Lord Abbett
Tax-Free
Income Fund
o National o New York o Texas o New Jersey o Connecticut
o Missouri o Hawaii o Washington o Minnesota o California
1996 ANNUAL REPORT
[GRAPHIC
PHOTO OF
TAX FORMS]
Portfolios with the
objective of
providing you with
high tax-free income
[LOGO]
<PAGE>
Report to Shareholders
For the Fiscal Year Ended September 30, 1996
[PHOTO OF ROBERT S. DOW]
/s/ ROBERT S. DOW
- ----------------------
ROBERT S. DOW
CHAIRMAN
OCTOBER 21, 1996
We would like to thank all shareholders who voted their proxy ballots. We are
pleased to announce that, on June 19, 1996, shareholders approved all the
proposals recommended by your Board of Directors. In addition, we welcome
shareholders of the California Series to the Fund.
Lord Abbett Tax-Free Income Fund completed its fiscal year on September 30,
1996 with aggregate net assets of $2.0 billion. (See inside front cover for
net assets and performance of each Series.)
A series of short-term interest-rate reductions implemented by the Federal
Reserve (the "Fed") early in the Fund's fiscal year succeeded in keeping
the economy growing at a modest pace. As economic activity picked up in the
first two quarters of calendar 1996, investors anticipated the Fed would
raise short-term rates in an attempt to slow growth and prevent a
resurgence in inflation. This investor concern surfaced in the market and
pushed long-term taxable and tax-exempt bond rates sharply higher in March,
April and June. However, the favorable supply/demand characteristics of the
municipal bond market helped temper the volatility caused by interest-rate
movements; as a result, demand for municipal bonds remained high, while
supply continued to be limited.
We took advantage of the higher interest-rate environment by increasing our
position of higher yielding, long-term municipal bonds at the end of March.
Because the movement of bonds' yields and prices are inversely related, we
believe these securities will appreciate as the economy slows and long-term
interest rates begin to come down. Currently, municipal bonds yield roughly
86% of the taxable yield on the 30-year Treasury (historically, 83%-85% is
typical in the current federal tax structure). As always, your Fund
invested in high-quality bonds with good call protection. Call protection
(assurance by the issuer that a bond will not be redeemed before a specific
date) has become increasingly important given the continued decrease in the
supply of municipal bonds. Essential service revenue bonds, which finance
services that typically are in constant demand, remain an important part of
your Fund.
As we head into 1997, we believe economic growth will slow to a sustainable
rate of about 2%-21 1/2%, with inflation at about 3%. Given this, we expect
the 30-year U.S. Treasury bond yield to move toward 61 1/2%-6% over the
next few months. In addition, the current supply situation is favorable.
However, in a declining interest-rate environment, bond issuers may refund
bonds issued at higher rates and issue bonds at lower rates. As a result,
we will continue to closely watch the supply situation. While net asset
values will fluctuate along the way, your Fund's focus on high-quality
issues with good call protection should help it meet the challenges of this
environment.
We regret to inform you that Ronald P. Lynch, Chairman of your Fund, passed
away on June 27, 1996. Mr. Lynch had been with the Firm since 1965. He will
be sorely missed. Your Fund's Board of Directors has elected Robert S. Dow
as the new Chairman of your Fund.
Thank you for your continued confidence in Lord Abbett Tax-Free Income
Fund. We look forward to helping you achieve your goals in the years ahead.
<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 9/30/96.
[THE FOLLOWING TABLES WERE REPRESENTED BY PIE CHARTS IN THE PRINTED MATERIAL]
National Series New York Series
AAA 67.0% AAA 51.1%
AA 17.5% AA 11.3%
A 10.8% A 14.5%
BBB(1) 4.7% BBB 23.1%
Texas Series New Jersey Series Connecticut Series
AAA 52.9% AAA 67.5% AAA 56.9%
AA 31.3% AA 20.7% AA 17.5%
A 13.6% A 7.7% A 19.9%
BBB 2.2% BBB(1) 4.1% BBB 5.7%
Lord Abbett's Tax-Free Record and SEC-Required Information as of 9/30/96
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
National New York Texas New Jersey Connecticut
Series(2) Series(2) Series Series Series
<S> <C> <C> <C> <C> <C>
Date of Inception 4/2/84 4/2/84 1/20/87 1/2/91 4/1/91
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets (in millions) $672.3 $319.6 $94.4 $186.4 $122.9
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution Rate at Net Asset Value 5.42% 5.45% 5.46% 5.33% 5.45%
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Average Annual Rate of Total Return(4) at Net Asset Value:
1 Year 6.31% 4.87% 6.11% 6.29% 5.70%
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10 Years or Life of Series 7.75% 7.42% 7.85%(5) 8.21%(5) 7.66%(5)
- ------------------------------------------------------------------------------------------------------------------------------------
30-Day SEC Yield 4.83% 4.87% 4.94% 4.66% 4.98%
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Average Annual Rate of Total Return at the Class A Share Maximum Offering Price:
1 Year 1.20% -0.10% 1.00% 1.10% 0.70%
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5 Years 5.90% 5.22% 6.14% 6.37% 5.98%
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10 Years or Life of Series 7.24% 6.89% 7.30%(5) 7.28%(5) 6.72%(5)
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</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 table (pages 29 and 33).
(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>
[THE FOLLOWING TABLES WERE REPRESENTED BY PIE CHARTS IN THE PRINTED MATERIAL]
- --------------------------------------------------------------------------------
Missouri Series Hawaii Series Washington Series
AAA 70.7% AAA 69.1% AAA 72.1%
AA 20.9% AA 20.4% AA 11.9%
A 3.8% A 10.0% A 13.4%
BBB(1) 4.6% BBB 0.5% BBB 2.6%
Minnesota Series California Series
AAA 63.6% AAA 77.2%
AA 29.3% AA 14.1%
A 7.1% A 8.7%
- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------
$134.1 $85.3 $71.3 $8.0 $294.8
- --------------------------------------------------------------------------------
5.43% 5.35% 5.56% 5.63% 5.47%
- --------------------------------------------------------------------------------
5.54% 5.94% 6.80% 4.44% 5.47%
- --------------------------------------------------------------------------------
7.55%(5) 6.98%(5) 7.26%(5) 8.31%(5) 7.28%
- --------------------------------------------------------------------------------
4.73% 4.79% 4.96% 5.18% 4.58%
- --------------------------------------------------------------------------------
0.60% 1.00% 1.80% -0.50% 0.50%
- --------------------------------------------------------------------------------
5.92% -- -- -- 5.47%
- --------------------------------------------------------------------------------
6.58%(5) 5.93%(5) 6.08%(5) 5.34%(5) 6.75%
- --------------------------------------------------------------------------------
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>
Important Information
As of 9/30/96, 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. A RIB, 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.
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS September 30, 1996
NATIONAL SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded Austin TX Combined Util Sys 103/4% 5/15/2010 AAA $ 1,290M $ 1,549,612
16.36%
Austin TX Sys Rev Ser A 91/2% 5/15/2015 AAA 1,500M 1,741,875
Austin TX Wtr Sewer & Elec Ref Rev 141/4% 11/15/2006 AAA 3,810M 4,049,954
Brainerd MN Health Care Facs/Benedictine Health/St Joseph Prjt 83/8%
2/15/2020 AAA 2,250M 2,553,750
Camden Co NJ Muni Util Auth Sewer Rev FGIC+ 81/4% 12/1/2017 AAA 7,565M 8,085,093
Chatham Co GA Sch Dist MBIA+ 63/4% 8/1/2020 AAA 385M 435,050
Chattanooga-Hamilton Co TN Hosp Auth Rev Erlanger Ser B
RIBS FSA+ 9.905% 5/25/2021++ AAA 2,000M 2,420,000
Clark Co NV Arpt Imp Rev/McCarran Intl Arpt Ser C 131/4% 7/1/2002 AAA 415M 443,132
Clermont Co OH Hosp Facs Ser A 71/2% 9/1/2019 AAA 285M 321,694
Clermont Co OH Hosp Facs Ser A AMBAC+ 71/2% 9/1/2019 AAA 965M 1,065,119
Colorado Spring Util Sys 97/8% 11/15/2012 AAA 2,000M 2,417,500
Franklin Co OH 63/8% 12/1/2020 AAA 5,000M 5,481,250
Fulton Co GA Hosp Auth Rev Ser B MBIA+ 6.60% 10/1/2011 AAA 3,000M 3,341,250
Glendale AZ Ind Dev Auth Ed Facs Rev CNLA+ 71/8% 7/1/2020 AAA 1,000M 1,158,750
Greene Co PA Gen Facs Auth Ser A 7% 7/1/2011 AAA 5,825M 6,480,313
Harris Co TX Ser A 7.70% 5/1/2003 AAA 415M 447,680
Indiana Univ Bldg Auth Ser N 101/8% 7/1/2010 AAA 710M 870,638
Intermountain UT Pwr Auth Ser A 73/4% 7/1/2020 AAA 225M 242,719
King Co WA Sch Dist Ser A 63/4% 12/1/2008 AAA 1,150M 1,242,000
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys Ser C
8% 8/15/2019 AAA 2,000M 2,275,000
Montgomery AL Med Clinic Bd 7% 3/1/2015 AAA 445M 485,050
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev FGIC+ 63/4% 6/15/2014 AAA 390M 419,250
New York St Dorm Auth Rev City Univ Sys Ser F 77/8% 7/1/2017 AAA 15,220M 17,236,650
Ohio St Higher Ed Fac Ser A 7.70% 10/1/2018 AAA 2,650M 2,792,915
Pinellas Co FL Health Facs Auth Sun Coast Health Sys Rev Ser A
81/2% 3/1/2020 AAA 2,055M 2,342,700
Plano TX Indpt Sch Dist FGIC+ 85/8% 2/15/2002 AAA 1,000M 1,153,750
Puerto Rico Commonwealth 8% 7/1/2007 AAA 750M 813,750
Puerto Rico Commonwealth 8% 7/1/2007 AAA 375M 401,719
Puerto Rico Commonwealth G.O. 7.70% 7/1/2020 AAA 450M 508,500
Puerto Rico Commonwealth Hwy Ser T 65/8% 7/1/2018 AAA 372M 413,716
Puerto Rico Commonwealth Hwy Auth Rev Ser S 61/2% 7/1/2022 AAA 150M 165,938
Puerto Rico Ind Med & Environmental/Catholic Univ 93/8% 12/1/2007 AAA 2,000M 2,165,000
Richmond VA Pub Imp Ser A 61/4% 1/15/2021 AAA 12,600M 13,608,000
Santa Fe NM Rev Ser A AMBAC+ 6.30% 6/1/2024 AAA 1,260M 1,371,825
Sikeston MO Elec Rev MBIA+ 61/4% 6/1/2022 AAA 10,540M 11,554,475
Uintah Co UT Poll Ctrl Rev 84-F-2 101/2% 6/15/2014 AAA 1,000M 1,240,000
</TABLE>
1
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Washington St Pub Pwr Supply Ser B 73/8% 7/1/2012 AAA $ 1,000M $ 1,112,500
Washington St Pub Pwr Supply Ser B 71/4% 7/1/2015 AAA 1,250M 1,371,875
Washington St Pub Pwr Supply Sys Nuclear Prjt No 2 Ser A 71/2% 7/1/2004 AAA 1,600M 1,788,000
Wisconsin St Clean Wtr Rev Ser 1 63/4% 6/1/2008 AAA 2,175M 2,395,220
Total 109,963,212
-----------
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General
Obligation Georgia St Ser C 61/4% 8/1/2013 Aaa 300M 327,000
State Louisiana St Ser A AMBAC+ 61/2% 5/1/2011 AAA 1,000M 1,061,250
5.38% Massachusetts St Ser B 61/2% 6/1/2013 A 4,750M 5,052,813
Nevada St Muni Bd Bk Prjt No 52 Ser A 6% 5/15/2021 AA 700M 709,625
New York St Ser B 6% 8/15/2018 A 200M 202,000
Ohio St 6.20% 8/1/2013 AA 750M 794,063
Pennsylvania St 2nd Ser 61/2% 11/1/2009 AA 4,000M 4,285,000
Pennsylvania St Ser A 61/2% 11/15/2011 AA 9,000M 9,686,250
Tennessee St Ser A 5.70% 3/1/2014 Aaa 1,285M 1,310,700
Texas St Ser A AMT+++ 6.30% 6/1/2014 AA 425M 430,844
Texas St Wtr Dev Bd 7.15% 8/1/2035 AA 1,915M 2,144,800
West Virginia St Ser A FGIC+ 75/8% 11/1/2018 AAA 7,995M 10,153,650
Total 36,157,995
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General Anne Arundel Co MD 5% 9/1/2020 AA 705M 645,956
Obligation Anne Arundel Co MD 5% 9/1/2022 AA 455M 415,756
Local Anne Arundel Co MD 6.30% 8/1/2023 AA 505M 535,931
4.89% Cedar Hill TX Indpt Sch Dist Cap Apprec Ref Zero Coupon
8/15/2015 Aaa 1,675M 538,094
Conroe TX Indpt Sch Dist 61/8% 8/15/2020 AAA 4,000M 4,115,000
Conroe TX Indpt Sch Dist 61/8% 8/15/2021 Aaa 2,000M 2,057,500
Cuyahoga Co OH 5.65% 5/15/2018 Aa 1,795M 1,797,244
Decatur TX Indpt Sch Dist 61/8% 8/1/2025 Aaa 3,325M 3,433,063
Harris Co TX Ser A 61/8% 8/15/2020 AA 8,500M 8,893,125
Jersey City Ser A 53/8% 10/1/2013 AA 1,250M 1,218,750
Kilmarnock VA 61/4% 3/1/2027 BBB** 1,930M 1,944,475
North Providence RI Ser A MBIA+ 61/8% 7/1/2016 AAA 1,410M 1,489,313
Plymouth-Canton MI Comm Sch Dist Ser C 61/2% 5/1/2016 AA 1,000M 1,068,750
Ringgold PA Sch Dist FSA+ 61/4% 2/1/2022 AAA 1,550M 1,623,625
University City MO Sch Dist MBIA+ 10% 2/15/2008 AAA 2,250M 3,102,188
Total 32,878,770
-----------
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Education Alexandria VA Ind Dev Auth Ed Facs Rev Ref Episcopal High 51/4% 1/1/2010 A 755M 734,238
7.99% Arkansas St Student Loan Auth Rev Ser B AMT+++ 71/4% 6/1/2009 A 3,500M 3,845,625
Connecticut St Health & Ed Facs Taft Sch Ser C FSA+ 53/4% 7/1/2026 AAA 4,125M 4,063,125
Connecticut St Higher Ed Supplement Loan Auth Ser A
AMT+++ 73/8% 11/15/2005 A 90M 94,275
District of Columbia Rev RIBS 8.719% 4/1/2022++ A 4,000M 4,340,000
District of Columbia Rev Ser B MBIA+ 7.15% 4/1/2021 AAA 1,000M 1,070,000
District of Columbia Rev/Howard Univ Ser F MBIA+ 71/4% 10/1/2020 A 4,890M 5,232,300
Georgetown Univ DC Exchanged 81/4% 4/1/2018 A 1,500M 1,601,250
Glendale AZ Ind Dev Auth Midwestern Univ Ser A CNLA+ 6% 5/15/2026 AAA 650M 663,813
Indiana St Ed Facs Auth Rev 6.65% 3/1/2019 Aaa 11,600M 12,557,000
Louisiana St Univ & Agrig & Mechanical College Univ Ser A
MBIA+ 5.60% 5/1/2026 AAA 1,000M 975,000
Marietta GA Dev Auth Rev Ser B 61/4% 9/1/2025 AAA 1,090M 1,143,137
Ohio St Higher Ed Fac Comm Rev Unrefunded Balance Ser A 7.70% 10/1/2018 Aa 100M 105,352
</TABLE>
2
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Pennsylvania St Higher Ed Ser B RIBS AMBAC+ AMT+++ 8.42% 3/1/2022++ AAA $ 3,000M $ 2,955,000
Rhode Island St Health & Ed Bldg Corp 6% 9/1/2025 Aa 7,515M 7,618,331
Rhode Island St Health & Ed Bldg Corp MBIA+ 55/8% 6/1/2026 AAA 375M 361,406
Texas St Higher Ed Coord AMT+++ 7.70% 10/1/2025 A 700M 723,625
Tulsa OK Tulsa Ind Auth Rev Ref/Univ Tulsa Ser A MBIA+ 6% 10/1/2016 AAA 750M 784,688
University NM Tech Dev Corp Lease Rev/Univ Ctr Res Pk Prjt Ser A
MBIA+ 6.55% 8/15/2025 AA 1,410M 1,554,525
Western MI Univ Rev Ser B AMBAC+ 63/4% 7/15/2011 AAA 3,000M 3,281,250
Total 53,703,940
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Finance Cumberland Co NC Ctf Civic Ctr Ser A AMBAC+ 6.40% 12/1/2019 AAA 2,800M 2,975,000
3.57% Cumberland Co NC Ctf Ser A AMBAC+ 6.40% 12/1/2024 AAA 500M 528,750
East Chicago Multi Sch 61/2% 1/15/2016 A 1,000M 1,041,250
Indiana Bd Bk Rev Guarantee/St Revolving Fd PG Ser A 63/4% 2/1/2017 A 500M 540,000
Indianapolis IN Loc Pub Imp Ser D 61/2% 2/1/2022 A 1,350M 1,370,250
Iowa St Fin Auth Rev 61/4% 5/1/2024 A 2,500M 2,590,625
Raleigh NC Pkg Fac Lease Ctfs Part Rpda Prjt 63/4% 1/1/2012 AA 6,095M 6,514,030
