC+ 5.90% 11/1/2021 AAA 11,700M 11,743,875
University CA Rev AMBAC+ 6% 7/1/2026 AAA 6,825M 6,876,187
Total 28,203,812
- ------------------------------------------------------------------------------------------------------------------------============
Health and Hospital 1.97% California Health Fac Auth Rev/Cedarknoll Ser B MTGE 7-1/2%
8/1/2020 A 1,000M 1,073,750
California Health Fac Auth Rev/San Diego Hosp Assn MBIA+ 6.95%
10/1/2021 AAA 2,750M 3,007,813
California Health Fac Fin Auth Rev Ser C 6-1/4% 9/1/2017 A 1,290M 1,315,800
Total 5,397,363
- ------------------------------------------------------------------------------------------------------------------------============
Housing 6.49% California Hsg Fin Agy Rev Home Mtge Ser A 7-3/8% 8/1/2017 Aa 7,330M 7,742,312
California Hsg Fin Agy Rev Home Mtge Ser R MBIA
AMT+++ 6.15% 8/1/2027 AAA 3,250M 3,254,063
California St Hsg Fin Agy Home Mtge Rev Ser L MBIA+ AMT+++
6.40% 8/1/2027 AAA 6,625M 6,749,219
San Diego CA Sing Fam Mtge Rev 9.20% 7/15/2016 Aa 5M 5,131
Total 17,750,725
- ------------------------------------------------------------------------------------------------------------------------============
Industrial Revenue Bonds .61% Puerto Rico Ind Med & Environmental/Upjohn 7-1/2% 12/1/2023 AA 1,550M 1,668,188
- ------------------------------------------------------------------------------------------------------------------------============
Miscellaneous 5.38% Concord CA Redev Agy 3rd Ser MBIA+ 8% 7/1/2018 AAA 35M 37,100
Delano CA Unified Sch Dist Ctfs Part Ser A AMBAC+ 5.90% 1/1/2022 AAA 895M 884,931
Los Angeles Co CA Met Trans Auth Sales Tax Rev Ser A
MBIA+ 6% 7/1/2023 AAA 5,000M 5,037,500
Los Angeles Co CA Trans Comm Sales Tax Rev MBIA+ 7% 7/1/2019 AAA 4,960M 5,338,200
Puerto Rico Commonwealth Infrastructure Fin Auth Ser A 7.90%
7/1/2007 BBB 1,900M 2,006,875
Santa Clara CA Ctfs 7.80% 11/1/2013 A 1,295M 1,405,075
Total 14,709,681
- ------------------------------------------------------------------------------------------------------------------------============
Pollution Control Revenue 5.39% California Poll Ctrl Rev/Mobil Oil Prjt AMT+++ 5-1/2% 12/1/2029 AA 3,950M 3,648,812
California Poll Ctrl Rev/Pacific Gas & Elec MBIA+ AMT+++ 8-3/4%
1/1/2007 AAA 650M 681,889
California Poll Ctrl Rev/So CA Edison AMBAC+ AMT+++ 6.40%
12/1/2024 AAA 10,000M 10,425,000
Total 14,755,701
- ------------------------------------------------------------------------------------------------------------------------============
Power 11.32% Los Angeles CA Dept Wtr & Pwr Elec Plt Rev 5-3/8% 9/1/2023 Aa 1,300M 1,183,000
Los Angeles CA Dept Wtr & Pwr Elec Plt Rev FGIC+ 5.40% 11/15/2031 AAA 1,000M 920,000
Northern CA Transmission Rev MBIA+ 6-1/2% 5/1/2016 AAA 4,250M 4,547,500
Northern CA Transmission Rev RIBS MBI+ 6.927% 4/29/2024++ AAA 8,500M 7,596,875
Palo Alto CA Util Rev Ser A 6-1/4% 6/1/2020 AA 2,860M 2,977,975
Puerto Rico Elec Pwr Auth Rev Ser D 7-1/8% 7/1/2014 Baa 500M 531,250
Puerto Rico Elec Pwr Auth Rev Ser X 5-1/2% 7/1/2025 Baa 1,000M 930,000
</TABLE>
24
<PAGE>
Statement of Net Assets
CALIFORNIA SERIES March 31, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investment or Moody's Amount Market Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sacramento CA Muni Util Dist Elec Rev RIBS FGIC+ 8.666%++
8/15/2018 AAA $ 6,000M $ 6,487,500
Sacramento CA Muni Util Dist Elec Rev MBIA+ 6-3/8%
8/15/2022 AAA 3,700M 3,857,250
Santa Clara CA Elec Rev Ser A MBIA+ 6-1/4% 7/1/2019 AAA 1,890M 1,953,788
Total 30,985,138
- ------------------------------------------------------------------------------------------------------------------------============
Solid Waste 1.01% California Poll Ctrl Fin Auth Solid Waste Rev/Browning Ferris
AMT+++ 6-3/4% 9/1/2019 A 2,600M 2,769,000
- ------------------------------------------------------------------------------------------------------------------------============
Transportation 12.84% Foothill/Eastern Corridor Agy Toll Rd Rev 5% 1/1/2035 Baa 7,000M 5,696,250
Los Angeles CA Dept Arpt Rev Ontario Intl Arpt Ser A FGIC+ AMT+++
6% 5/15/2026 AAA 12,750M 12,654,375
Los Angeles CA Harbor Rev Ser B AMT+++ 6-5/8% 8/1/2025 AA 1,000M 1,047,500
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser C
5% 7/1/2036 A 1,000M 853,750
San Francisco CA Bay Area Rapid Trans Dist Sales Tax Rev
FGIC+ 6.60% 7/1/2012 AAA 1,540M 1,655,500
San Francisco CA City & Co Comm Intl Arpt Rev Ser I AMBAC+
AMT+++ 6-1/2% 5/1/2018 AAA 4,500M 4,770,000
San Francisco CA City & Co Comm Intl Arpt Rev 2nd Ser
MBIA+ 6-3/4% 5/1/2020 AAA 5,000M 5,443,750
San Francisco CA City & Co Comm Intl Arpt Rev Ser 12-A
AMT+++ 5.90% 5/1/2026 A 1,000M 965,000
San Francisco CA City & Co Comm Intl Arpt Rev Second Ser Issue 8B
FGIC+ 6.10% 5/1/2025 AAA 2,000M 2,037,500
Total 35,123,625
- ------------------------------------------------------------------------------------------------------------------------============
Water and Sewer 12.65% Azusa CA Pub Fin Auth Rev Wtr Sys Ser A 5% 7/1/2023 AAA 2,015M 1,763,125
California St Dept Wtr Res Cent Valley Prjt Rev Wtr Sys Ser P
6.10% 12/1/2029 AA 5,000M 5,050,000
East Bay CA Muni Util Dist Wastewtr Treatment Sys Rev
RIBS AMBAC+ 7.17% 6/1/2020++ AAA 1,750M 1,581,562
Fairfield CA Wtr Rev AMBAC+ 5-3/8% 4/1/2017 AAA 2,000M 1,890,000
Los Angeles CA Dept Wtr & Pwr Wtrwks Rev 6.40%
5/15/2028 AA 3,000M 3,101,250
Los Angeles CA Wastewtr Rev Ser C 7.10% 6/1/2018 A 5,980M 6,376,175
Metropolitan Wtr Dist So CA Wtrwks Rev RIBS 7.905% 8/5/2022++ AA 7,300M 7,327,375
Metropolitan Wtr Dist So CA Wtrwks Rev Ser C 5% 7/1/2037 AA 3,000M 2,561,250
Vallejo CA Rev Ref Wtr Imp Prjt Ser A FSA+ 5-7/8%
5/1/2026 AAA 5,000M 4,950,000
Total 34,600,737
------------------------------------------------------------------------------------============
Total Municipal Bonds 98.63% (Cost $264,795,296) 269,849,392
- ------------------------------------------------------------------------------------------------------------------------============
Other Assets, Less Liabilities 1.37%
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 3,744,169
- ------------------------------------------------------------------------------------------------------------------------============
Net Assets 100.00% $273,593,561
- ------------------------------------------------------------------------------------------------------------------------============
Class A Shares-Net asset value ($258,236,783 + 25,054,756 shares outstanding) $10.31
Class C Shares-Net asset value ($15,356,778 + 1,488,235 shares outstanding) $10.32
</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, 1997.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
25
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Six Months Ended 3/31/97
------------------------------------------------------------------------------
National New York Texas New Jersey Connecticut
Investment Income Series Series Series Series Series
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income
Interest $ 20,558,730 $ 9,784,178 $ 2,930,277 $ 5,615,438 $ 3,691,240
- --------------------------------------------------------------------------------------------------------
Expenses
Management fee 1,676,872 791,832 235,239 464,765 305,205
Management fee waived -- -- -- (46,394) (152,294)
12b-1 distribution plan 939,671 393,988 92,541 217,679 122,300
Shareholder servicing 207,097 82,650 30,000 57,000 24,000
Registration 47,161 4,500 1,500 3,000 1,500
Reports to shareholders 42,871 10,800 2,900 12,000 3,000
