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LORD ABBETT
NATIONAL TAX-FREE INCOME FUND
NEW YORK TAX-FREE INCOME FUND
TEXAS TAX-FREE INCOME FUND
NEW JERSEY TAX-FREE INCOME FUND
CONNECTICUT TAX-FREE INCOME FUND
MISSOURI TAX-FREE INCOME FUND
HAWAII TAX-FREE INCOME FUND
WASHINGTON TAX-FREE INCOME FUND
MINNESOTA TAX-FREE INCOME FUND
CALIFORNIA TAX-FREE INCOME FUND
1999 ANNUAL REPORT
Funds that seek to provide attractive levels of tax-advantaged income
<PAGE>
REPORT TO SHAREHOLDERS
For the Fiscal Year Ended September 30,1999
Lord Abbett Tax-Free Income Fund completed its fiscal year on
September 30, 1999 with aggregate net assets of $1.7 billion.
Please see the inside front cover of this report for individual
net assets and performance of each Fund.
What started out as a good year for municipal bonds turned sour
in the later part of 1999 as municipal bond yields backed up from
lower levels earlier in the year. The municipal market enjoyed an
early rally spurred by strong demand as investors took advantage
of the cheapness of tax-free bonds in relation to Treasuries.
However, as interest rates began to climb in the spring amid
worries of renewed inflation and subsequent Federal Reserve Board
increases in the Federal Funds Rate, yields on tax-free bonds
rose and prices declined.
Over the summer, a number of factors contributed to excess supply
of municipal paper relative to demand, which in turn kept
interest rates on tax-free bonds high in relation to Treasuries.
Property and casualty insurance companies, traditionally large
buyers of municipal bonds, became net sellers as lower insurance
profits reduced their need for tax-free income. At the same time,
less traditional institutional buyers, such as life insurance
companies, became heavy sellers. In addition, as interest rates
rose on all fixed-income securities, individual investors were
more reluctant to purchase bonds. The flood of extra supply,
resulting from a high level of selling, and in some instances,
from issuers trying to have bonds underwritten before year end,
temporarily overwhelmed demand for municipals and forced yields
to move significantly higher.
While these periods of market weakness do have an impact on the
value of your portfolio, they also present opportunities for us
to purchase high-quality, long-term bonds at very attractive
yields. Currently, inflation remains low and the Federal Reserve
seems resolved to prevent any sustained increase. While difficult
to justify, given the low inflation the economy continues to
enjoy, we would consider any additional increase in the Federal
Funds Rate by the Federal Reserve as an "insurance move" given
that today's high rates are only beginning to impact the economy.
We anticipate that the factors that resulted in the yields on
tax-free bonds increasing more than the yields on Treasuries will
prove to be temporary. Once supply and demand fall more in line,
tax-free bonds should rally relative to Treasuries.
We believe municipal bonds remain extremely attractive from a
relative value perspective, offering tax-free yields equivalent
to nearly 98% of the yield of Treasuries.(1) We continue to
emphasize highly liquid, high-quality bonds that offer attractive
levels of income.
Thank you for including the Lord Abbett Tax-Free Income Fund as
part of your diversified investment portfolio. We look forward to
helping you attain your financial goals in the years ahead.
(1) Unlike U.S. Treasury securities, an investment in the Fund is
neither insured nor guaranteed by the U.S. Government.
RISK: All or a portion of income derived from this portfolio may
be subject to the Federal Alternative Minimum Tax. The Fund has
the ability to invest in derivatives, including options,
financial futures, options on financial futures and residual
interest bonds (also known as "inverse floaters"). These
instruments involve special risks.
- --------------------------------------------------------------------------------
ROBERT S. DOW
CHAIRMAN
OCTOBER 8, 1999
"We believe municipal bonds remain extremely attractive from a relative value
perspective, offering tax-free yields equivalent to nearly 98% of the yield of
Treasuries."
<PAGE>
FUND FACTS
All Funds managed by Lord Abbett emphasize high quality, call protection and
total return potential. Portfolio quality shown as of 9/30/99.
Lord Abbett's Focus on Quality
<TABLE>
<CAPTION>
NATIONAL TAX-FREE NEW YORK TAX-FREE CONNECTICUT TAX-FREE MISSOURI TAX-FREE HAWAII TAX-FREE
INCOME FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND
<S> <C> <C> <C> <C> <C>
AAA 59.1% AAA 68.3% AAA 53.0% AAA 59.7% AAA 70.3%
AA 23.4% AA 10.2% AA 19.5% AA 28.5% AA 6.4%
A 12.9% A 10.0% A 4.8% A 4.9% A 14.3%
BBB(1) 4.6% BBB(1) 11.5% BBB(1) 18.4% BBB(1) 6.9% BBB 9.0%
TEXAS TAX-FREE NEW JERSEY TAX-FREE WASHINGTON TAX-FREE MINNESOTA TAX-FREE CALIFORNIA TAX-FREE
INCOME FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND
AAA 63.9% AAA 75.4% AAA 60.6% AAA 51.4% AAA 79.3%
AA 19.2% AA 10.1% AA 32.6% AA 34.5% AA 15.4%
A 13.9% A 8.3% A 6.1% A 7.5% A 3.0%
BB 1.2% BBB(1) 6.2% BBB(1) 0.7% BBB 6.6% BBB(1) 2.3%
BBB(1) 1.8%
</TABLE>
<TABLE>
<CAPTION>
Lord Abbett's Tax-Free Record and SEC-Required Information as of 9/30/99 for Class A Shares
NATIONAL NEW YORK TEXAS NEW JERSEY CONNECTICUT MISSOURI
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
INCOME FUND(2) INCOME FUND(2) INCOME FUND INCOME FUND INCOME FUND INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Date of Inception 4/2/84 4/2/84 1/20/87 1/2/91 4/1/91 5/31/91
Net Assets (in millions) $542.6 $248.5 $84.5 $163.2 $111.8 $125.8
Dividend Distribution Rate at Net Asset Value(5) 5.12% 5.25% 5.28% 5.31% 5.22% 5.05%
- -----------------------------------------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return(6) at Net Asset Value:
1 Year -3.85% -3.23% -4.96% -3.73% -3.04% -2.25%
10 Years or Life of Series 6.80% 6.37% 6.94% 6.90%(7) 6.52%(7) 6.43%(7)
30-Day SEC Yield(8) 4.54% 4.95% 4.84% 4.99% 4.89% 4.29%
- -----------------------------------------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return(6) at the Class A Share Maximum Offering
Price:
1 Year -6.90% -6.30% -8.10% -6.90% -6.20% -5.40%
5 Years 5.40% 4.76% 5.29% 5.19% 5.19% 5.13%
10 Years or Life of Series 6.45% 6.01% 6.60% 6.50%(7) 6.12%(7) 6.01%(7)
HAWAII WASHINGTON MINNESOTA CALIFORNIA
TAX-FREE TAX-FREE TAX-FREE TAX-FREE
INCOME FUND INCOME FUND INCOME FUND(3) INCOME FUND(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Date of Inception 10/28/91 4/15/92 12/27/94 9/3/85(4)
Net Assets (in millions) $71.6 $51.8 $19.8 $207.1
Dividend Distribution Rate at Net Asset Value(5) 4.96% 5.13% 5.52% 5.08%
- -----------------------------------------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return(6) at Net Asset Value
1 Year -3.31% -4.17% -2.72% -4.09%
10 Years or Life of Series 6.00%(7) 6.27%(7) 5.99%(7) 6.45%
30-Day SEC Yield(8) 4.81% 5.12% 5.14% 4.74%
- -----------------------------------------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return(6) at the Class A Share
Maximum Offering Price Price:
1 Year -6.60% -7.30% -5.90% -7.20%
5 Years 5.18% 5.63% - 4.65%
10 Years or Life of Series 5.56%(7) 5.80%(7) 5.27%(7) 6.11%
</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 Fund's Financial
Highlights (pages 36, 37 and 42).
(3) Returns and yield for Minnesota Tax-Free Income Fund reflect a voluntary
waiver of Lord, Abbett & Co.'s management fee. Absent this waiver, the
Fund's returns and yield would have been lower. Lord, Abbett & Co. may
revise or terminate this waiver at any time.
(4) Date shown is inception of a substantially similar predecessor fund that
became the Fund effective 7/15/96.
(5) Dividend Distribution Rate at Net Asset Value: The dividend distribution
rate is calculated by dividing the dividends of a class derived from net
investment income during a stated period by the net asset value on the last
day of the period.
(6) 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 Federal
Alternative Minimum Tax liability 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 Fund.
(7) Since inception.
(8) 30-Day SEC Yield: The 30-day SEC yield for each class of shares is
calculated by dividing annualized net investment income per share during a
recent 30-day period by the maximum offering price per share on the last
day of that period.
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 3.25%.
Effective May 3, 1999, the maximum sales charge was reduced from 4.75% to
3.25%.
Lord Abbett's National, California and New York Tax-Free Income Funds also
offer other classes of shares having varying fees and expenses.
See Important Information on page 1.
<PAGE>
Important Information
Each portfolio may invest up to 20% of its net assets in residual interest bonds
("RIBs"). RIBs, sometimes referred to as inverse floaters, are debt instruments
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
make lower interest payments and values fall faster than fixed-rate bonds. But
when interest rates fall, not only do RIBs make higher interest payments, their
values also rise faster than fixed-rate bonds. If used as sales material after
12/31/99, this report must be accompanied by Lord Abbett's Performance Quarterly
for the most recently completed calendar quarter.
A Note About Year 2000 Matters
As you may know, there has been extensive media coverage about possible problems
that may arise as a result of uncertainties about the ability of computers to
"understand" dates using the Year 2000. Potentially, these problems could
disrupt the services and systems that the Funds rely on in theirdaily
operations.
As a general matter, we believe the financial industry has taken a leadership
role addressing Year 2000 (Y2K) issues which should help to inspire confidence
among concerned investors. More specifically, Lord Abbett, Lord Abbett
Distributor LLC and the Funds' transfer agent, custodian and other providers of
services critical to the Funds have been actively working on reviewing and
replacing or updating computer systems and computer-to-computer interfaces, as
needed. Each has completed or is in the process of testing new or revised
systems and interfaces and generally expects that their systems, as well as
those of their key external service providers, will be ready to handle Y2K
without significant problems. Furthermore, the Funds have been routinely taking
each company's Y2K preparations into account when considering or reviewing
investments.
In summary, while the Y2K problem is unprecedented and we cannot completely
eliminate the possibility that the Funds could be affected in some way, we are
confident that all parties involved are taking appropriate steps to resolve Y2K
concerns.