St Louis MO Fin Corp Leasehold Rev Ser A AMBAC+ 6% 2/15/2019 AAA 4,000M 4,060,000
Vincennes IN Co Sch Bldg FSA+ 5% 7/1/2015 AAA 1,000M 916,250
Weber Co UT Muni Bldg Auth Lease Rev 71/2% 12/15/2019 AA 3,000M 3,457,500
Total 23,993,655
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Health and Alton IL Hosp Fac Rev & Ref St Anthonys Health Ctr 6% 9/1/2014 BBB 750M 697,500
Hospital Armstrong Co PA Hosp Auth Health Ctr Rev MBIA+ 61/2% 12/1/2021 AAA 2,795M 2,948,725
9.44% Augusta Co VA Ind Dev Auth Hosp Rev AMBAC+ 65/8% 9/1/2012 AAA 925M 988,593
Bessemer AL Med Clinic Bd Rev MBIA+ 55/8% 5/15/2017 AAA 5,000M 4,862,500
California Health Facs Fin Auth Rev Pomona Valley Hosp Med Ctr 73/8% 1/1/2014 A 2,000M 2,157,500
Connecticut St Health & Ed/Waterbury Hosp Ser B FSA+ 7% 7/1/2020 AAA 1,000M 1,075,000
Flint MI Hosp Bldg Auth Rev 91/2% 7/1/2006 Baa 1,500M 1,515,135
Glynn-Brunswick Mem Hosp Auth GA Rev Antic Ctfs Southeast GA
MBIA+ 6% 8/1/2016 AAA 500M 513,125
Greenville SC Hosp Sys Hosp Facs Rev Ser B 51/4% 5/1/2023 Aa 1,000M 912,500
Illinois Health Facs Auth Rev CNLA+ 6% 2/15/2026 AAA 2,000M 2,015,000
Illinois Health Facs Auth Rev/Alexian Brothers Med Ctr Prjt
FSA+ 71/8% 1/1/2021 Aaa 4,860M 5,236,650
Jonesboro AR Residential Hsg & Health Care Facs Bd Hosp Rev Ser B
AMBAC+ 5.90% 7/1/2016 AAA 500M 510,000
Lebanon OR Facs Auth Gro Midvalley Health Care Wiley Creek 61/2% 4/1/2021 BBB** 2,000M 1,992,500
Louisiana Pub Fin Auth Hosp RIBS FSA+ 6.815% 7/22/2024++ AAA 3,000M 2,531,250
Massachusetts St Health & Ed Facs Auth Rev Brigham & Womens Ser D
MBIA+ 63/4% 7/1/2024 AAA 3,450M 3,730,312
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys
6.90% 12/1/2022 A 700M 757,750
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys Ser A
MBIA+ 63/4% 8/15/2014 AAA 1,300M 1,394,250
Montgomery AL Med Clinic Bd Unrefunded Balance 7% 3/1/2015 A 1,305M 1,363,725
Montgomery Co OH Hospital MBIA+ 61/4% 4/1/2020 AAA 2,500M 2,631,250
New Jersey Health Care Facs Fin Auth Rev/St Peters Med Ctr Ser C
MBIA+ 8.60% 7/1/2017 AAA 400M 421,975
New Jersey Health Care Facs Ser C MBIA+ 65/8% 7/1/2010 AAA 250M 265,625
New York St Med Care Facs Fin Agy Rev Ser A 87/8% 8/15/2007 BBB 2,905M 3,063,090
Norfolk VA Ind Dev Auth Rev Hosp/Childrens Hosp Kings Grp
AMBAC+ 61/2% 6/1/2021 AAA 1,150M 1,206,063
Norman OK Regl Hosp Auth Hosp Rev MBIA+ 63/4% 9/1/2011 AAA 1,000M 1,076,250
North Carolina Med Care Comm Ser A FSA+ 63/8% 8/15/2020 AAA 750M 791,250
3
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
North Cent TX Health Fac Dev Corp Rev Ref Hosp Baylor Health 61/4% 5/15/2010 AA $150M $ 161,437
Peninsula Ports Auth VA Health Care Facs Rev 67/8% 8/1/2010 BBB 500M 519,375
Peninsula Ports Auth VA Health Care Facs Rev 7% 8/1/2017 BBB 1,000M 1,045,000
Rochester MN Health Care Reg Fixed ARS LINK 6.026% 11/15/2015 AA 5,000M 5,081,250
Rochester MN Health Care Ser H RIBS 8.067% 11/15/2015++ AA 9,450M 9,709,875
St Paul MN Hsg & Redev Auth Hosp Rev Ser B 95/8% 11/1/2008 Baa 1,000M 1,067,160
Wisconsin Health & Ed Facs Auth Rev MBIA+ 61/2% 8/15/2011 AAA 1,140M 1,218,375
Total 63,459,990
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Housing Alaska St Hsg Fin Corp Ser B-2 GNMA+ 77/8% 6/1/2024 AAA 135M 141,580
6.85% Arlington Co VA Ind Dev Auth Multi-Fam Rev Hsg Mtge 8% 7/1/2015 BBB** 890M 887,775
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 Ser A GNMA+ AMT+++ 8.20% 4/1/2022 AAA 960M 1,027,200
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 2,596,737
Colorado Hsg & Fin Auth Ser C FHA+ 83/4% 9/1/2017 AA 145M 149,894
Connecticut St Hsg Fin Auth Ser A Sub Ser A-2
FHA+ AMT+++ 7.20% 11/15/2008 AA 625M 660,938
De Kalb Co Hsg Auth FSA+ AMT+++ 7.15% 1/1/2025 AAA 1,430M 1,514,013
Georgia St Hsg & Fin Auth Rev Sing Fam Mtge-A-Sub Ser A-2
AMT+++ 6.45% 12/1/2027 AA 250M 251,563
Georgia St Hsg & Fin Auth Rev Sing Fam Mtge-B-Sub Ser B-2
FHA+ AMT+++ 6.55% 12/1/2027 AA 2,000M 2,065,000
Georgia St Hsg & Fin Auth Rev Sub Ser A-2 AMT+++ 6.40% 12/1/2015 AA 2,000M 2,057,500
Idaho Hsg Agy Ser A AMT+++ 6.70% 7/1/2027 AAA 1,000M 1,030,000
Idaho Hsg Agy Ser F AMT+++ 7.45% 7/1/2015 Aaa 1,245M 1,321,256
Illinois Hsg Dev Auth FHA+ AMT+++ 7.10% 12/1/2034 AAA 1,500M 1,571,250
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 1,032,500
Jefferson Co KY Multi-Fam Rev 81/4% 5/1/2010 BBB** 400M 399,000
Kentucky Hsg Corp Hsg Rev Ser D-1 FHA+ AMT+++ 6.80% 1/1/2024 AAA 965M 992,743
Maine St Hsg Auth Mtge Pur Ser A-2 AMT+++ 63/4% 11/15/2035 AA 980M 1,013,075
Marion Co OR Hsg Auth Rev Sr Hsg/Elliott Residence
GNMA+ AMT+++ 71/2% 10/20/2037 AAA 2,170M 2,327,325
Maryland Sing Fam Mtge 2nd Ser FHA/VA+ AMT+++ 7.85% 4/1/2029 Aa 1,045M 1,101,169
Maryland St Comm Dev Admin Sing Fam 7th Ser AMT+++ 7.30% 4/1/2025 Aa 495M 523,463
Massachusetts Hsg Fin Auth AMT+++ 8.10% 6/1/2020 Aa 1,300M 1,365,000
Massachusetts St Hsg Fin Agy Hsg Rev Rental-Mtge Ser A
AMBAC/FHA+ AMT+++ 7.35% 1/1/2035 AAA 1,470M 1,600,463
Massachusetts St Hsg Fin Agy Hsg Ser 29 AMT+++ 63/4% 6/1/2026 Aa 1,425M 1,476,656
Missouri St Hsg Dev Comm Ser A GNMA+ AMT+++ 73/8% 8/1/2023 AAA 645M 685,312
New Jersey St Hsg & Mtge Fin Agy Ser B MBIA+ AMT+++ 7.90% 10/1/2022 AAA 1,580M 1,649,125
North Carolina Hsg Fin Agy Sing Fam Rev Ser BB
AMT+++ 61/4% 3/1/2012 Aa 1,300M 1,327,625
Ohio Hsg Fin Auth Ser C GNMA+ AMT+++ 7.85% 9/1/2021 AAA 565M 605,256
Radcliff KY Hsg Auth 81/4% 5/1/2010 BBB** 330M 329,175
Seattle WA Hsg Auth Low Income Hsg Assistance Rev
GNMA+ 7.40% 11/20/2036 AAA 4,000M 4,305,000
Tennessee Hsg Dev Agy Mtge Ser A AMT+++ 71/8% 7/1/2026 A 3,500M 3,714,375
Utah St Hsg Fin Agy Sing Fam Ser A-2 FHA+ AMT+++ 73/4% 1/1/2023 AA 345M 364,838
Vermont Hsg Fin Auth Ser B FHA/VA+ AMT+++ 8.10% 6/1/2022 A 1,645M 1,714,913
Total 46,067,494
------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C>
Industrial Butler AL Ind Bd Solid Waste Disp Rev/James River Corp
Revenue AMT+++ 8% 9/1/2028 BBB $ 1,500M $ 1,657,500
Bonds Connecticut St Dev Auth/Pfizer Inc Prjt AMT+++ 7% 7/1/2025 AAA 2,500M 2,768,750
3.20% Henrico Co VA Ind Dev Auth Rev 71/8% 8/1/2021 AA 1,070M 1,214,450
Hillsborough Co FL Ind Dev Auth Rev 8% 5/1/2022 Aa 1,955M 2,272,688
King George Co VA Ind Dev Auth Lease Rev 6.40% 8/1/2016 BBB** 1,000M 987,500
Maryland St Ind Dev Fin Auth Econ Dev Rev LINK FSA+ 5.929% 8/26/2022 AAA 11,600M 11,861,000
Texas City TX Ind Dev Corp Marine Term Rev/ARCO 73/8% 10/1/2020 A 650M 785,687
Total 21,547,575
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous
4.37% California St Pub Wks Bd Lease Rev Ref Various Comm Prjt B
AMBAC+ 55/8% 3/1/2019 AAA 3,000M 2,955,000
Cobb-Marietta GA Coliseum & Exhibit Hall Auth Rev MBIA+ 55/8% 10/1/2026 AAA 12,000M 12,075,000
Metropolitan Pier & Exposition Auth IL Dedicated St Tax AMBAC+ 51/4% 6/15/2027 AAA 1,500M 1,381,875
Richmond VA Ind Dev Auth Museum Facs Rev Ref VA Historical 61/4% 9/1/2020 BBB** 1,125M 1,099,688
St Louis Co MO Ind Dev Rev Arena Prjt AMT+++ 77/8% 12/1/2024 BBB** 3,500M 3,745,000
St Louis MO Land Clearance Rev 73/4% 7/1/2021 BBB** 7,200M 7,596,000
West Virginia St Sch Bldg Auth Rev Cap Imp Ser B MBIA+ 63/4% 7/1/2020 AAA 500M 536,875
Total 29,389,438
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pollution Burke Co GA Dev Auth Poll Ctrl Rev MBIA+ 6.60% 7/1/2024 AAA 450M 475,312
Control La Crosse WI Res Recovery Rev AMT+++ 6% 11/1/2021 AA 6,000M 6,045,000
Revenue Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev 7.20% 7/1/2016 Aa 3,250M 3,721,250
1.99% Potter Co TX Ind Dev Corp Poll Ctrl Rev Ser B Ref/Southwestern
AMBAC+ 53/4% 9/1/2016 AAA 2,000M 2,002,500
Rhode Island Clean Wtr Protection Fin Agy Wtr Poll Ctrl Rev Ser A
MBIA+ 5.40% 10/1/2015 AAA 1,200M 1,167,000
Total 13,411,062
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Power Camden Co NJ Muni Util Auth Sys FGIC+ 81/4% 12/1/2017 AAA 3,920M 4,179,700
16.01% Chelan Co WA Pub Util Dist Ser A MBIA+ AMT+++ 6.40% 7/1/2017 AAA 1,170M 1,170,000
Effingham Co GA Dev Auth MBIA+ 63/4% 2/1/2022 AAA 2,200M 2,261,842
Hamilton City OH Elec Ser A FGIC+ 6% 10/15/2012 AAA 2,725M 2,844,219
Hamilton City OH Elec Ser B FGIC+ 6.30% 10/15/2025 AAA 7,500M 7,875,000
Hawaii St Dept of Bdg & Fin RIBS 7.119% 12/15/2023++ AAA 2,000M 1,732,500
Intermountain Pwr Agy UT Pwr Supply Rev Ref Ser B
MBIA+ 53/4% 7/1/2019 AAA 3,500M 3,360,000
Intermountain Pwr Agy UT Pwr Supply Rev Reg Lkd Pars TCRS Ser A
LINK AMBAC+ 5.60% 7/1/2021 AAA 6,400M 6,176,000
Kansas City KS Util Sys Rev FGIC+ 63/8% 9/1/2023 AAA 14,235M 15,160,275
Lawrenceburg TN Elec Rev MBIA+ 65/8% 7/1/2018 AAA 1,910M 2,151,138
Lewis Co WA Pub Util Dist No 1 Cowlitz Falls Hydroelec 51/2% 10/1/2022 AA 6,470M 6,203,113
Milwaukee WI Loc Dist AMT+++ 6.85% 10/1/2021 AA 500M 535,000
New York St Energy Res & Dev RIBS 8.81% 4/1/2020++ A 1,500M 1,623,750
New York St Energy Res & Dev/Con Edison Ser B AMT+++ 91/4% 9/15/2022 A 1,100M 1,164,845
North Carolina Eastern Muni Pwr Ser B 6% 1/1/2022 A 10,000M 9,875,000
North Carolina Eastern Muni Pwr Ser C FSA+ 5% 1/1/2021 AAA 12,250M 11,025,000
Piedmont Muni Pwr Agy SC 6.55% 1/1/2016 Baa 250M 251,250
Piedmont Muni Pwr SC Elec Rev MBIA+ 53/8% 1/1/2025 AAA 10,350M 9,936,000
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.348% 7/1/2023++ AAA 2,500M 2,534,375
Puerto Rico Elec Pwr Auth Ser D 71/8% 7/1/2014 BBB 2,255M 2,415,669
South Carolina St Pub Svc Auth Rev Ref Ser C TCRS
AMBAC+ 51/8% 1/1/2032 AAA 3,500M 3,115,000
Tacoma WA Elec Sys Rev RIBS AMBAC+ 9.092% 1/2/2015++ AAA 4,900M 5,432,875
5
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Western Generation Agy OR Cogeneration Prjt Rev Ser B
AMT+++ 7.40% 1/1/2016 BBB** $1,500M $ 1,569,375
Wisconsin St Pub Pwr Supply Sys Rev RIBS AMBAC+ 6.95% 7/1/2014++ AAA 5,500M 5,039,375
Total 107,631,301
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Solid Broward Co FL Wtr & Sewer Solid Waste 7.95% 12/1/2008 A 2M 2,203
Waste Cobb Co GA Solid Waste Mgmt Auth AMT+++ 6.40% 1/1/2015 Aaa 900M 956,250
1.78% Henrico Co VA Ind Dev Auth Rev 5.45% 1/1/2014 A 500M 484,375
Northeast MD Waste Disp Auth Solid Waste Rev Ser A AMT+++ 6.30% 7/1/2016 A 5,000M 5,037,500
Palm Beach Co FL Solid Waste 83/4% 7/1/2010 A 5,140M 5,486,333
Total 11,966,661
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation
6.72% Albuquerque NM Arpt Rev 7.60% 7/1/2008 A 1,000M 1,040,250
Albuquerque NM Arpt Rev Ser A AMBAC+ AMT+++ 6.60% 7/1/2016 AAA 2,400M 2,580,000
Hillsborough Co FL Aviation Ser A FGIC+ 6.90% 10/1/2011 AAA 500M 537,500
Kansas City MO Arpt Rev Ser B CGIC+ 67/8% 9/1/2014 AAA 2,400M 2,655,000
Metropolitan Atlanta Rapid Trans Auth GA Sales Tax Rev Ser P
AMBAC+ 61/4% 7/1/2020 AAA 20,485M 22,277,438
New Jersey St Tnpk Auth Ser C FSA+ 61/2% 1/1/2016 AAA 1,000M 1,117,500
New York St Twy Auth & Brdg TR Fd Ser A AMBAC+ 51/4% 4/1/2016 AAA 3,155M 3,013,025
Port Auth NY & NJ 67/8% 1/1/2025 AA 5,740M 6,120,275
Port Auth NY & NJ 70th Ser AMT+++ 71/4% 8/1/2025 AA 500M 541,250
Port Kalama WA Rev Ser B 55/8% 12/1/2015 Baa 1,375M 1,299,375
Texas St Tnpk Auth Dallas Northwy Rev FGIC+ 53/4% 1/1/2011 AAA 4,020M 3,994,875
Total 45,176,488
-----------
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Baltimore MD Prjt Rev Ser A FGIC+ 5% 7/1/2024 AAA 5,000M 4,575,000
Sewer Big Bear Lake CA Wtr Rev Ref MBIA+ 6% 4/1/2015 AAA 1,450M 1,531,562
12.35% Cherokee Co GA Wtr & Sewer Auth Rev MBIA+ 5.20% 8/1/2025 AAA 12,980M 12,266,100
Dauphin Co PA Ind Dev Auth Wtr Dev Ser A AMT+++ 6.90% 6/1/2024 A 1,000M 1,123,750
Fairfax Co VA Wtr Auth 53/4% 4/1/2029 Aa 7,420M 7,327,250
Hamilton OH Wtr Wks Rev Ser A MBIA+ 6.30% 10/15/2021 AAA 1,000M 1,050,000
Los Angeles CA Dept Wtr & Pwr Elec Plt Rev FGIC+ 51/4% 11/15/2026 AAA 2,200M 2,010,250
Los Angeles CA Dept Wtr & Pwr Elec Plt Rev MBIA+ 5% 10/15/2033 AAA 1,175M 1,022,250
Louisville & Jefferson Co KY Metro Sewer Dist Sewer & Drain Sys Ser A
AMBAC+ 63/4% 5/15/2016 AAA 5,010M 5,561,100
Metropolitan Govt Nashville & Davidson Co TN Wtr & Sewer
RIBS AMBAC+ 6.075% 1/1/2022++ AAA 5,500M 5,568,750
Metropolitan Govt Nashville Wtr & Sewer RIBS AMBAC+ 8.254% 1/7/2022++ AAA 12,000M 12,210,000
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev
AMBAC+ 6.20% 6/15/2021 AAA 1,000M 1,048,750
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev Ser B
61/2% 6/15/2020 A 5,125M 5,342,813
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev Ser C
RIBS MBIA+ 6.843% 6/15/2013++ AAA 4,850M 4,468,062
Seattle WA Muni Metro Ser U FGIC+ 6.60% 1/1/2032 AAA 7,150M 7,659,438
Spartanburg SC Wtr Wks Rev FGIC+ 61/8% 6/1/2026 AAA 2,500M 2,584,375
Springfield IL Wtr Rev 61/2% 3/1/2015 AA 1,000M 1,046,250
Texas Wtr Resource Fin Auth 75/8% 8/15/2008 A 1,955M 2,096,738
Washington Co OR Sewer Agy Sewer Rev Sr Lien FGIC+ 51/2% 10/1/2016 AAA 2,500M 2,481,250
West Virginia St Wtr Dev Auth Dev Rev Ref-LN Prjt II Ser B
FSA+ 51/4% 11/1/2035 AAA 2,260M 2,065,075
Total 83,038,763
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 100.90% (Cost $666,558,213) 678,386,344
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NATIONAL SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
OTHER ASSETS, LESS LIABILITIES (.90)%
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Securities
California St Ser A 41/2% 6/30/1997 MIG 1 $ 2,100M $ 2,110,793
Texas St Tax & Rev Anticipation Notes 43/4% 8/29/1997 MIG 1 100M 100,835
University of MO 43/4% 6/30/1997 Ser FY 1996-97 MIG 1 3,000M 3,020,700
Total (Cost $5,230,711) 5,232,328
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (11,274,817)
-------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities (6,042,489)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
100.00% $672,343,855
====================================================================================================================================
Class A Shares-Net asset value ($628,071,491 / 56,684,846 shares outstanding) $11.08
Class B Shares-Net asset value ($600,966 / 54,227 shares outstanding) $11.08
Class C Shares-Net asset value ($43,671,398 / 3,940,097 shares outstanding) $11.08
* Ratings have not been audited by Deloitte & Touche LLP.
**This security has not been rated by an independent ratings service but is, in Lord Abbett's opinion, of comparable
quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation or Federal agency.
++The interest rate is subject to change periodically and inversely to the prevailing market rate. The interest rate shown
is the rate in effect at September 30, 1996. See page 1 for additional information.