Audit and tax 34,564 21,000 14,800 15,000 11,603
Legal 12,065 9,150 2,600 6,000 1,297
Directors 8,250 4,500 1,000 2,700 1,500
Organization -- -- -- -- --
Other 32,004 25,806 19,757 19,874 1,065
Total expenses 3,000,555 1,344,226 400,337 751,624 319,176
- --------------------------------------------------------------------------------------------------------
Net investment
income 17,558,175 8,439,952 2,529,940 4,863,814 3,372,064
- --------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- --------------------------------------------------------------------------------------------------------
Realized gain from investment transactions
Proceeds from sales 899,052,538 168,575,788 83,725,873 170,406,429 22,687,794
Cost of
investments sold 894,039,922 166,569,190 83,087,925 168,941,978 22,381,518
Net realized gain 5,012,616 2,006,598 637,948 1,464,451 306,276
- --------------------------------------------------------------------------------------------------------
Unrealized
depreciation (9,357,260) (4,821,961) (1,147,061) (2,780,969) (1,178,275)
- --------------------------------------------------------------------------------------------------------
Net realized and
unrealized (loss)
on investments (4,344,644) (2,815,363) (509,113) (1,316,518) (871,999)
- --------------------------------------------------------------------------------------------------------
Net Increase in
Net Assets Resulting
from Operations $ 13,213,531 $ 5,624,589 $ 2,020,827 $ 3,547,296 $ 2,500,065
- --------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------
Missouri Hawaii Washington Minnesota California
Series Series Series Series Series
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income
Interest $ 4,022,215 $ 2,459,551 $ 2,100,554 $ 253,576 $ 8,758,122
- --------------------------------------------------------------------------------------------------------
Expenses
Management fee 341,740 206,287 175,734 21,203 725,374
Management fee waived (103,043) (123,142) (17,663) (21,203) --
12b-1 distribution plan 175,858 92,712 -- -- 435,126
Shareholder servicing 50,000 30,000 15,000 5,400 66,600
Registration 1,800 -- 1,500 930 10,200
Reports to shareholders 7,200 3,000 2,000 450 12,000
Audit and tax 10,700 9,600 4,450 5,340 17,500
Legal 2,700 3,000 1,100 300 12,200
Directors 2,300 1,740 900 90 2,700
Organization -- 450 2,862 690 --
Other 7,968 8,721 100 2,584 28,140
Total expenses 497,223 232,368 185,983 15,784 1,309,840
Net investment
income 3,524,992 2,227,183 1,914,571 237,792 7,448,282
- --------------------------------------------------------------------------------------------------------
Proceeds from sales 23,618,946 22,936,134 65,784,970 1,878,449 214,006,183
Cost of
investments sold 23,478,800 22,689,681 65,138,250 1,872,934 212,738,271
Net realized gain 140,146 246,453 646,720 5,515 1,267,912
- --------------------------------------------------------------------------------------------------------
Unrealized
depreciation (1,452,819) (1,039,420) (818,933) (50,269) (4,251,526)
- --------------------------------------------------------------------------------------------------------
Net realized and
unrealized (loss)
on investments (1,312,673) (792,967) (172,213) (44,754) (2,983,614)
- --------------------------------------------------------------------------------------------------------
Net Increase in
Net Assets Resulting
from Operations $ 2,212,319 $ 1,434,216 $ 1,742,358 $ 193,038 $ 4,464,668
- --------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended 3/31/97
----------------------------------------------------------
National New York Texas
Increase (Decrease) in Net Assets Series Series Series
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 17,558,175 $ 8,439,952 $ 2,529,940
Net realized gain from investment transactions 5,012,616 2,006,598 637,948
Net unrealized depreciation of investments (9,357,260) (4,821,961) (1,149,061)
Net increase in net assets resulting from operations 13,213,531 5,624,589 2,020,827
- --------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income (17,938,113) (8,554,674) (2,567,340)
Net realized gain from investment transactions -- -- (646,428)
Total distributions (17,938,113) (8,554,674) (3,213,768)
- --------------------------------------------------------------------------------------------------------------------
Capital share transactions
Net proceeds from sales of shares 19,783,227 6,740,614 1,807,189
Net asset value of shares issued to shareholders in
reinvestment of net investment income and realized gain
from investment transactions 9,432,845 4,937,784 1,777,401
Net asset value of shares issued in exchange for
assets acquired in tax-free acquisition -- -- --
Total 29,216,072 11,678,398 3,584,590
- --------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (48,230,927) (26,691,056) (5,956,094)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from capital
share transactions (19,014,855) (15,012,658) (2,371,504)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (23,739,437) (17,942,743) (3,564,445)
- --------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 672,343,855 319,552,746 94,414,494
- --------------------------------------------------------------------------------------------------------------------
End of period+ $ 648,604,418 $ 301,610,003 $ 90,850,049
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended 9/30/96
-----------------------------------------------------------
National New York Texas
Increase (Decrease) in Net Assets Series Series Series
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 35,611,434 $ 18,011,455 $ 5,477,906
Net realized gain from investment transactions 6,073,693 3,622,706 732,214
Net unrealized depreciation of investments (906,258) (5,732,944) (334,915)
Net increase in net assets resulting from operations 40,778,869 15,901,217 5,875,205
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income (35,301,437) (17,627,218) (5,330,896)
Net realized gain from investment transactions -- -- --
Total distributions (35,301,437) (17,627,218) (5,330,896)
- ---------------------------------------------------------------------------------------------------------------------
Capital share transactions
Net proceeds from sales of shares 39,972,447 20,810,440 4,835,019
Net asset value of shares issued to shareholders in
reinvestment of net investment income and realized gain
from investment transactions 19,064,736 10,332,398 2,685,685
Net asset value of shares issued in exchange for
assets acquired in tax-free acquisition 44,391,757 7,525,059 --
Total 103,428,940 38,667,897 7,520,704
- ---------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (87,261,992) (49,006,799) (13,954,985)
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from capital
share transactions 16,166,948 (10,338,902) (6,434,281)
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 21,644,380 (12,064,903) (5,889,972)
- ---------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 650,699,475 331,617,649 100,304,466
- ---------------------------------------------------------------------------------------------------------------------
End of period $ 672,343,855 $ 319,552,746 $ 94,414,494
=====================================================================================================================
</TABLE>
+ Includes (overdistributed) undistributed net investment income of
$(1,974,956), $(810,041) and $12,688 at March 31, 1997 and $(1,595,018),
$(695,319) and $50,088 at September 30, 1996.