Statement of Net Assets
National Tax-Free Income Fund September 30, 1999
<TABLE>
<CAPTION>
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education 15.29% Allegheny Cnty PA Higher Ed Bldg Auth Rev Robert Morris College
ACA+ 6.00% 5/1/2028 A $ 2,755 $ 2,789,437
Coastal Carolina Univ SC Rev AMBAC+ 5.30% 6/1/2022 Aaa 3,765 3,572,044
Colorado Sch Mines Aux Fac Rev Enterprise MBIA+ 5.00% 12/1/2028 AAA 465 406,294
Connecticut St Higher Ed Supplemental Ln Auth Rev Ser A
AMT+++ 7 3/8% 11/15/2005 A1 65 65,856
Connecticut St Hlth & Ed Fac Auth Rev Fairfield Univ Ser I
MBIA+ 5 1/4% 7/1/2025 AAA 1,000 940,000
Connecticut St Hlth & Ed Fac Auth Rev Fairfield Univ Ser I
MBIA+ 5 1/2% 7/1/2029 AAA 1,000 970,000
Connecticut St Hlth & Ed Fac Auth Rev Quinnipiac College Ser E
FSA+ 4 3/4% 7/1/2028 AAA 2,950 2,489,062
Delaware St Econ Dev Auth Rev DE St Univ Proj MBIA+ 5 1/4% 10/1/2017 AAA 2,490 2,415,300
Dinwiddie Cnty VA Ind Dev Auth Rev Dinwiddie Sch Proj Ser A
MBIA+ 6.00% 2/1/2018 AAA 650 660,562
District of Columbia Rev Amer College Obstetrician
AMBAC+ 4 3/4% 8/15/2018 Aaa 1,250 1,075,000
District of Columbia Rev Catholic Univ America Proj
AMBAC+ 5 5/8% 10/1/2029 AAA 1,250 1,200,000
District of Columbia Rev Georgetown Univ Ser A MBIA+ 6.00% 4/1/2018 AAA 900 919,125
1
<PAGE>
Statement of Net Assets
National Tax-Free IncomE fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
District of Columbia Rev Gonzaga College High Sch
FSA+ 5 3/8% 7/1/2019 AAA $ 1,000 $ 943,750
Greenville Cnty SC Univ Ctr Univ Ctr Proj Ser A
AMBAC+ 5 1/4% 4/1/2019 AAA 520 490,750
Indiana St Ed Fac Auth Rev 6.65% 3/1/2019 Aaa 10,740 11,693,175
Massachusetts St Dev Fin Agy Rev Applewild Sch Issue
ASSET GTY+ 5 3/4% 8/1/2019 AA 365 356,331
Massachusetts St Dev Fin Agy Rev Boston Univ Ser P 6.00% 5/15/2059 A3 2,000 1,952,500
Massachusetts St Dev Fin Agy Rev Brooks Sch Issue Ser B
MBIA+ 5.00% 7/1/2029 Aaa 1,000 866,250
Massachusetts St Dev Fin Agy Rev Curry College Ser A
ACA+ 5 3/8% 3/1/2019 A 500 466,875
Massachusetts St Hlth & Ed Fac Auth Rev Boston College Issue Ser L
4 3/4% 6/1/2031 Aa3 750 608,437
Massachusetts St Hlth & Ed Fac Auth Rev Northeastern Univ Ser G
MBIA+ 5.00% 10/1/2028 AAA 300 260,250
Massachusetts St Hlth & Ed Fac Auth Rev Univ MA Med Sch Resh Ser A
CONNIE LEE+ 6.00% 7/1/2023 AAA 1,175 1,191,156
Massachusetts St Hlth & Ed Fac Auth Rev Wellesley College Ser F
5 1/8% 7/1/2039 Aa1 1,500 1,323,750
Minnesota St Higher Ed Fac Auth Rev Hamline Univ Ser 5-B
6.00% 10/1/2029 Baa1 750 743,437
Monroe Cnty NY Ind Dev Agy Rev Student Hsg Ser A 5 3/8% 4/1/2029 Baa3 500 444,375
New Jersey Econ Dev Auth Rev Princeton Jr Sch Inc 1996 Proj
7.00% 5/1/2020 BBB* 980 1,005,725
Northern IL Univ Rev Auxiliary Fac Sys FGIC+ 5 3/4% 4/1/2022 Aaa 3,000 2,996,250
Oklahoma St Capitol Impt Auth Ser A MBIA+ 5 1/2% 9/1/2017 AAA 500 493,750
Oregon Hlth Sciences Univ Rev Cap Apprec Ser A
MBIA+ Zero Coupon 7/1/2021 AAA 6,000 1,732,500
Pennsylvania St Higher Ed Assistance Agy Student Ln Rev
RIBs AMBAC+ AMT+++ 8.21% 3/1/2022++ AAA 4,500 4,792,500
Pennsylvania St Higher Ed Assistance Agy Student Ln Rev
RIBs AMBAC+ AMT+++ 9.27% 9/1/2026++ AAA 2,000 2,337,500
Pennsylvania St Higher Ed Fac Auth Rev College & Univ Trustees
4 5/8% 7/15/2030 AA 10,000 8,000,000
Pennsylvania St Higher Ed Fac Auth Rev Drexel Univ AAA 3,550 3,066,312
MBIA+ 4.65% 5/1/2018
Private Colleges & Univ Auth GA Student Ln Rev Ser B
AMT+++ 5.00% 11/1/2033 Aa1 400 342,000
Private Colleges & Univ Auth GA Emory Univ Ser A 6.40% 10/1/2023 Aa1 310 327,437
Private Colleges & Univ Auth GA Emory Univ Proj Ser A 5 1/2%
11/1/2025 Aa1 1,500 1,441,875
Private Colleges & Univ Auth GA Mercer Univ Proj Ser A 5 1/4%
10/1/2025 A3 1,100 994,125
Puerto Rico Ind Tourist Ed Med Ana G Mendez Univ Sys Proj BBB 500 467,500
5 3/8% 2/1/2019
Rensselaer Cnty NY IDA Polytechnic Inst Dorm Proj Ser A
5 1/8% 8/1/2029 A+ 1,225 1,087,188
Rhode Island St Hlth & Ed Bldg Rev Higher Ed Fac Brown Univ
6.00% 9/1/2025 Aa1 7,465 7,614,300
Rhode Island St Hlth & Ed Bldg Rev Higher Ed Fac Brown Univ
5.00% 9/1/2028 Aa1 850 742,688
Texas St Higher Ed Coord Brd College Student Ln Rev Sr Lien
AMT+++ 7.70% 10/1/2025 A 400 412,500
University Akron OH Gen Rcpt FGIC+ 5 3/4% 1/1/2029 AAA 4,750 4,708,438
University NC Sys Pool Rev Ser B MBIA+ 4 1/2% 10/1/2023 AAA 230 188,025
University NC Univ Rev Comp Int Util Sys Zero Coupon 8/1/2019 Aa2 1,100 354,750
University NC Univ Rev Comp Int Util Sys Zero Coupon 8/1/2021 Aa2 6,510 1,839,075
University TX Univ Rev Fin Sys Ser A 5.70% 8/15/2020 AAA 2,000 1,987,500
University WY Univ Rev Fac Impt MBIA+ 5 1/2% 6/1/2019 AAA 500 484,375
2
<PAGE>
Statement of Net Assets
National Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Vermont Ed & Hlth Bldgs Fin Agy Rev Middlebury College Proj
6.00% 11/1/2013 AA $ 1,450 $ 1,517,063
Virginia St Pub Sch Auth Ser A 6.20% 8/1/2014 Aa1 1,500 1,588,125
Wayne St Univ MI Univ Rev AMBAC+ 5.65% 11/15/2015 AAA 215 215,269
Wisconsin St Hlth & Ed Fac Auth Rev Marquette Univ
MBIA+ 4 3/4% 6/1/2023 AAA 2,000 1,685,000
Total 91,265,486
===================================================================================================================================
Finance .91% Delaware VY PA Regl Fin Auth Loc Govt Rev Ser C
AMBAC+ 7 3/4% 7/1/2027 AAA 1,000 1,273,750
Indiana Bd Bk Rev St Revolving Fund Prog Ser A 6 3/4% 2/1/2017 AAA 500 545,000
Iowa Fin Auth Rev IA St Revolving Fd Comb Ser 6 1/4% 5/1/2024 A+ 3,400 3,587,000
Total 5,405,750
===================================================================================================================================
General Obligation 12.00% Anchor Bay MI Sch Dist FGIC+ 4 3/4% 5/1/2026 AAA 905 756,806
Brunswick OH Str Impt 5 5/8% 12/1/2019 A1 375 373,125
Coopersville Area MI Pub Schs MBIA+ 5.00% 5/1/2029 AAA 1,900 1,683,875
Courtland AL Wts Ser A ACA+ 6.00% 5/1/2019 A 750 746,250
Dakota Cnty MN Cap Impt Ser C 4 1/2% 2/1/2001*** Aa2 1,000 1,005,000
Dakota Cnty MN Cap Impt Ser C 4 1/2% 2/1/2002*** Aa2 1,000 1,006,250
De Kalb & La Salle Cntys IL Cmnty Unit Sch Dist 432
FGIC+ Zero Coupon 2/1/2019 Aaa 1,160 371,200
Deer Park TX Indpt Sch Dist 4.00% 2/15/2019 AAA 2,000 1,552,500
Dodge KS Univ Sch Dist # 443 FSA+ 4 3/8% 9/1/2018 AAA 2,325 1,938,469
Douglas Cnty NE Sch Dist # 17 Millard FSA+ 4 3/4% 6/15/2017 AAA 2,225 1,983,031
Glen Cove NY FGIC+ 5.00% 9/15/2014 AAA 705 671,513
Hawaii St Ser CT FSA+ 5 7/8% 9/1/2019 AAA 2,250 2,269,687
Highlands Ranch Met CO Dist # 3 ACA+ 5.30% 12/1/2019 A 700 651,875
Honolulu HI City & Cnty Ser D FGIC+ AMT+++ 4.45% 2/1/2005*** AAA 4,430 4,352,475
Idaho Falls ID Elec Defd Int FGIC+ Zero Coupon 4/1/2013 AAA 1,500 720,000
Kilmarnock VA Pub Impt 6 1/4% 3/1/2027 BBB* 1,430 1,483,625
King Cnty WA RIBs 7.66% 12/1/2013++ AA* 2,000 2,142,500
Memphis MI Cmnty Schls FGIC+ 5 1/4% 5/1/2029 Aaa 1,000 918,750
Midlothian TX Indpt Sch Dist 6.00% 2/15/2030 Aaa 4,000 4,000,000
Mississippi St Cap Impt Ser B FGIC+ 4 1/4% 11/1/2018 AAA 5,140 4,195,525
New York St Ser B 6.00% 8/15/2018 A 200 205,500
North Providence RI Ser A MBIA+ 6 1/8% 7/1/2016 AAA 1,410 1,498,125
Ohio St Infrastructure Impt Ser A 5 1/2% 2/1/2019 Aa1 2,000 1,962,500
Oregon St Alternate Energy Proj Ser A AMT+++ 5.00% 1/1/2015 Aa2 1,915 1,814,462
Oregon St Alternate Energy Proj Ser A AMT+++ 5.05% 1/1/2016 Aa2 1,995 1,887,769
Oregon St Alternate Energy Proj Ser A AMT+++ 5.10% 1/1/2017 Aa2 1,130 1,067,850
Oregon St Veterans Welfare Ser 76A 6.05% 10/1/2028 Aa2 1,000 1,033,750
Perrysburg OH Exmp Vlg Sch Dist 5.35% 12/1/2025 Aa3 1,200 1,138,500
Plymouth-Canton MI Cmnty Sch Dist FGIC+ 4.60% 5/1/2014 AAA 1,780 1,608,675
Port Arthur TX MBIA+ 5.00% 2/15/2021 AAA 1,555 1,380,062
Richmond VA FSA+ 5 1/2% 1/15/2018*** AAA 2,250 2,196,563
Richmond VA Pub Impt Ser B 5 1/2% 7/15/2023 AA 3,360 3,250,800
Sebring OH Loc Sch Dist Classroom Fac Impt 6 1/8% 12/1/2021 Aa3 810 834,300
University City MO Sch Dist MBIA+ 10.00% 2/15/2008 AAA 2,250 3,015,000
Washington St Ser A 5 3/4% 7/1/2014 Aa1 4,665 4,711,650
Washington St Ser A 5 3/4% 9/1/2019 Aa1 1,800 1,797,750
Washoe Cnty NV Sch Dist FGIC+ 4 1/2% 6/1/2019 AAA 5,000 4,143,750
3
<PAGE>
Statement of Net Assets
National Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
West Virginia St Cap Apprec Infrastructure Ser A
FGIC+ Zero Coupon 11/1/2026 AAA $ 9,450 $ 1,901,813
Westport CT 5 1/4% 7/15/2015 Aaa 1,615 1,584,719
Westport CT 5 1/4% 7/15/2016 Aaa 1,840 1,796,300
Total 71,652,294
===================================================================================================================================
Healthcare 15.34% Chester Cnty PA Hlth & Ed Fac Auth Rev Devereux Fndtn 6.00% 11/1/2019 A- 435 426,300
Cobb Cnty GA Hosp Auth Rev Antic Ctfs Ser A AMBAC+ 4 3/4% 4/1/2026 AAA 1,000 831,250
Colorado Springs CO Hosp Rev MBIA+ 6.00% 12/15/2024 AAA 7,765 7,949,419
Connecticut St Hlth & Ed Fac Auth Rev Cherry Brook
AMBAC+ 6.00% 11/1/2022 AAA 2,800 2,870,000
Connecticut St Hlth & Ed Fac Auth Rev Waterbury Hosp Ser B
FSA+ 7.00% 7/1/2020 AAA 1,000 1,036,480
Connecticut St Hlth & Ed Fac Auth Rev Child Care Fac Prog Ser C
AMBAC+ 5 1/2% 7/1/2019 AAA 500 490,625
Connecticut St Hlth & Ed Fac Auth Rev Child Care Fac Prog Ser C
AMBAC+ 5 5/8% 7/1/2029 AAA 700 686,875
Connecticut St Hlth & Ed Fac Auth Rev Horace Bushnell Mem Hall Ser A
MBIA+ 5 1/2% 7/1/2019 Aaa 200 192,500
Connecticut St Hlth & Ed Fac Auth Rev The Griffin Hosp Ser A
5 3/4% 7/1/2023 Baa2 2,980 2,894,325
Connecticut St Hlth & Ed Fac Auth Rev Univ CT Fndtn Ser A
5 3/8% 7/1/2029 A+ 560 531,300
Cumberland Cnty PA Muni Auth Rev 1st Mtg Carlisle Hosp & Hlth
6.80% 11/15/2014 BBB- 1,650 1,716,000
Cuyahoga Cnty OH Hosp Rev Univ Hosps Hlth Ser A
MBIA+ 5 5/8% 1/15/2013 AAA 2,400 2,451,000
Delaware Cnty PA Auth Hosp Rev Crozer Chester Med Ctr
ACA+ 5 3/8% 12/1/2018 A 2,625 2,451,094
District of Columbia Rev Amer Assoc of Homes & Svcs
ACA+ 6.00% 7/1/2024 A 1,000 986,250
Fairfax Cnty VA Ind Dev Auth Rev Hlth Care Inova Hlth Sys Proj
5 7/8% 8/15/2016 Aa2 1,000 1,026,250
Glynn-Brunswick GA Mem Hosp Auth Rev Antic Ctfs Southeast GA Hlth
MBIA+ 6.00% 8/1/2016 AAA 500 518,750
Grand Forks ND Hlth Care Sys Rev Altru Hlth Sys Oblig Group
MBIA+ 5.60% 8/15/2017 AAA 1,625 1,602,656
Hanover Cnty VA Ind Dev Auth Bon Secours Hlth Sys Projs