+++Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NEW YORK SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded
16.74%
New York NY Ser A 73/4% 8/15/2016 AAA $ 1,380M $ 1,583,550
New York St Dorm Auth Rev Ser A 7.70% 5/15/2012 AAA 6,000M 6,735,000
New York St Dorm Auth Rev Ser A 75/8% 7/1/2020 AAA 1,400M 1,573,250
New York St Dorm Auth Rev/City Univ Ser C FGIC+ 7% 7/1/2014 AAA 4,600M 5,077,250
New York St Dorm Auth Rev/St Univ Ed Ser A 71/4% 5/15/2018 AAA 4,000M 4,560,000
New York St Loc Govt Assistance Corp Ser B 71/2% 4/1/2020 AAA 3,300M 3,737,250
New York St Loc Govt Assistance Corp Ser D 7% 4/1/2018 AAA 3,000M 3,378,750
New York St Loc Govt Assistance Corp Ser D 63/4% 4/1/2021 AAA 1,950M 2,171,813
New York St Med Care Facs Fin Agy Rev Ser A 71/2% 2/15/2021 AAA 2,185M 2,469,050
New York St Pwr Auth Ser V 8% 1/1/2017 AAA 7,370M 7,849,050
New York St Urban Dev 71/2% 4/1/2011 AAA 1,975M 2,236,688
New York St Urban Dev 73/4% 1/1/2014 AAA 275M 306,280
Puerto Rico Commonwealth Aqu & Sewer Auth Rev 101/4% 7/1/2009 AAA 1,565M 2,161,656
Puerto Rico Commonwealth Hwy Auth Rev Ser P 81/8% 7/1/2013 AAA 250M 271,563
Puerto Rico Elec Pwr Auth Rev Ser M 8% 7/1/2008 AAA 6,650M 7,215,250
Puerto Rico Ind Med & Environmental/Catholic Univ 93/8% 12/1/2007 AAA 2,000M 2,165,000
Total 53,491,400
----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Puerto Rico Commonwealth RIBS FSA+ 7.962% 7/1/2020++ AAA 12,000M 12,090,000
Obligation Puerto Rico Commonwealth MBIA+ 53/8% 7/1/2022 AAA 2,200M 2,101,000
State Total 14,191,000
4.44% ----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Obligation
Local .38% Bethlehem NY MBIA+ 7.20% 3/1/2022 AAA 1,080M 1,227,150
------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NEW YORK SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Education Hempstead Town NY Ind Dev Agy/Hofstra Univ MBIA+ 5.80% 7/1/2015 AAA $750M $ 760,313
11.74% New York NY City Ind Dev Agy/New Sch For Social Research
MBIA+ 53/4% 9/1/2015 AAA 230M 228,563
New York St Dorm Auth Lease Rev FSA+ 51/2% 5/15/2024 AAA 1,000M 966,250
New York St Dorm Auth Rev/City Univ Ser U MBIA+ 6.45% 7/1/2005 AAA 300M 329,250
New York St Dorm Auth Rev/City Univ 2nd Ser MBIA+ 67/8% 7/1/2014 AAA 5,650M 6,257,375
New York St Dorm Auth Rev/Colgate Univ MBIA+ 6% 7/1/2016 AAA 1,000M 1,048,750
New York St Dorm Auth Rev/Cornell Univ Ser A 73/8% 7/1/2020 AA 5,075M 5,601,531
New York St Dorm Auth Rev/Spcl Act Sch Dists MBIA+ 6% 7/1/2016 AAA 1,400M 1,433,250
New York St Dorm Auth Rev/St Univ Ed Facs Ser A 6% 5/15/2016 BBB 4,300M 4,278,500
New York St Dorm Auth Rev/St Univ Ed Facs Ser A 51/4% 5/15/2021 BBB 1,025M 927,625
New York St Dorm Auth Rev/St Univ Ed Facs Ser B 71/2% 5/15/2011 BBB 5,000M 5,837,500
New York St Dorm Auth Rev/St Univ Ed Facs Ser B 53/4% 5/15/2024 BBB 7,000M 6,685,000
New York St Dorm Auth Rev/Univ Rochester Ser A 6.40% 7/1/2013 A 2,030M 2,159,413
New York St Dorm Auth Rev/Upstate Cmnty Colleges Ser A 6.20% 7/1/2015 Baa 1,000M 1,005,000
Total 37,518,320
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Finance Municipal Assistance Corp NY Ser 66 73/4% 7/1/2008 Aa 265M 291,169
8.49% Municipal Assistance Corp NY Ser 67 75/8% 7/1/2008 Aa 2,515M 2,753,925
New York St Loc Govt Assistance Corp Ser A 67/8% 4/1/2019 A 7,600M 8,274,500
New York St Loc Govt Assistance Corp Ser A 61/2% 4/1/2020 A 9,360M 9,863,100
New York St Loc Govt Assistance Corp Ser C 61/2% 4/1/2015 A 5,675M 5,958,750
Total 27,141,444
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Health and
Hospital New York City Health & Hosp Corp LINK AMBAC+ 5.70% 2/15/2023 AAA 500M 485,000
14.40% New York City Health & Hosp Corp RIBS AMBAC+ 7.40% 2/15/2023++ AAA 6,000M 5,535,000
New York St Dorm Auth Rev Dept of Health 55/8% 7/1/2012 Baa 2,000M 1,925,000
New York St Dorm Auth Rev Dept of Health 51/2% 7/1/2025 Baa 4,250M 3,888,750
New York St Dorm Auth Rev Mental Health Svcs Facs Imp B 6% 8/15/2012 BBB 1,460M 1,478,250
New York St Dorm Auth Rev Mental Health Svcs Facs Imp B
MBIA+ 51/8% 8/15/2021 AAA 7,250M 6,670,000
New York St Dorm Auth Rev/United Cerebral Palsy MBIA+ 51/2% 7/1/2024 AAA 1,000M 962,500
New York St Med Care Facs Agy Rev Unrefunded Balance Ser A 7.80% 2/15/2019 BBB 615M 662,663
New York St Med Care Facs Fin/Beth Israel Ser A MBIA+ 71/2% 11/1/2010 AAA 1,250M 1,395,313
New York St Med Care Facs Fin/Mental Health Ser A 71/2% 2/15/2021 BBB 10,775M 11,919,844
New York St Med Care Facs Fin/North Shore Univ Hosp
MBIA+ 7.20% 11/1/2020 AAA 7,340M 8,074,000
New York St Med Care Facs Fin/St Francis Hosp Ser A FGIC+ 7.60% 11/1/2008 AAA 1,000M 1,075,000
New York St Med Care Facs Fin/St Francis Hosp Ser A FGIC+ 75/8% 11/1/2021 AAA 1,775M 1,917,000
Total 45,988,320
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Housing New York St Hsg Fin Agy Svc Co Ser A AMT+++ 6% 3/15/2026 Baa 3,420M 3,338,775
2.84% New York St Mtge Agy Rev Ser 30 B FHA+ AMT+++ 71/2% 4/1/2026 Aa 2,495M 2,672,769
New York St Mtge Agy Rev Ser 41 MBIA+ 6.45% 10/1/2014 AAA 2,990M 3,072,225
Total 9,083,769
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue
Bonds .21% Puerto Rico Tel Auth Rev RIBS MBIA+ 7.065% 1/16/2015++ AAA 700M 656,250
--------
- ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous
6.26% New York St Urban Dev Corp Rev 51/4% 4/1/2012 Baa 1,765M 1,641,450
New York St Urban Dev Corp Rev 53/8% 4/1/2017 Baa 2,615M 2,399,262
New York St Urban Dev Corp Rev 5.70% 4/1/2020 Baa 4,150M 4,035,875
New York St Urban Dev Corp Rev Correctional Cap Facs Ser 6
53/8% 1/1/2025 Baa 4,590M 4,119,525
United Nations Dev Sr Lien Ser A Corp 6% 7/1/2026 A 4,800M 4,764,000
United Nations Dev Sub Lien Ser B Corp 61/4% 7/1/2026 A 3,000M 3,041,250
Total 20,001,362
----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NEW YORK SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Pollution
Control New York St Environmental Fac Poll Ctrl Rev St Wtr Ser A 71/2% 6/15/2012 Aa $ 7,000M $ 7,735,000
Revenue New York St Environmental Fac Poll Ctrl Rev St Wtr Ser E 67/8% 6/15/2014 Aa 4,780M 5,281,900
4.07% Total 13,016,900
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Power New York St Energy Res & Dev Gas Facs Rev/Bklyn Union Gas Ser II
20.65% MBIA+ 7% 12/1/2020 AAA 2,500M 2,558,950
New York St Energy Res & Dev Poll Ctrl Rev/Niagara Mohawk
FGIC+ 7.20% 7/1/2029 AAA 11,750M 13,277,500
New York St Energy Res & Dev/Bklyn Union Gas Ser A
MBIA+ AMT+++ 63/4% 2/1/2024 AAA 13,000M 14,023,750
New York St Energy Res & Dev/Bklyn Union Gas Ser B
RIBS AMT+++ 9.927% 7/1/2026++ A 4,000M 4,725,000
New York St Energy Res & Dev/Bklyn Union Gas 1st Ser 71/8% 12/1/2020 A 1,100M 1,125,927
New York St Energy Res & Dev/Central Hudson Gas & Elec Ser C
MBIA+ AMT+++ 83/8% 12/1/2028 AAA 2,215M 2,439,268
New York St Energy Res & Dev/Con Edison Ser A AMT+++ 71/2% 7/1/2025 A 2,035M 2,182,537
New York St Energy Res & Dev/Con Edison Ser A
MBIA+ AMT+++ 71/8% 12/1/2029 AAA 2,500M 2,762,500
New York St Energy Res & Dev/Con Edison Ser B AMT+++ 73/8% 7/1/2024 A 1,465M 1,538,250
Port Auth NY & NJ Spcl Oblig Rev 2nd Install-SPL PJ-KIAC-4 63/4% 10/1/2019 Baa** 2,945M 2,967,088
Puerto Rico Elec Pwr Auth RIBS FSA+ 7.852% 7/1/2018++ AAA 3,500M 3,775,625
Puerto Rico Elec Pwr Auth Ser E 51/2% 7/1/2014 BBB 1,970M 1,908,437
Puerto Rico Elec Pwr Auth Ser Z 51/4% 7/1/2021 BBB 13,855M 12,694,643
Total 65,979,475
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Solid Waste
.75% Dutchess Co Resource Recovery Ser A FGIC+ 71/2% 1/1/2009 AAA 2,200M 2,384,250
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation
5.54% Metropolitan Trans Auth NY Ser L AMBAC+ 71/2% 7/1/2017 AAA 2,310M 2,471,700
Metropolitan Trans Auth NY Ser A FGIC+ 6.10% 7/1/2026 AAA 1,000M 1,023,750
Metropolitan Trans Auth NY Svc Contract Trans Facs Ser O 53/4% 7/1/2008 Baa 1,000M 1,001,250
Port Auth NY & NJ 67th Ser 67/8% 1/1/2025 AA 1,000M 1,066,250
Port Auth NY & NJ 92nd Ser 43/4% 1/15/2029 AA 1,000M 843,750
Port Auth NY & NJ 106th Ser AMT+++ 6% 7/1/2015 AA 350M 354,812
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y 51/2% 7/1/2026 A 2,000M 1,910,000
Triborough Brdg & Tunnel Auth Ser L 81/8% 1/1/2012 Aa 4,000M 4,250,000
Triborough Brdg & Tunnel Auth Ser Y 51/2% 1/1/2017 Aa 4,780M 4,785,975
Total 17,707,487
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer
1.91% Buffalo NY Muni Wtr Fin Auth Wtr Sys Rev FGIC+ 53/4% 7/1/2021 AAA 500M 499,375
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev Ser A
FGIC+ 6% 6/15/2019 AAA 2,000M 2,027,500
New York City Muni Wtr Fin Auth Wtr & Sewer Sys Rev Ser A
FGIC+ 61/4% 6/15/2021 AAA 3,500M 3,591,875
Total 6,118,750
----------
------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 98.42% (Cost $305,337,309) 314,505,877
====================================================================================================================================
OTHER ASSETS, LESS LIABILITIES 1.58%
====================================================================================================================================
Cash and Receivables, Net of Liabilities 5,046,869
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
100.00% $319,552,746
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares-Net asset value ($312,140,006 / 28,946,427 shares outstanding) $10.78
Class C Shares-Net asset value ($7,412,740 / 687,483 shares outstanding) $10.78
* Ratings have not been audited by Deloitte & Touche LLP.
** This security has not been rated by an independent ratings service but is, in Lord Abbett's opinion, of comparable
quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation or Federal agency.
++ The interest rate is subject to change periodically and inversely to the prevailing market rate. The interest rate shown
is the rate in effect at September 30, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax. See Notes to Financial Statements
</TABLE>
9
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
TEXAS SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded
20.94% Austin TX Sys Rev Ser A 91/2% 5/15/2015 AAA $ 1,000M $ 1,161,250
Austin TX Util Sys Rev Ser A 103/4% 5/15/2015 AAA 5,450M 6,546,813
Austin TX Wtr Sewer & Elec Ref Rev 141/4% 11/15/2006 AAA 1,000M 1,062,980
Board of Regents TX A&M Univ Rev 7.80% 8/15/2009 AAA 900M 957,375
Dallas Co TX Flood Ctrl Dist No 1 91/4% 4/1/2010 AAA 1,460M 1,843,250
Dallas Co TX Util & Reclamation Dist MBIA+ 8.30% 2/15/2016 AAA 700M 738,500
Harris Co TX Detention MBIA+ 7.80% 12/15/2011 AAA 1,110M 1,212,675
Houston TX Wtr & Sewer Sys Rev Prior Lien MBIA+ 7.40% 12/1/2018 AAA 1,000M 1,123,750
Lower CO River Auth TX Rev MBIA+ 75/8% 1/1/2016 AAA 925M 981,656
Lower CO River Auth TX Rev AMBAC+ 6% 1/1/2017 AAA 1,445M 1,504,606
North Central TX Health MBIA+ 77/8% 7/1/2018 AAA 750M 787,312
Puerto Rico Commonwealth Hwy Ser T 65/8% 7/1/2018 AAA 433M 481,846
San Antonio TX Elec & Gas Rev Ser A 101/2% 2/1/2013 AAA 1,000M 1,098,750
Texas St Tnpk Auth Dallas Northwy Rev AMBAC+ 71/8% 1/1/2015 AAA 250M 269,062
Total 19,769,825
------------
- ------------------------------------------------------------------------------------------------------------------------------------
General Obligation
State
20.81% Texas St Ser A AMT+++ 6.30% 6/1/2014 AA 565M 572,769
Texas St Ser A-1 RIBS 7.245% 12/1/2023++ AA 6,000M 5,572,500
Texas St Ser B-1 & B-2 LINK 6.20% 9/30/2011 AA 11,000M 11,715,000
Texas St Wtr Dev Bd 7.15% 8/1/2035 AA 1,600M 1,792,000
Total 19,652,269
------------
- ------------------------------------------------------------------------------------------------------------------------------------
General Brazoria TX AMBAC+ 61/4% 2/15/2021 AAA 690M 709,838
Obligation College Station TX Indpt SC 41/2% 8/15/2019 AAA 1,590M 1,339,575
Local Conroe TX Indpt Sch Dist 61/8% 8/15/2020 AAA 1,000M 1,028,750
17.78% Decatur TX Indpt Sch Dist 61/8% 8/1/2025 Aaa 1,500M 1,548,750
Harris Co TX Ser A 61/8% 8/15/2020 AA 4,475M 4,681,969
Harris Co TX Toll Rd Sub Lien Ser A 6.10% 8/15/2016 AA 2,640M 2,768,700
Ingram TX Indpt Sch Dist 5% 8/15/2022 AAA 1,490M 1,350,313
Keller TX Indpt Sch Dist Ser A 51/8% 8/15/2025 AAA 1,600M 1,470,000
San Antonio TX Indpt Sch Dist Pub Facs Corp Lease Rev
AMBAC+ 5.85% 10/15/2020 AAA 1,000M 1,032,500
Watauga TX FGIC+ 51/8% 3/1/2015 Aaa 915M 855,525
Total 16,785,920
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Education
.95% Texas St Higher Ed Coord AMT+++ 7.70% 10/1/2025 A 870M 899,362
- ------------------------------------------------------------------------------------------------------------------------------------
Health and
Hospital Amarillo TX Health Facs Corp LINK FSA+ 6.562% 1/1/2022 AAA 3,600M 3,802,500
13.50% Amarillo TX Health Facs Corp RIBS FSA+ 9.24% 1/1/2022++ AAA 2,250M 2,497,500
Bexar Co TX Health Facs MBIA+ 71/2% 8/15/2010 AAA 750M 819,375
Bexar Co TX Health Facs Dev Corp Rev/Incarnate Word RMK
FSA+ 6.10% 11/15/2023 AAA 3,500M 3,583,125
Harris Co TX Health Facs MBIA+ 6% 5/15/2026 AAA 1,330M 1,339,975
Lubbock TX Health Facs Dev Corp Rev/St Joseph Health Sys 51/2% 7/1/2023 AA 750M 705,937
Total 12,748,412
- ------------------------------------------------------------------------------------------------------------------------------------
Housing Dallas TX Hsg Corp Cap Prjt/Estell Village Apts Ser A 77/8% 12/1/2009 BBB 530M 545,900
.70% Texas Hsg Agy Ser D AMT+++ 8.40% 1/1/2021 Aa 105M 109,594
Total 655,494
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial Brazos River Auth TX Ser A 81/4% 5/1/2019 A 1,000M 1,068,750
Revenue Brazos River Auth TX Ser C MBIA+ 8.10% 5/1/2019 AAA 750M 805,313
Bonds Harris Co TX Ind Dev Corp Marine Term & Wtr Poll Ctrl Rev 65/8% 2/1/2024 BBB 1,500M 1,563,750
16.27% Matagorda Co TX Nav Dist No 1 Poll Ctrl Rev Ref/Cent Power
FGIC+ 7.70% 2/1/2019 AAA 240M 254,400
Orange Co TX Nav & Port Dist Ind Dev Corp Rev Ref-North 63/8% 2/1/2017 AA 2,400M 2,499,000
Puerto Rico Ind Med & Environmental Ctrl/Baxter Lab Ser A 8% 9/1/2012 A 2,315M 2,517,563
</TABLE>
11
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
TEXAS SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Texas City TX Ind Dev Corp Marine Term Rev/ARCO 73/8% 10/1/2020 A $5,500M $ 6,648,125
Total 15,356,901
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Pollution Potter Co TX Ind Dev Corp Poll Ctrl Rev Ref/Southwestern
Control AMBAC+ 53/4% 9/1/2016 AAA 1,000M 1,001,250
Revenue Trinity River Auth TX Poll Ctrl Rev/Texas Instruments
1.98% AMT+++ 6.20% 3/1/2020 A 855M 864,619
Total 1,865,869
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Power Austin TX Util Sys Ser B 7.80% 11/15/2012 A 640M 696,800
2.83% Lower CO River Auth Rev Ser B AMBAC+ 6% 1/1/2015 AAA 1,000M 1,013,750
West Harris Co TX Util Dist #11 FSA+ 51/2% 9/1/2021 AAA 1,000M 960,000
Total 2,670,550
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation
6.07% Dallas-Ft Worth TX Regl Arpt Rev Ref JT Ser A FGIC+ 73/8% 11/1/2011 AAA 1,000M 1,136,250
Houston TX Arpt Sys Rev MBIA+ AMT+++ 8.20% 7/1/2017 AAA 1,500M 1,616,250
Texas St Tnpk Auth Dallas Northwy Rev FGIC+ 53/4% 1/1/2011 AAA 3,000M 2,981,250
Total 5,733,750
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer
.96% Texas Wtr Resource Fin Auth 75/8% 8/15/2008 A 500M 536,250
Texas Wtr Resource Fin Auth AMBAC+ 71/2% 8/15/2013 AAA 350M 374,062
Total 910,312
-------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 102.79% (Cost $95,171,474) 97,048,664
====================================================================================================================================
OTHER ASSETS, LESS LIABILITIES (2.79)%
====================================================================================================================================
Short-Term Securities
Texas St Tax & Rev Anticipation Notes 43/4% 8/29/1997 (Cost $201,378) MIG 1 200M 201,670
-------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (2,835,840)
------------------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities (2,634,170)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
100.00% $94,414,494
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value ($94,414,494 / 9,339,469 shares outstanding) $10.11
* Ratings have not been audited by Deloitte & Touche LLP.
+ 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 September 30, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NEW JERSEY SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded Camden Co NJ Muni Util Auth Sewer Rev FGIC+ 81/4% 12/1/2017 AAA $3,395M $ 3,628,406
15.66% Essex Co NJ Imp Auth Lease/Jail & Youth Hse Prjts AMBAC+ 7% 12/1/2024 AAA 5,875M 6,800,313
Essex Co NJ Imp Auth Rev GTD Coll AMBAC+ 7% 12/1/2024 AAA 1,750M 2,025,625
Hudson Co NJ Ctf Correctional Fac MBIA+ 7.60% 12/1/2021 AAA 5,155M 5,612,506
Hudson Co NJ Util Auth Util Sys Rev 10% 7/1/2011 AAA 1,000M 1,258,750
Monmouth Co NJ MBIA+ 67/8% 8/1/2012 AAA 500M 550,000
New Jersey Economic Dev Auth 63/4% 6/15/2012 AAA 2,275M 2,511,031
New Jersey Health Care Facs Fin Auth Rev/St Peters Med Ser C
MBIA+ 8.60% 7/1/2017 AAA 2,100M 2,215,521
Puerto Rico Commonwealth Aqu & Sewer Auth Rev 101/4% 7/1/2009 AAA 450M 621,563
Puerto Rico Pub Bldg Auth Ser L 67/8% 7/1/2021 AAA 200M 225,000
</TABLE>
11
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NEW JERSEY SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Rutgers St Univ NJ Rev Ser O 7.90% 5/1/2010 AAA $400M $ 430,500
Stony Brook Reg Sewer Auth NJ Rev Ser A 7.40% 12/1/2009 AAA 1,000M 1,103,750
Tinton Falls NJ Sch Bd Ed FSA+ 61/2% 6/15/2017 AAA 1,000M 1,088,750
Union Co NJ 61/2% 2/1/2011 AAA 1,000M 1,090,000
University of Puerto Rico Ser L 61/2% 6/1/2013 AAA 25M 26,000
Total 29,187,715
----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Puerto Rico Commonwealth RIBS MBIA+ 7.894% 7/1/2008++ AAA 5,000M 5,268,750
Obligation Puerto Rico Commonwealth 51/4% 7/1/2018 A 1,000M 936,250
State Total 6,205,000
3.33% ----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Essex Co NJ Imp Auth Lease Co Jail MBIA+ 5.55% 12/1/2026 AAA 1,000M 971,430
Obligation Jersey City NJ Ser A 61/4% 10/1/2012 AA 3,080M 3,260,950
Local Jersey City NJ Ser A 51/4% 10/1/2016 AA 7,000M 6,667,500
15.72% Keansburg NJ 6.80% 12/1/2010 A 1,000M 1,097,500
Millburn Township NJ Sch Dist 5.35% 7/15/2018 Aaa 1,150M 1,125,563
Millburn Township NJ Sch Dist 5.35% 7/15/2019 Aaa 1,100M 1,075,250
Morristown NJ FSA+ 61/2% 8/1/2019 AAA 3,440M 3,762,500
Paterson NJ FSA+ 9.30% 2/15/2004 AAA 4,200M 5,307,750
Pohatcong Township NJ Sch Dist FSA+ 5.95% 7/15/2023 AAA 650M 662,188
Pohatcong Township NJ Sch Dist FSA+ 5.95% 7/15/2026 AAA 350M 356,563
South Brunswick Township NJ Bd Ed FGIC+ 6.40% 8/1/2024 AAA 1,600M 1,698,000
Sparta Township NJ Sch Dist MBIA+ 5.80% 9/1/2022 AAA 1,100M 1,109,625
Sparta Township NJ Sch Dist MBIA+ 5.80% 9/1/2023 AAA 1,100M 1,109,625
Sparta Township NJ Sch Dist MBIA+ 5.80% 9/1/2024 AAA 1,100M 1,105,500
Total 29,309,944
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Education New Jersey Economic Dev Auth Rev Ser B MBIA+ 61/4% 5/15/2025 AAA 2,700M 2,808,000
5.49% New Jersey St Ed Facs Auth MBIA+ 6.85% 7/1/2019 AAA 1,150M 1,231,937
New Jersey St Ed Facs Auth 63/8% 7/1/2022 AA 5,000M 5,331,250
Rutgers St Univ NJ Ser P 6.85% 5/1/2021 AA 800M 867,000
Total 10,238,187
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Finance
.56% Hamilton Township NJ Bd Ed Ser B FSA+ 7% 12/15/2015 AAA 970M 1,051,238
- ------------------------------------------------------------------------------------------------------------------------------------
Health and New Jersey Health Care Facs Auth Rev Ser A CNLA+ 5.70% 7/1/2012 AAA 2,225M 2,205,530
Hospital New Jersey Health Care Facs Fin Auth Rev Ser A AMBAC+ 7% 7/1/2020 AAA 5,000M 5,387,500
7.05% New Jersey Health Care Facs Fin Auth Rev/Bayonne Hosp
FSA+ 61/4% 7/1/2012 AAA 1,600M 1,668,000
New Jersey Health Care Facs Ser A FHA+ 71/4% 2/15/2021 AA 1,485M 1,596,375
New Jersey Health Care Facs Ser B FHA+ 61/2% 2/1/2022 AAA 945M 986,343
New Jersey Health Care Facs Ser C FSA+ 63/4% 7/1/2020 AAA 735M 788,288
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Facs
61/4% 8/1/2032 AAA 500M 511,250
Total 13,143,286
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Housing New Jersey St Hsg & Mtge Fin MBIA+ 7.70% 10/1/2029 AAA 1,415M 1,478,675
3.07% New Jersey St Hsg & Mtge Fin Ser B
MBIA+ AMT+++ 7.90% 10/1/2022 AAA 1,965M 2,050,969
New Jersey St Hsg & Mtge Fin Ser 1 6.70% 11/1/2028 A 1,000M 1,033,750
Puerto Rico Hsg Fin Corp Mtge Rev Ser B GNMA+ 7.65% 10/15/2022 AAA 515M 542,037
Virgin Islands Hsg Fin Auth Sing Fam Rev Ser A
GNMA+ AMT+++ 61/2% 3/1/2025 AAA 600M 610,500
Total 5,715,931
----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
NEW JERSEY SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Industrial New Jersey Economic Dev Auth AMT+++ 71/4% 3/1/2021 A $ 1,500M $ 1,567,500
Revenue Puerto Rico Ind Med & Environmental/Upjohn 71/2% 12/1/2023 AA 1,500M 1,633,125
Bonds Puerto Rico Tel Auth Rev LINK MBIA+ 5.51% 1/16/2015 AAA 3,000M 2,913,750
3.28% Total 6,114,375
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous
1.74% Middlesex Co NJ Imp Auth Rev Cap Imp/Monroe Township
5.90% 9/15/2021 A 1,000M 996,250
Monmouth Co NJ Imp Auth Rev Govt Loan MBIA+ 6.40% 12/1/2009 AAA 1,075M 1,161,000
New Jersey Sports & Expo Auth Rev Ser A 8% 1/1/2025 BBB** 1,000M 1,086,250
Total 3,243,500
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Pollution Cape May Co NJ Ind Poll Ctrl Rev Fin Auth Ser B MBIA+ 7% 11/1/2029 AAA 500M 558,750
Control Salem Co NJ Poll Ctrl Auth Ser A AMT+++ 61/2% 11/15/2021 AA 2,000M 2,100,000
Revenue Total 2,658,750
1.43% ----------
- ------------------------------------------------------------------------------------------------------------------------------------
Power Camden Co NJ Muni Util Auth Sys FGIC+ 81/4% 12/1/2017 AAA 2,185M 2,329,756
12.37% Essex Co NJ Imp Auth Rev Orange Muni Util & Lease MBIA+ 6.80% 7/1/2014 AAA 1,710M 1,900,238
Puerto Rico Elec Pwr Auth 71/8% 7/1/2014 BBB 715M 765,943
Puerto Rico Elec Pwr Auth LINK 5.929% 7/1/2023 AAA 1,000M 1,010,000
Puerto Rico Elec Pwr Auth LINK FSA+ 6.30% 7/1/2018 AAA 6,000M 6,285,000
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.348% 7/1/2023++ AAA 4,500M 4,561,875
Puerto Rico Elec Pwr Auth RIBS FSA+ 7.852% 7/1/2018++ AAA 4,600M 4,962,250
Raritan Township NJ Muni Util Auth 6.45% 5/1/2012 A 1,180M 1,241,950
Total 23,057,012
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation
25.75% Delaware River & Bay Auth DE Auth Rev FGIC+ 51/4% 1/1/2026 AAA 5,300M 4,982,000
New Jersey Economic Dev Auth 7% 7/1/2016 BBB** 5,545M 5,780,663
New Jersey St Tnpk Auth FSA+ 61/2% 1/1/2016 AAA 4,730M 5,285,775
New Jersey St Tnpk Auth Ser C MBIA+ 61/2% 1/1/2016 AAA 9,635M 10,767,113
Port Auth NY & NJ 93rd Ser 61/8% 6/1/2094 AA 14,500M 14,989,375
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser C 5% 7/1/2036 A 6,000M 5,242,500
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y 51/2% 7/1/2036 A 1,000M 950,000
Total 47,997,426
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Water and New Jersey Economic Dev Auth Ser D 7% 10/1/2017 A 1,250M 1,282,812
Sewer New Jersey Economic Dev Auth Wtr Facs Rev FGIC+ AMT+++ 67/8% 11/1/2034 AAA 1,750M 1,927,188
4.57% New Jersey Wastewtr 67/8% 6/15/2009 AA 1,905M 2,081,212
New Jersey Wastewtr Ser A MBIA+ 7% 5/15/2006 AAA 500M 534,375
New Jersey Wtr Supply Auth Rev MBIA+ AMT+++ 77/8% 11/1/2013 AAA 2,500M 2,687,500
Total 8,513,087
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 100.02% (Cost $180,952,930) 186,435,451
====================================================================================================================================
OTHER ASSETS, LESS LIABILITIES (.02)%
====================================================================================================================================
Cash and Receivables, Net of Liabilities (33,149)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
100.00% $186,402,302
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value ($186,402,302 / 35,999,741 shares outstanding) $5.18
* Ratings have not been audited by Deloitte & Touche LLP.