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended 3/31/97
- -----------------------------------------------------------------------------------------------------------------------
New Jersey Connecticut Missouri Hawaii
Increase (Decrease) in Net Assets Series Series Series Series
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 4,863,814 $ 3,372,064 $ 3,524,992 $ 2,227,183
Net realized gain from investment transactions 1,464,451 306,276 140,146 246,453
Net unrealized depreciation of investments (2,780,969) (1,178,275) (1,452,819) (1,039,420)
Net increase in net assets resulting from operations 3,547,296 2,500,065 2,212,319 1,434,216
- -----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income (4,943,021) (3,322,355) (3,602,867) (2,200,009)
- -----------------------------------------------------------------------------------------------------------------------
Capital share transactions
Net proceeds from sales of shares 9,064,945 4,048,248 11,157,891 2,527,980
Net asset value of shares issued to shareholders
in reinvestment of net investment income 2,747,423 1,758,894 1,974,062 1,011,929
Total 11,812,368 5,807,142 13,131,953 3,539,909
- -----------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (15,795,001) (9,731,985) (9,618,613) (10,872,407)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived
from capital share transactions (3,982,633) (3,924,843) 3,513,340 (7,332,498)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (5,378,358) (4,747,133) 2,122,792 (8,098,291)
- -----------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 186,402,302 122,884,988 134,143,954 85,344,275
- -----------------------------------------------------------------------------------------------------------------------
End of period $ 181,023,944 $ 118,137,855 $ 136,266,746 $ 77,245,984
=======================================================================================================================
<CAPTION>
Six Months Ended 3/31/97
- ------------------------------------------------------------------------------------------------------------------
Washington Minnesota California
Increase (Decrease) in Net Assets Series Series Series
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income $ 1,914,571 $ 237,792 $ 7,448,282
Net realized gain from investment transactions 646,720 5,515 1,267,912
Net unrealized depreciation of investments (818,933) (50,269) (4,251,526)
Net increase in net assets resulting from operations 1,742,358 193,038 4,464,668
- ------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income (1,957,090) (237,394) (7,695,119)
- ------------------------------------------------------------------------------------------------------------------
Capital share transactions
Net proceeds from sales of shares 1,116,119 1,166,255 7,803,135
Net asset value of shares issued to shareholders
in reinvestment of net investment income 1,165,321 152,712 3,359,983
Total 2,281,440 1,318,967 11,163,118
- ------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (4,674,518) (757,638) (29,176,586)
- ------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived
from capital share transactions (2,393,078) 561,329 (18,013,468)
- ------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (2,607,810) 516,973 (21,243,919)
- ------------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 71,295,329 8,046,889 294,837,480
- ------------------------------------------------------------------------------------------------------------------
End of period+ $ 68,687,519 $ 8,563,862 $ 273,593,561
==================================================================================================================
</TABLE>
+ Includes (overdistributed) undistributed net investment income of
$(331,584), $41,164, $(631,257), $(194,683), $(226,933), $15,050 and
$(1,228,844) at March 31, 1997.
See Notes to Financial Statements.
27
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended 9/30/96
---------------------------------------------------------------------------
Increase (Decrease) New Jersey Connecticut Missouri Hawaii
in Net Assets Series Series Series Series
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 10,094,793 $ 6,679,207 $ 6,998,862 $ 4,691,747
Net realized gain (loss) from
investment transactions 2,284,474 233,088 984,793 620,421
Net unrealized
appreciation (depreciation)
of investments (934,233) (458,922) (627,703) (489,915)
Net increase (decrease)
in net assets resulting
from operations 11,445,034 6,453,373 7,355,952 4,813,253
- ---------------------------------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income (10,130,335) (6,419,221) (7,226,857) (4,609,365)
Net realized gain from
investment transactions -- -- -- --
Total distributions (10,130,335) (6,419,221) (7,226,857) (4,609,365)
- ---------------------------------------------------------------------------------------------------------------
Capital share transactions
Net proceeds from sales of shares 20,596,239 19,396,365 11,241,199 10,477,052
Net asset value of shares
issued to shareholders
in reinvestment of net
investment income and
realized gain from
investment transactions 5,684,017 3,443,037 4,116,755 2,125,689
Net asset value of shares
issued in exchange for
assets acquired in tax-free
acquisition -- -- -- --
Total 26,280,256 22,839,402 15,357,954 12,602,741
- ---------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (32,754,740) (13,424,762) (13,166,042 (13,567,467)
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) in
net assets derived from
capital share transactions (6,474,484) 9,414,640 2,191,912 (964,726)
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease)
in net assets (5,159,785) 9,448,792 2,321,007 (760,838)
- ---------------------------------------------------------------------------------------------------------------
Net Assets
Beginning of period 191,562,087 113,436,196 131,822,947 86,105,113
- ---------------------------------------------------------------------------------------------------------------
End of period+ $ 186,402,302 $ 122,884,988 $ 134,143,954 $ 85,344,275
===============================================================================================================
<CAPTION>
One
Month Ended Year Ended
Year Ended 9/30/96 9/30/96 8/31/96
-------------------------------- ---------------- -------------
Washington Minnesota California California
Series Series Series Series
- -------------------------------------------------------------------- ---------------- -------------
<S> <C> <C> <C> <C>
Net investment income $ 4,036,501 $ 402,293 $ 1,270,077 $ 15,909,947
Net realized gain (loss) from
investment transactions 400,112 (29,599) 152,431 1,550,576
Net unrealized
appreciation (depreciation)
of investments 356,916 (110,355) 3,003,787 (3,799,733)
Net increase (decrease)
in net assets resulting
from operations 4,793,529 262,339 4,426,295 13,660,790
- -----------------------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income (4,111,145) (388,612) (1,331,764) (15,888,739)
Net realized gain from
investment transactions -- (44,188) -- --
Total distributions (4,111,145) (432,800) (1,331,764) (15,888,739)
- -------------------------------------------------------------------- ---------------- -------------
Capital share transactions
Net proceeds from sales of shares 4,280,899 4,297,692 2,814,821 20,619,999
Net asset value of shares
issued to shareholders
in reinvestment of net
investment income and
realized gain from
investment transactions 2,420,812 284,450 575,513 6,879,438
Net asset value of shares
issued in exchange for
assets acquired in tax-free
acquisition -- -- -- 16,355,395
Total 6,701,711 4,582,142 3,390,334 43,854,832
- -------------------------------------------------------------------- ---------------- -------------
Cost of shares reacquired (10,448,073) (679,941) (3,258,486) (46,289,724)
- -------------------------------------------------------------------- ---------------- -------------
Increase (decrease) in
net assets derived from
capital share transactions (3,746,362) 3,902,201 131,848 (2,434,892)
- -------------------------------------------------------------------- ---------------- -------------
Increase (decrease)
in net assets (3,063,978) 3,731,740 3,226,379 (4,662,841)
- -------------------------------------------------------------------- ---------------- -------------
Net Assets
Beginning of period 74,359,307 4,315,149 291,611,101 296,273,942
- -------------------------------------------------------------------- ---------------- -------------
End of period+ $ 71,295,329 $ 8,046,889 $ 294,837,480 $ 291,611,101
- -------------------------------------------------------------------- ---------------- -------------
</TABLE>
+Includes (overdistributed) undistributed net investment income of $(252,377),
$(8,545), $(553,382), $(221,857), $(184,414), $14,652 and $(982,007) at
September 30, 1996 and $(920,320) at August 31, 1996.
See Notes to Financial Statements.