MBIA+ 5 1/2% 8/15/2025 AAA 1,000 967,500
Hanover Cnty VA Ind Dev Auth Mem Regl Med Ctr Proj
MBIA+ 5 1/2% 8/15/2025 AAA 1,440 1,387,800
Hastings MN Hlth Care Fac Rev Regina Med Ctr ACA+ 5.30% 9/15/2028 A 1,100 1,003,750
Hawaii St Dept Bdg & Fin Sp Purp Mtg Rev RIBs AMT+++
6.74% 12/15/2023++ AAA 2,000 1,780,000
Illinois Hlth Fac Auth Rev Holy Cross Hosp Proj 6 3/4% 3/1/2024 Baa1 2,000 2,107,500
Indiana Cnty PA Hosp Auth Rev Ser A 7 1/8% 7/1/2023 A3 1,500 1,591,875
Kentucky Economic Dev Fin Auth Rev South Cent Nursing Ser A
MBIA+ 6.00% 1/1/2027 AAA 1,000 1,033,750
Knox Cnty TN Hlth Ed & Hsg Fac Univ Hlth Sys Inc 5 5/8% 4/1/2029 Baa1 795 720,469
Lorain Cnty OH Health Fac Rev Catholic Hlthcare Partners Ser A
AMBAC+ 5 1/2% 9/1/2029 AAA 725 694,188
Lucas Cnty OH Hosp Rev Promedia Healthcare Oblig Corp
AMBAC+ 5 3/8% 11/15/2039 AAA 1,625 1,484,844
Maryland St Hlth & Higher Ed Fac Auth Rev Upper Chesapeake Hosp
Ser A FSA+ 5 1/8% 1/1/2038 Aaa 3,830 3,403,912
Maryland St Hlth & Higher Ed Fac Auth Rev Kaiser Permanente Ser A
5 3/8% 7/1/2015 A 4,750 4,583,750
4
<PAGE>
Statement of Net Assets
National Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Maryland St Hlth & Higher Ed Fac Auth Rev Medlantic/Helix Ser B
AMBAC+ 5 1/4% 8/15/2038 AAA $ 2,550 $ 2,326,875
Massachusetts St Dev Fin Agy Rev May Institute Issue
ASSET GTY+ 6.00% 9/1/2019 AA 750 752,813
Massachusetts St Hlth & Ed Fac Auth Rev Harvard Pilgrim Hlth Ser A
FSA+ 5.00% 7/1/2028 AAA 500 430,625
McKean Cnty PA Hosp Auth Rev Bradford Hosp Proj ACA+ 6.00% 10/1/2013 A 3,500 3,661,875
Minneapolis & St Paul MN Hsg & Redev Auth Hlth Care Sys
Group Hlth Plan Proj 6.90% 10/15/2022 A 700 739,375
Montgomery AL Med Clinic Brd Hlth Care Fac Rev 7.00% 3/1/2015 A- 1,305 1,334,362
Nassau Hlthcare Corp NY Hlth Sys Rev FSA+ 6.00% 8/1/2016 AAA 1,000 1,031,250
Nassau Hlthcare Corp NY Hlth Sys Rev FSA+ 5 1/2% 8/1/2019 AAA 1,000 971,250
New Hampshire Hgr Ed & Hlth Fac Auth Rev Androscoggin Vly Hosp
5.80% 11/1/2027 A- 1,000 956,250
New Jersey Hlth Care Fac Fin Auth Rev Ser C MBIA+ 8.60% 7/1/2017 AAA 325 334,344
New Jersey Hlth Care Fac Fin Auth Rev Society Of the VY Hosp Ser C
MBIA+ 6 5/8% 7/1/2010 AAA 250 256,272
New Jersey Econ Dev Auth Rev 1st Mtg Cadbury Corp Proj Ser A
ACA+ 5 1/2% 7/1/2028 A 1,000 946,250
New Jersey Econ Dev Auth Rev United Methodist Homes 5 1/8% 7/1/2018 BBB- 1,000 862,500
New York St Med Care Fac Fin Agy Rev 8 7/8% 8/15/2007 A- 1,105 1,111,796
Plymouth MN Hlth Fac Rev West Hlth Proj Ser A FSA+ 6 1/8% 6/1/2024 AAA 4,000 4,135,000
Pottsville PA Hosp Auth Hosp Rev Hosp & Warne Clinic
ACA+ 55/8% 7/1/2024 A 250 236,250
Rhode Island St Hlth & Ed Bldg Rev Hlth Fac Tockwotton Home
6 1/4% 8/15/2022 BBB** 1,000 1,012,500
Rhode Island St Hlth & Ed Bldg Rev Hosp Fin ASSET AA 1,250 1,128,125
GTY+ 5.30% 7/1/2029
Rochester MN Hlth Care Fac Rev Ser H RIBs 7.76% 11/15/2015++ AA+ 9,000 9,461,250
University KS Hosp Auth Hlth Fac Rev KU Hlth Sys Ser A
AMBAC+ 5.55% 9/1/2019 AAA 1,250 1,215,625
Washington Cnty OH Hosp Rev Marietta Area Hlth FSA+ 4 1/2% 9/1/2023 Aaa 4,415 3,592,706
Wisconsin St Hlth & Ed Fac Auth Rev Aurora Hlth Care Ser B
5 1/2% 2/15/2015 A- 1,650 1,546,875
Wisconsin St Hlth & Ed Fac Auth Rev Hess Mem Hosp Assn
ACA+ 7 7/8% 11/1/2022 A 3,275 3,692,563
Wisconsin St Hlth & Ed Fac Auth Rev Wheaton Franciscan Svc
MBIA+ 6 1/2% 8/15/2011 AAA 415 435,231
Total 91,592,374
===================================================================================================================================
Housing 11.13% Arlington Cnty VA Ind Dev Auth Multi Fam Rev Hsg Mtg Sr Lien
8.00% 7/1/2015 BBB* 890 915,587
Arlington Cnty VA Ind Dev Auth Multi Fam Rev Hsg Mtg Sr Lien
6.30% 7/1/2016 A 500 519,375
Bexar Cnty TX Hsg Fin Corp Rev Coll Mtg Ser A
GNMA+ AMT+++ 8.20% 4/1/2022 AAA 585 596,700
Clayton Cnty GA Hsg Auth Multi Fam Hsg Rev Pointe Clear Apts
RIBs FSA+ AMT+++ 5.70% 7/1/2023++ AAA 1,000 996,250
Colorado Hsg Fin Auth Multi Fam Hsg Ser A AMT+++ 6.80% 10/1/2037 AA+ 2,360 2,504,550
Georgia St Hsg & Fin Auth Rev Sing Fam Mtg Ser A Sub A 2
FHA+ AMT+++ 6.45% 12/1/2027 AAA 210 216,562
Georgia St Hsg & Fin Auth Rev Sing Fam Mtg Ser B Sub B 2
FHA+ AMT+++ 6.55% 12/1/2027 AAA 2,000 2,075,000
Georgia St Hsg & Fin Auth Rev Sing Fam Mtg Sub Ser A 2
FHA+ AMT+++ 6.40% 12/1/2015 AAA 2,000 2,075,000
Georgia St Hsg & Fin Auth Rev Sing Fam Mtg Sub Ser B 2
AMT+++ 5.85% 12/1/2028 AAA 495 488,812
5
<PAGE>
Statement of Net Assets
National Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Hawaii St Hsg Fin & Dev Corp Sing Fam Mtg Purp Rev Ser A
FNMA+ AMT+++ 5 3/4% 7/1/2030 Aa1 $ 4,770 $ 4,620,937
Idaho Hsg Agy Sing Fam Mtg Ser F FHA+ AMT+++ 7.45% 7/1/2015 Aaa 875 919,844
Illinois Hsg Dev Auth Multi Fam Hsg Lawndale FHA+ AMT+++
6.80% 12/1/2016 AAA 1,000 1,067,500
Illinois Hsg Dev Auth Multi Fam Hsg Lawndale FHA+ AMT+++
7.10% 12/1/2034 AAA 1,500 1,620,000
Indiana St Hsg Fin Auth Sing Fam Mtg Rev Ser D
GNMA+ AMT+++ 7.80% 1/1/2022 Aaa 505 517,625
Kentucky Hsg Corp Hsg Rev Ser B AMT+++ 6.10% 7/1/2016 AAA 1,205 1,229,100
Lee Cnty FL Hsg Fin Auth Sing Fam Mtg Rev Multi Cnty Ser A-1
GNMA/FNMA/FHLMC+ AMT+++ 6 1/4% 9/1/2031 Aaa 1,000 1,038,750
Maine St Hsg Auth Mtg Pur Ser A-2 AMT+++ 6 3/4% 11/15/2035 Aa2 130 134,712
Maryland St Cmnty Dev Admin Dept Hsg & Cmnty Dev Sing Fam Ser 7
AMT+++ 7.30% 4/1/2025 Aa2 375 390,000
Massachusetts St Hsg Fin Agy Hsg Rev Rental Mtg Ser A
AMBAC+ AMT+++ 7.35% 1/1/2035 AAA 1,435 1,531,862
Massachusetts St Hsg Fin Agy Hsg Rev Sing Fam Ser 29
AMT+++ 6 3/4% 6/1/2026 Aa3 1,460 1,520,225
Minneapolis St Paul MN Hsg Fin Brd Rev Sing Fam Mtg Ser AB
GNMA/FNMA+ AMT+++ 6 1/4% 11/1/2030 AAA 1,000 1,040,000
Minnesota St Hsg Fin Agy Sing Fam Mtg Ser G-1 AMT+++ 5.60% 7/1/2022 AA+ 1,195 1,148,694
Minnesota St Hsg Fin Agy Sing Fam Mtg Ser H-1 AMT+++ 5.65% 7/1/2031 AA+ 1,000 957,500
Missouri St Hsg Dev Cmnty Mtg Rev Cap Apprec Sing Fam Ser E-1
GNMA/FNMA+ AMT+++ Zero Coupon 3/1/2029 AAA 2,000 347,500
Missouri St Hsg Dev Cmnty Mtg Sing Fam Mtg Ser A
GNMA+ AMT+++ 7 3/8% 8/1/2023 AAA 455 471,494
Montana State Board Housing Sing Fam Mtg Ser A-2
AMT+++ 5 3/4% 6/1/2030 AA+ 2,500 2,421,875
Nevada Hsg Div Multi Fam Hsg Diamond Crk A
FNMA+ AMT+++ 5.90% 10/1/2018 AAA 1,250 1,251,563
New Jersey Econ Dev Auth Rev Jewish Cmnty Hsg Corp Met Proj
5.90% 12/1/2031 Aa3 1,000 997,500
New York St Mtg Agy Rev Cap Apprec Mtg Rev 2nd Ser
Zero Coupon 10/1/2014 Aaa 780 187,793
North Carolina Hsg Fin Agy Sing Fam Rev Ser BB AMT+++ 6 1/4% 3/1/2012 Aa2 1,245 1,285,463
North Dakota St Hsg Fin Agy Rev Home Mtg Fin Ser B
AMT+++ 5.85% 7/1/2028 Aa3 2,390 2,369,088
North Dakota St Hsg Fin Agy Rev Home Mtg Fin Ser E
AMT+++ 5 1/4% 1/1/2030 Aa3 5,125 4,644,531
Ohio Hsg Fin Agy Mtg Rev Residential Ser C GNMA+
AMT+++ 5 3/4% 9/1/2028 AAA 2,500 2,450,000
Ohio Hsg Fin Auth Sing Fam Mtg Rev Ser C
GNMA+ AMT+++ 7.85% 9/1/2021 AAA 265 274,307
Oklahoma Hsg Fin Agy Sing Fam Rev Cap Apprec Ser B-1
Zero Coupon 3/1/2029 Aaa 5,000 825,000
Oklahoma Hsg Fin Agy Sing Fam Rev Cap Apprec Ser D-1
Zero Coupon 3/1/2029 Aaa 7,480 1,280,950
Oklahoma Hsg Fin Agy Sing Fam Rev Ser B-2
AMT+++ Zero Coupon 9/1/2030 Aaa 10,000 1,537,500
South Dakota Hsg Dev Auth Home Ownership Mtg Ser A 5 1/8% 5/1/2027 AAA 5,500 5,087,500
Tennessee Hsg Dev Agy Homeownership Prog Ser 2-A
AMT+++ 5.65% 7/1/2025 Aa2 1,225 1,185,188
Tennessee Hsg Dev Agy Mtg Fin Ser A AMT+++ 7 1/8% 7/1/2026 A+ 1,550 1,577,125
Utah St Hsg Fin Agy Sing Fam Mtg Ser A 2 FHA+ AMT+++ 7 3/4% 1/1/2023 AAA 55 56,788
Virginia St Hsg Dev Auth Comwlth Mtg Ser A 7.10% 1/1/2022 Aa1 7,600 7,847,000
6
<PAGE>
Statement of Net Assets
National Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Washington Cnty OR Hsg Auth Multi Fam Rev Tualatin Meadows Proj
FNMA+ AMT+++ 5.90% 11/1/2018 AAA $ 1,400 $ 1,400,000
Wyoming Cmnty Dev Auth Hsg Rev Ser 2 AMT+++ 6.35% 6/1/2029 Aa2 825 845,625
Total 66,468,375
===================================================================================================================================
Industrial 4.47% Broward Cnty FL Resource Recov Rev Ses Broward Co LP South Proj
7.95% 12/1/2008 A+ 2 2,069
Butler AL Ind Dev Brd Solid Waste Disp Rev James River Proj
AMT+++ 8.00% 9/1/2028 BBB 1,500 1,659,375
Clark Cnty NV Ind Dev Rev PA Ser 349 RIBs ACA+ 6.84% 10/1/2030++ A* 12,500 10,343,750
Clark Cnty NV Ind Dev Rev Southwest Gas Corp Ser A
AMBAC+ 6.10% 12/1/2038 AAA 1,000 1,000,000
Connecticut St Dev Auth Solid Waste Disp Fac Rev Pfizer Inc Proj
AMT+++ 7.00% 7/1/2025 AAA 2,500 2,759,375
Green Bay WI Redev Auth Fort James Proj AMT+++ 5.60% 5/1/2019 Baa2 2,200 2,076,250
Henrico Cnty VA Ind Dev Auth Pub Fac Lease Rev 7 1/8% 8/1/2021 Aa2 3,095 3,419,975
Matagorda Cnty TX Nav Dist #1 Rev Houston Ltg
AMBAC+ AMT+++ 5 1/8% 11/1/2028 AAA 3,500 3,128,125
Moraine OH Solid Waste Disp General Motors Corp Proj
AMT+++ 5.65% 7/1/2024 A 450 432,563
St Clair Cnty MI Economic Detroit Edison Ser AA AMBAC+ 6.40% 8/1/2024 AAA 1,000 1,065,000
Texas City TX Ind Dev Corp Marine Term Rev Arco Pipe Line A 650 783,250
7 3/8% 10/1/2020
Total 26,669,732
===================================================================================================================================
Miscellaneous 6.29% Arizona Student Ln Acquisition Sr Ser A-1 AMT+++ 5.90% 5/1/2024 Aaa 1,000 995,000
Cobb-Marietta GA Coliseum & Exhibit Hall Auth Rev AAA 8,250 8,219,062
MBIA+ 5 5/8% 10/1/2026
Greenville Cnty SC Sp Source Roads Proj AMBAC+ 5 1/2% 4/1/2019 AAA 250 243,125
Hancock Cnty GA Ctfs Partn ASSET GTY+ 5 3/4% 6/1/2022 AA 625 611,719
Harnett Cnty NC Ctfs Partn AMBAC+ 6.20% 12/1/2009 AAA 2,900 3,095,750
Harrisburg PA Auth Rev Pooled Bd Prog Ser II MBIA+ 5 5/8% 9/15/2017 AAA 1,000 992,500
Iowa Fin Auth Rev Mercy Hlth Sys Ser V 5 1/4% 8/15/2021 Aa3 750 690,937
Miami Dade Cnty FL Sp Oblig Sub Ser A MBIA+ Zero Coupon 10/1/2024 AAA 5,000 1,143,750
New Jersey Bldg Auth St Bldg Rev 5 3/8% 6/15/2019 Aa2 2,500 2,409,375
New York City Transitional Fin Auth Rev Future Tax 2nd Ser B
4 1/2% 11/15/2027 AA 4,000 3,215,000
New York City Transitional Fin Auth Rev Future Tax 2nd Ser C
5.00% 5/1/2029 AA 200 174,250
Philadelphia PA Pkg Auth Rev Ser A AMBAC+ 5 1/8% 2/15/2024 AAA 2,000 1,810,000
Prince William Cnty Va Park Auth Rev 6.00% 10/15/2028 A3 3,000 2,955,000