** This security has not been rated by an independent ratings service but is, in Lord Abbett's opinion, of comparable
quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation or Federal agency.
++ The interest rate is subject to change periodically and inversely to the prevailing market rate. The interest rate shown
is the rate in effect at September 30, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
13
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
CONNECTICUT SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded Connecticut St Clean Wtr Fd 7% 1/1/2011 AAA $ 400M $ 443,000
18.44% Connecticut St Health & Ed/St Raphael Hosp Ser C AMBAC+ 71/2% 7/1/2014 AAA 1,000M 1,075,000
Connecticut St Health & Ed/Yale-New Haven Hosp Ser F
MBIA+ 7% 7/1/2010 AAA 75M 82,688
Connecticut St Health & Ed/Yale-New Haven Hosp Ser F
MBIA+ 7.10% 7/1/2025 AAA 3,105M 3,431,025
Connecticut St Ser A 63/4% 3/1/2011 AAA 100M 109,875
Connecticut St Spcl Tax Oblig Rev Ser A 71/8% 6/1/2007 AAA 5,000M 5,562,500
Connecticut St Spcl Tax Oblig Rev Ser A 7.20% 2/1/2009 AAA 1,400M 1,513,750
Puerto Rico Commonwealth 73/4% 7/1/2006 AAA 3,000M 3,243,750
Puerto Rico Commonwealth Aqu & Sewer Auth Rev Ser A 77/8% 7/1/2017 AAA 2,000M 2,167,500
Puerto Rico Commonwealth G.O. 7.70% 7/1/2020 AAA 900M 1,017,000
Puerto Rico Commonwealth Hwy Ser P 81/8% 7/1/2013 AAA 2,150M 2,335,438
Puerto Rico Commonwealth Hwy Ser R 63/4% 7/1/2005 AAA 1,000M 1,095,440
Puerto Rico Commonwealth Hwy Ser T 65/8% 7/1/2018 AAA 453M 504,096
Puerto Rico Commonwealth Hwy Ser T 65/8% 7/1/2018 AAA 67M 74,404
Total 22,655,466
----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Connecticut St Ser B 51/8% 8/15/2016 Aa 2,000M 1,870,000
Obligation Puerto Rico Commonwealth 6.45% 7/1/2017 A 2,000M 2,130,000
State Puerto Rico Commonwealth 61/2% 7/1/2023 A 2,000M 2,135,000
4.99% Total 6,135,000
----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Darien CT 51/2% 10/15/2015 Aaa 500M 496,875
Obligation East Haven CT FGIC+ 51/2% 9/1/2015 AAA 1,000M 980,000
Local Hamden CT MBIA+ 51/2% 8/15/2016 Aaa 1,165M 1,146,069
4.57% Hartford CT 61/2% 12/15/2005 AA 730M 801,175
Killingly CT 71/4% 12/15/2004 A 250M 264,062
Monroe CT 6.60% 4/15/2005 A 100M 109,125
Montville CT 6.70% 6/15/2009 Aa 550M 619,437
Montville CT 6.70% 6/15/2010 Aa 575M 648,312
Portland CT 7.10% 12/15/2000 A 100M 108,625
Redding CT 6.60% 4/15/2010 Aa 100M 111,375
Voluntown CT 63/4% 10/1/2002 A 100M 108,375
Watertown CT 61/2% 6/15/2003 A 100M 106,875
West Haven CT MBIA+ 61/2% 6/15/2006 AAA 100M 110,750
Total 5,611,055
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Education Connecticut St Health & Ed Facs/Fairfield Univ Ser F 6.90% 7/1/2014 BBB 1,500M 1,565,625
13.60% Connecticut St Health & Ed Facs/Kent Sch Ser B MBIA+ 5.40% 7/1/2023 AAA 2,500M 2,375,000
Connecticut St Health & Ed Facs/New Haven Ser D
6.70% 7/1/2026 BBB 1,000M 998,750
Connecticut St Health & Ed Facs/Sacred Heart Ser C
61/2% 7/1/2016 BBB 1,000M 1,015,000
Connecticut St Health & Ed Facs/Trinity Coll Ser E
MBIA+ 57/8% 7/1/2026 AAA 1,670M 1,678,350
Connecticut St Health & Ed Facs/Westminster Ser A
MBIA+ 51/2% 7/1/2016 AAA 1,000M 971,250
Connecticut St Health & Ed Facs/Yale Univ RIBS 8.023% 6/10/2030++ AAA 6,800M 6,851,000
Connecticut St Higher Ed Supplemental Loan Auth
AMT+++ 73/8% 11/15/2005 A 770M 806,575
Connecticut St Higher Ed Supplemental Loan Auth Ser A
AMT+++ 7.20% 11/15/2010 A 425M 449,437
Total 16,710,987
----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
CONNECTICUT SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Health and Connecticut St Health & Ed/Danbury Hosp Ser F
Hospital AMBAC+ 53/8% 7/1/2017 AAA $ 2,500M $ 2,400,000
9.62% Connecticut St Health & Ed/Danbury Hosp Ser F
AMBAC+ 53/8% 7/1/2023 AAA 2,000M 1,895,000
Connecticut St Health & Ed/Greenwich Hosp
MBIA+ 53/4% 7/1/2016 AAA 1,850M 1,852,313
Connecticut St Health & Ed/Bridgeport Hosp Ser A MBIA+ 65/8% 7/1/2018 AAA 1,250M 1,334,375
Connecticut St Health & Ed/St Marys Hosp Ser C 73/8% 7/1/2020 Baa 3,250M 3,371,875
Connecticut St Health & Ed/Waterbury Hosp Ser B FSA+ 7% 7/1/2020 AAA 100M 107,500
Connecticut St Health & Ed/William Backus Hosp Ser C 63/8% 7/1/2022 A 850M 860,625
Total 11,821,688
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Housing Connecticut St Hsg Fin Auth Ser A-2 AMT+++ 6.45% 5/15/2022 AA 1,100M 1,119,250
9.17% Connecticut St Hsg Fin Auth Ser B 63/4% 11/15/2023 AA 3,000M 3,142,500
Connecticut St Hsg Fin Auth Ser D-2 6.90% 5/15/2020 AA 1,000M 1,040,000
Connecticut St Hsg Fin Auth Sub Ser A Ser A-2
FHA+ AMT+++ 7.20% 11/15/2008 AA 655M 692,663
Connecticut St Hsg Fin Auth Sub Ser D-2 6.20% 11/15/2027 AA 2,150M 2,117,750
Puerto Rico Pub Bldg Auth Ser H 77/8% 7/1/2007 AAA 3,000M 3,152,670
Total 11,264,833
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial Connecticut St Dev Auth/Pfizer Inc Prjt 6.55% 2/15/2013 AAA 3,570M 3,860,063
Revenue Connecticut St Dev Auth/Pfizer Inc Prjt AMT+++ 7% 7/1/2025 AAA 2,500M 2,768,750
Bonds Eastern CT Resource Recovery/Wheelabrator Lisbon Prjt Ser A
12.28% AMT+++ 51/2% 1/1/2020 A 4,000M 3,630,000
Puerto Rico Ind Med & Environmental/American Home Products
5.10% 12/1/2018 A 2,000M 1,830,000
Puerto Rico Ind Med & Environmental/Upjohn 71/2% 12/1/2023 AA 1,000M 1,088,750
Puerto Rico Ind Med & Environmental/Warner Lambert 7.60% 5/1/2014 Aa 1,750M 1,914,063
Total 15,091,626
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous
9.16% Connecticut Middletown Courthouse MBIA+ 61/4% 12/15/2010 AAA 575M 606,625
Connecticut St Dev Govt Lease Rev MBIA+ 6.60% 6/15/2014 AAA 500M 544,375
New Haven CT Air Rights Pkg MBIA+ 61/2% 12/1/2015 AAA 9,475M 10,102,718
Total 11,253,718
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Power Connecticut St Dev Auth/New England Pwr Co 71/4% 10/15/2015 A 760M 815,100
2.60% Puerto Rico Elec Pwr Auth Ser T RIBS FSA+ 7.852% 7/1/2018++ AAA 1,500M 1,618,125
Puerto Rico Elec Pwr Auth Ser X 61/8% 7/1/2021 A 750M 764,062
Total 3,197,287
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Solid Waste Connecticut St Resource Recovery/American Ref Fuel Ser A
5.13% AMT+++ 8% 11/15/2015 AA 1,100M 1,192,125
Connecticut St Resource Recovery/American Ref Fuel Ser A
AMT+++ 6.45% 11/15/2022 A 4,985M 5,115,856
Total 6,307,981
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation
8.33% Connecticut St Spcl Tax Oblig Rev Ser B 10% 10/1/2000 AA 4,000M 4,785,000
Connecticut St Spcl Tax Oblig Rev Ser B FGIC+ 6.10% 10/1/2011 AAA 1,000M 1,043,750
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser W 51/2% 7/1/2015 A 600M 587,250
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y 51/2% 7/1/2026 A 750M 716,250
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y 51/2% 7/1/2036 A 3,275M 3,111,250
Total 10,243,500
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer
.57% Connecticut St Dev Auth Wtr Fac Rev Ser A AMBAC+ AMT+++ 53/4% 7/1/2028 AAA 250M 241,563
Puerto Rico Commonwealth Aqu & Sewer Auth Rev 5% 7/1/2015 A 500M 458,750
Total 700,313
----------
------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 98.46% (Cost $119,012,860) 120,993,454
------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
CONNECTICUT SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
OTHER ASSETS, LESS LIABILITIES 1.54%
====================================================================================================================================
Cash and Receivables, Net of Liabilities $ 1,891,534
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
100.00% $122,884,988
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value ($122,884,988 / 12,129,707 shares outstanding) $10.13
* Ratings have not been audited by Deloitte & Touche LLP.
+ 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 September 30, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
STATEMENT OF NET ASSETS September 30, 1996*
<TABLE>
<CAPTION>
MISSOURI SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded Cape Girardeau MO Wtrwks Sys Rev FGIC+ 6.40% 3/1/2012 AAA $ 1,150M $ 1,247,750
21.98% Central MO St Univ MBIA+ 7% 7/1/2014 AAA 150M 168,000
Kansas City MO Muni Assistance Corp Rev AMBAC+ 65/8% 4/15/2015 AAA 6,225M 6,847,500
Kansas City MO Muni Assistance Corp Rev AMBAC+ 71/8% 4/15/2016 AAA 805M 889,525
Kansas City MO Muni Assistance Corp Rev AMBAC+ 6% 4/15/2020 AAA 1,030M 1,090,513
Missouri St Health & Ed Facs Rev/Christian Health FGIC+ 67/8% 2/15/2013 AAA 2,100M 2,325,750
Missouri St Health & Ed Facs Rev/St Lukes MBIA+ 7% 11/15/2013 AAA 1,030M 1,160,038
Missouri St Regional Convention Ser A 6.90% 8/15/2021 AAA 9,750M 10,968,750
Puerto Rico Commonwealth G.O. 7.70% 7/1/2020 AAA 1,570M 1,774,100
Sikeston MO Elec Rev MBIA+ 61/4% 6/1/2022 AAA 1,535M 1,682,744
Springfield MO Sch Dist No 12 Ser A FGIC+ 63/4% 3/1/2011 AAA 1,225M 1,332,187
Total 29,486,857
----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Puerto Rico Commonwealth RIBS MBIA+ 7.894% 7/1/2008++ AAA 1,000M 1,053,750
Obligation Puerto Rico Commonwealth RIBS FSA+ 7.962% 7/1/2020++ AAA 4,000M 4,030,000
State Total 5,083,750
3.80% ----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Columbia MO Spcl Oblig Cap Imp 51/2% 2/1/2016 A 500M 488,750
Obligation Greene Co MO Reorg Sch Dist Direct Dep 53/4% 3/1/2016 AA 1,785M 1,820,700
Local Total 2,309,450
1.72% ----------
- ------------------------------------------------------------------------------------------------------------------------------------
Education Missouri St Health & Ed Facs Rev/St Louis Univ HS 6.35% 10/1/2014 A 2,000M 2,087,500
7.38% Platte Co MO Reorg Sch Dist Ctfs 71/8% 1/1/2011 A 500M 527,500
St Louis MO Sch Dist FGIC+ 6% 4/1/2012 AAA 1,275M 1,324,406
University of MO Rev 51/2% 11/1/2023 AA 375M 366,094
University of MO Rev Ser A AMBAC+ 61/2% 11/1/2011 AAA 2,000M 2,147,500
University of MO Univ Rev 51/2% 11/1/2017 AA 3,500M 3,447,500
Total 9,900,500
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Finance Blue Spring MO Pub Bldg Auth Leasehold Rev Ser A FGIC+ 51/8% 9/1/2016 AAA 1,630M 1,536,275
15.16% Kansas City MO Muni Assistance Corp Rev MBIA+ 51/8% 4/15/2015 AAA 9,000M 8,505,000
Kansas City MO Muni Assistance Corp Rev MBIA+ 5.60% 4/15/2016 AAA 2,000M 1,997,500
Kansas City MO Muni Assistance Corp Rev MBIA+ 53/8% 4/15/2016 AAA 7,000M 6,807,500
Poplar Bluff MO Pub Bldg Leasehold Rev Ser A MBIA+ 51/2% 9/1/2012 AAA 1,500M 1,485,000
Total 20,331,275
----------
------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
MISSOURI SERIES
<TABLE>
<CAPTION>
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Health and Hospital
15.14% Hannibal MO Ind Dev Auth Health Facs Rev Ser A FSA+ 55/8% 3/1/2012 AAA $ 2,170M $ 2,164,575
Hannibal MO Ind Dev Auth Health Facs Rev Ser A
FSA+ 53/4% 3/1/2022 AAA 1,250M 1,250,000
Jackson Co MO Ind Dev Rev/St Joseph Health Ctr 7% 7/1/2022 Baa 1,500M 1,575,000
Missouri St Health & Ed Facs Rev/BJC Health Ser A 61/2% 5/15/2020 AA 4,650M 5,051,062
Missouri St Health & Ed Facs Rev/Health Midwest Ser B
MBIA+ 61/4% 2/15/2022 AAA 5,000M 5,187,500
Missouri St Health & Ed Facs Rev/Heartland Health Sys
AMBAC+ 6.35% 11/15/2017 AAA 2,600M 2,733,250
Missouri St Health & Ed Facs Rev/Ssm Health Care Ser AA
MBIA+ 61/4% 6/1/2016 AAA 2,250M 2,345,625
Total 20,307,012
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Housing Missouri St Hsg Dev Comm Mtge Rev Ser A GNMA+ AMT+++ 63/4% 6/1/2024 AAA 350M 364,438
5.79% 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 2,172,363
Puerto Rico Hsg Fin Corp Mtge Rev Ser A GNMA+ 7.80% 10/15/2021 AAA 15M 15,619
Puerto Rico Hsg Fin Corp Mtge Rev Ser B GNMA+ 7.65% 10/15/2022 AAA 140M 147,350
Total 7,762,270
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial Missouri St Environmental Imp & Energy Rev/Union Elec Ser A
Revenue 7.40% 5/1/2020 AA 550M 599,500
Bonds Puerto Rico Tel Auth Rev RIBS MBIA+ 6.768% 1/25/2007++ AAA 2,000M 1,982,500
2.62% Puerto Rico Tel Auth Rev RIBS MBIA+ 7.065% 1/16/2015++ AAA 1,000M 937,500
Total 3,519,500
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous
4.16% Clay Co MO Pub Bldg Auth Leasehold Rev FGIC+ 7% 5/15/2014 AAA 1,000M 1,113,750
St Louis Co MO Ind Dev Rev Arena Prjt AMT+++ 77/8% 12/1/2024 BBB** 2,000M 2,140,000
St Louis MO Land Clearance Rev 73/4% 7/1/2021 BBB** 2,210M 2,331,550
Total 5,585,300
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Pollution Missouri St Environmental Imp & Energy Res Auth Poll Ctrl Rev 51/2% 12/1/2013 AA 1,765M 1,745,143
Control Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev Ser A 6.55% 7/1/2014 Aa 3,000M 3,232,500
Revenue Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev Ser A 53/4% 1/1/2016 Aa 2,400M 2,427,000
9.66% Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev Ser B 7.20% 7/1/2016 Aa 2,250M 2,576,250
Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev Ser D 5.90% 1/1/2019 Aa 2,050M 2,078,187
Missouri St Environmental Imp & Energy Wtr Poll Ctrl Rev Ser E 55/8% 7/1/2016 Aa 900M 901,125
Total 12,960,205
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Power Puerto Rico Elec Pwr Auth RIBS FSA+ 8.348% 7/1/2023++ AAA 2,500M 2,534,375
2.10% Sikeston MO Elec Rev Ref MBIA+ 5% 6/1/2022 AAA 315M 287,044
Total 2,821,419
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation
2.65% Kansas City MO Arpt Rev Ser B CGIC+ 67/8% 9/1/2014 AAA 1,490M 1,648,312
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y 51/2% 7/1/2026 A 2,000M 1,910,000
Total 3,558,312
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer
5.14% Kansas City MO Wtr Rev Ser D 7th Issue 6.65% 12/1/2013 AA 2,800M 3,052,000
Missouri St Environmental Imp Energy Res Auth Fac Rev Ser A
MBIA+ AMT+++ 5.95% 11/1/2019 AAA 1,500M 1,507,500
St Louis MO Wtr Rev FGIC+ 6% 7/1/2014 AAA 2,250M 2,334,375
Total 6,893,875
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 97.30% (Cost $126,865,118) 130,519,725
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
MISSOURI SERIES
<TABLE>
<CAPTION>
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
OTHER ASSETS, LESS LIABILITIES 2.70%
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Securities
University of MO Ser FY 1996-97 43/4% 6/30/1997 (Cost $853,627) MIG1 $1,850M $ 1,862,765
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 1,761,464
- ------------------------------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 3,624,229
====================================================================================================================================
Net Assets
100.00% $134,143,954
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value ($134,143,954 / 26,401,567 shares outstanding) $5.08
* Ratings have not been audited by Deloitte & Touche LLP.