28
<PAGE>
Financial Highlights
NATIONAL SERIES
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------------------------------------------------------------
Six Months Ended 3/31, Year Ended 9/30,
Per Share Operating Performance: 1997 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.08 $11.00 $10.62 $12.37 $11.72 $11.31
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .295 .603 .626 .657 .695 .700
Net realized and unrealized gain
(loss)on investments (.073) .075 .382 (1.3124) .9255 .4795
Total from investment operations .222 .678 1.008 (.6554) 1.6205 1.1795
-------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.302) (.598) (.628) (.6596) (.693) (.717)
Distributions from net realized gain -- -- -- (.435) (.2775) (.0525)
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.00 $11.08 $11.00 $10.62 $12.37 $11.72
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 1.99%(b) 6.31% 9.84% (5.64)% 14.57% 10.78%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.43%(b) 0.90% 0.82% 0.86% 0.87% 0.83%
Net investment income 2.65%(b) 5.63% 5.92% 5.76% 5.79% 6.00%
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
----------------------------------------- -----------------------------------
Six Months Ended 3/31, 8/1/96(c) Six Months Ended 3/31, 7/15/96(c)
Per Share Operating Performance: 1997 to 9/30/96 1997 to 9/30/96
- ----------------------------------------------------------------------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.08 $11.05 $11.08 $10.90
- ----------------------------------------------------------------------------------------------- -----------------------------------
Income (loss) from investment operations
Net investment income .269 .089 .253 .106
Net realized and unrealized gain (loss) on investments (.075) .033 (.072) .190
Total from investment operations .194 .122 .181 .296
------------------------------------------------------------------------------------------ -----------------------------------
Distributions
Dividends from net investment income (.274) (.092) (.261) (.116)
------------------------------------------------------------------------------------------ -----------------------------------
Net asset value, end of period $11.00 $11.08 $11.00 $11.08
- ----------------------------------------------------------------------------------------------- -----------------------------------
Total Return(a)(b) 1.74% 1.16% 1.63% 2.71%
- ----------------------------------------------------------------------------------------------- -----------------------------------
Ratios to Average Net Assets(b):
Expenses 0.69% 0.20% 0.78% 0.34%
Net investment income 2.35% 0.68% 2.28% 0.96%
------------------------------------------------------------------------------------------ -----------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended 3/31, Year Ended 9/30,
Supplemental Data for AllClasses: 1997 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $648,604 $672,344 $650,699 $662,380 $709,413 $546,768
Portfolio turnover rate 114.48% 205.35% 225.39% 184.07% 138.06% 87.56%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a)Total return does not consider the effects of sales loads.
(b)Not annualized.
(c)Commencement of offering Class shares.
See Notes to Financial Statements.
29
<PAGE>
Financial Highlights
NEW YORK SERIES
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------------------------------
Six Months Ended 3/31, Year Ended 9/30,
Per Share Operating Performance: 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.78 $10.85 $10.54 $12.27 $11.60 $11.26
- ---------------------------------------------------------------------- ------------------------------------------------------------
Income (loss) from investment operations
Net investment income .291 .597 .610 .649 .682 .691
Net realized and unrealized gain
(loss)on investments (.095) (.081) .316 (1.3665) .874 .458
Total from investment operations .196 .516 .926 (.7175) 1.556 1.149
----------------------------------------------------------------- ------------------------------------------------------------
Distributions
Dividends from net investment income (.296) (.586) (.616) (.6475) (.681) (.709)
----------------------------------------------------------------- ------------------------------------------------------------
Distribution from net realized gain -- -- -- (.365) (.205) (.10)
Net asset value, end of period $10.68 $10.78 $10.85 $10.54 $12.27 $11.60
- ---------------------------------------------------------------------- ------------------------------------------------------------
Total Return(a) 1.80%(b) 4.87% 9.12% (6.21)% 13.95% 10.69%
- ---------------------------------------------------------------------- ------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.42%(b) 0.81% 0.82% 0.83% 0.85% 0.81%
Net investment income 2.69%(b) 5.54% 5.83% 5.72% 5.72% 5.98%
----------------------------------------------------------------- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
- -----------------------------------------------------------------------------------------
Six Months Ended 3/31, 7/15/96(c)
Per Share Operating Performance: 1997 to 9/30/96
- --------------------------------------------------------------------------- ------------
<S> <C> <C>
Net asset value, beginning of period $10.78 $10.63
- --------------------------------------------------------------------------- ------------
Income (loss) from investment operations
Net investment income .246 .111
Net realized and unrealized gain (loss) on investments (.100) .152
Total from investment operations .146 .263
---------------------------------------------------------------------- ------------
Distributions
Dividends from net investment income (.256) (.113)
---------------------------------------------------------------------- ------------
Net asset value, end of period $10.67 $10.78
- --------------------------------------------------------------------------- ------------
Total Return(a)(b) 1.34% 2.48%
- --------------------------------------------------------------------------- ------------
Ratios to Average Net Assets(b):
Expenses 0.78% 0.34%
Net investment income 2.29% 1.04%
---------------------------------------------------------------------- ------------
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended 3/31, Year Ended 9/30,
Supplemental Data for AllClasses: 1997 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $301,610 $319,553 $331,618 $338,539 $376,456 $306,447
Portfolio turnover rate 49.67% 64.25% 105.62% 149.13% 101.59% 146.68%
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Not annualized.
(c) Commencement of offering Class shares.
See Notes to Financial Statements.
30
<PAGE>
Financial Highlights
TEXAS SERIES
<TABLE>
<CAPTION>
Six Months
Ended 3/31, Year Ended 9/30,
Per Share Operating Performance: 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.11 $10.05 $9.59 $10.82 $10.28 $9.94
- ---------------------------------------------------------------------- ------------------------------------------------------------
Income (loss) from investment operations
Net investment income .274 .567 .571 .604 .624 .611
Net realized and unrealized gain (loss)
on investments (.056) .045 .452 (1.0802 .7135 .4155
Total from investment operations .218 .612 1.023 (.4762) 1.3375 1.0265
----------------------------------------------------------------- ------------------------------------------------------------
Distributions
Dividends from net investment income (.278) (.552) (.563) (.6038 (.615) (.629)
Distributions from net realized gain (.070) -- -- (.15) (.1825) (.0575)
- ---------------------------------------------------------------------- ------------------------------------------------------------
Net asset value, end of period $9.98 $10.11 $10.05 $9.59 $10.82 $10.28
- ---------------------------------------------------------------------- ------------------------------------------------------------
Total Return(a) 2.14%(b) 6.11% 11.14% (4.60)% 13.64% 10.68%
- ---------------------------------------------------------------------- ------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $90,850 $94,414 $100,304 $103,836 $109,232 $90,205
----------------------------------------------------------------- ------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver 0.43%(b) 0.69% 0.62% 0.50% 0.57% 0.60%
Expenses, excluding waiver 0.43%(b) 0.87% 0.87% 0.87% 0.97% 1.00%
Net investment income 2.70%(b) 5.58% 5.90% 5.97% 5.96% 5.96%
Portfolio turnover rate 63.90% 112.34% 108.00% 96.79% 58.10% 123.33%
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Not annualized.
See Notes to Financial Statements.
Financial Highlights
NEW JERSEY SERIES
<TABLE>
<CAPTION>
Six Months
Ended 3/31, Year Ended 9/30,
Per Share Operating Performance: 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.18 $5.14 $4.95 $5.55 $5.14 $4.97
- ---------------------------------------------------------------------- ------------------------------------------------------------
Income (loss) from investment operations
Net investment income .137 .277 .287 .300 .318 .32
Net realized and unrealized gain (loss)
on investments (.038) .041 .192 (.507) .439 .185
Total from investment operations .099 .318 .479 (.207) .757 .505
----------------------------------------------------------------- ------------------------------------------------------------
Distributions
Dividends from net investment income (.139) (.278) (.289) (.303) (.307) (.325)
Distributions from net realized gain -- -- -- (.09) (.04) (.01)
- ---------------------------------------------------------------------- ------------------------------------------------------------
Net asset value, end of period $5.14 $5.18 $5.14 $4.95 $5.55 $5.14
- ---------------------------------------------------------------------- ------------------------------------------------------------
Total Return(a) 1.90%(b) 6.29% 9.98% (3.91)% 15.26% 10.51%
- ---------------------------------------------------------------------- ------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $181,024 $186,402 $191,562 $184,230 $178,767 $118,386
----------------------------------------------------------------- ------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver 0.41%(b) 0.79% 0.72% 0.51% 0.35% 0.19%
Expenses, excluding waiver 0.43%(b) 0.86% 0.87% 0.83% 0.83% 0.73%
Net investment income 2.62%(b) 5.31% 5.73% 5.76% 5.88% 6.09%
Portfolio turnover rate 86.52% 171.63% 133.11% 75.62% 88.29% 54.63%
----------------------------------------------------------------- ------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Not annualized.
See Notes to Financial Statements.