Riverside VA Regl Jail Auth Jail Fac Rev MBIA+ 6.00% 7/1/2025 AAA 7,000 7,245,000
St Louis MO Ind Dev Auth Rev Kiel Ctr Multi Purp Arena
AMT+++ 7 7/8% 12/1/2024 BBB* 3,500 3,736,250
Total 37,536,718
===================================================================================================================================
Pollution 1.35% Coconino Cnty AZ Poll Ctrl Cor Rev Nev Pwr Co Ser B
AMT+++ 5.80% 11/1/2032 BBB 2,000 1,910,000
Missouri St Env Impt & Enrg Res Auth Wtr Poll Ctrl Ser B Aa1 3,250 3,607,500
7.20% 7/1/2016
New York St Enr Res & Dev Auth Poll Ctrl Rev Ser 43
RIBs MBIA+ AMT+++ 7.75% 9/1/2033++ Aaa 2,500 2,562,500
Total 8,080,000
===================================================================================================================================
Power 6.00% Grant Cnty WA Pub Util Dist #2 Priest Rapids Hydro 2nd Ser B
MBIA+ AMT+++ 5 3/8% 1/1/2018 AAA 300 283,875
Hamilton OH Elec Sys Mtg Rev Ser B FGIC+ 6.30% 10/15/2025 AAA 7,555 7,932,750
Michigan St Strategic Fund Ltd Oblig Detroit Edison Co Ser A
MBIA+ AMT+++ 5.55% 9/1/2029 AAA 500 469,375
Milwaukee WI Loc Dist Heating Fac Rev WI Elec Pwr Co Proj
AMT+++ 6.85% 10/1/2021 Aa1 500 530,000
7
<PAGE>
Statement of Net Assets
National Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Monroe Cnty MI Econ Dev Corp Oblig Detroit Edison Ser AA
FGIC+ 6.95% 9/1/2022 AAA $ 1,000 $ 1,172,500
Nebraska Pub Pwr Dist Rev Ser A FSA+ 51/8% 1/1/2015 AAA 975 921,375
North Carolina Eastern Muni Pwr Agy Pwr Sys Rev Ser G
ACA+ 53/4% 12/1/2016 A 5,000 5,068,750
North Carolina Muni Pwr Agy No 1 Catawba Elec Rev
ACA+ 5.00% 1/1/2015 A 5,950 5,451,688
Salt River Proj AZ Agric Imp Pwr Dist Elec Sys Rev Ser C Aa2 3,000 2,681,250
5.00% 1/1/2025
Salt River Proj AZ Agric Impt Pwr Dist Elec Sys Rev Ser A Aa2 3,900 3,861,000
5 1/2% 1/1/2019
Snohomish Cnty WA Pub Util Dist #1 Elec Rev RIBs AAA* 5,000 4,881,250
MBIA+ 7.51% 1/1/2024++
South Carolina St Pub Svc Auth Rev Ser A MBIA+ 5 1/2% 1/1/2022 AAA 1,000 962,500
Western Generation Agy OR Rev Wauna Cogeneration Ser B
AMT+++ 7.40% 1/1/2016 BBB* 1,500 1,591,875
Total 35,808,188
===================================================================================================================================
Prerefunded 16.00% Amarillo TX Hlth Fac Corp Reg RIBs FSA+ 9.15% 1/3/2022++ AAA 4,050 4,581,562
Anne Arundel Cnty MD Cons Gen Impt 6.30% 8/1/2014 AAA 2,000 2,190,000
Anne Arundel Cnty MD Cons Gen Impt 6.30% 8/1/2015 AAA 1,000 1,095,000
Anne Arundel Cnty MD Cons Wtr & Swr 6.30% 8/1/2023 AAA 505 552,975
Chattanooga Hamilton Cnty TN Hosp Auth Rev Ser B RIBs
FSA+ 10.03% 5/25/2021++ AAA 3,500 3,920,000
Clermont Cnty OH Hosp Fac Rev Mercey Hlth Ser A Prerefunded
AMBAC+ 7 1/2% 9/1/2019 AAA 285 302,456
Cobb Cnty GA Kennestone Hosp Auth Rev Ctfs Ser 86A ETM
MBIA+ Zero Coupon 8/1/2015 AAA 1,000 380,000
Cumberland Cnty NC Ctfs Partn Civic Ctr Proj Ser A
AMBAC+ 6.40% 12/1/2019 AAA 2,800 3,087,000
Cumberland Cnty NC Ctfs Partn Civic Ctr Proj Ser A
AMBAC+ 6.40% 12/1/2024 AAA 500 551,250
District of Columbia Rev Catholic Univ America
CONNIE LEE+ 6.45% 10/1/2023 AAA 1,950 2,123,062
District of Columbia Rev RIBs 9.15% 4/25/2022++ AAA 7,750 8,815,625
Fulton Cnty GA Hosp Auth Rev Ctfs Northside Hosp Ser B
MBIA+ 6.60% 10/1/2011 AAA 2,000 2,165,000
Fulton Cnty GA Hsg Auth Multi Fam Hsg Rev Concorde Pl Ser A
AMT+++ 6 3/8% 1/1/2027 AAA 2,900 3,161,000
Glendale AZ Dev Auth Ed Fac Rev Amer Graduate Sch Intl
CONNIE LEE+ 7 1/8% 7/1/2020 AAA 1,000 1,135,000
Indiana St Ed Fac Auth Rev 6.65% 3/1/2019 AAA* 860 944,925
Indiana Univ Rev 10 1/8% 7/1/2010 AAA 710 779,225
Kansas City MO Arpt Rev Gen Impt Ser B FSA+ 6 7/8% 9/1/2014 AAA 2,550 2,833,687
Massachusetts St Hlth & Ed Fac VY Regl Hlth Sys Issue Ser B
8.00% 7/1/2018 Aaa 500 525,330
Massachusetts St Wtr Res Auth Ser A 6.00% 4/1/2020 AAA 4,500 4,550,310
Met Govt Nashville & Davidson Cnty TN Wtr & Swr Rev RIBs
AMBAC+ 8.47% 1/1/2022++ AAA 10,750 11,959,375
Michigan St Trunk Line Ser A MBIA+ 5 1/2% 10/1/2021 AAA 1,000 1,033,750
Minneapolis & St Paul MN Hsg & Redev Auth Hlth Care Sys Ser A
MBIA+ 6 3/4% 8/15/2014 AAA 1,300 1,357,044
Montgomery AL Med Clinic Brd Hlth Care Fac Rev 7.00% 3/1/2015 AAA* 445 461,687
Norfolk VA Ind Dev Auth Rev Childrens Hosp Kings Grp
AMBAC+ 6 1/2% 6/1/2021 AAA 650 676,813
Ohio St 6.20% 8/1/2013 AAA 750 819,375
Phoenix Ariz Civic Impt Corp Wastewtr Sys Lease Rev 6.00% 7/1/2007 AAA 1,400 1,503,250
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser S 6 1/2% 7/1/2022 AAA 150 161,250
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser T 6 5/8% 7/1/2018 AAA 372 401,166
8
<PAGE>
Statement of Net Assets
National Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Elec Pwr Auth Pwr Rev RIBs FSA+ 8.41% 7/1/2023++ AAA $ 2,500 $ 2,784,375
Spartanburg SC Wtr Wks Rev FGIC+ 6 1/8% 6/1/2026 AAA 5,000 5,431,250
Uintah Cnty UT Poll Ctrl Rev Natl Rural Util Dsrt Ser 84F 2
10 1/2% 6/15/2014 Aaa 1,000 1,101,250
University NM Tech Dev Corp Lease Rev Univ Ctr Res Ser A
MBIA+ 6.55% 8/15/2025 AAA 1,410 1,556,288
Vermont Ed & Hlth Bldgs Fin Agy Rev St Michaels College Proj
7.05% 10/1/2016 AAA 2,000 2,185,000
Wayne St Univ MI Univ Rev AMBAC+ 5.65% 11/15/2015 AAA 4,785 5,048,175
Weber Cnty UT Mun Bldg Auth Lease Rev ASSET GTY+ 7 1/2% 12/15/2019 AAA 3,000 3,457,500
Wisconsin Ctr Dist WI Tax Rev RIBs 7.17% 12/15/2027++ AAA* 10,500 11,878,125
Total 95,509,080
===================================================================================================================================
Solid Waste .16% Cobb Cnty GA Solid Waste Mgmt Auth Rev AMT+++ 6.40% 1/1/2015 AAA 900 964,125
===================================================================================================================================
Transportation 7.94% Albuquerque NM Arpt Rev Ser A AMBAC+ AMT+++ 6.60% 7/1/2016 AAA 2,400 2,544,984
Kansas St Dept Transn Hwy Rev 5 1/4% 9/1/2019 AA+ 3,000 2,865,000
Maryland St Ctfs Partn Aviation Admin Fac AMT+++ 5.00% 5/1/2022 AA 6,075 5,520,656
Maryland St Ctfs Partn Aviation Admin Fac AMT+++ 5.00% 5/1/2026 AA 3,540 3,168,300
Massachusetts Bay Transn Auth Gen Transn Sys Ser A AAA 2,465 2,095,250
MBIA+ 4 3/4% 3/1/2021
Massachusetts St Port Auth PFC Ser A FSA+ 5 1/8% 7/1/2017 AAA 500 465,625
Massachusetts St Tpk Auth Met Hwy Sys Rev Sub Ser A
AMBAC+ 5.00% 1/1/2039 AAA 1,000 851,250
New Jersey Econ Dev Auth Rev Transn Proj Sublease Ser A
FSA+ 5.00% 5/1/2018 AAA 1,100 1,016,125
Pensacola FL Arpt Rev Ser A MBIA+ AMT+++ 6 1/8% 10/1/2018 AAA 1,000 1,046,250
Pocahontas Pkwy Assoc VA Toll Rd Rev Cap Apprec Ser B
ACA+ Zero Coupon 8/15/2017 A 5,500 1,842,500
Port Auth NY & NJ Cons 114th Ser 4 3/4% 8/1/2033 AA- 1,750 1,437,188
Port Auth NY & NJ Cons 70th Ser AMT+++ 7 1/4% 8/1/2025 AA- 500 515,750
Port Auth NY & NJ RIBs 5.55% 8/1/2033++ AA* 5,000 3,418,750
Port Kalama WA Rev Ser B AMT+++ 5 5/8% 12/1/2015 Baa1 1,025 1,009,625
Port Portland OR Arpt Rev Portland Intl Arpt Ser B
AMBAC+ AMT+++ 5 1/2% 7/1/2018 AAA 1,800 1,737,000
Santa Rosa Bay FL Brdg Auth Rev ACA+ 6 1/4% 7/1/2028 A 11,500 12,089,375
Santa Rosa Bay FL Brdg Auth Rev 6 1/4% 7/1/2028 BBB- 2,140 2,193,500
Virginia St Transn Brd Rev US Route 58 Corridor Dev Ser B Aa2 3,675 3,619,875
5 1/2% 5/15/2018
Total 47,437,003
===================================================================================================================================
Water/Sewer 6.31% Albuquerque NM Jt Wtr & Swr Sys Rev Ser A AMBAC+ 5.00% 7/1/2004*** AAA 2,880 2,872,800
Arizona Wtr Infrastructure Wtr Quality Ser A 5 5/8% 10/1/2014 Aa2 1,110 1,122,487
Arizona Wtr Infrastructure Wtr Quality Ser A 5 3/8% 10/1/2015 Aa2 1,330 1,306,725
Arizona Wtr Infrastructure Wtr Quality Ser A 5 1/2% 10/1/2016 Aa2 1,335 1,321,650
Arizona Wtr Infrastructure Wtr Quality Ser A 5 1/2% 10/1/2017 Aa2 1,355 1,334,675
Boston MA Wtr & Swr Commn Rev Sr Ser D FGIC+ 5.00% 11/1/2028 AAA 1,240 1,074,150
Bucks Cnty PA Wtr & Swr Auth Neshaminy Interceptor Swr Sys
AMBAC+ 5.60% 6/1/2019 Aaa 2,260 2,223,275
Bucks Cnty PA Wtr & Swr Auth Neshaminy Interceptor Swr Sys
AMBAC+ 5 1/2% 6/1/2020 Aaa 1,355 1,317,738
California Statewide Cmntys Pooled Fin Prog Ser B AAA 1,000 1,001,250
FSA+ 5.70% 10/1/2024
Charlotte NC Wtr & Swr Sys Rev 5 1/4% 6/1/2024 AA+ 1,500 1,404,375
Colorado Wtr Res & Pwr Dev Drinking Wtr Rev Ser A 5.00% 9/1/2019 AAA 125 114,062
Colorado Wtr Res Pwr Dev Auth Clean Wtr Rev Ser A 5 1/4% 9/1/2019 AAA 865 821,750
DeKalb Cnty GA Wtr & Swr 5.00% 10/1/2028 Aa2 500 440,000
Fort Smith AR Wtr & Swr Rev AMBAC+ 5.65% 10/1/2019 AAA 1,000 995,000
9
<PAGE>
Statement of Net Assets
National Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Hallsdale Powell Util Dist Knox Cnty TN Wtr & Swr Rev
AMBAC+ 5.00% 4/1/2019 AAA $ 230 $ 208,725
Hamilton OH Wtr Wks Rev Ser A MBIA+ 6.30% 10/15/2021 AAA 1,000 1,038,750
Houston TX Wtr & Swr Sys Rev Cap Apprec Ser A
FSA+ Zero Coupon 12/1/2028 AAA 30,000 5,362,500
Kansas St Dev Fin Auth Rev Pub Wtr Supply Revolving Ln-2 AA 1,600 1,394,000
4 3/4% 4/1/2018
Louisville & Jefferson Cnty KY Ser A FGIC+ 5.00% 5/15/2022 AAA 1,295 1,149,766
New York City Muni Wtr Fin Wtr & Swr Rev Ser A FGIC+ 4 3/4% 6/15/2031 AAA 1,250 1,037,500
New York City Muni Wtr Fin Wtr & Swr Rev Ser A FGIC+ 5 1/2% 6/15/2032 AAA 5,425 5,164,329
Scottsdale AZ Wtr & Swr Rev Proj of 1989 Ser E 4 1/2% 7/1/2020 Aa1 2,000 1,680,000
Scottsdale AZ Wtr & Swr Rev Proj of 1989 Ser E 4 1/2% 7/1/2023 Aa1 1,500 1,235,625
Texas St Wtr Dev Brd 7.15% 8/1/2035 Aa1 1,915 2,072,988
Total 37,694,120
===================================================================================================================================
Total Municipal Bonds 103.19% (Cost $630,279,685) 616,083,245
===================================================================================================================================
Other Assets, Less Liabilities (3.19)%
- -----------------------------------------------------------------------------------------------------------------------------------
Short-term Investment Texas St Tax & Rev Antic Nts Ser A 4 1/2% 8/31/2000 AAA* 17,200 17,329,000
(Cost $17,318,935)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (36,349,262)
===================================================================================================================================