** This security has not been rated by an independent ratings service but is, in Lord Abbett's opinion, of comparable
quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation or Federal agency.
++ The interest rate is subject to change periodically and inversely to the prevailing market rate. The interest rate
shown is the rate in effect at September 30, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
STATEMENT OF NET ASSETS September 30, 1996
HAWAII SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded Hawaii St Dept Bdg & Fin/Pali Moni Med Ctr 7.60% 7/1/2010 AAA $200M $ 229,000
21.59% Hawaii St Dept Bdg & Fin/Pali Moni Med Ctr 7.65% 7/1/2019 AAA 1,000M 1,147,500
Hawaii St Dept Bdg & Fin/Queens Med Hosp FGIC+ 61/2% 7/1/2012 AAA 250M 260,313
Hawaii St G.O. Ser B-R 7% 6/1/2009 AAA 1,000M 1,085,000
Hawaii St G.O. Ser B-R 7% 6/1/2010 AAA 2,430M 2,636,550
Hawaii St G.O. Ser B-S 7% 9/1/2003 AAA 500M 549,375
Hawaii St G.O. Ser B-S 71/8% 9/1/2009 AAA 700M 772,625
Honolulu HI City & Co G.O. 7.10% 6/1/2006 AAA 1,000M 1,095,000
Honolulu HI City & Co G.O. Ser B 6.90% 10/1/2002 AAA 100M 106,750
Honolulu HI City & Co G.O. Ser C 7.15% 6/1/2008 AAA 500M 549,375
Honolulu HI City & Co G.O. Ser C 7.15% 6/1/2010 AAA 1,000M 1,098,750
Honolulu HI City & Co G.O. Ser D 6.90% 12/1/2010 AAA 400M 440,000
Puerto Rico Commonwealth Aqu & Sewer Auth Rev Ser A 77/8% 7/1/2017 AAA 2,000M 2,167,500
Puerto Rico Commonwealth G.O. 7.30% 7/1/2020 AAA 1,000M 1,116,250
Puerto Rico Commonwealth G.O. 7.70% 7/1/2020 AAA 1,950M 2,203,500
Puerto Rico Commonwealth Hwy Ser Q 73/4% 7/1/2010 AAA 525M 593,906
Puerto Rico Commonwealth Pub Imp Ser A 7.70% 7/1/2008 AAA 1,700M 1,870,000
Puerto Rico Pub Bldg Auth Ser K 67/8% 7/1/2012 AAA 450M 506,250
Total 18,427,644
----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Hawaii St Hwy Rev 51/4% 7/1/2016 AA 2,550M 2,428,875
Obligation Hawaii St Ser B-Z 6% 10/1/2010 AA 500M 526,875
State Hawaii St Ser B-Z 6% 10/1/2012 AA 500M 524,375
23.52% Hawaii St Ser C-J 61/4% 1/1/2015 AA 2,625M 2,733,280
Hawaii St Ser C-L 51/4% 3/1/2013 AA 2,555M 2,443,219
Hawaii St Ser C-L 51/4% 3/2/2014 AA 2,700M 2,578,500
Hawaii St Ser C-L 51/4% 3/1/2015 AAA 1,805M 1,710,238
Hawaii St Ser C-L 51/4% 3/1/2016 AA 2,030M 1,920,888
Puerto Rico Commonwealth 6.45% 7/1/2017 A 2,050M 2,183,250
Puerto Rico Commonwealth RIBS FSA+ 7.962% 7/1/2020++ AAA 3,000M 3,022,500
Total 20,072,000
----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
HAWAII SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
General Hawaii Co HI Ser A FGIC+ 5.60% 5/1/2013 AAA $ 1,780M $ 1,791,125
Obligation Honolulu HI City & Co Ser A MBIA+ 5% 11/1/2015 AAA 1,500M 1,372,500
Local Honolulu HI City & Co Ser A FGIC+ 6% 12/1/2015 AAA 1,000M 1,051,250
9.35% Honolulu HI City & Co Ser A FGIC+ 51/2% 9/1/2016 AAA 2,795M 2,725,125
Maui Co HI Ser A MBIA+ 53/4% 6/1/2016 AAA 1,035M 1,042,762
Total 7,982,762
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Education
.33% University of HI Ser G AMBAC+ 5.45% 10/1/2006 AAA 275M 281,188
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Health and Hawaii St Dept Bdg & Fin Spcl Purp Rev Kapi'olani 6.20% 7/1/2016 A 1,000M 1,015,000
Hospital Hawaii St Dept Bdg & Fin Spcl Purp Rev Kapi'olani 61/4% 7/1/2021 A 2,000M 2,030,000
6.90% Hawaii St Dept Bdg & Fin/St Francis Hosp CGIC+ 61/2% 7/1/2022 AAA 1,200M 1,278,000
Puerto Rico Ind Med & Environmental/St Luke Hosp 61/4% 6/1/2010 A 1,390M 1,407,375
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Facs Ser A
MBIA+ 61/4% 7/1/2024 AAA 150M 156,563
Total 5,886,938
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Housing Hawaii St Hsg Fin & Dev Corp/Univ of HI Faculty Hsg Prjt
3.02% AMBAC+ 5.65% 10/1/2016 AAA 1,000M 1,003,750
Hawaii St Hsg Fin & Dev Corp/Univ of HI Faculty Hsg Prjt
AMBAC+ 5.70% 10/1/2025 AAA 500M 501,875
Hawaii St Hsg Fin & Dev Corp Ser A FNMA+ AMT+++ 7.10% 7/1/2024 Aa 960M 1,003,200
Puerto Rico Hsg Fin Corp Mtge Rev Ser B GNMA+ 7.65% 10/15/2022 AAA 65M 68,413
Total 2,577,238
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial Puerto Rico Ind Med & Environmental/Baxter Lab Ser A 8% 9/1/2012 A 1,000M 1,087,500
Revenue Puerto Rico Ind Med & Environmental/Warner Lambert 7.60% 5/1/2014 Aa 1,500M 1,640,625
Bonds Puerto Rico Tel Auth Rev RIBS MBIA+ 7.065% 1/16/2015++ AAA 800M 750,000
4.07% Total 3,478,125
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Power Hawaii St Dept Bdg & Fin RIBS 7.119% 12/15/2023++ AAA 1,500M 1,299,375
18.07% Hawaii St Dept Bdg & Fin Spcl Purp Mtge Rev Reg Linked Sav
LINK 5.538% 12/15/2023 AAA 7,000M 6,553,750
Hawaii St Dept Bdg & Fin/HI Elec Ser A MBIA+ AMT+++ 6.60% 1/1/2025 AAA 2,750M 2,915,000
Hawaii St Dept Bdg & Fin/HI Elec Ser C MBIA+ AMT+++ 73/8% 12/1/2020 AAA 2,500M 2,740,625
Puerto Rico Elec Pwr Auth 71/8% 7/1/2014 BBB 365M 391,005
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.348% 7/1/2023++ AAA 1,500M 1,520,625
Total 15,420,380
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation
8.55% Hawaii St Arpt Sys Rev 2nd Ser MBIA+ AMT+++ 7% 7/1/2018 AAA 2,125M 2,316,250
Hawaii St Arpt Sys Rev 2nd Ser FGIC+ AMT+++ 71/2% 7/1/2020 AAA 445M 490,612
Hawaii St Arpt Sys Rev 2nd Ser MBIA+ AMT+++ 63/4% 7/1/2021 AAA 2,745M 2,923,425
Hawaii St Hbr Cap Imp Rev FGIC+ AMT+++ 61/4% 7/1/2015 AAA 500M 516,250
Hawaii St Hbr Cap Imp Rev FGIC+ AMT+++ 63/8% 7/1/2024 AAA 500M 516,875
Puerto Rico Commonwealth Hwy Ser V 65/8% 7/1/2012 A 500M 530,625
Total 7,294,037
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Water and
Sewer Honolulu HI City & Co Bd Wtr Supply Wtr Sys Rev 5.80% 7/1/2021 AA 1,000M 1,006,250
---------
1.18%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 96.58% (Cost $81,046,850) 82,426,562
------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
HAWAII SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES 3.42%
====================================================================================================================================
Cash and Receivables, Net of Liabilities $ 2,917,713
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
100.00% $85,344,275
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value ($85,344,275 / 17,328,741 shares outstanding) $ 4.93
* Ratings have not been audited by Deloitte & Touche LLP.
+ 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 September 30, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
WASHINGTON SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded Douglas Co WA Pub Util Dist No 1 Wells Hydroelec Ser A 83/4% 9/1/2018 AAA $ 150M $ 196,313
16.85% King Co WA Sch Dist Ser A 63/4% 12/1/2008 AAA 2,415M 2,608,200
Lewis Co WA Pub Util Dist No 1 Cowlitz Falls Hydroelec 7% 10/1/2022 AAA 500M 560,000
Puerto Rico Pub Bldg Auth Ser L 67/8% 7/1/2012 AAA 1,000M 1,125,000
Seattle WA Muni Metro Ser T 67/8% 1/1/2014 AAA 500M 543,125
Seattle WA Muni Metro Ser T 67/8% 1/1/2031 AAA 500M 543,125
Tacoma WA Elec Sys Rev FGIC+ 73/8% 1/1/2009 AAA 500M 541,875
Washington St Pub Pwr Supply Ser B Prjt No 2 73/8% 7/1/2012 AAA 1,790M 1,991,375
Washington St Pub Pwr Supply Ser B Prjt No 3 71/4% 7/1/2015 AAA 1,460M 1,602,350
Washington St Pub Pwr Supply Ser C Prjt No 1 8% 7/1/2017 AAA 475M 537,938
Washington St Pub Pwr Supply Sys Nuclear Prjt No 2 Ser A 71/2% 7/1/2004 AAA 1,575M 1,760,063
Total 12,009,364
-----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Obligation
State 1.66%
Washington St Ser B 51/2% 5/1/2018 AA 1,205M 1,182,406
---------
- ------------------------------------------------------------------------------------------------------------------------------------
General Mount Vernon WA AMBAC+ 6.85% 12/1/2014 AAA 1,285M 1,413,500
Obligation Whatcom Co WA 53/4% 12/1/2012 A 115M 115,000
Local Total 1,528,500
2.14% ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Education
.38%
Washington St Higher Ed Facs Auth Rev CNLA+ 7% 10/1/2015 AAA 250M 274,375
-------
- ------------------------------------------------------------------------------------------------------------------------------------
Health and Washington St Health Care Facs Auth Rev/Yakima Valley Mem Hosp
Hospital CNLA+ 51/4% 12/1/2020 AAA 500M 456,250
.64% -------
- ------------------------------------------------------------------------------------------------------------------------------------
Housing Skagit Co WA Hsg Auth Low Income Hsg Assistance Coll GNMA+ 7% 6/20/2035 AAA 750M 796,875
4.50% Washington St Hsg Fin Comm Sing Fam Mtge Rev
GNMA+ AMT+++ 6.65% 7/1/2016 AAA 755M 765,381
Washington St Hsg Fin Comm Sing Fam Mtge Rev
GNMA+ AMT+++ 7.05% 7/1/2022 AAA 1,560M 1,645,800
Total 3,208,056
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue
Bonds .66% Puerto Rico Tel Auth Rev RIBS MBIA+ 7.065% 1/16/2015++ AAA 500M 468,750
-------
- ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous
2.96% Pike Place Mkt Preservation Ser A 6.60% 12/1/2021 AA 2,000M 2,107,500
---------
- ------------------------------------------------------------------------------------------------------------------------------------
Power Chelan Co WA Pub Util Dist Ser A MBIA+ AMT+++ 6.40% 7/1/2017 AAA 2,000M 2,000,000
44.04% Douglas Co WA Pub Util Dist No 1 Wells Hydroelec Ser A 83/4% 9/1/2018 A 350M 438,375
Douglas Co WA Pub Util Dist No 1 Wells Hydroelec Ser B AMBAC+ 83/4% 9/1/2006 AAA 5,860M 6,980,725
</TABLE>
20
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
WASHINGTON SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Grant Co WA Pub Util Dist No 2 Wanapum Hydroelec Ser A 63/8% 1/1/2023 A $ 630M $ 646,538
Lewis Co WA Pub Util Dist No 1 Cowlitz Falls Hydroelec 51/2% 10/1/2022 AA 1,400M 1,342,250
Mason Co WA Pub Util Dist No 3 6.35% 1/1/2013 A 1,040M 1,073,800
Puerto Rico Elec Pwr Auth LINK FSA+ 5.929% 7/1/2023 AAA 1,000M 1,010,000
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.348% 7/1/2023++ AAA 3,000M 3,041,250
Tacoma WA Elec Sys Rev LINK AMBAC+ 6.514% 1/2/2015 AAA 4,400M 4,636,500
Tacoma WA Elec Sys Rev RIBS AMBAC+ 9.092% 1/2/2015++ AAA 2,300M 2,550,125
Washington St Pub Pwr Supply Sys Nuclear Prjt No 2 Rev Reg
FSA+ 5.40% 7/1/2012 AAA 8,000M 7,680,000
Total 31,399,563
-----------
- ------------------------------------------------------------------------------------------------------------------------------------
Solid Waste Pierce Co WA Economic Dev Corp Rev Solid Waste-Occidental
1.29% AMT+++ 5.80% 9/1/2029 BBB 1,000M 922,500
-----------
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation
11.67% Port Kalama WA Rev Ser B 55/8% 12/1/2015 Baa 1,000M 945,000
Port Seattle WA Rev Ser B AMT+++ 7.60% 12/1/2009 AA 750M 836,250
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 1,750M 1,529,062
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y 51/2% 7/1/2036 A 5,000M 4,750,000
Total 8,323,124
-----------
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer
13.76% Pasco WA Wtr & Sewer Rev MBIA+ 6.40% 6/1/2014 AAA 865M 921,225
Renton WA Wtr & Sewer Rev 6.55% 11/1/2013 A 1,000M 1,058,750
Seattle WA Muni Metro Ser U FGIC+ 6.60% 1/1/2032 AAA 3,250M 3,481,563
Seattle WA Wtr Sys Rev 51/4% 12/1/2023 AA 2,990M 2,769,487
Tukwila WA Wtr & Sewer Rev MBIA+ 65/8% 2/1/2015 AAA 1,370M 1,578,925
Total 9,809,950
- ------------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 100.55% (Cost $68,712,612) 71,690,338
-----------
====================================================================================================================================
OTHER ASSETS, LESS LIABILITIES (0.55)%
====================================================================================================================================
Short-Term Securities
Texas St Tax & Rev Anticipation Notes 43/4% 8/29/1997 (Cost $100,723) 100M 100,835
-------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (495,844)
-----------
====================================================================================================================================
Total Other Assets, Less Liabilities (395,009)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
100.00% $71,295,329
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value ($71,295,329 / 14,371,089 shares outstanding) $4.96
* Ratings have not been audited by Deloitte & Touche LLP.
+ 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 September 30, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
MINNESOTA SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded Brainerd MN Health Care Facs/Benedictine Health/St Joseph Prjt 83/8% 2/15/2020 AAA $775M $ 879,625
28.14% Breckenridge MN Hosp Facs/Franciscan Sisters Health Care Ser B
93/8% 9/1/2017 AAA 350M 374,217
Minneapolis MN Hosp Rev MN Childrens Med Ctr Prjt Ser C 7.30% 12/1/2006 AAA 200M 225,750
Minneapolis MN Hosp Rev MN Childrens Med Ctr Prjt Ser C 7% 12/1/2020 AAA 200M 223,250
Puerto Rico Commonwealth G.O. 7.70% 7/1/2020 AAA 200M 226,000
</TABLE>
21
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
MINNESOTA SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
St Louis Park MN Health Care Facs Rev 91/4% 1/1/2020 AAA $100M $ 115,625
Western MN Muni Pwr Agy MN 1977 Ser A 63/8% 1/1/2015 AAA 210M 220,238
Total 2,264,705
------------
- ------------------------------------------------------------------------------------------------------------------------------------
General Obligation
State 3.20%
Minnesota St 51/4% 8/1/2014 AA 265M 257,712
------------
- ------------------------------------------------------------------------------------------------------------------------------------
General Burnsville MN Indpt Sch Dist No 191 Ser A 51/8% 2/1/2017 AA 250M 234,688
Obligation Frazee MN Indpt Sch Dist Ser A 5% 2/1/2016 FSA+ Aaa 250M 230,313
Local Lakeville MN Indpt Sch Dist No 194 MBIA+ 51/8% 2/1/2013 AAA 250M 237,812
20.46% Minneapolis MN 51/8% 10/1/2020 Aaa 500M 466,250
Minneapolis MN Spcl Sch Dist No 1 FGIC+ 53/8% 2/1/2014 AAA 250M 245,625
North St Paul Maplewood MN Indpt Sch Dist No 622 Ser A 51/8% 2/1/2025 Aa 250M 231,562
Total 1,646,250
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Education Minnesota St Higher Ed Facs Auth Rev/MacAlester Coll Ser 4-C
4.21% 5.55% 3/1/2016 Aa 100M 96,750
Minnesota St Higher Ed Facs Auth Rev/Univ St Thomas Ser 4-A1 55/8% 10/1/2016 A 250M 241,875
Total 338,625
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Health and Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys
Hospital 63/4% 8/15/2014 AAA 245M 262,763
24.79% Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys 6.90% 12/1/2022 A 300M 324,750
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys Ser A
AMBAC+ 5% 11/15/2013 AAA 255M 235,875
Minneapolis & St Paul MN Hsg & Redev Auth Health Care Sys Ser A
5.70% 8/15/2016 AAA 150M 150,000
Rochester MN Health Care Ser H RIBS 8.067% 11/15/2015++ AA 550M 565,125
St Cloud MN Hosp Facs Rev Ref St Cloud Ser B AMBAC+ 5% 7/1/2020 AAA 250M 226,875
St Louis Park MN Health Care AMBAC+ 5.20% 7/1/2023 AAA 250M 229,687
Total 1,995,075
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Housing Dakota Co MN Hsg Dev AMBAC+ 51/8% 1/1/2017 AAA 250M 240,937
14.78% Minnesota St Hsg Fin Agy Sing Fam Mtge Ser B-1 AMT+++ 63/4% 1/1/2026 AA 95M 97,730
Minnesota St Hsg Fin Agy Sing Fam Mtge Ser D AMT+++ 6.40% 7/1/2015 AA 250M 253,750
Minnesota St Hsg Fin Agy Sing Fam Mtge Ser E 5.90% 7/1/2025 AA 250M 245,000
Minnesota St Hsg Fin Agy Sing Fam Mtge Ser G AMT+++ 61/4% 7/1/2026 AA 250M 250,313
St Louis Park MN Multi-Fam Hsg 6.15% 12/1/2016 Aa 100M 101,625
Total 1,189,355
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Marshall MN Elec & Wtr Util 6.45% 7/1/2011 AAA 150M 158,250
Sewer Minnesota Pub Facs Auth Wtr Poll Ctrl Rev Ser A 61/4% 3/1/2016 AAA 100M 105,376
3.28% Total 263,626
------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 98.86% (Cost $8,024,862) 7,955,348
------------
====================================================================================================================================
OTHER ASSETS, LESS LIABILITIES 1.14%
====================================================================================================================================
Cash and Receivables, Net of Liabilities 91,541
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
100.00% $ 8,046,889
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value ($8,046,889 / 1,643,047 shares outstanding) $4.90
* Ratings have not been audited by Deloitte & Touche LLP.