31
<PAGE>
Financial Highlights
CONNECTICUT SERIES
<TABLE>
<CAPTION>
Six Months
Ended 3/31, Year Ended 9/30,
Per Share Operating Performance: 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.13 $10.12 $ 9.71 $11.01 $10.16 $ 9.86
- ---------------------------------------------------------------------- ------------------------------------------------------------
Income (loss) from investment operations
Net investment income .282 .576 .579 .585 .612 .617
Net realized and unrealized gain (loss)
on investments (.074) (.013) .407 (1.1287) .906 .311
Total from investment operations .208 .563 .986 (.5437) 1.518 .928
----------------------------------------------------------------- ------------------------------------------------------------
Distributions
Dividends from net investment income (.278) (.553) (.576) (.6038) (.608) (.628)
Distributions from net realized gain -- -- -- (.1525) (.06) --
- ---------------------------------------------------------------------- ------------------------------------------------------------
Net asset value, end of period $ 10.06 $10.13 $10.12 $ 9.71 $ 11.01 $10.16
- ---------------------------------------------------------------------- ------------------------------------------------------------
Total Return(a) 2.05%(b) 5.70% 10.52% (5.13)% 15.48% 9.69%
- ---------------------------------------------------------------------- ------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $118,138 $122,885 $113,436 $101,619 $ 93,020 $ 58,880
----------------------------------------------------------------- ------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver 0.26%(b) 0.38% 0.41% 0.49% 0.44% 0.20%
Expenses, excluding waiver 0.39%(b) 0.80% 0.86% 0.86% 0.91% 0.74%
Net investment income 2.77%(b) 5.66% 5.89% 5.67% 5.60% 5.96%
Portfolio turnover rate 15.99% 63.61% 54.19% 97.42% 45.81% 54.90%
----------------------------------------------------------------- ------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Not annualized.
See Notes to Financial Statements.
Financial Highlights
MISSOURI SERIES
<TABLE>
<CAPTION>
Six Months
Ended 3/31, Year Ended 9/30,
Per Share Operating Performance: 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.08 $5.08 $4.88 $5.51 $5.14 $4.91
- ---------------------------------------------------------------------- ------------------------------------------------------------
Income (loss) from investment operations
Net investment income .132 .267 .277 .292 .305 .310
Net realized and unrealized gain (loss)
on investments (.048) .008 .204 (.568) .381 .236
Total from investment operations .084 .275 .481 (.275) .686 .546
----------------------------------------------------------------- ------------------------------------------------------------
Distributions
Dividends from net investment income (.134) (.275) (.281) (.297) (.301) (.316)
Distributions from net realized gain -- -- -- (.057 (.015) --
- ---------------------------------------------------------------------- ------------------------------------------------------------
Net asset value, end of period $35.03 $5.08 $5.08 $4.88 $5.51 $5.14
- ---------------------------------------------------------------------- ------------------------------------------------------------
Total Return(a) 1.65%(b) 5.54% 10.21% (5.22) 13.80% 11.47%
- ---------------------------------------------------------------------- ------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $136,267 $134,144 $131,823 $119,690 $107,478 $65,812
----------------------------------------------------------------- ------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver 0.36%(b) 0.77% 0.74% 0.60% 0.48% 0.26%
Expenses, excluding waiver 0.44%(b) 0.92% 0.89% 0.91% 0.92% 0.79%
Net investment income 2.57%(b) 5.21% 5.61% 5.60% 5.66% 5.94%
Portfolio turnover rate 13.79% 93.17% 58.17% 50.59% 56.20% 44.19%
----------------------------------------------------------------- ------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Not annualized.
See Notes to Financial Statements.
32
<PAGE>
Financial Highlights
HAWAII SERIES
<TABLE>
<CAPTION>
Six Months
Ended 3/31, Year Ended 9/30 10/28/91(c)
Per Share Operating Performance: 1997 1996 1995 1994 1993 to9/30/92
- ---------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.93 $4.91 $4.72 $5.34 $4.89 $4.76
- ---------------------------------------------------------------------- ------------------------------------------------------------
Income (loss) from investment operations
Net investment income .134 .27 .27 .29 .29 .281
Net realized and unrealized gain (loss)
on investments (.061) .015 .198 (.578) .454 .138
Total from investment operations .073 .288 .469 (.2862) .751 .419
----------------------------------------------------------------- ------------------------------------------------------------
Distributions
Dividends from net investment income (.133) (.268) (.279) (.2888) (.301) (.289)
Distribution from net realized gain -- -- -- (.045) -- --
----------------------------------------------------------------- ------------------------------------------------------------
Net asset value, end of period $4.87 $4.93 $4.91 $4.72 $5.34 $4.89
- ---------------------------------------------------------------------- ------------------------------------------------------------
Total Return(a) 1.45%(b) 5.94 10.30 (5.54) 15.85 9.06%(b)
- ---------------------------------------------------------------------- ------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $77,246 $85,344 $86,105 $92,972 $92,883 $47,031
----------------------------------------------------------------- ------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver 0.28%(b) 0.57 0.58 0.41 0.40 0.00%(b)
Expenses, excluding waiver 0.43%(b) 0.87 0.87 0.87 0.90 0.74%(b)
Net investment income 2.71%(b) 5.46 5.74 5.80 5.62 5.96%(b)
Portfolio turnover rate 20.26% 59.46 70.64 66.04 34.49 53.24%
----------------------------------------------------------------- ------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Not annualized.
(c) Commencement of operations.
See Notes to Financial Statements.
Financial Highlights
WASHINGTON SERIES
<TABLE>
<CAPTION>
Six Months
Ended 3/31, Year Ended 9/30 4/16/92(c)
Per Share Operating Performance: 1997 1996 1995 1994 1993 to9/30/92
- ---------------------------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.96 $4.91 $4.72 $5.35 $4.92 $4.76
- ---------------------------------------------------------------------- ------------------------------------------------------------
Income (loss) from investment operations
Net investment income .136 .271 .277 .2976 .304 .140
Net realized and unrealized gain (loss)
on investments .013 .056 .200 (.5895) .427 .165
Total from investment operations .149 .327 .477 (.2919) .731 .305
------------------------------------------------------------------ ------------------------------------------------------------
Distributions
Dividends from net investment income (.139) (.277) (.287) (.2931) (.301) (.145)
Distribution from net realized gain -- -- -- (.045) -- --
------------------------------------------------------------------ ------------------------------------------------------------
Net asset value, end of period $4.97 $4.96 $4.91 $4.72 $5.35 $4.92
- ---------------------------------------------------------------------- ------------------------------------------------------------
Total Return(a) 3.00%(b) 6.80% 10.48% (5.65)% 15.32% 6.47%(b)
- ---------------------------------------------------------------------- ------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $69,088 $71,295 $74,359 $78,854 $77,324 $42,627
Ratios to Average Net Assets:
Expenses, including waiver 0.26%(b) 0.60% 0.53% 0.29% 0.30% 0.00%(b)
Expenses, excluding waiver 0.29%(b) 0.68% 0.68% 0.67% 0.80% 0.38%(b)
Net investment income 2.71%(b) 5.47% 5.84% 5.93% 5.86% 2.58%(b)
Portfolio turnover rate 74.97% 78.02% 92.85% 137.74% 85.45% 37.23%
------------------------------------------------------------------ ------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Not annualized.
(c) Commencement of operations.
See Notes to Financial Statements.
33
<PAGE>
Financial Highlights
MINNESOTA SERIES
<TABLE>
<CAPTION>
Six Months Ended Year Ended 12/27/94(c)
Per Share Operating Performance: 3/31/97 9/30/96 to 9/30/95
- --------------------------------------------------------------------------------------------- ----------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $4.90 $5.01 $4.76
- --------------------------------------------------------------------------------------------- ----------------------------------
Income from investment operations
Net investment income .139 .294 .230
Net realized and unrealized gain (loss) on investments (.030) (.078) .249
Total from investment operations .109 .216 .479
---------------------------------------------------------------------------------------- ----------------------------------
Distributions
Dividends from net investment income (.139) (.286) (.229)
Distribution from net realized gain -- (.04) --
- --------------------------------------------------------------------------------------------- ----------------------------------
Net asset value, end of period $4.87 $4.90 $5.01
- --------------------------------------------------------------------------------------------- ----------------------------------
Total Return(a) 2.21%(b) 4.44% 10.22%(b)
- --------------------------------------------------------------------------------------------- ----------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $8,564 $8,047 $4,315
---------------------------------------------------------------------------------------- ----------------------------------
Ratios to Average Net Assets:
Expenses, including waiver 0.19%(b) 0.00% 0.00%(b)
Expenses, excluding waiver 0.44%(b) 0.91% 0.64%(b)
Net investment income 2.80%(b) 5.91% 4.58%(b)
Portfolio turnover rate 22.64% 43.08% 121.41%
---------------------------------------------------------------------------------------- ----------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Not annualized.