Total Other Assets, Less Liabilities (19,020,262)
===================================================================================================================================
Net Assets 100.00% $597,062,983
===================================================================================================================================
Class A Shares-Net asset value ($542,601,159/50,268,348 shares outstanding) $10.79
Class A Shares-Maximum offering price (net asset value plus sales charge
of 3.25% of the offering price) $11.15
Class B Shares-Net asset value ($16,052,764/1,483,547 shares outstanding) $10.82
Class C Shares-Net asset value ($38,409,060/3,553,730 shares outstanding) $10.81
Ratings are unaudited.
* This investment has not been rated by an independent ratings service but
is, in Lord Abbett's opinion, of comparable quality.
** This investment has been rated by Fitch Investors Service only.
*** When-issued security.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency. See page 32 for Glossary of Terms.
++ 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, 1999. See page 1 for additional important information.
+++ Income from these investments may be subject to the Alternative Minimum
Tax.
See Notes to Financial Statements.
Statement of Net Assets
New York Tax-Free Income fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Education 11.79% Hempstead Town NY Ind Dev Agy Civic Fac Rev Hofstra Univ Proj
MBIA+ 5.80% 7/1/2015 AAA $ 750 $ 771,562
New York St Dorm Auth Rev City Univ Ser C FGIC+ 7.00% 7/1/2014 AAA 3,240 3,370,054
New York St Dorm Auth Rev City Univ Ser U MBIA+ 6.45% 7/1/2005 AAA 300 327,375
New York St Dorm Auth Rev Colgate Univ MBIA+ 6.00% 7/1/2016 AAA 1,000 1,060,000
New York St Dorm Auth Rev Cornell Univ Ser A 7 3/8% 7/1/2020 Aa2 5,075 5,281,756
New York St Dorm Auth Rev Long Island Univ ASSET GTY+ 5 1/8% 9/1/2023 AA 500 448,125
New York St Dorm Auth Rev New York Univ Ser A AAA 2,000 1,977,500
AMBAC+ 5 3/4% 7/1/2015**
New York St Dorm Auth Rev Sp Act Sch Dist Prog MBIA+ 6.00% 7/1/2016 AAA 1,400 1,452,500
New York St Dorm Auth Rev St Univ Ed Fac Ser A MBIA+ 4 3/4% 5/15/2025 AAA 5,250 4,423,125
New York St Dorm Auth Rev St Univ Ed Fac 5 1/2% 5/15/2026 A 75 70,594
New York St Dorm Auth Rev State Univ Ed Fac Ser A 5 1/4% 5/15/2021 A 1,025 950,687
10
<PAGE>
Statement of Net Assets
New York Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
New York St Dorm Auth Rev Univ Rochester Ser A 6.40% 7/1/2013 A+ $ 2,030 $ 2,177,175
New York St Dorm Auth Rev Univ Rochester Ser B 5 5/8% 7/1/2024 A+ 840 813,750
New York St Dorm Auth Rev Upstate Cmnty Colleges Ser A
5.00% 7/1/2028 A 7,000 6,037,500
Niagara Falls NY City Sch Dist Ctfs Partn High Sch Fac BBB- 1,000 905,000
5 3/8% 6/15/2028
Total 30,066,703
===================================================================================================================================
General Obligation 5.36% Bethlehem NY MBIA+ AMT+++ 7.20% 3/1/2022 AAA 1,080 1,192,050
Buffalo NY Gen Impt Ser A AMBAC+ 4 3/4% 2/1/2019 AAA 325 286,812
Puerto Rico Comwlth RIBs FSA+ 8.28% 7/1/2020++ AAA 12,000 12,195,000
Total 13,673,862
===================================================================================================================================
Healthcare 7.47% New York NY City Hlth & Hosp Corp Rev RIBs AMBAC+ 7.73% 2/15/2023++ AAA 6,300 6,000,750
New York St Dorm Auth Rev Hosp NY Hosp Med Ctr
AMBAC+ 5.60% 2/15/2039 AAA 1,000 956,250
New York St Dorm Auth Rev Mental Hlth Svcs Fac Ser B 5 3/4% 2/15/2010 A- 1,500 1,558,125
New York St Dorm Auth Rev Mental Hlth Svcs Fac Ser B 5 3/4% 2/15/2011 A- 1,385 1,428,281
New York St Dorm Auth Rev Mental Hlth Svcs Fac Ser B 5 3/4% 2/15/2012 A- 1,155 1,180,988
New York St Dorm Auth Rev Mental Hlth Svcs Fac Ser B 6.00% 8/15/2012 A- 1,460 1,542,125
New York St Dorm Auth Rev Mental Hlth Svcs Fac Ser D 6.00% 8/15/2021 A- 1,000 1,008,750
New York St Dorm Auth Rev Mental Hlth Svcs Fac Ser F
AMBAC+ 4 1/2% 8/15/2028 AAA 3,170 2,512,225
New York St Dorm Auth Rev Nurs Home Rosalind & Joseph
AMBAC+ 5.60% 2/1/2027 AAA 1,000 967,500
New York St Dorm Auth Rev Sarah Neuman Nursing Home
AMBAC+ 5.45% 8/1/2027 AAA 550 526,625
New York St Med Care Fac Fin Agy Rev 7.80% 2/15/2019 A- 355 362,476
New York St Med Care Fac Fin Agy Rev Montefiore Med Ser A
AMBAC+ 5 3/4% 2/15/2025 AAA 1,000 998,750
Total 19,042,845
===================================================================================================================================
Housing 3.86% New York St Mtg Agy Rev Home Owner Mtg Ser 44
AMT+++ 7 1/2% 4/1/2026 Aa2 2,495 2,632,225
New York St Mtg Agy Rev Home Owner Mtg Ser 67
AMT+++ 5.80% 10/1/2028 Aa2 500 490,000
New York St Mtg Agy Rev Home Owner Mtg Ser 70 5.40% 4/1/2022 Aa2 520 499,200
New York St Mtg Agy Rev Ser 41 A MBIA+ 6.45% 10/1/2014 AAA 2,000 2,105,000
New York St Urban Dev Corp Rev St Fac 5.70% 4/1/2020 BBB+ 4,150 4,118,875
Total 9,845,300
===================================================================================================================================
Industrial 4.70% New York NY City Ind Dev Agy Civic Fac Rev Light House Intl
MBIA+ 4 1/2% 7/1/2023 AAA 950 776,625
New York NY City Ind Dev Agy Civic Fac Rev Light House Intl
MBIA+ 4 1/2% 7/1/2033 AAA 5,575 4,383,344
New York NY City Ind Dev Agy Civic Fac Rev New Sch Ser A
MBIA+ 53/4% 9/1/2015 AAA 1,335 1,356,694
New York St Urban Dev Corp Rev Correctl Fac Svc Contrct Ser A
5.00% 1/1/2028 BBB+ 2,710 2,340,762
New York St Urban Dev Corp Rev Pine Barrens 5 1/4% 4/1/2012 BBB+ 1,765 1,731,906
Suffolk Cnty NY Ind Dev Agy Civic Fac Rev S Cntry Library
MBIA+ 4 3/4% 1/1/2019 Aaa 500 436,875
Yonkers NY Ind Dev Agy Rev Michael Malotz Skilled
MBIA+ 5.65% 2/1/2039 AAA 1,000 965,000
Total 11,991,206
===================================================================================================================================
Miscellaneous 3.71% New York City Transitional Fin Auth Rev Future Tax Ser C AA 1,300 1,239,875
5 1/2% 5/1/2025
New York St Dorm Auth Lease Office Fac Audit & Control
MBIA+ 5 1/2% 4/1/2023 AAA 440 425,150
11
<PAGE>
Statement of Net Assets
New York Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
New York St Dorm Auth Lease Rev Cap Apprec Court Fac
Zero Coupon 8/1/2019 Aa1 $ 3,700 $ 1,193,250
New York St Dorm Auth Lease Rev Cap Apprec Court Fac
Zero Coupon 8/1/2021 Aa1 4,000 1,135,000
New York St Dorm Auth Lease Rev Cap Apprec Court Fac
Zero Coupon 8/1/2022 Aa1 3,165 846,637
New York St Dorm Auth Rev Office Gen Svcs 5.00% 4/1/2028 BBB+ 1,000 862,500
Virgin Islands Pub Fin Auth Rev Sub Lien Fd Ln Nts Ser E
5 7/8% 10/1/2018 BBB* 1,850 1,796,813
Virgin Islands Pub Fin Auth Rev Sub Lien Fd Ln Nts Ser E
6.00% 10/1/2022 BBB* 2,000 1,970,000
Total 9,469,225
===================================================================================================================================
Pollution 10.75% Essex Cnty NY Ind Dev Agy Poll Ctrl Rev Intl Paper Ser B A3 305 299,281
5.55% 1/1/2014
New York St Enr Res & Dev Auth Poll Ctrl Rev Niagara Mohawk Ser A
FGIC+ 7.20% 7/1/2029 AAA 11,750 13,027,813
New York St Enr Res & Dev Auth Poll Ctrl Rev Rchstr Gas/Elec Ser A
MBIA+ AMT+++ 5.95% 9/1/2033 AAA 1,000 1,013,750
New York St Enr Res & Dev Auth Poll Ctrl Rev Ser 43
RIBs MBIA+ AMT+++ 7.75% 9/1/2033++ Aaa 2,500 2,562,500
New York St Enviro Fac Poll Ctrl Rev St Wtr Revolving Fd Ser A
7 1/2% 6/15/2012 Aa1 8,000 8,329,040
New York St Enviro Fac Poll Ctrl Rev St Wtr Ser E 6 7/8% 6/15/2014 Aa1 1,985 2,173,575
Total 27,405,959
===================================================================================================================================
Power 13.90% Long Island Pwr Auth NY Elec Sys Rev Gen Ser A 5 1/4% 12/1/2026 A- 270 243,337
New York St Enr Res & Dev Auth Fac Rev Con Edison Inc Ser A
MBIA+ AMT+++ 7 1/8% 12/1/2029 AAA 2,500 2,781,250
New York St Enr Res & Dev Auth Gas Fac Rev Brklyn Un Ser A
MBIA+ AMT+++ 6 3/4% 2/1/2024 AAA 13,000 13,715,000
New York St Enr Res & Dev Auth Gas Fac Rev Brklyn Un Ser B
RIBs AMT+++ 9.56% 7/1/2026++ A1 4,000 4,560,000
Puerto Rico Elec Pwr Auth Pwr Rev Ser EE 4 3/4% 7/1/2024 BBB+ 9,000 7,638,750
Puerto Rico Elec Pwr Auth Pwr Rev Ser T RIBs FSA+ 9.12% 7/1/2018++ AAA 3,500 4,160,625
Puerto Rico Elec Pwr Auth Pwr Rev Ser U 6.00% 7/1/2014 BBB+ 2,250 2,359,688
Total 35,458,650
===================================================================================================================================
Prerefunded 21.99% Dutchess Cnty NY Res Recovery Agy Rev Solid Waste Mgmt Ser A
FGIC+ 7 1/2% 1/1/2009 AAA 2,200 2,263,206
Metropolitan Transn Auth NY Commuter Fac Rev Ser A
FGIC+ 6.00% 7/1/2021 AAA 4,000 4,360,000
Metropolitan Transn Auth NY Commuter Fac Rev Ser A
FGIC+ 6.10% 7/1/2026 AAA 2,000 2,192,500
Metropolitan Transn Auth NY Tran Fac Rev Ser A FSA+ 6.10% 7/1/2026 AAA 1,500 1,644,375
New York St Enviro Fac Poll Ctrl Rev St Wtr Ser E 6 7/8% 6/15/2014 AAA 2,795 3,105,944
New York NY City Muni Wtr Fin Auth Wtr & Swr Sys Rev Ser A
FGIC+ 6 1/4% 6/15/2021 AAA 3,500 3,574,375
New York St Dorm Auth Rev City Univ 3rd Gen Res Ser 2
MBIA+ 6 7/8% 7/1/2014 AAA 5,650 6,320,938
New York St Dorm Auth Rev Manhattan Eye Ear Throat Hosp
5 3/8% 7/1/2012 AAA 1,500 1,567,500
New York St Dorm Auth Rev Upstate Cmnty Colleges Ser A
6.20% 7/1/2015 AAA 1,000 1,096,250
New York St Loc Govt Assist Corp Ser A 6 1/2% 4/1/2020 Aaa 5,000 5,268,750
New York St Med Care Fac Fin Agy Rev 7 1/2% 2/15/2021 Aaa 10,000 10,637,500
New York St Med Care Fac Fin Agy Rev 7 1/2% 2/15/2021 AAA 3,955 4,147,806
Puerto Rico Comwlth Aqueduct & Swr Auth Rev 10 1/4% 7/1/2009 AAA 1,000 1,283,750
Puerto Rico Tel Auth Rev RIBs MBIA+ 7.27% 1/16/2015++ AAA 700 766,500
12
<PAGE>
Statement of Net Assets
New York Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
United Nations Dev Corp NY Rev Sr Lien Ser A 6.00% 7/1/2026 Aaa $ 4,300 $ 4,617,125
United Nations Dev Corp NY Rev Sub Lien Ser B 6 1/4% 7/1/2026 Aaa 3,000 3,243,750
Total 56,090,269
===================================================================================================================================
Transportation 11.40% Metropolitan Transn Auth NY Commuter Fac Rev Ser A