+ 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 September 30, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
22
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
CALIFORNIA SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded California Health Fac Auth Rev/Robert F Kennedy Med Ctr
24.99% CA MTGE+ 73/4% 3/1/2014 AAA $ 1,000M $ 1,070,000
California St Dept Wtr Rev Ser H 6.90% 12/1/2025 AAA 1,000M 1,096,250
Concord CA Redev Agy 3rd Ser MBIA+ 8% 7/1/2018 AAA 1,715M 1,860,775
East Bay CA Muni Util Dist Wtr Sys Rev AMBAC+ 61/2% 6/1/2017 AAA 10,435M 11,739,375
Local Govt Fin/Anaheim Redev 8.20% 9/1/2015 AAA 1,500M 1,638,750
Los Angeles CA Civic Ctr Ctfs 8% 6/1/2010 AAA 3,000M 3,240,000
Los Angeles CA Convention Ctfs Ser A 73/8% 8/15/2018 AAA 9,900M 10,852,875
Northern CA Transmission Rev Ser A MBIA+ 7% 5/1/2024 AAA 7,000M 7,682,500
Puerto Rico Commonwealth G.O. 7.70% 7/1/2020 AAA 2,000M 2,260,000
Puerto Rico Commonwealth Hwy Auth Rev Ser Q 73/4% 7/1/2016 AAA 2,250M 2,545,313
Puerto Rico Commonwealth Hwy Auth Rev Ser Q 8% 7/1/2018 AAA 3,500M 3,981,250
Puerto Rico Elec Pwr Auth Rev Ser P 7% 7/1/2021 AAA 7,800M 8,745,750
Sacramento CA Muni Util Dist Elec Rev Ser V 77/8% 8/15/2016 AAA 6,880M 7,482,000
Santa Clara CA Redev FGIC+ 73/4% 6/1/2014 AAA 2,000M 2,157,500
Vallejo CA Rev Wtr Imp Ser B FGIC+ 61/2% 11/1/2014 AAA 6,565M 7,328,181
Total 73,680,519
-----------
- ------------------------------------------------------------------------------------------------------------------------------------
General Palo Alto CA Unified Sch Dist Ser B 53/8% 8/1/2018 AA 2,345M 2,280,512
Obligation Palo Alto CA Unified Sch Dist Ser B 53/8% 8/1/2021 AA 3,000M 2,895,000
Local Total 5,175,512
1.76% -----------
- ------------------------------------------------------------------------------------------------------------------------------------
Education California Ed Fac Auth Rev/Loyola Marymount Univ Ser B 6.60% 10/1/2022 A 1,900M 2,033,000
11.09% California Ed Fac Auth Rev/Univ of San Francisco MBIA+ 6% 10/1/2016 AAA 1,500M 1,543,125
California Ed Fac Auth Rev/Univ of San Francisco MBIA+ 6% 10/1/2026 AAA 6,000M 6,120,000
California St Univ Rev FGIC+ 5.90% 11/1/2021 AAA 11,700M 11,831,625
University CA Rev AMBAC+ 6% 7/1/2026 AAA 11,000M 11,178,750
Total 32,706,500
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Health and California Health Fac Auth Rev/Catholic Ser A MBIA+ 6% 7/1/2025 AAA 1,190M 1,206,362
Hospital California Health Fac Auth Rev/Cedarknoll Ser B CA MTGE+ 71/2% 8/1/2020 A 1,000M 1,078,750
1.81% California Health Fac Auth Rev/San Diego Hosp Assn MBIA+ 6.95% 10/1/2021 AAA 2,750M 3,038,750
Total 5,323,862
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Housing California Hsg Fin Agy Rev Home Mtge Ser A 73/8% 8/1/2017 Aa 8,000M 8,480,000
5.17% 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 Ser A 9.20% 7/15/2016 Aa 5M 5,138
Total 15,234,357
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous
2.78% Concord CA Redev Agy 3rd Ser MBIA+ 8% 7/1/2018 AAA 35M 37,713
Los Angeles Co CA Met Trans Auth Sales Tax 2nd Tier Ser A MBIA+ 53/4% 7/1/2018 AAA 1,330M 1,334,988
Los Angeles Co CA Trans Comm Sales Tax Rev MBIA+ 7% 7/1/2019 AAA 4,960M 5,412,600
Santa Clara CA Ctfs 7.80% 11/1/2013 A 1,295M 1,421,262
Total 8,206,563
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Pollution California Poll Ctrl Rev/Pacific Gas & Elec MBIA+ AMT+++ 83/4% 1/1/2007 AAA 650M 695,500
Control California Poll Ctrl Rev/So CA Edison AMBAC+ AMT+++ 6.40% 12/1/2024 AAA 10,000M 10,512,500
Revenue Total 11,208,000
3.80% ----------
- ------------------------------------------------------------------------------------------------------------------------------------
Power Northern CA Transmission Rev RIBS MBIA+ 6.82% 4/29/2024++ AAA 8,500M 7,703,125
10.80% Northern CA Transmission Rev Ser A MBIA+ 61/2% 5/1/2016 AAA 2,000M 2,157,500
Palo Alto CA Util Rev Ser A 61/4% 6/1/2020 AA 2,860M 3,003,000
Redding CA Jt Pwrs Fin Auth Elec Sys Rev Ser A MBIA+ 51/4% 6/1/2015 AAA 2,670M 2,549,850
Sacramento CA Muni Util Dist Elec Rev RIBS FGIC+ 8.818% 8/15/2018++ AAA 6,000M 6,570,000
Sacramento CA Muni Util Dist Elec Rev Ser B MBIA+ 63/8% 8/15/2022 AAA 3,700M 3,889,625
Santa Clara CA Elec Rev Ser A MBIA+ 61/4% 7/1/2019 AAA 1,890M 1,967,962
Santa Clara CA Elec Rev Ser A MBIA+ 53/4% 7/1/2024 AAA 4,000M 4,005,000
Total 31,846,062
----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
STATEMENT OF NET ASSETS September 30, 1996
<TABLE>
<CAPTION>
CALIFORNIA SERIES
Rating*: S&P Principal
Security or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Solid Waste California Poll Ctrl Fin Auth Solid Waste Rev/Browning Ferris
.93% AMT+++ 63/4% 9/1/2019 A $2,600M $ 2,749,500
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation
16.14% Los Angeles CA Dept Arpts Rev Ontario Intl Arpt Ser A
FGIC+ AMT+++ 6% 5/15/2026 AAA 12,750M 12,909,375
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y 51/2% 7/1/2026 A 10,035M 9,583,425
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser Y 51/2% 7/1/2036 A 2,000M 1,900,000
Sacramento Co CA Arpt Sys Ser B MBIA+ 53/4% 7/1/2026 AAA 1,935M 1,932,580
San Francisco CA Bay Area Rapid Trans Dist Sales Tax Rev FGIC+ 6.60% 7/1/2012 AAA 1,540M 1,663,200
San Francisco CA City & Co Arpt Comm Intl Arpt Rev 2nd Ser
AMBAC+ AMT+++ 61/2% 5/1/2018 AAA 4,500M 4,809,375
San Francisco CA City & Co Arpt Comm Intl Arpt Rev 2nd Ser
MBIA+ 63/4% 5/1/2020 AAA 5,000M 5,493,750
San Francisco CA City & Co Arpt Comm Intl Arpt Rev 2nd Ser
MBIA+ AMT+++ 5.70% 5/1/2026 AAA 5,500M 5,390,000
San Francisco CA City & Co Arpt Comm Intl Arpt Rev 2nd Ser Issue 10 A
MBIA+ AMT+++ 55/8% 5/1/2021 AAA 4,000M 3,905,000
Total 47,586,705
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Big Bear Lake CA Wtr Rev Ref MBIA+ 6% 4/1/2022 AAA 1,500M 1,578,750
Sewer California St Dept Wtr Res Cent Valley Prjt Rev Wtr Sys Ser P 6.10% 12/1/2029 AA 5,000M 5,143,750
18.92% Central Coast Wtr Auth CA Rev St Wtr Prjt Regl Facs AMBAC+ 6.60% 10/1/2022 AAA 3,250M 3,538,438
East Bay CA Muni Util Dist Wastewtr Treatment Sys Rev
RIBS AMBAC+ 7.07% 6/1/2020++ AAA 1,750M 1,642,813
Fairfield CA Wtr Rev AMBAC+ 51/4% 4/1/2014 AAA 2,270M 2,190,550
Fresno CA Sewer Rev Ser A MBIA+ 5% 9/1/2015 AAA 7,000M 6,510,000
Los Angeles CA Wastewtr Rev Ser C 7.10% 6/1/2018 A 5,980M 6,473,350
Metropolitan Wtr Dist So CA Wtrwks Rev RIBS 7.661% 8/5/2022++ AA 7,300M 7,427,750
San Buenaventura CA Sewer Rev FGIC+ 51/2% 3/1/2015 AAA 2,255M 2,226,813
San Francisco CA City & Co Pub Util Wtr Rev Ser A 61/2% 11/1/2017 AA 10,750M 11,462,188
Santa Rosa CA Wastewtr Rev Ser A FGIC+ 5.15% 9/1/2017 AAA 2,655M 2,505,656
Vallejo CA Rev Ref Wtr Imp Prjt Ser A FSA+ 57/8% 5/1/2026 AAA 5,000M 5,068,750
Total 55,768,808
------------
------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 98.19% (Cost $280,181,045) 289,486,388
====================================================================================================================================
OTHER ASSETS, LESS LIABILITIES 1.81%
====================================================================================================================================
Short-Term
Securities California St Ser A 41/2% 6/30/1997 (Cost $1,004,861) MIG 1 1,000M 1,005,140
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 4,345,952
- ------------------------------------------------------------------------------------------------------------------------------------
Total Other Assets, Less Liabilities 5,351,092
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
100.00% $294,837,480
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Shares-Net asset value ($278,233,578 / 26,669,073 shares outstanding) $10.43
Class C Shares-Net asset value ($16,603,902 / 1,591,476 shares outstanding) $10.43
* Ratings have not been audited by Deloitte & Touche LLP.
+ 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 September 30, 1996. See page 1 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.*
</TABLE>
24
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Year Ended 9/30/96
----------------------------------------------------------------------------
Investment Income National Series New York Series Texas Series New Jersey Series
===============================================================================================================
Income
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest $ 41,367,874 $ 20,666,382 $ 6,154,367 $ 11,588,665
- ----------------------------------- --------------- --------------- --------------- ---------------
Expenses
- ----------------------------------- --------------- --------------- --------------- ---------------
Management fee 3,318,985 1,632,539 492,682 964,350
- ----------------------------------- --------------- --------------- --------------- ---------------
Management fee waived -- -- (172,582) (148,339)
- ----------------------------------- --------------- --------------- --------------- ---------------
12b-1 distribution plan 1,569,042 738,238 229,710 443,529
- ----------------------------------- --------------- --------------- --------------- ---------------
Shareholder servicing 441,387 170,925 66,000 135,300
- ----------------------------------- --------------- --------------- --------------- ---------------
Registration 98,229 6,750 17,000 6,043
- ----------------------------------- --------------- --------------- --------------- ---------------
Reports to shareholders 69,015 19,800 7,500 20,702
- ----------------------------------- --------------- --------------- --------------- ---------------
Audit and tax 89,009 39,000 12,300 28,418
- ----------------------------------- --------------- --------------- --------------- ---------------
Legal 28,123 11,675 3,600 10,500
- ----------------------------------- --------------- --------------- --------------- ---------------
Directors' fees 15,214 4,500 600 5,400
- ----------------------------------- --------------- --------------- --------------- ---------------
Organization -- -- -- 912
- ----------------------------------- --------------- --------------- --------------- ---------------
Other 127,436 31,500 19,651 27,057
- ----------------------------------- --------------- --------------- --------------- ---------------
Total expenses 5,756,440 2,654,927 676,461 1,493,872
- ----------------------------------- --------------- --------------- --------------- ---------------
Net investment income 35,611,434 18,011,455 5,477,906 10,094,793
- ----------------------------------- --------------- --------------- --------------- ---------------
Realized and Unrealized Gain (Loss)
on Investments
==============================================================================================================
Realized gain from securities
transactions
- ----------------------------------- --------------- --------------- --------------- ---------------
Proceeds from sales 1,642,555,265 223,521,830 160,723,375 328,949,121
--------------- --------------- --------------- ---------------
Cost of securities sold 1,636,481,572 219,899,124 159,991,161 326,664,647
- ----------------------------------- --------------- --------------- --------------- ---------------
Net realized gain 6,073,693 3,622,706 732,214 2,284,474
- ----------------------------------- --------------- --------------- --------------- ---------------
Net unrealized depreciation (906,258) (5,732,944) (334,915) (934,233)
- ----------------------------------- --------------- --------------- --------------- ---------------
Net realized and unrealized gain
(loss) on investments 5,167,435 (2,110,238) 397,299 1,350,241
- ----------------------------------- --------------- --------------- --------------- ---------------
Net Increase in Net Assets
Resulting from Operations $ 40,778,869 $ 15,901,217 $ 5,875,205 $ 11,445,034
==============================================================================================================
See Notes to Financial Statements.
<CAPTION>
Year Ended 9/30/96
- ------------------------------------------------------------------------
Investment Income Connecticut Series Missouri Series
========================================================================
- ------------------------------------------------------------------------
<S> <C> <C>
Interest $ 7,121,529 $ 8,037,768
- ----------------------------------- --------------- ---------------
Expenses
- ----------------------------------- --------------- ---------------
Management fee 589,230 667,705
- ----------------------------------- --------------- ---------------
Management fee waived (500,557) (201,043)
- ----------------------------------- --------------- ---------------
12b-1 distribution plan 241,040 356,557
- ----------------------------------- --------------- ---------------
Shareholder servicing 55,000 102,970
- ----------------------------------- --------------- ---------------
Registration 3,250 16,800
- ----------------------------------- --------------- ---------------
Reports to shareholders 6,000 15,250
- ----------------------------------- --------------- ---------------
Audit and tax 20,500 25,950
- ----------------------------------- --------------- ---------------
Legal 1,800 11,500
- ----------------------------------- --------------- ---------------
Directors' fees 3,000 3,600
- ----------------------------------- --------------- ---------------
Organization 1,584 1,128
- ----------------------------------- --------------- ---------------
Other 21,475 38,489
- ----------------------------------- --------------- ---------------
Total expenses 442,322 1,038,906
- ----------------------------------- --------------- ---------------
Net investment income 6,679,207 6,998,862
- ----------------------------------- --------------- ---------------
Realized and Unrealized Gain (Loss)
on Investments
========================================================================
Realized gain from securities
transactions
- ----------------------------------- --------------- ---------------
Proceeds from sales 74,369,510 148,039,147
--------------- ---------------
Cost of securities sold 74,136,422 147,054,354
- ----------------------------------- --------------- ---------------
Net realized gain 233,088 984,793
- ----------------------------------- --------------- ---------------
Net unrealized depreciation (458,922) (627,703)
- ----------------------------------- --------------- ---------------
Net realized and unrealized gain
(loss) on investments (225,834) 357,090
- ----------------------------------- --------------- ---------------
Net Increase in Net Assets
Resulting from Operations $ 6,453,373 $ 7,355,952
========================================================================
</TABLE>
25
<PAGE>
Statements of Operations
<TABLE>
<PAGE>
One Month Year
Ended Ended
Year Ended 9/30/96 9/30/96 8/31/96
---------------------------------------------------- ----------------- -----------------
Investment Income Hawaii Series Washington Series Minnesota Series California Series California Series
=================================================================================================================================
<S> <C> <C> <C> <C> <C>
Income
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Interest $ 5,184,230 $ 4,482,184 $ 402,293 $ 1,493,033 $ 18,136,876
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Expenses
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Management fee 430,864 369,624 34,041 123,314 1,459,596
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Management fee waived (258,022) (55,661) (34,041) -- (322,490)
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
12b-1 distribution plan 210,085 -- -- 72,713 756,279
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Shareholder servicing 48,000 66,000 9,000 11,100 123,700
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Registration 2,000 4,500 1,500 1,700 28,900
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Reports to shareholders 6,000 13,250 1,000 3,000 34,000
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Audit and tax 17,700 17,550 7,500 2,250 35,000
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Legal 9,500 5,400 550 4,100 55,700
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Directors' fees 2,940 1,800 200 1,550 18,100
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Organization 900 5,724 1,380 -- --
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Other 22,516 17,496 6,715 3,229 38,144
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Expenses assumed by Lord Abbett -- -- (27,845) -- --
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Total expenses 492,483 445,683 -- 222,956 2,226,929
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Net investment income 4,691,747 4,036,501 402,293 1,270,077 15,909,947
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Realized and Unrealized Gain (Loss)
on Investments
================================================================================================================================
Realized gain (loss) from
securities transactions
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Proceeds from sales 51,687,357 81,968,253 2,810,507 13,732,043 457,763,094
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Cost of securities sold 51,066,936 81,568,141 2,840,106 13,579,612 456,212,518
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Net realized gain (loss) 620,421 400,112 (29,599) 152,431 1,550,576
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Net unrealized appreciation
(depreciation) (498,915) 356,916 (110,355) 3,003,787 (3,799,733)
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Net realized and unrealized gain
(loss) on investments 121,506 757,028 (139,954) 3,156,218 (2,249,157)
- ----------------------------------- --------------- --------------- --------------- --------------- ---------------
Net Increase in Net Assets
Resulting from Operations $ 4,813,253 $ 4,793,529 $ 262,339 $ 4,426,295 $ 13,660,790
================================================================================================================================
See Notes to Financial Statements.
</TABLE>
26
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended September 30, 1996
---------------------------------------------
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 (loss) from securities transactions 6,073,693 3,622,706 732,214
- ------------------------------------------------------------- ------------- ------------- ------------
Net unrealized appreciation (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)
- ------------------------------------------------------------- ------------- ------------- ------------
Capital share transactions
- ------------------------------------------------------------- ------------- ------------- ------------
Net proceeds from sales of shares 39,972,459 20,811,142 4,835,000
- ------------------------------------------------------------- ------------- ------------- ------------
Net asset value of shares issued to shareholders in
reinvestment of net investment income 19,064,733 10,329,658 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 103,428,949 38,665,859 7,520,685
- ------------------------------------------------------------- ------------- ------------- ------------
Cost of shares reacquired (87,262,001) (49,004,761) (13,954,966)
- ------------------------------------------------------------- ------------- ------------- ------------
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 year 650,699,475 331,617,649 100,304,466
- ------------------------------------------------------------- ------------- ------------- ------------
End of year+ $672,343,855 $319,552,746 $ 94,414,494
============================================================================================================
</TABLE>
+Includes (overdistributed) undistributed net investment income of
$(1,595,018), $(695,319) and $50,088, respectively, at September 30, 1996
and (overdistributed) net investment income of $(1,881,464), $(1,068,896)
and $(96,922), respectively, at September 30, 1995. See Notes to Financial
Statements.
Statement of Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
Year Ended September 30, 1995
----------------------------------------------
National New York Texas
Increase (Decrease) in Net Assets Series Series Series
========================================================== ==============================================
<S> <C> <C> <C>
Operations
- ---------------------------------------------------------- ------------ ------------ -----------
Net investment income $ 38,131,494 $ 19,222,187 $ 5,907,664
- ---------------------------------------------------------- ------------ ------------ -----------
Net realized gain (loss) from securities transactions (4,496,594) (6,847,163) 173,610
- ---------------------------------------------------------- ------------ ------------ -----------
Net unrealized appreciation (depreciation) of investments 26,432,040 15,971,156 4,297,137
- ---------------------------------------------------------- ------------ ------------ -----------
Net increase in net assets resulting from operations 60,066,940 28,346,180 10,378,411
- ---------------------------------------------------------- ------------ ------------ -----------
Distributions to shareholders from
- ---------------------------------------------------------- ------------ ------------ -----------
Net investment income (38,145,154) (19,378,819) (5,809,683)
- ---------------------------------------------------------- ------------ ------------ -----------
Capital share transactions
- ---------------------------------------------------------- ------------ ------------ -----------
Net proceeds from sales of shares 70,991,645 34,159,185 7,991,552
- ---------------------------------------------------------- ------------ ------------ -----------
Net asset value of shares issued to shareholders in
reinvestment of net investment income 20,425,516 11,332,845 2,885,936
- ---------------------------------------------------------- ------------ ------------ -----------
Net asset value of shares issued in exchange
for assets acquired in tax-free acquisition -- -- --
- ---------------------------------------------------------- ------------ ------------ -----------
Total 91,417,161 45,492,030 10,877,488
- ---------------------------------------------------------- ------------ ------------ -----------
Cost of shares reacquired (125,019,799) (61,380,990) (18,977,324)
- ---------------------------------------------------------- ------------ ------------ -----------
Increase (decrease) in net assets derived from
capital share transactions (33,602,638) (15,888,960) (8,099,836)
- ---------------------------------------------------------- ------------ ------------ -----------
Increase (decrease) in net assets (11,680,852) (6,921,599) (3,531,108)
- ---------------------------------------------------------- ------------ ------------ -----------
Net Assets
========================================================== ============ ============ ===========
Beginning of year 662,380,327 338,539,248 103,835,574
- ---------------------------------------------------------- ------------ ------------ -----------
End of year+ $650,699,475 $331,617,649 $100,304,466
========================================================== ==============================================
</TABLE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended September 30, 1996
-----------------------------------------------------------------
New Jersey Connecticut Missouri Hawaii
Increase (Decrease) in Net Assets Series Series Series Series
- ---------------------------------------------------------------------------------------------------------------------------
Operations
========================================================= ================ ================ ================ =============
<S> <C> <C> <C> <C>
Net investment income $ 10,094,793 $ 6,679,207 $ 6,998,862 $ 4,691,747
- --------------------------------------------------------- ---------------- ---------------- ---------------- --------------
Net realized gain (loss) from securities transactions 2,284,474 233,088 984,793 620,421
- --------------------------------------------------------- ---------------- ---------------- ---------------- --------------
Net unrealized appreciation (depreciation) of investments (934,233) (458,922) (627,703) (498,915)
- --------------------------------------------------------- ---------------- ---------------- ---------------- --------------
Net increase 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 securities 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 securities transactions 5,684,017 3,443,037 4,116,755 2,125,689
- --------------------------------------------------------- ---------------- ---------------- ---------------- --------------
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 3,226,379
- --------------------------------------------------------- ---------------- ---------------- ---------------- --------------
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
========================================================= ================ ================ ================ ==============
</TABLE>
+Includes (overdistributed) undistributed net investment income of $(252,377),
$(8,545), $(553,382), $(221,857), $(184,414), $14,652 and $(982,007),
respectively, at September 30, 1996. See Notes to Financial Statements.