(c) Commencement of operations.
See Notes to Financial Statements.
34
<PAGE>
Financial Highlights
CALIFORNIA SERIES
<TABLE>
<CAPTION>
Class A Shares
----------------------------------------------------------------------------------------
Six Months One Month
Ended 3/31, Ended 9/30, Year Ended 8/31,
Per Share Operating Performance: 1997 1996 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------- --------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.43 $10.32 $10.41 $10.45 $11.79 $11.21 $10.78
- -------------------------------------------------------------------------- --------------------------------------------------------
Income (loss) from investment
operations
Net investment income .270 .046 .566 .588 .623 .656 .663
Net realized and unrealized gain (loss)
on investments (.108) .112 (.089) (.038) (.989) .872 .5615
Total from investment operations .162 .158 .477 .550 (.366) 1.528 1.2245
--------------------------------------------------------------------- --------------------------------------------------------
Distributions
Dividends from net investment income (.282) (.048) (.567) (.590) (.624) (.658) (.672)
Distributions from net realized gain -- -- -- -- (.350) (.290) (.1225)
--------------------------------------------------------------------- --------------------------------------------------------
Net asset value, end of period $10.31 $10.43 $10.32 $10.41 $10.45 $11.79 $11.21
- -------------------------------------------------------------------------- --------------------------------------------------------
Total Return(a) 1.54%(b) 1.53%(b) 4.65% 5.58% (3.33)% 14.43% 11.79%
- -------------------------------------------------------------------------- --------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver 0.43%(b) 0.07%(b) 0.75% 0.76% 0.67% 0.68% 0.67%
Expenses, excluding waiver 0.43%(b) 0.07%(b) 0.86% 0.86% 0.87% 0.88% 0.87%
Net investment income 2.61%(b) 0.44%(b) 5.41% 5.84% 5.63% 5.68% 5.87%
--------------------------------------------------------------------- --------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
---------------------------------------------------
Six Months One Month
Ended 3/31, Ended 9/30, 7/15/96(c)
Per Share Operating Performance: 1997 1996 to 8/31/96
- ---------------------------------------------------------------------------------------------- ---------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.43 $10.32 $10.28
- ---------------------------------------------------------------------------------------------- ---------------- ------------------
Income (loss) from investment
operations
Net investment income .245 .039 .068
Net realized and unrealized gain (loss) on investments (.112) .113 .041
Total from investment operations .133 .152 .109
----------------------------------------------------------------------------------------- ---------------- ------------------
Distributions
Dividends from net investment income (.243) (.042) (.069)
----------------------------------------------------------------------------------------- ---------------- ------------------
Net asset value, end of period $10.32 $10.43 $10.32
- ---------------------------------------------------------------------------------------------- ---------------- ------------------
Total Return(a)(b) 1.27% 1.47% 1.16%
- ---------------------------------------------------------------------------------------------- ---------------- ------------------
Ratios to Average Net Assets(b):
Expenses, including waiver 0.79% 0.13% 0.17%
Expenses, excluding waiver 0.79% 0.13% 0.21%
Net investment income 2.25% 0.38% 0.65%
----------------------------------------------------------------------------------------- ---------------- ------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months One Month
Ended 3/31, Ended 9/30, Year Ended 8/31,
Per Share Operating Performance: 1997 1996 1996 1995 1994 1993 1992
- ---------------------------------------------------------- ----------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $273,594 $294,837 $291,611 $296,274 $329,474 $336,291 $224,505
Portfolio turnover rate 60.49% 2.74% 132.37% 100.20% 86.05% 81.34% 152.79%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads.
(b) Not annualized.
(c) Commencement of offering Class shares.
See Notes to Financial Statements.
35
Notes to Financial Statements
1. Significant Accounting Policies
Lord Abbett Tax-Free Income Fund (the "Company") is an open-end management
investment company. The Company consists of ten separate portfolios ("Series").
Each Series is non-diversified as defined under the Investment Company Act of
1940 except for the National Series. The financial statements have been prepared
in conformity with generally accepted accounting principles, which require
management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Company.
(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, at 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 companies 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 securities are
purchased or sold (trade date). Interest income is recorded on the accrual
basis. Net investment income (other than distribution and service fees) and
realized and unrealized gains or losses are allocated to each class of shares
based upon the relative proportion of net assets at the beginning of the day.
(d) The organization expenses of the Hawaii, Washington and Minnesota Series are
being amortized evenly over a period of five years from their respective
commencement dates of operations.
2. Management Fee and Other Transactions With Affiliates
The Company has a management agreement with Lord, Abbett & Co. ("Lord Abbett")
pursuant to which Lord Abbett 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 an annual rate of 0.50%. Lord Abbett may
voluntarily reimburse any Series for certain of its other expenses. Any such
other expenses reimbursed for the Minnesota Series are subject to repayment
pursuant to a formula based on the expense ratio and size of the Series until
five years from the commencement of its operations or the termination of the
management agreement, whichever is earlier. As of March 31, 1997, other expenses
reimbursed by Lord Abbett and not repaid by the Minnesota Series amounted to
$43,480.
Each Series of the Company has Rule 12b-1 plans and agreements with respect to
one or more classes of shares as described below (the "Class A, Class B and
Class C Plans") with Lord Abbett Distributor LLC ("Distributor"), an affiliate
of Lord Abbett. Each Series makes payments to Distributor which uses or passes
on such payments to authorized institutions. Pursuant to the Class A Plan, the
Series pay Distributor(1) an annual service fee of (a) 0.25% of the average
daily net assets of Class A shares of the Connecticut, Missouri and California
Series and (b) 0.15% of the average daily net asset value of shares sold prior
to the effective date of the Class A Plan and 0.25% of the average daily net
asset value of shares sold on or after that date for the National, New York,
Texas, New Jersey, Hawaii, Washington and Minnesota Series and (2) a one-time
distribution fee of up to 1% on certain qualifying purchases and a supplemental
annual distribution fee of 0.10% of the average daily net assets of Class A
shares serviced by certain qualifying institutions. The Class A Plan of the
Washington and Minnesota Series will not go into effect until the quarter
subsequent to the net assets of each Series reaching $100 million. Pursuant to
the Class B Plan of the National Series, the Series pays Distributor an annual
service and distribution fee of 0.25% and 0.75%, respectively, of the average
daily net asset value of the Class B shares. Pursuant to the Class C Plan of the
National, New York and California Series, the Series pay Distributor (1) a
service fee and a distribution fee, at the time such shares are sold, not to
exceed 0.25% and 0.75%, respectively, of the net asset value of such shares sold
and (2) at each quarter-end after the first anniversary of the sale of such
shares, a service fee and a distribution fee at an annual rate not to exceed
0.25% and 0.75%, respectively, of the average annual net asset value of such
shares outstanding.