FGIC+ 6.00% 7/1/2016 AAA 2,000 2,062,500
Metropolitan Transn Auth NY Dedicated Tax Fd Ser A
FGIC+ 4 3/4% 4/1/2028 AAA 2,500 2,078,125
Metropolitan Transn Auth NY Dedicated Tax Fd Ser A
FSA+ 5.00% 4/1/2029 AAA 2,775 2,428,125
Metropolitan Transn Auth NY Svc Contract Transn Fac Ser O
5 3/4% 7/1/2008 BBB+ 1,000 1,045,000
Metropolitan Transn Auth NY Tran Fac Rev Svc Contrct Ser R
5 1/2% 7/1/2017 BBB+ 1,000 967,500
Niagra NY Frontier Auth Arpt Buffalo Niagra Intl Arpt Ser B
MBIA+ 5 1/2% 4/1/2019 AAA 750 730,312
Port Auth NY & NJ Cons 106th Ser AMT+++ 6.00% 7/1/2015 AA- 350 364,438
Port Auth NY & NJ Cons 116th Ser FGIC+ 4 1/4% 10/1/2026 AAA 6,350 4,905,375
Port Auth NY & NJ Cons 67th Ser 6 7/8% 1/1/2025 AA- 1,000 1,016,150
Port Auth NY & NJ Sp Oblig Rev 5th Installment Sp Proj Ser 4
AMT+++ 6 3/4% 10/1/2019 BBB* 2,970 3,111,075
Port Auth NY & NJ Sp Oblig Rev Sp Proj JFK Intl Air Term 6
MBIA+ AMT+++ 5 3/4% 12/1/2025 AAA 10,345 10,189,825
Puerto Rico Comwlth Hwy & Transn Auth Transn Rev Ser A
4 3/4% 7/1/2038 A 200 164,000
Total 29,062,425
===================================================================================================================================
Water/Sewer 3.94% Buffalo NY Muni Wtr Fin Auth Wtr Sys Rev FGIC+ 5 3/4% 7/1/2021 AAA 500 505,000
New York City Muni Wtr Fin Auth Wtr & Swr Sys Rev Ser B
FSA+ 5.00% 6/15/2029 AAA 5,300 4,637,500
New York NY City Muni Wtr Fin Auth Wtr & Swr Sys Rev Ser B
5 3/4% 6/15/2029 A1 5,000 4,900,000
Total 10,042,500
===================================================================================================================================
Total Municipal Bonds 98.87% (Cost $254,013,359) 252,148,944
===================================================================================================================================
Cash and Receivables, Net of Liabilities 1.13% 2,883,762
===================================================================================================================================
Net Assets 100.00% $255,032,706
====================================================================================================================================
Class A Shares-Net asset value ($248,455,556/23,639,722 shares outstanding) $10.51
Class A Shares-Maximum offering price (net asset value plus sales
charge of 3.25% of the offering price) $10.86
Class C Shares-Net asset value ($6,577,150/625,747 shares outstanding) $10.51
Ratings are unaudited.
* This investment has not been rated by an independent ratings service but
is, in Lord Abbett's opinion, of comparable quality.
**When-issued security.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency. See page 32 for Glossary of Terms.
++ 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, 1999. See page 1 for additional important information.
+++ Income from these investments may be subject to the Alternative Minimum
Tax. See Notes to Financial Statements.
13
<PAGE>
Statement of Net Assets
Texas Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Education 11.48% Connecticut St Hlth & Ed Fac Auth Rev Fairfield Univ Ser I
MBIA+ 5 3/8% 7/1/2022 AAA $ 500 $ 483,125
District of Columbia Rev Catholic Univ America Proj
AMBAC+ 5 5/8% 10/1/2029 AAA 1,250 1,200,000
Houston TX Higher Ed Fin Corp Higher Ed Rev Rice Univ Ser A
5 3/8% 11/15/2029 AAA 3,435 3,233,193
Texas St Higher Ed Coord Brd College Student Ln Rev Sr Lien
AMT+++ 7.70% 10/1/2025 A 455 469,219
University TX Univ Rev Fin Sys Ser A 5 3/8% 8/15/2017 AAA 3,480 3,353,850
University TX Univ Rev Fin Sys Ser B 5 3/8% 8/15/2017 AAA 1,000 963,750
Total 9,703,137
====================================================================================================================================
General Obligation 26.96% Azle TX Indpt Sch Dist Ser A 6.00% 2/15/2022 Aaa 250 251,092
Brazosport TX Indpt Sch Dist 5.00% 2/15/2015 AAA 350 329,000
Harlingen TX Cons Indpt Sch United TX Sch Bd 5.65% 8/15/2029 AAA 6,000 5,820,000
Keller TX Indpt Sch Dist 4 3/4% 8/15/2020 AAA 1,000 855,000
Keller TX Indpt Sch Dist 4 3/4% 8/15/2022 AAA 1,100 930,875
Leander TX Indpt Sch Dist 5 3/8% 8/15/2020 AAA 1,000 951,250
Midlothian TX Indpt Sch Dist 6.00% 2/15/2030 Aaa 1,000 1,000,000
Port Beaumont TX Nav Dist Ref & Impt Ser A AMBAC+ 5.00% 3/1/2018 Aaa 1,080 980,100
Port Beaumont TX Nav Dist Ser A FGIC+ 4 3/4% 3/1/2018 Aaa 500 434,375
Puerto Rico Comwlth Pub Impt 4 1/2% 7/1/2023 A 1,000 816,250
South San Antonio TX Indpt Sch Dist 5 3/4% 8/15/2024 AAA 1,500 1,481,250
Texas St RIBs 6.20% 9/30/2011++ Aa1 5,000 5,425,000
Texas St Ser B RIBs 8.52% 9/30/2011++ Aa1 3,000 3,502,500
Total 22,776,692
====================================================================================================================================
Healthcare 3.41% Denton Cnty TX Hlth Fac Dev Corp Rev Lutheran Social Svcs
7 1/2% 8/15/2015 BB** 1,000 1,040,000
Georgetown TX Hlth Fac Dev Rev Wesleyan Homes Inc Proj
ACA+ 5 3/8% 8/15/2028 A 500 456,875
Texarkana TX Hlth Fac Wadley Regl Med Ctr Ser B MBIA+ 6.00% 10/1/2019 AAA 1,335 1,381,725
Total 2,878,600
====================================================================================================================================
Housing 2.95% Texas St Vets Hsg Assistance Prog Ser B FHA+ AMT+++ 6.10% 6/1/2031 Aa1 2,500 2,496,875
====================================================================================================================================
Industrial 12.99% Brazos River Auth TX Rev AMBAC+ 5 1/8% 5/1/2019 AAA 2,000 1,835,000
Orange Cnty TX Nav & Port Dist Indl Dev Rev North Star Steel
6 3/8% 2/1/2017 A+ 2,400 2,511,000
Texas City TX Ind Dev Corp Marine Term Rev Arco Pipe Line
7 3/8% 10/1/2020 A 5,500 6,627,500
Total 10,973,500
====================================================================================================================================
Miscellaneous 1.17% Austin TX Hotel Occupancy Tax Rev Sub Lien AMBAC+ 5.80% 11/15/2029 AAA 1,000 991,250
====================================================================================================================================
Pollution 3.21% Harris Cnty TX Ind Dev Corp Marine Term & Wtr Poll Ctrl BBB+ 1,500 1,573,125
6 5/8% 2/1/2024
Trinity River Auth TX Poll Ctrl Rev Texas Instruments Inc
AMT+++ 6.20% 3/1/2020 A 1,105 1,138,150
Total 2,711,275
====================================================================================================================================
Power 3.41% Lubbock TX Elec Lt & Pwr Sys Rev AMBAC+ 4 1/4% 4/15/2018 AAA 460 368,000
San Antonio TX Elec & Gas 5.60% 2/1/2014 Aa1 2,500 2,509,375
Total 2,877,375
====================================================================================================================================
Prerefunded 15.10% Austin TX Util Sys Rev Ser A 8.00% 11/15/2016 AAA 1,000 1,060,000
Bexar Cnty TX Hlth Fac Dev Corp Hosp Rev Baptist Mem Sys
MBIA+ 7 1/2% 8/15/2010 AAA 750 788,288
Dallas Cnty TX Flood Ctrl Distano 1 9 1/4% 4/1/2010 Aaa 1,460 1,735,575
14
<PAGE>
Statement of Net Assets
Texas Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Harris Cnty TX Toll Rd Sub Lien Ser A 6.10% 8/15/2016 AAA $2,640 $ 2,857,800
Houston TX Wtr & Swr Sys Rev Jr Lien Ser A AMBAC+ 6 1/2% 12/1/2021 AAA 2,665 2,841,556
Houston TX Wtr & Swr Sys Rev Jr Lien Ser A AMBAC+ 6 1/2% 12/1/2021 AAA 335 357,194
Houston TX Wtr & Swr Sys Rev Prior Lien MBIA+ 7.40% 12/1/2018 AAA 1,000 1,060,000
Puerto Rico Comwlth 6 1/2% 7/1/2023 AAA 750 828,750
Texas St Tpk Auth Rev Jr Lien Houston Ship Chan 12 5/8% 1/1/2020 AAA 1,000 1,228,750
Total 12,757,913
====================================================================================================================================
Transportation 8.76% Dallas-Fort Worth TX Regl Arpt Jt Dallas/Ft Worth Intl
FGIC+ 5 5/8% 11/1/2015 AAA 4,000 3,985,000
Dallas-Fort Worth TX Regl Arpt Jt Dallas/Ft Worth Intl
MBIA+ AMT+++ 5 3/4% 11/1/2024 AAA 2,500 2,521,875
North TX Thruway Auth Dallas Ser A FGIC+ 5.00% 1/1/2020 AAA 1,000 896,250
Total 7,403,125
====================================================================================================================================
Water/Sewer 13.05% Amarillo TX Wtrwks/Swr Sys 5 1/4% 4/1/2014 Aa2 550 530,750
Amarillo TX Wtrwks/Swr Sys 5 1/4% 4/1/2015 Aa2 445 426,644
Houston TX Wtr & Swr Sys Rev Cap Apprec Jr Lien Ser A
FSA+ Zero Coupon 12/1/2026 AAA 5,795 1,180,731
Nueces River Auth TX Wtr Supp Rev Fac Corpus Christi Lake
FSA+ 5 1/2% 3/1/2027 AAA 6,500 6,223,750
Texas St Wtr Dev Brd 7.15% 8/1/2035 Aa1 1,600 1,732,000
Texas Wtr Dev Brd Rev St Revolving Fd Sr Lien Ser B 5 1/8% 7/15/2018 AAA 1,000 932,500
Total 11,026,375
====================================================================================================================================
Total Municipal Bonds 102.49% (Cost $86,513,894) 86,596,117
====================================================================================================================================
Other Assets, Less Liabilities (2.49)%
====================================================================================================================================
Cash 2,651,819
====================================================================================================================================
Receivable for: Interest 1,575,277
Securities sold 1,078,310
Capitalstock sold 2,142
Total Other Assets 5,307,548
====================================================================================================================================
Payable for: Securities purchased 6,873,015
Dividends 312,377
Capital stock reacquired 94,562
Other 133,008
Total Liabilities 7,412,962
====================================================================================================================================
Cash and Receivables, Net of Liabilities (2,105,414)
====================================================================================================================================
Net Assets 100.00% $84,490,703
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value ($84,490,703 / 8,849,633 shares outstanding) $9.55
Maximum offering price (net asset value plus sales charge of 3.25% of the offering price) $9.87
Ratings are unaudited.