Statements of changes in Net Assets (Continued)
<TABLE>
<CAPTION>
One
Month Ended
Year Ended September 30, 1996 9/30/96
------------------------------- -------------
Washington Minnesota California
Increase (Decrease) in Net Assets Series Series Series
- ---------------------------------------------------------- ----------------- ---------------- --------------
Operations
========================================================== ================= ================ =============
<S> <C> <C> <C>
Net investment income $ 4,036,501 $ 402,293 $ 1,270,077
- ---------------------------------------------------------- ----------------- ---------------- --------------
Net realized gain (loss) from securities transactions 400,112 (29,599) 152,431
- ---------------------------------------------------------- ----------------- ---------------- --------------
Net unrealized appreciation (depreciation) of investments 356,916 (110,355) 3,003,787
- ---------------------------------------------------------- ----------------- ---------------- --------------
Net increase in net assets resulting from operations 4,793,529 262,339 4,426,295
- ---------------------------------------------------------- ----------------- ---------------- --------------
Distributions to shareholders from
- ---------------------------------------------------------- ----------------- ---------------- --------------
Net investment income (4,111,145) (388,612) (1,331,764)
- ---------------------------------------------------------- ----------------- ---------------- --------------
Net realized gain from securities transactions -- (44,188) --
- ---------------------------------------------------------- ----------------- ---------------- --------------
Total distributions (4,111,145) (432,800) (1,331,764)
- ---------------------------------------------------------- ----------------- ---------------- --------------
Capital share transactions
- ---------------------------------------------------------- ----------------- ---------------- --------------
Net proceeds from sales of shares 4,280,899 4,297,692 2,814,821
- ---------------------------------------------------------- ----------------- ---------------- --------------
Net asset value of shares issued to shareholders in
reinvestment of net investment income and realized
gain from securities transactions 2,420,812 284,450 575,513
- ---------------------------------------------------------- ----------------- ---------------- --------------
Total 6,701,711 4,582,142 3,390,334
- ---------------------------------------------------------- ----------------- ---------------- --------------
Cost of shares reacquired (10,448,073) (679,941) (3,258,486)
- ---------------------------------------------------------- ----------------- ---------------- --------------
Increase (decrease) in net assets derived from
- ---------------------------------------------------------- ----------------- ---------------- --------------
capital share transactions (3,746,362) 3,902,201 131,848
- ---------------------------------------------------------- ----------------- ---------------- --------------
Increase (decrease) in net assets (760,838) (3,063,978) 3,731,740
- ---------------------------------------------------------- ----------------- ---------------- --------------
Net Assets
========================================================== ================= ================ =============
Beginning of period 74,359,307 4,315,149 291,611,101
- ---------------------------------------------------------- ----------------- ---------------- --------------
End of period+ $ 71,295,329 $ 8,046,889 $ 294,837,480
===========================================================================================================
27
</TABLE>
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
12/27/94
(Commencement
of
Operations)
Year Ended September 30, 1995 to 9/30/95
---------------------------------------------------------------- ----------
New Jersey Connecticut Missouri Hawaii Washington Minnesota
Increase (Decrease) in Net Assets Series Series Series Series Series Series
======================================================= ================================================================ ===========
<S> <C> <C> <C> <C> <C> <C>
Operations
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Net investment income $ 10,695,466 $ 6,389,615 $ 7,008,245 $ 4,941,681 $ 4,303,497 $ 112,411
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Net realized gain (loss) from securities transactions (750,270) (863,091) (2,665,301) (2,266,214) (2,102,172) 41,390
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Net unrealized appreciation of investments 7,864,384 5,530,910 7,820,219 5,533,332 4,845,905 40,841
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Net increase in net assets resulting from operations 17,809,580 11,057,434 12,163,163 8,208,799 7,047,230 194,642
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Distributions to shareholders from
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Net investment income (10,767,877) (6,378,895) (7,134,709) (5,058,302) (4,454,972) (111,440)
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Capital share transactions
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Net proceeds from sales of shares 37,494,837 21,140,560 18,499,072 9,444,574 4,847,026 4,366,457
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Net asset value of shares issued to shareholders
in reinvestment of net investment income 5,789,415 3,020,814 3,919,019 2,109,022 2,352,040 67,117
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Total 43,284,252 24,161,374 22,418,091 11,553,596 7,199,066 4,433,574
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Cost of shares reacquired (42,993,555) (17,022,919) (15,313,492) (21,570,981)(14,285,705) (202,627)
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Increase (decrease) in net assets derived from capital
share transactions 290,697 7,138,455 7,104,599 (10,017,385) (7,086,639) 4,230,947
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Increase (decrease) in net assets 7,332,400 11,816,994 12,133,053 (6,866,888) (4,494,381) 4,314,149
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
Net Assets
======================================================= ============= ============ ============ ============ =========== ===========
Beginning of period 184,229,687 101,619,202 119,689,894 92,972,001 78,853,688 1,000
- ------------------------------------------------------- ------------- ------------ ------------ ------------ ----------- ----------
End of period+ $191,562,087 $113,436,196 $131,822,947 $ 86,105,113 $74,359,307 $4,315,149
====================================================================================================================================
</TABLE>
+Includes (overdistributed) undistributed net investment income of
$(216,835), $(268,531), $(325,387), $(304,239), $(109,770) and $971,
respectively, at September 30, 1995.
See Notes to Financial Statements.*
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended August 31,
1996 1995
----------------- ------------------
Increase (Decrease) in Net Assets California Series California Series
============================================================================================== ================= =================
<S> <C> <C>
Operations
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Net investment income $ 15,909,947 $ 17,806,695
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Net realized gain (loss) from securities transactions 1,550,576 (10,205,412)
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Net unrealized appreciation (depreciation) of investments (3,799,733) 7,769,337
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Net increase in net assets resulting from operations 13,660,790 15,370,620
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Distributions to shareholders from
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Net investment income (15,888,739) (17,785,423)
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Capital share transactions
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Net proceeds from sales of shares 20,619,999 23,388,320
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Net asset value of shares issued to shareholders in reinvestment of net investment income 6,879,438 7,446,359
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Net asset value of shares issued in exchange for assets acquired in tax-free acquisition 16,355,395 -
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Total 43,854,832 30,834,679
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Cost of shares reacquired (46,289,724) (61,619,627)
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Decrease in net assets derived from capital share transactions (2,434,892) (30,784,948)
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Decrease in net assets (4,662,841) (33,199,751)
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
Net Assets
============================================================================================== ================= =================
Beginning of period 296,273,942 329,473,693
- ---------------------------------------------------------------------------------------------- ----------------- -----------------
End of period+ $291,611,101 $296,273,942
============================================================================================== ================= =================
</TABLE>
+Includes undistributed net investment income of $920,320 and $942,812,
respectively, at August 31, 1996 and August 31, 1995, respectively.
See Notes to Financial Statements.
28
<PAGE>
Financial Highlights
National Series
<TABLE>
<CAPTION>
Class B Class C
Class A Shares Shares Shares
------------------------------------------------------- ------------ -----------
Year Ended September 30, 8/1/96** 7/15/96**
------------------------------------------------------- ------------ -----------
Per Share Operating Performance: 1996 1995 1994 1993 1992 to 9/30/96 to 9/30/96
================================================== ========== ========== =========== ========= =========== ============ ===========
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.00 $ 10.62 $ 12.37 $ 11.72 $ 11.31 $ 11.05 $ 10.90
---------------------------------------------- ---------- ---------- ----------- --------- ----------- ------------ -----------
Income (loss) from investment operations
------------------------------------------ ---------- ---------- ----------- --------- ----------- ------------ -----------
Net investment income .603 .626 .657 .695 .700 .089 .106
------------------------------------------ ---------- ---------- ----------- --------- ----------- ------------ -----------
Net realized and unrealized
------------------------------------------ ---------- ---------- ----------- --------- ----------- ------------ -----------
gain (loss) on investments .075 .382 (1.3124) .9255 .4795 .033 .190
------------------------------------------ ---------- ---------- ----------- --------- ----------- ------------ -----------
Total from investment operations .678 1.008 (.6554) 1.6205 1.1795 .122 .296
---------------------------------------------- ---------- ---------- ----------- --------- ----------- ------------ -----------
Distributions
------------------------------------------ ---------- ---------- ----------- --------- ----------- ------------ -----------
Dividends from net investment income (.598) (.628) (.6596) (.693) (.717) (.092) (.116)
------------------------------------------ ---------- ---------- ----------- --------- ----------- ------------ -----------
Distributions from net realized gain - - (.435) (.2775) (.0525) - -
- -------------------------------------------------- ---------- ---------- ----------- --------- ----------- ------------ -----------
Net asset value, end of period $ 11.08 $ 11.00 $ 10.62 $ 12.37 $ 11.72 $ 11.08 $ 11.08
================================================== ========== ========== =========== ========= =========== ============ ===========
Total Return* 6.31% 9.84% (5.64)% 14.57% 10.78% 1.16%+ 2.71%+
================================================== ========== ========== =========== ========= =========== ============ ===========
Ratios to Average Net Assets:
================================================== ========== ========== =========== ========= =========== ============ ===========
Expenses 0.90% 0.82% 0.86% 0.87% 0.83% 0.20%+ 0.34%+
------------------------------------------ ---------- ---------- ----------- --------- ----------- ------------ -----------
Net investment income 5.63% 5.92% 5.76% 5.79% 6.00% 0.68%+ 0.96%+
================================================== ================================================================================
<CAPTION>
Year Ended September 30,
----------------------------------------------------
Supplemental Data For All Classes: 1996 1995 1994 1993 1992
========================================== ====================================================
<S> <C> <C> <C> <C> <C>
Net assets, end of year (000) $672,344 $650,699 $662,380 $709,413 $546,768
------------------------------------------ -------- -------- -------- -------- --------
Portfolio turnover rate 205.35% 225.39% 184.07% 138.06% 87.56%
========================================== ====================================================
</TABLE>
*Total return does not consider the effects of sales loads.
**Commencement of offering Class shares.
+Not annualized.
See Notes to Financial Statements.
Financial Highlights
New York Series
<TABLE>
<CAPTION>
------------------------ Class A Shares --------------------- Class C Shares
Year Ended September 30, -------------
------------------------------------------------------------- 7/15/96**
Per Share Operating Performance: 1996 1995 1994 1993 1992 to 9/30/96
======================================================= ============================================================= ===========
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.85 $ 10.54 $ 12.27 $ 11.60 $ 11.26 $ 10.63
--------------------------------------------------- -------- ------------ ------------ ------------ ------------ --------------
Income (loss) from investment operations
--------------------------------------------------- -------- ------------ ------------ ------------ ------------ --------------
Net investment income .597 .610 .649 .682 .691 .111
--------------------------------------------------- -------- ------------ ------------ ------------ ------------ --------------
Net realized and unrealized gain (loss)
on investments (.081) .316 (1.3665) .874 .458 .152
--------------------------------------------------- -------- ------------ ------------ ------------ ------------ --------------
Total from investment operations .516 .926 (.7175) 1.556 1.149 .263
--------------------------------------------------- -------- ------------ ------------ ------------ ------------ --------------
Distributions
--------------------------------------------------- -------- ------------ ------------ ------------ ------------ --------------
Dividends from net investment income (.586) (.616) (.6475) (.681) (.709) (.113)
--------------------------------------------------- -------- ------------ ------------ ------------ ------------ --------------
Distributions from net realized gain -- -- (.365) (.205) (.10) --
- ------------------------------------------------------- -------- ------------ ------------ ------------ ------------ --------------
Net asset value, end of period $ 10.78 $ 10.85 $ 10.54 $ 12.27 $ 11.60 $ 10.78
======================================================= ======== ============ ============ ============ ============ ==============
Total Return* 4.87% 9.12% (6.21)% 13.95% 10.69% 2.48%+
======================================================= ======== ============ ============ ============ ============ ==============
Ratios to Average Net Assets:
======================================================= ======== ============ ============ ============ ============ ==============
Expenses 0.81% 0.82% 0.83% 0.85% 0.81% 0.34%+
--------------------------------------------------- -------- ------------ ====-------- ------------ ------------ --------------
Net investment income 5.54% 5.83% 5.72% 5.72% 5.98% 1.04%+
======================================================= ===========================================================================
<CAPTION>
Year Ended September 30,
------------------------------------------------------------
Supplemental Data For All Classes: 1996 1995 1994 1993 1992
=============================================== ============================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of year (000) $319,553 $331,618 $338,539 $376,456 $306,447
----------------------------------------------- --------- -------- -------- -------- --------
Portfolio turnover rate 64.25% 105.62% 149.13% 101.59% 146.68%
=============================================== ============================================================
</TABLE>
* Total return does not consider the effects of sales loads.
** Commencement of offering Class shares.
+ Not annualized.
See Notes to Financial Statements.*
29
<PAGE>
Financial Highlights
Texas Series
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------------------------------------
Per Share Operating Performance: 1996 1995 1994 1993 1992
============================================================= =====================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.05 $9.59 $10.82 $10.28 $9.94
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Income (loss) from investment operations
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income .567 .571 .604 .624 .611
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net realized and unrealized gain (loss)
on investments .045 .452 (1.0802) .7135 .4155
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Total from investment operations .612 1.023 (.4762) 1.3375 1.0265
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Dividends from net investment income (.552) (.563) (.6038) (.615) (.629)
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions from net realized gain -- -- (.15) (.1825) (.0575)
- ------------------------------------------------------------- ------ -------------- -------------- -------------- -----------------
Net asset value, end of year $10.11 $10.05 $9.59 $10.82 $10.28
============================================================= ====== ============== ============== ============== =================
Total Return* 6.11% 11.14% (4.60)% 13.64% 10.68%
============================================================= ====== ============== ============== ============== =================
Ratios/Supplemental Data:
============================================================= ====== ============== ============== ============== =================
Net assets, end of year (000) $94,414 $100,304 $103,836 $109,232 $90,205
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Ratios to Average Net Assets:
====================================================== ====== ============== ============== ============== =================
Expenses, including waiver 0.69% 0.62% 0.50% 0.57% 0.60%
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Expenses, excluding waiver 0.87% 0.87% 0.87% 0.97% 1.00%
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income 5.58% 5.90% 5.97% 5.96% 5.96%
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Portfolio turnover rate 112.34% 108.00% 96.79% 58.10% 123.33%
============================================================= =====================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
See Notes to Financial Statements.
Financial Highlights
New Jersey Series
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------------------------------------
Per Share Operating Performance: 1996 1995 1994 1993 1992
============================================================= =====================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 5.14 $4.95 $ 5.55 $ 5.14 $4.97
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Income (loss) from investment operations
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income .277 .287 .300 .318 .32
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net realized and unrealized gain (loss)
on investments .041 .192 (.507) .439 .185
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Total from investment operations .318 479 (.207) .757 .505
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Dividends from net investment income (.278) (.289) (.303) (.307) (.325)
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions from net realized gain -- -- (.09) (.04) (.01)
- ------------------------------------------------------------- ------ -------------- -------------- -------------- -----------------
Net asset value, end of year $5.18 $5.14 $4.95 $5.55 $5.14
============================================================= ====== ============== ============== ============== =================
Total Return* 6.29% 9.98% (3.91)% 15.26% 10.51%
============================================================= ====== ============== ============== ============== =================
Ratios/Supplemental Data:
============================================================= ====== ============== ============== ============== =================
Net assets, end of year (000) $186,402 $191,562 $184,230 $178,767 $118,386
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Ratios to Average Net Assets:
====================================================== ====== ============== ============== ============== =================
Expenses, including waiver 0.79% 0.72% 0.51% 0.35% 0.19%
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Expenses, excluding waiver 0.86% 0.87% 0.83% 0.83% 0.73%
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income 5.31% 5.73% 5.76% 5.88% 6.09%
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Portfolio turnover rate 171.63% 133.11% 75.62% 88.29% 54.63%
============================================================= =====================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
See Notes to Financial Statements.
30
<PAGE>
Financial Highlights
Connecticut Series
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------------------------------------
Per Share Operating Performance: 1996 1995 1994 1993 1992
============================================================= =====================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.12 $9.71 $11.01 $10.16 $9.86
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Income (loss) from investment operations
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income .576 .579 .585 .612 .617
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net realized and unrealized gain (loss)
on investments (.013) .407 (1.1287) .906 .311
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Total from investment operations .563 .986 (.5437) 1.518 .928
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Dividends from net investment income (.553) (.576) (.6038) (.608) (.628)
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions from net realized gain -- -- (.1525) (.06) --
- ------------------------------------------------------------- ------ -------------- -------------- -------------- -----------------
Net asset value, end of year $10.13 $10.12 $9.71 $11.01 $10.16
- ------------------------------------------------------------- ------ -------------- -------------- -------------- -----------------
Total Return* 5.70% 10.52% (5.13)% 15.48% 9.69%
============================================================= ====== ============== ============== ============== =================
Ratios/Supplemental Data:
============================================================= ====== ============== ============== ============== =================
Net assets, end of year (000) $122,885 $113,436 $101,619 $93,020 $58,880
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Ratios to Average Net Assets:
====================================================== ====== ============== ============== ============== =================
Expenses, including waiver 0.38% 0.41% 0.49% 0.44% 0.20%
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Expenses, excluding waiver 0.80% 0.86% 0.86% 0.91% 0.74%
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income 5.66% 5.89% 5.67% 5.60% 5.96%
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Portfolio turnover rate 63.61% 54.19% 97.42% 45.81% 54.90%
============================================================= =====================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
See Notes to Financial Statements.*
Financial Highlights
Missouri Series
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------------------------------------
Per Share Operating Performance: 1996 1995 1994 1993 1992
============================================================= =====================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $5.08 $4.88 $5.51 $5.14 $4.91
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Income (loss) from investment operations
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income .267 .277 .2926 .305 .310
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net realized and unrealized gain (loss)
on investments .008 .204 (.5681) .381 .236
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Total from investment operations .275 .481 (.2755) .686 .546
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions
Dividends from net investment income (.275) (.281) (.297) (.301) (.316)
Distributions from net realized gain -- -- (.0575) (0.15) --
- ------------------------------------------------------------- ------ -------------- -------------- -------------- -----------------
Net asset value, end of year $5.08 $5.08 $4.88 $5.51 $5.14
============================================================= ====== ============== ============== ============== =================
Total Return* 5.54% 10.21% (5.22)% 13.80% 11.47%
============================================================= ====== ============== ============== ============== =================
Ratios/Supplemental Data:
============================================================= ====== ============== ============== ============== =================
Net assets, end of year (000) $134,144 $131,823 $119,690 $107,478 $65,812
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Ratios to Average Net Assets:
====================================================== ====== ============== ============== ============== =================
Expenses, including waiver 0.77% 0.74% 0.60% 0.48% 0.26%
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Expenses, excluding waiver 0.92% 0.89% 0.91% 0.92% 0.79%
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income 5.21% 5.61% 5.60% 5.66% 5.94%
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Portfolio turnover rate 93.17% 58.17% 50.59% 56.20% 44.19%
============================================================= =====================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
See Notes to Financial Statements.*
31
<PAGE>
Financial Highlights
Hawaii Series
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------------- 10/28/91**
Per Share Operating Performance: 1996 1995 1994 1993 to 9/30/92
============================================================= =====================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.91 $4.72 $5.34 $4.89 $4.76
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Income (loss) from investment operations
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income .273 .271 .2918 .297 .281
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net realized and unrealized gain (loss)
on investments .015 .198 (.578) .454 .138
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Total from investment operations .288 .469 (.2862) .751 .149
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Dividends from net investment income (.268) (.279) (.2888) (.301) (.289)
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions from net realized gain -- -- (.045) -- --
- ------------------------------------------------------------- ------ -------------- -------------- -------------- -----------------
Net asset value, end of period $4.93 $4.91 $4.72 $5.34 $4.89
- ------------------------------------------------------------- ------ -------------- -------------- -------------- -----------------
Total Return* 5.94% 10.30% (5.54)% 15.85% 9.06%+
============================================================= ====== ============== ============== ============== =================
Ratios/Supplemental Data:
============================================================= ====== ============== ============== ============== =================
Net assets, end of period (000) $85,344 $86,105 $92,972 $92,883 $47,031
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Ratios to Average Net Assets:
====================================================== ====== ============== ============== ============== =================
Expenses, including waiver 0.57% 0.58% 0.41% 0.40% 0.00%+
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Expenses, excluding waiver 0.87% 0.87% 0.87% 0.90% 0.74%+
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income 5.46% 5.74% 5.80% 5.62% 5.96%+
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Portfolio turnover rate 59.46% 70.64% 66.04% 34.49% 53.24%
============================================================= =====================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
** Commencement of operations.
+ Not annualized.
See Notes to Financial Statements.
Financial Highlights
Washington Series
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------------- 4/15/92**
Per Share Operating Performance: 1996 1995 1994 1993 to 9/30/92
============================================================= =====================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.91 $4.72 $5.35 $4.92 $4.76
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Income (loss) from investment operations
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income .271 .277 .2976 .304 .140
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net realized and unrealized gain (loss)
on investments .056 .200 (.5895) .427 .165
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Total from investment operations .327 .477 (.2919) .731 .305
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Dividends from net investment income (.277) (.287) (.2931) (.301) (.145)
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Distributions from net realized gain -- -- (.045) -- --
- ------------------------------------------------------------- ------ -------------- -------------- -------------- -----------------
Net asset value, end of period $4.96 $4.91 $4.72 $5.35 $4.92
- ------------------------------------------------------------- ------ -------------- -------------- -------------- -----------------
Total Return* 6.80% 10.48% (5.65)% 15.32% 6.47%+
============================================================= ====== ============== ============== ============== =================
Ratios/Supplemental Data:
============================================================= ====== ============== ============== ============== =================
Net assets, end of period (000) $71,295 $74,359 $78,854 $77,324 $42,627
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Ratios to Average Net Assets:
====================================================== ====== ============== ============== ============== =================
Expenses, including waiver 0.60% 0.53% 0.29% 0.30% 0.00%+
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Expenses, excluding waiver 0.68% 0.68% 0.67% 0.80% 0.38%+
------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Net investment income 5.47% 5.84% 5.93% 5.86% 2.58%+
------------------------------------------------------ ------ -------------- -------------- -------------- -----------------
Portfolio turnover rate 78.02% 92.85% 137.74% 85.45% 37.23%
============================================================= =====================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
** Commencement of operations.
+ Not annualized.
See Notes to Financial Statements.