12b-1 distribution plan expenses for the multiple share class Series were as
follows:
12b-1 Expenses
--------------------------------------------
Series Class A Class B Class C
- --------------------------------------------------------------------------------
National $730,711 $6,120 $202,840
- --------------------------------------------------------------------------------
New York 359,902 -- 34,086
- --------------------------------------------------------------------------------
California 358,058 -- 77,068
- --------------------------------------------------------------------------------
Lord Abbett received the following commissions on sales of capital stock of the
Company after concessions were paid to authorized distributors:
Lord Abbett Distributors'
Series Commissions Concessions
- --------------------------------------------------------------------------------
National-Class A $37,101 $253,758
- --------------------------------------------------------------------------------
New York-Class A 19,764 132,436
- --------------------------------------------------------------------------------
Texas 9,094 55,917
- --------------------------------------------------------------------------------
New Jersey 29,589 199,879
- --------------------------------------------------------------------------------
Connecticut 17,319 113,259
- --------------------------------------------------------------------------------
Missouri 19,672 129,568
- --------------------------------------------------------------------------------
Hawaii 8,857 60,145
- --------------------------------------------------------------------------------
Washington 5,141 35,442
- --------------------------------------------------------------------------------
Minnesota 6,310 38,579
- --------------------------------------------------------------------------------
California-Class A 15,764 111,018
- --------------------------------------------------------------------------------
Certain of the Company's officers and directors have an interest in Lord Abbett.
36
<PAGE>
3. Capital Share Transactions Transactions in shares of capital stock for the
single class Series were as follows:
<TABLE>
<CAPTION>
Six Months Ended 3/31/97
-------------------------------------------------------------------------------------------
Texas New Jersey Connecticut Missouri Hawaii Washington Minnesota
Series Series Series Series Series Series Series
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales of shares 177,359 1,739,375 396,939 2,188,098 509,278 222,299 235,933
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of net investment income 174,770 526,644 172,448 386,182 203,732 232,269 30,830
- ------------------------------------------------------------------------------------------------------------------------------------
Total 352,129 2,266,019 569,387 2,574,280 713,010 454,568 266,763
- ------------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (586,456) (3,025,347) (956,104) (1,882,308) (2,194,905) (933,180) (132,941)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in shares (234,327) (759,328) (386,717) 691,972 (1,481,895) (478,612) 133,822
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended 9/30/96
---------------------------------------------------------------------------------------------
Texas New Jersey Connecticut Missouri Hawaii Washington Minnesota
Series Series Series Series Series Series Series
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales of shares 475,866 3,974,605 1,905,589 2,206,553 2,128,597 860,560 861,206
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of net investment income
and realized gain from investment
transactions 265,530 1,098,145 339,929 808,814 431,565 488,901 57,627
- ------------------------------------------------------------------------------------------------------------------------------------
Total 741,396 5,072,750 2,245,518 3,015,367 2,560,162 1,349,461 918,833
- ------------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (1,377,623) (6,324,324) (1,321,872) (2,584,262) (2,750,815) (2,109,723) (137,934)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in shares (636,227) (1,251,574) 923,646 431,105 (190,653) (760,262) 780,899
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Transactions in multiple class share Series (both shares and dollars) were as
follows:
<TABLE>
<CAPTION>
Six Months Ended 3/31/97
-----------------------------------------------------------------------------------------
National Series New YorkSeries California Series
Class A Shares Amount Shares Amount Shares Amount
- --------------------------------------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 1,498,339 $ 16,740,597 583,154 $ 6,319,916 645,298 $ 6,765,271
- --------------------------------------------------------------------- -------------------------------------------------------------
Shares issued to shareholders in
reinvestment of net investment income 788,720 8,815,136 446,527 4,847,988 301,460 3,164,379
- --------------------------------------------------------------------- -------------------------------------------------------------
Total 2,287,059 25,555,733 1,029,681 11,167,904 946,758 9,929,650
- --------------------------------------------------------------------- -------------------------------------------------------------
Shares reacquired (3,875,524) (43,264,184) (2,340,872) (25,391,132) (2,561,075) (26,859,599)
- --------------------------------------------------------------------- -------------------------------------------------------------
Decrease in shares (1,588,465) $(17,708,451) (1,311,191) $(14,223,228) (1,614,317) $(16,929,949)
- --------------------------------------------------------------------- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended 9/30/96 One Month Ended 9/30/96 Year Ended 8/31/96
--------------------------------------------------- ----------------------- ------------------------
National Series New YorkSeries California Series California Series
Class A Shares Amount Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------- --------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of shares 3,460,521 $38,540,261 1,905,900 $20,626,851 267,904 $2,778,820 1,920,287 $20,210,489
- -------------------------------------------------------- -------------------------- --------------------- ------------------------
Shares issued to
shareholders in
reinvestment of net
investment income 1,705,482 18,872,688 953,105 10,302,679 52,730 543,646 654,374 6,851,665
- -------------------------------------------------------- -------------------------- --------------------- ------------------------
Total 5,166,003 57,412,949 2,859,005 30,929,530 320,634 3,322,466 2,574,661 27,062,154
- -------------------------------------------------------- -------------------------- --------------------- ------------------------
Shares reacquired (7,648,786) (84,781,412) (4,489,130) (48,590,185) (301,434) (3,124,462) (4,377,777) (45,915,889)
- -------------------------------------------------------- -------------------------- --------------------- ------------------------
Increase (decrease) in shares (2,482,783) $(27,368,463) (1,630,125) $(17,660,655) 19,200 $ 198,004 (1,803,116) $(18,853,735)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
8/1/96
(Commencement of Offering
Class B Shares)
Six Months Ended 3/31/97 to 9/30/96
--------------------------------- ---------------------------
National Series National Series
Class B Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------- ---------------------------
<S> <C> <C> <C> <C>
Sales of shares 100,706 $1,122,982 59,802 $661,582
- ---------------------------------------------------------------------------------------------------- ---------------------------
Shares issued to shareholders in reinvestment
of net investment income 977 10,916 72 786
- ---------------------------------------------------------------------------------------------------- ---------------------------
Total 101,683 1,133,898 59,874 662,368
- ---------------------------------------------------------------------------------------------------- ---------------------------
Shares reacquired (2,912) (32,276) (5,647) (61,732)
- ---------------------------------------------------------------------------------------------------- ---------------------------
Increase in shares 98,771 $1,101,622 54,227 $600,636
- ---------------------------------------------------------------------------------------------------- ---------------------------
</TABLE>
37
<PAGE>
Notes to Financial Statements
<TABLE>
<CAPTION>
Six Months Ended 3/31/97
--------------------------------------------------------------------------------
NationalSeries New York Series California Series
Class C Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 171,852 $1,919,648 38,847 $420,698 99,313 $1,037,864
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of net investment income 54,291 606,793 8,272 89,796 18,635 195,604
- ------------------------------------------------------------------------------------------------------------------------------------
Total 226,143 2,526,441 47,119 510,494 117,948 1,233,468
- ------------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (442,119) (4,934,467) (120,066) (1,299,924) (221,189) (2,316,987)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in shares (215,976) $(2,408,026) (72,947) $(789,430) (103,241) $(1,083,519)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
7/15/96
(Commencement of Offering
Class C Shares) One Month Ended
to 9/30/96 9/30/96
---------------------------------------------------------- --------------------------
National Series New YorkSeries California Series
Class C Shares Amount Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 69,802 $770,616 15,695 $184,291 3,458 $36,001
- ---------------------------------------------------------------------------------------------- --------------------------
Shares issued to shareholders in
reinvestment of net investment
income 17,293 191,259 2,504 26,979 3,091 31,867
- ---------------------------------------------------------------------------------------------- --------------------------
Shares issued to shareholders in
exchange for assets acquired in
tax-free acquisition 4,072,638 44,391,757 707,908 7,525,059 -- --
- ---------------------------------------------------------------------------------------------- --------------------------
Total 4,159,733 45,353,632 726,107 7,736,329 6,549 67,868
- ---------------------------------------------------------------------------------------------- --------------------------
Shares reacquired (219,636) (2,418,857) (38,624) (414,576) (12,944) (134,024)
- ---------------------------------------------------------------------------------------------- --------------------------
Increase (decrease) in shares 3,940,097 $42,934,775 687,483 $7,321,753 (6,395) $(66,156)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
7/15/96
(Commencement of Offering
Class C Shares) to 8/31/96
---------------------------
California Series
Class C Shares Amount
- ---------------------------------------------------------------
Sales of shares 39,504 $409,510
- ---------------------------------------------------------------
Shares issued to shareholders in
reinvestment of net investment
income 2,635 27,773
- ---------------------------------------------------------------
Shares issued to shareholders in
exchange for assets acquired in
tax-free acquisition 1,591,611 16,355,395
- ---------------------------------------------------------------
Total 1,633,750 16,792,678
- ---------------------------------------------------------------
Shares reacquired (35,879) (373,835)
- ---------------------------------------------------------------
Increase (decrease) in shares 1,597,871 $16,418,843
- ---------------------------------------------------------------
4. Distributions
Dividends from net investment income are declared daily and paid monthly.