* This investment has not been rated by an independent ratings service but
is, in Lord Abbett's opinion, of comparable quality.
** This investment has been rated by Fitch Investors Service only.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency. See page 32 for Glossary of Terms.
++ 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, 1999. See page 1 for additional important information.
+++ Income from these investments may be subject to the Alternative Minimum
Tax. See Notes to Financial Statements.
15
<PAGE>
Statement of Net Assets
New Jersey Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Education 3.84% New Jersey Econ Dev Auth Rev Princeton Jr Sch Inc Proj 7.00% 5/1/2020 BBB* $ 1,800 $ 1,847,250
New Jersey St Ed Fac Auth Rev Princeton Univ Ser A 5.00% 7/1/2029 AAA 2,000 1,797,500
New Jersey St Ed Fac Auth Rev Princeton Univ Ser B 5 1/8% 7/1/2019 AAA 500 469,375
New Jersey St Ed Fac Auth Rev Seton Hall Univ Proj
AMBAC+ 5.00% 7/1/2018 AAA 1,000 916,250
New Jersey St Ed Fac Auth Rev Trenton State College Ser E
AMBAC+ 6.00% 7/1/2019 AAA 1,190 1,231,650
Total 6,262,025
====================================================================================================================================
Finance .52% Puerto Rico Muni Fin Agy Ser A FSA+ 5 1/2% 7/1/2021 AAA 850 843,625
====================================================================================================================================
General Obligation 15.00% Keansburg NJ 6.80% 12/1/2010 Aa2 1,000 1,077,500
Metuchen NJ Sch Dist FGIC+ 5.15% 9/15/2020 AAA 1,010 945,612
Millburn Township NJ Sch Dist 5.35% 7/15/2018 Aaa 1,050 1,036,875
Millburn Township NJ Sch Dist 5.35% 7/15/2019 Aaa 900 883,125
Morristown NJ FSA+ 6 1/2% 8/1/2019 AAA 3,440 3,728,100
Paterson NJ FSA+ 9.30% 2/15/2004 AAA 4,200 5,008,500
Puerto Rico Comwlth Pub Impt 4 1/2% 7/1/2023 A 1,500 1,224,375
Puerto Rico Comwlth RIBs MBIA+ 8.08% 7/1/2008++ AAA 5,000 5,356,250
Union Cnty NJ 5.00% 2/1/2015 Aaa 1,770 1,679,288
Union Cnty NJ Gen Impt 5 1/8% 2/1/2018 Aaa 1,450 1,377,500
Winslow Twp NJ Sch Dist FGIC+ 5.20% 8/1/2017 AAA 1,455 1,400,438
Winslow Twp NJ Sch Dist FGIC+ 5.20% 8/1/2018 AAA 800 767,000
Total 24,484,563
====================================================================================================================================
Healthcare 14.45% Camden Cnty NJ Impt Auth Rev Hlth Care Proj Cooper
ACA+ 6.00% 2/15/2027 A 8,750 8,892,187
New Jersey Hlth Care Fac Fin Auth Rev St Barnabas Hlth Ser B
MBIA+ 5 1/4% 7/1/2014 AAA 1,000 973,750
New Jersey Hlth Care Fac Fin Auth Rev Cap Apprec St Barnabas Ser B
MBIA+ Zero Coupon 7/1/2022 AAA 1,130 300,862
New Jersey Hlth Care Fac Fin Auth Rev Hunterdon Med Ctr Ser A
AMBAC+ 7.00% 7/1/2020 AAA 5,000 5,175,700
New Jersey Hlth Care Fac Fin Auth Rev Meridian Hlth Sys Oblig Grp
FSA+ 5 1/4% 7/1/2029 AAA 1,100 1,021,625
New Jersey Hlth Care Fac Fin Auth Rev Spectrum For Living Ser B
FHA+ 6 1/2% 2/1/2022 AAA 890 927,825
New Jersey Hlth Care Fac Fin Auth Rev St Barnabas Hlth Ser C
MBIA+ 5.00% 7/1/2008** AAA 500 493,125
New Jersey Hlth Care Fac Fin Auth Rev St Barnabas Hlth Ser C
MBIA+ 5 1/4% 7/1/2018** AAA 1,000 928,750
New Jersey Hlth Care Fac Fin Auth Rev Unrefunded Bal Bayonne Hosp
FSA+ 6 1/4% 7/1/2012 AAA 1,370 1,471,038
New Jersey Econ Dev Auth Rev 1st Mtg Cadbury Corp Ser A
ACA+ 5 1/2% 7/1/2028 A 250 236,563
New Jersey Econ Dev Auth Rev RWJ Health Care Corp AAA 1,500 1,593,750
FSA+ 6 1/2% 7/1/2024
Puerto Rico Ind Tourist Ed Dr Pila Hosp Ser A FHA+ 6 1/4% 8/1/2032 AAA 500 515,625
Puerto Rico Ind Tourist Ed Mutuo Oblig Grp Ser A AAA 1,000 1,058,750
MBIA+ 6 1/4% 7/1/2024
Total 23,589,550
====================================================================================================================================
Housing 6.55% New Jersey Econ Dev Auth Rev Jewish Cmnty Hsg Corp Met Proj
5.90% 12/1/2031 Aa3 1,500 1,496,250
New Jersey St Hsg & Mtg Fin Agy Multi Fam Hsg Rev Ser A
FSA+ AMT+++ 5.15% 11/1/2030 AAA 3,800 3,467,500
New Jersey St Hsg & Mtg Fin Agy Rev Home Buyer Ser B
MBIA+ AMT+++ 7.90% 10/1/2022 AAA 4,730 4,836,425
New Jersey St Hsg & Mtg Fin Agy Rev Home Buyer Ser D
MBIA+ AMT+++ 7.70% 10/1/2029 AAA 530 541,925
16
<PAGE>
Statement of Net Assets
New Jersey Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Hsg Fin Corp Sing Fam Mtg Rev Portfolio 1 Ser B
GNMA+ 7.65% 10/15/2022 AAA $ 125 $ 129,177
Virgin Islands Hsg Fin Auth Sing Fam Rev Ser A
GNMA+ AMT+++ 6 1/2% 3/1/2025 AAA 215 221,719
Total 10,692,996
- ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 8.17% Atlantic City NJ Brd Ed Ctfs Partn MBIA+ 5.10% 5/1/2014 Aaa 1,135 1,088,181
East Orange NJ Brd Ed Ctfs Partn Cap Apprec FSA+ Zero Coupon 2/1/2026 AAA 750 160,313
Hamilton Township NJ Brd Ctfs Partn Ser B FSA+ 7.00% 12/15/2015 AAA 970 1,022,137
Middlesex Cnty NJ Impt Auth Rev Open Space Tr Fd 5 1/2% 9/15/2019 Aaa 2,000 1,972,500
Monmouth Cnty NJ Impt Auth Rev Govtl Ln MBIA+ 6.40% 12/1/2009 AAA 1,075 1,177,125
New Jersey Econ Dev Auth Rev Station Plaza Pk & Ride LP
AMT+++ 7.00% 7/1/2016 BBB* 4,245 4,505,006
New Jersey Sports & Exposition Auth St Contract Ser A
MBIA+ 4 1/2% 3/1/2024 AAA 4,125 3,413,438
Total 13,338,700
====================================================================================================================================
Pollution .34% Cape May Cnty NJ Ind Poll Ctrl Fin Auth Rev Atlantic City Ser B
MBIA+ 7.00% 11/1/2029 AAA 500 552,500
- -----------------------------------------------------------------------------------------------------------------------------------
Power 5.10% Puerto Rico Elec Pwr Auth Pwr Rev Ser T RIBs FSA+ 9.12% 7/1/2018++ AAA 7,000 8,321,250
- -----------------------------------------------------------------------------------------------------------------------------------
Prerefunded 23.96% Essex Cnty NJ Impt Auth Rev Orange Muni Util & Lease
MBIA+ 6.80% 7/1/2014 AAA 1,710 1,921,612
Hudson Cnty NJ Util Auth Util Sys Rev 10.00% 7/1/2011 AAA 1,000 1,145,000
New Jersey Hlth Care Fac Fin Auth Rev Mtg Cathedral Hlth Ser A
7 1/4% 2/15/2021 AAA 1,485 1,572,244
New Jersey Hlth Care Fac Fin Auth Rev Ocean Cnty Med Ctr
FSA+ 6 3/4% 7/1/2020 AAA 2,755 2,927,188
New Jersey Hlth Care Fac Fin Auth Rev Prerefunded Bayonne Hosp Oblig
FSA+ 6 1/4% 7/1/2012 AAA 230 250,700
New Jersey Hlth Care Fac Fin Auth Rev St Elizabeth Hosp Ser B
8 1/4% 7/1/2020 AAA 2,470 2,585,497
New Jersey Econ Dev Auth Rev Ed Testing Svc Ser A
MBIA+ 6.00% 5/15/2025 AAA 3,250 3,518,125
New Jersey Econ Dev Auth Rev Ed Testing Svc Ser B
MBIA+ 8.76% 5/15/2025 AAA 13,000 14,235,000
New Jersey Sports & Exposition Auth Monmouth Pk Ser A
8.00% 1/1/2025 AAA 1,000 1,166,250
North Brunswick Twp NJ Brd Ed 6.30% 2/1/2014 AAA 1,000 1,077,500
Pohatcong Township NJ Sch Dist FSA+ 5.95% 7/15/2023 AAA 650 705,250
Pohatcong Township NJ Sch Dist FSA+ 5.95% 7/15/2026 AAA 250 271,250
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser T 6 5/8% 7/1/2018 Aaa 283 305,416
Puerto Rico Elec Pwr Auth Pwr Rev RIBs FSA+ 8.41% 7/1/2023++ AAA 5,000 5,568,750
Puerto Rico Pub Bldg Auth Pub Ed & Hlth Fac Ser L 6 7/8% 7/1/2021 AAA 200 217,000
Puerto Rico Tel Auth Rev RIBs MBIA+ 7.27% 1/16/2015++ AAA 1,500 1,642,500
Total 39,109,282
====================================================================================================================================
Transportation 22.96% Delaware River Port Auth PA & NJ Rev FGIC+ 5 1/2% 1/1/2026 AAA 1,550 1,513,187
Delaware River Port Auth PA & NJ Rev RIBs FGIC+ 7.05% 1/1/2026++ AAA* 4,225 4,029,594
New Jersey Econ Dev Auth Rev Transn Sublease Ser A
FSA+ 5 5/8% 5/1/2018 AAA 3,250 3,245,937
New Jersey St Transn Tr Fd Auth Transn Sys Ser A 5 3/4% 6/15/2020 Aa2 6,500 6,573,125
Port Auth NY & NJ Cons 114th Ser 4 3/4% 8/1/2033 AA- 6,000 4,927,500
Port Auth NY & NJ Cons 116th Ser FGIC+ 4 1/4% 10/1/2026 AAA 885 683,663
Port Auth NY & NJ Cons 119th Ser FGIC+ AMT+++ 5 1/2% 9/15/2019 AAA 1,000 966,250
Port Auth NY & NJ RIBs 5.55% 8/1/2033++ AA* 2,500 1,709,375
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser Y 5 1/2% 7/1/2036 A 3,600 3,442,500
17
<PAGE>
Statement of Net Assets
New Jersey Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Comwlth Hwy & Transn Auth Transn Rev Ser A
MBIA+ 4 3/4% 7/1/2038 AAA $10,000 $ 8,375,000
South Jersey NJ Port Corp Rev MBIA+ 5.10% 1/1/2017 AAA 690 648,600
South Jersey NJ Port Corp Rev Marine Terminal Ser J AAA 1,440 1,364,400
MBIA+ 5.10% 1/1/2016
Total 37,479,131
====================================================================================================================================
Water/Sewer 1.47% Middlesex Cnty NJ Impt Auth Util Sys Rev Cap Apprec Perth Amboy Proj
Ser B AMBAC+ Zero Coupon 9/1/2023 AAA 3,000 753,750
Middlesex Cnty NJ Impt Auth Util Sys Rev Cap Apprec Perth Amboy Proj
Ser B AMBAC+ Zero Coupon 9/1/2024 AAA 6,000 1,417,500
New Jersey Wastewater Treatment Trust 6 7/8% 6/15/2009 Aa2 155 160,296
New Jersey Wastewater Treatment Trust Ser A MBIA+ 7.00% 5/15/2006 AAA 75 76,525
Total 2,408,071
- -----------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 102.36% (Cost $169,106,421) 167,081,693
====================================================================================================================================
Other Assets, Less Liabilities (2.36)%
====================================================================================================================================
Cash 3,319,832
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for: Securities sold 4,165,605
Capitalstock sold 41,237
Interest 2,503,457
Total Other Assets 10,030,131
- -----------------------------------------------------------------------------------------------------------------------------------
Payable for: Securities purchased 12,811,501
Capital stock reacquired 220,521
Dividends 589,905
Other 252,760
Total Liabilities 13,874,687
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (3,844,556)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% $163,237,137
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value ($163,237,137/32,828,801 shares outstanding) $4.97
Maximum offering price (net asset value plus sales charge
of 3.25% of the offering price) $5.14
Ratings are unaudited.