32
<PAGE>
Financial Highlights
Minnesota Series
<TABLE>
<CAPTION>
Year Ended
September 30, 12/27/94**
Per Share Operating Performance: 1996 to 9/30/95
================================================================================================== ============= ==================
<S> <C> <C>
Net asset value, beginning of period $5.01 $4.76
------------------------------------------------------------------------------------------- -------------- -----------------
Income (loss) from investment operations
------------------------------------------------------------------------------------- -------------- -----------------
Net investment income .294 .230
------------------------------------------------------------------------------------- -------------- -----------------
Net realized and unrealized gain (loss)
on investments (.078) .249
------------------------------------------------------------------------------------- -------------- -----------------
Total from investment operations .216 .479
------------------------------------------------------------------------------------------- -------------- -----------------
Distributions
------------------------------------------------------------------------------------- -------------- -----------------
Dividends from net investment income (.286) (.229)
------------------------------------------------------------------------------------- -------------- -----------------
Distributions from net realized gain -- --
- -------------------------------------------------------------------------------------------------- -------------- -----------------
Net asset value, end of period $4.90 $5.01
================================================================================================== ============= ==================
Total Return* 4.44% 10.22%+
================================================================================================== ============= ==================
Ratios/Supplemental Data:
================================================================================================== ============= ==================
Net assets, end of period (000) $8,047 $4,315
------------------------------------------------------------------------------------- -------------- -----------------
Ratios to Average Net Assets:
=========================================================================================== ============= ==================
Expenses, including waiver 0.00% 0.00%+
------------------------------------------------------------------------------------- -------------- -----------------
Expenses, excluding waiver 0.91% 0.64%+
------------------------------------------------------------------------------------- -------------- -----------------
Net investment income 5.91% 4.58%+
------------------------------------------------------------------------------------------- -------------- -----------------
Portfolio turnover rate 43.08% 121.41%
=============================================================+=====================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
** Commencement of operations.
+ Not annualized.
See Notes to Financial Statements.
Financial Highlights
California Series
<TABLE>
<CAPTION>
Class C Shares
Class A Shares -----------------------
------------------------------------------------------- One
One Year Ended August 31, Month 7/15/96**
Month Ended -------------------------------------------- Ended -----------
Per Share Operating Performance: 9/30/96 1996 1995 1994 1993 1992 9/30/96 to 8/31/96
============================================= ========== ======== ========= ========== ========= ========== ========== ============
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.32 $ 10.41 $ 10.45 $ 11.79 $ 11.21 $ 10.78 $ 10.32 $ 10.28
----------------------------------------- ---------- -------- --------- ---------- --------- ---------- ---------- ------------
Income (loss) from investment operations
------------------------------------- ---------- -------- --------- ---------- --------- ---------- ---------- ------------
Net investment income .046 .566 .588 .623 .656 .663 .039 .068
------------------------------------- ---------- -------- --------- ---------- --------- ---------- ---------- ------------
Net realized and unrealized
gain (loss) on investments .112 (.089) (.038) (.989) .872 .5615 .113 .041
------------------------------------- ---------- -------- --------- ---------- --------- ---------- ---------- ------------
Total from investment operations .158 .477 .550 (.366) 1.528 1.2245 .152 .109
----------------------------------------- ---------- -------- --------- ---------- --------- ---------- ---------- ------------
Distributions
------------------------------------- ---------- -------- --------- ---------- --------- ---------- ---------- ------------
Dividends from net investment income (.048) (.567) (.590) (.624) (.658) (.672) (.042) (.069)
------------------------------------- ---------- -------- --------- ---------- --------- ---------- ---------- ------------
Distributions from net realized gain -- -- -- (.350) (.290) (.1225) - -
- --------------------------------------------- ---------- -------- --------- ---------- --------- ---------- ---------- ------------
Net asset value, end of period $ 10.43 $ 10.32 $ 10.41 $ 10.45 $ 11.79 $ 11.21 $ 10.43 $ 10.32
============================================= ========== ======== ========= ========== ========= ========== ========== ============
Total Return* 1.53%+ 4.65% 5.58% (3.33)% 14.43% 11.79% 1.47%+ 1.16%+
============================================= ========== ======== ========= ========== ========= ========== ========== ============
Ratios to Average Net Assets:
============================================= ========== ======== ========= ========== ========= ========== ========== ============
Expenses, including waiver 0.07%+ 0.75% 0.76% 0.67% 0.68% 0.67% 0.13%+ 0.17%+
------------------------------------- ---------- -------- --------- ---------- --------- ---------- ---------- ------------
Expenses, excluding waiver 0.07%+ 0.86% 0.86% 0.87% 0.88% 0.87% 0.13%+ 0.21%+
------------------------------------- ---------- -------- --------- ---------- --------- ---------- ---------- ------------
Net investment income 0.44%+ 5.41% 5.84% 5.63% 5.68% 5.87% 0.38%+ 0.65%+
===================================================================================================================================
<CAPTION>
One Month Year Ended August 31,
Ended -----------------------------------------------------
Supplemental Data For All Classes: 9/30/96 1996 1995 1994 1993 1992
================================================== =================================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $294,837 $291,611 $296,274 $329,474 $336,291 $224,505
------------------------------------------ -------- ----------- --------- ---------- ---------- ------------
Portfolio turnover rate 2.74% 132.37% 100.20% 86.05% 81.34% 152.79%
====================================================================================================================
</TABLE>
* Total return does not consider the effects of sales loads.
** Commencement of offering Class shares.
+ Not annualized.
See Notes to Financial Statements.
33
<PAGE>
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 following is a sum mary of significant
accounting policies consistently fol lowed by 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 com panies and to distribute
substantially all net investment income and net realized gains. Therefore, there
is no provision for federal income tax.
(c) Security transactions are accounted for on the date that the securi ties are
purchased or sold (trade date). Interest income is recorded on the accrual
basis. 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) Dividends from net investment income are declared daily and paid monthly.
(e) The organization expenses of the New Jersey, Connecticut, Missouri, Hawaii,
Washington and Minnesota Series are being amortized evenly over a period of five
years from their respective commencements of operations.
2. Management Fee and Other Transactions With Affiliates
The Company has a management agreement with Lord, Abbett & Co. ("Lord Abbett")
pursuant to which it 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 September 30, 1996, 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. Such expenses under the
Class A Plan during the period were 0.23%, 0.22%, 0.24%, 0.22%, 0.21%, 0.25%,
0.22%, 0.00%, 0.00% and 0.25% (annualized) of the average daily net assets of
the Class A shares of the National, New York, Texas, New Jersey, Connecticut,
Missouri, Hawaii, Washington, Minnesota and California Series, respectively.
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. Such expenses (annualized) under the Class C Plan during the
period were 0.98%, 1.00% and 1.00% of the average daily net assets of the Class
C shares of the National, New York and California Series, respectively.
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 $1,477,675 $ 451 $ 90,916
- --------------------------------------------------------------------------------
New York 722,390 -- 15,848
- --------------------------------------------------------------------------------
California
9/1/96-9/30/96 59,198 -- 13,515
- --------------------------------------------------------------------------------
California
9/1/95-8/31/96 733,715 -- 22,564
- --------------------------------------------------------------------------------
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 $125,791 $847,733
- --------------------------------------------------------------------------------
New York-Class A 58,282 398,481
- --------------------------------------------------------------------------------
Texas 17,366 116,977
- --------------------------------------------------------------------------------
New Jersey 78,847 513,556
- --------------------------------------------------------------------------------
Connecticut 42,382 286,988
- --------------------------------------------------------------------------------
Missouri 57,961 375,199
- --------------------------------------------------------------------------------
Hawaii 15,685 105,352
- --------------------------------------------------------------------------------
Washington 20,198 134,639
- --------------------------------------------------------------------------------
Minnesota 21,703 155,891
- --------------------------------------------------------------------------------
California-Class A
9/1/96-9/30/96 2,661 20,471
- --------------------------------------------------------------------------------
California-Class A
9/1/95-8/31/96 54,797 378,916
- --------------------------------------------------------------------------------
Certain of the Company's officers and directors have an interest in Lord Abbett.
34
<PAGE>
Notes to Financial Statements
3. Capital Share Transactions Transactions in shares of capital stock for the
single class Series were as follows:
<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 income and
realized gain from securities 265,530 1,098,145 339,929 808,814 431,565 488,901 57,627
transactions
- ------------------------------------ ----------------------------------------------------------------------------------------------
Total 741,396 5,072,750 2,245,518 3,015,367 2,560,162 1,349,461 918,833
- ------------------------------------ ----------------------------------------------------------------------------------------------
Share 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
- ------------------------------------ ----------------------------------------------------------------------------------------------
<CAPTION>
12/27/94
(Commencement
of Operations)
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 834,676 7,613,373 2,208,179 3,777,825 2,008,926 1,016,217 888,992
- ------------------------------------ ----------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of net income and
realized gain from securities 297,890 1,161,742 309,088 798,404 445,406 496,267 13,479
transactions
- ------------------------------------ ----------------------------------------------------------------------------------------------
Total 1,132,566 8,775,115 2,517,267 4,576,229 2,454,332 1,512,484 902,471
- ------------------------------------ ----------------------------------------------------------------------------------------------
Share reacquired (1,983,550) (8,753,334) (1,776,654) (3,138,331) (4,635,494) (3,072,443) (40,533)
- ------------------------------------ ----------------------------------------------------------------------------------------------
Increase (decrease) in shares (850,984) 21,781 740,613 1,437,898 (2,181,162) (1,559,959) 861,938
- ------------------------------------ ----------------------------------------------------------------------------------------------
</TABLE>
Transaction in capital stock for the multiple class share Series (both shares
and dollar amount) were as follows:
<TABLE>
<CAPTION>
One Month Ended
Year Ended 9/30/96 9/30/96
----------------------------------------------------------------- --------------------------
National Series New York Series California Series
Class A Shares Amount Shares Amount Shares Amount
- -------------------------------- ----------------------------------------------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 3,460,521 $38,540,261 1,905,900 $20,626,951 267,904 $2,778,820
- -------------------------------- ----------------------------------------------------------------- --------------------------
Share issued to shareholders
in reinvestment of net
investment income 1,705,482 18,872,688 953,105 10,302,679 52,730 543,646
- -------------------------------- ----------------------------------------------------------------- --------------------------
Total 5,166,003 57,412,949 2,859,005 30,929,530 320,634 3,322,466
- -------------------------------- ----------------------------------------------------------------- --------------------------
Shares reacquired (7,648,786) (84,781,412) (4,489,130) (48,590,185) (301,434) (3,124,462)
- -------------------------------- ----------------------------------------------------------------- --------------------------
Increase (decrease) in shares (2,482,783) ($27,268,463) (1,630,125) ($17,660,655) 19,200 $198,004
- -------------------------------- ----------------------------------------------------------------- --------------------------
<CAPTION>
Year Ended 9/30/95 Year Ended 8/31/96 Year Ended 8/31/95
-------------------------------------------------------- ------------------------- ---------------------------
National Series New York Series 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 6,777,988 $70,991,645 3,314,242 $34,159,185 1,920,287 $20,210,489 2,319,204 $23,388,320
- --------------------- -------------------------------------------------------- ------------------------- ---------------------------
Share issued to
shareholders
in reinvestment
of net
investment income 1,917,292 20,425,516 1,077,774 11,332,845 654,374 6,851,665 734,943 7,446,359
- --------------------- -------------------------------------------------------- ------------------------- ---------------------------
Total 8,695,280 91,417,161 4,392,016 45,492,030 2,574,661 27,062,154 3,054,147 30,834,679
- --------------------- -------------------------------------------------------- ------------------------- ---------------------------
Shares reacquired (11,882,872) (125,019,799) (5,937,848) (61,380,990) (4,377,777) (45,915,889) (6,116,277) (60,619,627)
- --------------------- -------------------------------------------------------- ------------------------- ---------------------------
Decrease in shares (3,187,592) ($33,602,638) (1,545,832) ($15,888,960) (1,803,116) ($18,853,735) (3,062,130) ($29,784,948)
- --------------------- -------------------------------------------------------- ------------------------- ---------------------------
</TABLE>
35
<PAGE>
For the Period 8/1/96
(Commencement of Offering Class B Shares)
to 9/30/96
------------------------------------------
National Series
Class B Shares Amount
- ------------------------------------ ------------------------------------------
Sales of shares 59,802 $661,582
- ------------------------------------ ------------------------------------------
Share issued to shareholders
in reinvestment of net
investment income 72 786
- ------------------------------------ ------------------------------------------
Total 59,874 662,368
- ------------------------------------ ------------------------------------------
Shares reacquired (5,647) (61,732)
- ------------------------------------ ------------------------------------------
Increase in shares 54,227 $600,636
- ------------------------------------ ------------------------------------------
<TABLE>
<CAPTION>
For the Period 7/15/96 For the Period 7/15/96
(Commencement of Offering Class C Shares) One Month Ended (Commencement of Offering
to 9/30/96 9/30/96 Class C Shares) to 8/31/96
---------------------------------------------------- ----------------------- -----------------------------
National Series New York Series California Series California Series
Class C Shares Amount Shares Amount Shares Amount Shares Amount
- ------------------------- ---------------------------------------------------- ----------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales of shares 69,802 $ 770,616 15,695 $ 184,291 3,458 $36,001 39,504 $ 409,510
- ------------------------- ---------------------------------------------------- ----------------------- -----------------------------
Share issued to
shareholders
in reinvestment of net
investment income 17,293 191,259 2,504 26,979 3,091 31,867 2,635 27,773
- ------------------------- ---------------------------------------------------- ----------------------- -----------------------------
Share issued to
shareholders
in exchange for
assets acquired
in tax-free acquisitions 4,072,638 44,391,757 707,908 7,525,059 -- -- 1,591,611 16,355,395
- ------------------------- ---------------------------------------------------- ----------------------- -----------------------------
Total 4,159,733 45,353,632 726,107 7,736,329 6,549 67,868 1,633,750 16,792,678
- ------------------------- ---------------------------------------------------- ----------------------- -----------------------------
Shares reacquired (219,636) (2,418,857) (38,624) (414,576) (12,944) (134,024) (35,879) (373,835)
- ------------------------- ---------------------------------------------------- ----------------------- -----------------------------
Increase (decrease)
in shares 3,940,097 $42,934,775 687,483 $7,321,753 (6,395) ($66,156) 1,597,871 $16,418,843
- ------------------------- ---------------------------------------------------- ----------------------- -----------------------------
</TABLE>
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 in December 1996.
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 $(16,110,968) for the National Series,
$(15,958,422) for the New York Series, $625,000 for the Texas Series,
$(2,446,328) for the New Jersey Series, $(2,317,919) for the Connecticut Series,
$(4,618,221) for the Missouri Series, $(2,481,668) for the Hawaii Series,
$(3,984,899) for the Washington Series, $(32,397) for the Minnesota Series, and
$(23,787,986) 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 $34,858,538 $2,647 $440,252
- --------------------------------------------------------------------------------
New York 17,547,955 -- 79,263
- --------------------------------------------------------------------------------
California
9/1/96-9/30/96 1,272,057 -- 59,707
- --------------------------------------------------------------------------------
California
9/1/95-8/31/96 15,777,854 -- 110,885
- --------------------------------------------------------------------------------
5. Paid In Capital
At September 30, 1996, paid in capital for each Series was as follows:
- --------------------------------------------------------------------------------
National $678,220,093 Missouri $134,651,812
- --------------------------------------------------------------------------------
New York 327,037,919 Hawaii 86,668,088
- --------------------------------------------------------------------------------
Texas 91,861,924 Washington 72,486,804
- --------------------------------------------------------------------------------
New Jersey 183,618,486 Minnesota 8,134,148
- --------------------------------------------------------------------------------
Connecticut 123,230,858 California 310,301,851
- --------------------------------------------------------------------------------
36
<PAGE>
Notes to Financial Statements
6. Purchases and Sales of Securities
Purchases and sales of investment securities (other than short-term investments)
were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
National $1,369,038,378 $1,401,544,929
- --------------------------------------------------------------------------------
New York 206,742,741 223,521,832
- --------------------------------------------------------------------------------
Texas 111,181,101 113,769,095
- --------------------------------------------------------------------------------
New Jersey 322,851,896 327,971,621
- --------------------------------------------------------------------------------
Connecticut 83,915,468 74,369,510
- --------------------------------------------------------------------------------
Missouri 124,092,307 122,493,532
- --------------------------------------------------------------------------------
Hawaii 50,362,846 51,687,357
- --------------------------------------------------------------------------------
Washington 56,604,072 59,316,865
- --------------------------------------------------------------------------------
Minnesota 6,787,254 2,810,507
- --------------------------------------------------------------------------------
California
9/1/96-9/30/96 7,904,720 8,505,267
- --------------------------------------------------------------------------------
California
9/1/95-8/31/96 380,608,861 399,468,142
- --------------------------------------------------------------------------------
Security gains and losses are computed on the identified cost basis. As of
September 30, 1996, 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 $11,829,748 $16,317,745 $4,487,997
- --------------------------------------------------------------------------------
New York 9,168,568 11,657,834 2,489,266
- --------------------------------------------------------------------------------
Texas 1,877,482 3,085,504 1,208,022
- --------------------------------------------------------------------------------
New Jersey 5,482,521 6,279,946 797,425
- --------------------------------------------------------------------------------
Connecticut 1,980,594 3,559,150 1,578,556
- --------------------------------------------------------------------------------
Missouri 4,663,745 5,223,830 560,085
- --------------------------------------------------------------------------------
Hawaii 1,379,712 1,806,629 426,917
- --------------------------------------------------------------------------------
Washington 2,977,838 3,073,097 95,259
- --------------------------------------------------------------------------------
Minnesota (69,514) 72,173 141,687
- --------------------------------------------------------------------------------
California 9,305,622 11,567,773 2,262,151
- --------------------------------------------------------------------------------
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. Directors' fees accrued
during the year for outside Directors of the Company as a group was $31,536
(exclusive of expenses), a portion of which has been deemed in vested in shares
of the Company under a deferred compensation plan contemplating future payment
of the value of those shares. As of Septem ber 30, 1996, the aggregate amount in
Directors' accounts maintained under the plan was $449,952. Retirement costs
accrued during the year amounted to $20,791.
8. California Series
On July 12, 1996, Lord Abbett California Tax-Free Income Fund be came 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 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
- --------------------------------------------------------------------------------
Net Assets Unrealized Accumulated Net
Of Trust Appreciation 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)
- --------------------------------------------------------------------------------
37
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders,
Lord Abbett Tax-Free Income Fund, Inc.:
We have audited the accompanying statements of net assets of the National
Series, New York Series, Texas Series, New Jersey Series, Connecticut Series,
Missouri Series, Hawaii Series, Washington Series, Minnesota Series, and
California Series of Lord Abbett Tax-Free Income Fund, Inc. as of September 30,
1996, the related statements of operations, and of changes in net assets and the
financial highlights for the respective periods presented. These financial
statements and the financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at
September 30, 1996 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the National Series,
New York Series, Texas Series, New Jersey Series, Connecticut Series, Missouri
Series, Hawaii Series, Washington Series, Minnesota Series, and California
Series of Lord Abbett Tax-Free Income Fund, Inc. at September 30, 1996, the
results of their operations, the changes in their net assets and the financial
highlights for the respective periods presented, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
New York, New York
November 11, 1996
38
<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
Philip Fang, Executive Vice President
John R. Mousseau, Executive Vice President
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
39
<PAGE>
Copyright (C) 1996 by Lord Abbett Tax-Free Income Fund, Inc., 767 Fifth Avenue,
New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Tax-Free Income Fund, Inc., is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning the
Fund's investment objective and policies, sales charges and other matters. There
is no guarantee that the forecasts contained within this publication will come
to pass.
All rights reserved. Printed in the U.S.A.
40
<PAGE>
Investing in the
Lord Abbett
Family of Funds
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Growth & Balanced Income Tax-Free Money Market
Growth Funds Funds Income Funds Fund Funds Income Funds Fund
Developing Mid-Cap Affiliated Fund Balanced Series U.S. Government o National U.S. Government
Growth Fund Value Fund Securities Series* o California Securities
o Connecticut Money Market
Research Fund- Global Fund- Growth & Bond-Debenture o Florida Fund*+
Small-Cap Equity Series Income Series Fund o Georgia
Series o Hawaii
Research Fund- Global Fund- o Michigan
Large-Cap Income Series o Minnesota
Series o Missouri
Limited Duration o New Jersey
U.S. Government o New York
Securities Series* o Pennsylvania
o Texas
o Washington
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Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your financial adviser provides value in helping you identify and
under stand your investment objectives and, ultimately, offering fund recom
mendations suitable for your individual needs.
This publication, when used as sales literature, is to be distributed only
if preceded or accompanied by a cur rent prospectus for Lord Abbett
Tax-Free Income Fund.
For more complete information about any other Lord Abbett fund, in cluding
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 27
portfolios designed to meet a variety of investment needs. While you may
reallocate your assets among our funds at any time, we recommend speaking
with your financial adviser to help you customize your investment plan.
* An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
+ There can be no assur ance that this Fund will be able to main tain a
stable net asset value of $1.00 per share. This Fund is man aged to
maintain, and has maintained, its stable $1.00 per share price.
Numbers to Keep Handy
For Literature: 800-874-3733
For Shareholder Account
or Statement Inquiries: 800-821-5129
For More Information: 800-426-1130
[LOGO] LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Diciplined Investing
LORD ABBETT DISTRIBUTOR LLC
- ------------------------------------------------------------ LATFI-2-996
The GM Building o 767 Fifth Avenue o New York, NY 10153-0203 (11/96)
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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 48 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 com ponents in
overseeing a mutual fund. The Board of Directors watches over your Fund's
general oper ations 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 regard ing 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 back grounds to provide a variety of viewpoints in the
oversight of their Fund. Below, we feature one of our independent
directors, John C. Jansing.
John C. Jansing,
Director--Lord Abbett Tax-Free
Income Fund
An alumnus of Dartmouth College, Mr. Jansing is the founder and retired
Chairman of Independent Election Corporation of America, a proxy tabulating
firm. His diversified business career has spanned 40 years and includes
extensive experience in the investment company industry.
Mr. Jansing has served on the American Stock Exchange Board of Governors as
well as on a Securities and Exchange Commission Special Advisory Committee
on Investment Advisors. He has been an independent director for all of Lord
Abbett's funds since 1978.