Taxable net realized gains from securities transactions, if any, reduced by
capital loss carryforwards will be distributed to shareholders annually. 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. The accumulated net realized gain (loss) for financial
reporting purposes, which is substantially the same as for federal income tax
purposes, aggregated $(11,098,352) for the National Series, $(13,951,824) for
the New York Series, $616,520 for the Texas Series, $(981,877) for the New
Jersey Series, $(2,015,392) for the Connecticut Series, $(4,478,075) for the
Missouri Series, $(2,235,215) for the Hawaii Series, $(3,338,179) for the
Washington Series, $(26,882) for the Minnesota Series, and $(22,520,074) for the
California Series. The capital loss carryforwards expire in 2003, 2004 and 2005.
Dividends declared by class for the multiple class share Series were as follows:
Dividends
-----------------------------------------------
Series Class A Class B Class C
- --------------------------------------------------------------------------------
National $16,937,297 $34,967 $965,849
- --------------------------------------------------------------------------------
New York 8,398,600 -- 156,074
- --------------------------------------------------------------------------------
California 7,314,746 -- 380,373
- --------------------------------------------------------------------------------
5. Paid In Capital
At March 31, 1997, paid in capital for each Series was as follows:
- --------------------------------------------------------------------------------
National $659,205,239 Missouri $ 138,165,152
- --------------------------------------------------------------------------------
New York 312,025,261 Hawaii 79,335,590
- --------------------------------------------------------------------------------
Texas 89,490,379 Washington 70,093,727
- --------------------------------------------------------------------------------
New Jersey 179,635,853 Minnesota 8,695,476
- --------------------------------------------------------------------------------
Connecticut 119,309,765 California 292,288,383
- --------------------------------------------------------------------------------
38
<PAGE>
6. Purchases and Sales of Securities
Purchases and sales of investment securities (other than short-term investments)
were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
National $771,919,581 $799,156,046
- --------------------------------------------------------------------------------
New York 154,961,230 168,575,788
- --------------------------------------------------------------------------------
Texas 60,026,953 70,815,704
- --------------------------------------------------------------------------------
New Jersey 159,178,802 170,406,429
- --------------------------------------------------------------------------------
Connecticut 19,256,186 22,687,794
- --------------------------------------------------------------------------------
Missouri 24,320,658 18,748,660
- --------------------------------------------------------------------------------
Hawaii 16,352,447 20,627,373
- --------------------------------------------------------------------------------
Washington 56,042,490 54,220,529
- --------------------------------------------------------------------------------
Minnesota 2,368,453 1,878,449
- --------------------------------------------------------------------------------
California 172,024,353 188,530,758
- --------------------------------------------------------------------------------
Security gains and losses are computed on the identified cost basis. As of March
31, 1997, net unrealized appreciation (depreciation), unrealized appreciation,
and unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized
Appreciation Unrealized Unrealized
Series (Depreciation) Appreciation Depreciation
- --------------------------------------------------------------------------------
National $2,472,487 $9,550,871 $7,078,384
- --------------------------------------------------------------------------------
New York 4,346,607 7,474,078 3,127,471
- --------------------------------------------------------------------------------
Texas 730,462 1,966,508 1,236,046
- --------------------------------------------------------------------------------
New Jersey 2,701,552 3,431,821 730,269
- --------------------------------------------------------------------------------
Connecticut 802,317 1,840,567 1,038,250
- --------------------------------------------------------------------------------
Missouri 3,210,926 3,986,047 775,121
- --------------------------------------------------------------------------------
Hawaii 340,292 938,017 597,725
- --------------------------------------------------------------------------------
Washington 2,158,904 2,629,904 471,000
- --------------------------------------------------------------------------------
Minnesota (119,782) 55,616 175,398
- --------------------------------------------------------------------------------
California 5,054,096 8,038,574 2,984,478
- --------------------------------------------------------------------------------
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 and all officers of the
Company receive no compensation from the Company for acting as such. Outside
Directors' fees and retirement costs are allocated among all funds in the Lord
Abbett group based on the net assets of each fund. A portion of the Directors'
fees accrued during the period 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, 1997, the aggregate amount in Directors' accounts
maintained under the plan was $469,292.
8. California Series
On July 12, 1996, Lord Abbett California Tax-Free Income Fund became a Series of
the Company. The California Series changed its fiscal year end from August 31 to
September 30 to conform to the fiscal year end of the other Series in the
Company. Accordingly, the financial statements of the California Series cover a
one-month period from September 1, 1996 to September 30, 1996.
9. Acquisition
On July 12, 1996, the National, New York and California Series of the Company
acquired the net assets of the respective Series of Lord Abbett Securities Trust
(the "Trust") pursuant to a plan of reorganization approved by the Trust's
shareholders on June 19, 1996. The acquisition was accomplished by a tax-free
exchange of newly issued Class C shares of each Series for shares of the
respective Series of the Trust. The number of Class C shares of each Series of
the Company issued, the number of shares of each Series of the Trust exchanged,
and the aggregate net assets of each Series of the Company and Trust (including
net unrealized appreciation (depreciation) and accumulated net realized losses
for the Trust) immediately before the acquisition were as follows:
Class C Shares Trust Shares Net Assets
Issued Exchanged Of Company
- --------------------------------------------------------------------------------
National 4,072,638 9,484,046 $625,342,602
- --------------------------------------------------------------------------------
New York 707,908 1,662,757 $312,547,408
- --------------------------------------------------------------------------------
California 1,591,611 3,703,634 $276,270,190
- --------------------------------------------------------------------------------
Unrealized
Net Assets Appreciation Accumulated Net
Of Trust (Depreciation) Realized Losses
- --------------------------------------------------------------------------------
National $44,391,757 $ 61,000 $(2,390,370)
- --------------------------------------------------------------------------------
New York $ 7,525,059 $ (4,439) $ (825,448)
- --------------------------------------------------------------------------------
California $16,355,395 $ 162,427 $(2,264,239)
- --------------------------------------------------------------------------------
39
<PAGE>
Our Management
Board of Directors
Robert S. Dow
E. Wayne Nordberg
E. Thayer Bigelow*
Stewart S. Dixon*
John C. Jansing*
C. Alan MacDonald*
Hansel B. Millican, Jr.*
Thomas J. Neff*
*Outside Director
+Audit Committee
Officers
Robert S. Dow, Chairman and President
Zane E. Brown, Executive Vice
President and Portfolio Manager
Kenneth B. Cutler, Vice President
and Secretary
Stephen I. Allen, Vice President
Daniel E. Carper, Vice President
Daria L. Foster, Vice President
Robert G. Morris, Vice President
Robert J. Noelke, Vice President
E. Wayne Nordberg, Vice President
John J. Walsh, Vice President
Paul A. Hilstad, Vice President
and Assistant Secretary
Thomas F. Konop, Vice President
and Assistant Secretary
Keith F. O'Connor, Vice President
and Treasurer
A. Edward Oberhaus III, Vice President
Victor W. Pizzolato, Vice President
Donna McManus, Assistant Treasurer
Joseph Van Dyke, Assistant Treasurer
Lydia Guzman, Assistant Secretary
Robert M. Hickey, Assistant Secretary
Investment Manager and
Underwriter
Lord, Abbett & Co. and
Lord Abbett Distributor LLC
The General Motors Building
767 Fifth Avenue
New York, NY 10153-0203
212-848-1800
Custodian
The Bank of New York
New York, NY
Transfer Agent
United Missouri Bank of
Kansas City, N.A.
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419100
Kansas City, MO 64141
800-821-5129
Auditors
Deloitte & Touche LLP
New York, NY
Counsel
Debevoise & Plimpton
New York, NY
Copyright(C) 1997 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.
40