* This investment has not been rated by an independent ratings service but
is, in Lord Abbett's opinion, of comparable quality.
** When-issued security.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency. See page 32 for Glossary of Terms.
++ 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, 1999. See page 1 for additional important information.
+++ Income from these investments may be subject to the Alternative Minimum
Tax. See Notes to Financial Statements.
Statement of Net Assets
Connecticut Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Education 11.58% Connecticut St Hlth & Ed Fac Auth Rev CT College Ser C-1
MBIA+ 5 1/2% 7/1/2027 AAA $ 1,000 $ 962,500
Connecticut St Hlth & Ed Fac Auth Rev Fairfield Univ Ser I
MBIA+ 5 1/2% 7/1/2029 AAA 1,500 1,455,000
Connecticut St Hlth & Ed Fac Auth Rev Loomis Chaffee Sch Proj Ser B
MBIA+ 6.00% 7/1/2015 AAA 715 739,131
Connecticut St Hlth & Ed Fac Auth Rev Miss Porters Sch Ser A
5 3/4% 7/1/2029 A+ 3,000 2,962,500
18
<PAGE>
Statement of Net Assets
Connecticut Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Connecticut St Hlth & Ed Fac Auth Rev Salisbury Sch Issue Ser A
ASSET GTY+ 4 3/4% 7/1/2028 AA $ 3,005 $ 2,490,394
Connecticut St Hlth & Ed Fac Auth Rev St Joseph College Ser A
ASSET GTY+ 5.00% 7/1/2018 AA 585 540,394
Connecticut St Hlth & Ed Fac Auth Rev St Joseph College Ser A
ASSET GTY+ 5.00% 7/1/2019 AA 565 516,269
Connecticut St Hlth & Ed Fac Auth Rev Trinity College Ser E
MBIA+ 5 7/8% 7/1/2026 AAA 1,000 1,007,500
Connecticut St Hlth & Ed Fac Auth Rev Univ Of New Haven Ser D
6.70% 7/1/2026 BBB- 1,000 1,018,750
University CT Rev Student Fee Ser A MBIA+ 4 3/4% 11/15/2027 AAA 1,500 1,248,750
Total 12,941,188
====================================================================================================================================
General Obligation 5.71% Connecticut St Ser C 4 1/2% 10/15/2015 AA 1,000 881,250
Connecticut St Ser C 4 1/2% 10/15/2016 AA 1,000 865,000
Hartford CT 6 1/2% 12/15/2005 AA- 730 803,913
Killingly CT 7 1/4% 12/15/2004 A1 250 255,328
Monroe CT 6.60% 4/15/2005 Aa2 100 109,625
Montville CT 6.70% 6/15/2009 Aa3 550 623,563
Montville CT 6.70% 6/15/2010 Aa3 575 649,750
Portland CT 7.10% 12/15/2000 A2 100 103,750
Puerto Rico Comwlth Cap Apprec Pub Impt Zero Coupon 7/1/2018 A 2,000 685,000
Redding CT 6.60% 4/15/2010 Aa1 100 113,000
Voluntown CT 6 3/4% 10/1/2002 A3 100 106,875
Watertown CT 6 1/2% 6/15/2003 Aa3 100 107,125
West Haven CT MBIA+ 6 1/2% 6/15/2006 AAA 100 110,375
Westport CT 5 1/4% 7/15/2019 Aaa 1,000 961,250
Total 6,375,804
====================================================================================================================================
Healthcare 24.02% Connecticut St Dev Auth Rev Duncaster Proj Ser A
ASSET GTY+ 5 3/8% 8/1/2024 AA 1,000 931,250
Connecticut St Hlth & Ed Fac Auth Rev Bridgeport Hosp Ser A
MBIA+ 6 5/8% 7/1/2018 AAA 1,250 1,321,875
Connecticut St Hlth & Ed Fac Auth Rev RIBs 7.92% 6/10/2030++ AAA 6,800 6,834,000
Connecticut St Hlth & Ed Fac Auth Rev Brunswick Sch Ser A
MBIA+ 5.00% 7/1/2029 AAA 1,810 1,617,687
Connecticut St Hlth & Ed Fac Auth Rev Child Care Fac Prog Ser A
AMBAC+ 5.00% 7/1/2028 AAA 1,620 1,429,650
Connecticut St Hlth & Ed Fac Auth Rev Child Care Fac Prog Ser C
AMBAC+ 5 5/8% 7/1/2029 AAA 1,500 1,471,875
Connecticut St Hlth & Ed Fac Auth Rev Greenwich Hosp Ser A
MBIA+ 5 3/4% 7/1/2016 AAA 1,350 1,363,500
Connecticut St Hlth & Ed Fac Auth Rev Greenwich Hosp Ser A
MBIA+ 5.80% 7/1/2026 AAA 2,125 2,119,687
Connecticut St Hlth & Ed Fac Auth Rev Hosp For Sp Care Ser B
5 1/2% 7/1/2027 BBB 2,345 2,116,362
Connecticut St Hlth & Ed Fac Auth Rev Horace Bushnell Mem Hall Ser A
MBIA+ 5 5/8% 7/1/2029 Aaa 1,500 1,470,000
Connecticut St Hlth & Ed Fac Auth Rev Sacrd Hrt Ser C BBB- 275 289,094
6 1/2% 7/1/2016
Connecticut St Hlth & Ed Fac Auth Rev Vet Mem Med Ctr Ser A
MBIA+ 5 1/2% 7/1/2026 AAA 2,625 2,510,156
Connecticut St Hlth & Ed Fac Auth Rev WW Backus Hosp Ser D
AMBAC+ 5 3/4% 7/1/2027 AAA 1,000 997,500
Connecticut St Hlth & Ed Fac Auth Rev Waterbury Hosp Ser B
FSA+ 7.00% 7/1/2020 AAA 100 103,648
Connecticut St Hlth & Ed Fac Auth Rev Windham Cmnty Hosp Ser C
5 3/4% 7/1/2011 BBB- 1,700 1,646,875
19
<PAGE>
Statement of Net Assets
Connecticut Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Connecticut St Hlth & Ed Fac Auth Rev Univ CT Fndtn Ser A
5 3/8% 7/1/2029 A+ $ 660 $ 626,175
Total 26,849,334
====================================================================================================================================
Housing 9.59% Connecticut St Hsg Fin Auth Hsg Mtg Fin Prog Ser B 6 3/4% 11/15/2023 Aa2 1,605 1,701,300
Connecticut St Hsg Fin Auth Hsg Mtg Fin Prog Ser C-2
AMT+++ 5 1/2% 11/15/2035 Aa2 1,775 1,686,250
Connecticut St Hsg Fin Auth Hsg Mtg Fin Ser A Subser A-2
AMT+++ 6.45% 5/15/2022 Aa2 915 934,444
Connecticut St Hsg Fin Auth Hsg Mtg Fin Ser D-1 5.55% 11/15/2028 Aa2 1,690 1,628,737
Connecticut St Hsg Fin Auth Hsg Mtg Fin Subser C-2
AMT+++ 5.85% 11/15/2028 Aa2 995 985,050
Connecticut St Hsg Fin Auth Hsg Mtg Fin Subser D-2
AMT+++ 5.60% 11/15/2021 Aa2 535 515,606
Connecticut St Hsg Fin Auth Hsg Mtg Fin Subser D-2
AMT+++ 6.20% 11/15/2027 Aa2 1,740 1,770,450
Connecticut St Hsg Fin Auth Hsg Mtg Fin Subser F-2
AMT+++ 6.00% 11/15/2027 Aa2 1,490 1,499,312
Total 10,721,149
====================================================================================================================================
Industrial 5.57% Connecticut St Dev Auth Govt Lease Rev MBIA+ 6.60% 6/15/2014 AAA 500 540,625
Connecticut St Dev Auth Ind Dev Rev Watson Foods Co Inc
AMT+++ 5.90% 6/1/2028 BBB 795 730,406
Connecticut St Res Recovery Auth American Fuel Co Ser A
AMT+++ 6.45% 11/15/2022 BB- 4,985 4,953,844
Total 6,224,875
====================================================================================================================================
Miscellaneous 8.94% Connecticut St Dev Auth Aquarium Rev Mystic Marinelife Aquar Ser A
7.00% 12/1/2027 BBB* 1,500 1,537,500
New Haven CT Air Rights Pkg Fac Rev MBIA+ 6 1/2% 12/1/2015 AAA 8,025 8,456,344
Total 9,993,844
====================================================================================================================================
Pollution 5.03% Connecticut St Dev Auth Poll Ctrl Rev Pfizer Inc Proj Aaa 3,570 3,815,437
6.55% 2/15/2013
Puerto Rico Ind Med & Envirml Poll Ctrl Warner Lambert 7.60% 5/1/2014 Aa3 1,750 1,807,453
Total 5,622,890
====================================================================================================================================
Power 9.30% Puerto Rico Elec Pwr Auth Pwr Rev Ser DD FSA+ 4 1/2% 7/1/2019 AAA 2,000 1,695,000
Puerto Rico Elec Pwr Auth Pwr Rev Ser EE 4 3/4% 7/1/2024 BBB+ 10,250 8,699,688
Total 10,394,688
====================================================================================================================================
Prerefunded 12.79% Connecticut St Hlth & Ed Fac Auth Rev Auth Rev W W Backus Hosp Ser C
6 3/8% 7/1/2022 AAA 850 909,500
Connecticut St Hlth & Ed Fac Auth Rev Prerefunded Sacred Heart Ser C
6 1/2% 7/1/2016 AAA 725 806,562
Connecticut St Clean Wtr Fd Rev 7.00% 1/1/2011 AAA 2,050 2,157,625
Connecticut St Ctfs Partn Middletown Courthouse Fac Proj
MBIA+ 6 1/4% 12/15/2010 AAA 575 611,656
Connecticut St Sp Tax Oblig Rev FGIC+ 6.10% 10/1/2011 AAA 1,000 1,081,250
Darien CT 5 1/2% 10/15/2015 Aaa 500 527,500
Puerto Rico Comwlth 6.45% 7/1/2017 AAA 2,000 2,205,000
Puerto Rico Comwlth 6 1/2% 7/1/2023 AAA 2,000 2,210,000
Puerto Rico Comwlth 6.00% 7/1/2026 AAA 1,000 1,098,750
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser T 6 5/8% 7/1/2018 AAA 3 3,366
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser T 6 5/8% 7/1/2018 Aaa 67 72,147
Puerto Rico Elec Pwr Auth Pwr Rev Ser T RIBs FSA+ 9.12% 7/1/2018++ AAA 1,500 1,783,125
Puerto Rico Elec Pwr Auth Pwr Rev Ser X 6 1/8% 7/1/2021 Aaa 750 821,250
Total 14,287,731
====================================================================================================================================
20
<PAGE>
Statement of Net Assets
Connecticut Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Solid Waste 5.73% Connecticut St Dev Auth Solid Waste Disp Fac Rev Pfizer Inc Proj
AMT+++ 7.00% 7/1/2025 AAA $ 2,500 $ 2,759,375
Eastern CT Res Recov Auth Solid Wst Rev W Libson Ser A
AMT+++ 5 1/2% 1/1/2020 BBB 4,000 3,640,000
Total 6,399,375
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation .54% Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser W 5 1/2% 7/1/2015 A 600 600,750
- -----------------------------------------------------------------------------------------------------------------------------------
Water/Sewer .67% Connecticut St Dev Auth Wtr Fac Rev Bridgeport Hydraulic
AMT+++ 6.15% 4/1/2035 AA- 500 505,625
Connecticut St Dev Auth Wtr Fac Rev The CT Wtr Co Ser A
AMBAC+ AMT+++ 5 3/4% 7/1/2028 AAA 250 246,563
Total 752,188
- -----------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 99.47% (Cost $112,753,555) 111,163,816
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities .53% 594,414
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% $111,758,230
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value ($111,758,230 / 11,296,930 shares outstanding) $ 9.89
Maximum offering price (net asset value plus sales charge of 3.25% of the offering price) $10.22
Ratings are unaudited.
* This investment has not been rated by an independent ratings service but
is, in Lord Abbett's opinion, of comparable quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency. See page 32 for Glossary of Terms.
++ 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, 1999. See page 1 for additional important information.
+++ Income from these investments may be subject to the Alternative Minimum
Tax. See Notes to Financial Statements.
Statement of Net Assets
Missouri Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Education 3.13% Missouri St Hlth & Ed Fac Auth Rev Maryville Univ St Louis Proj
5 3/4% 6/15/2017 Baa1 $ 400 $ 385,500
University MO Univ Rev Sys Fac 5 1/2% 11/1/2017 AA+ 3,500 3,552,500
Total 3,938,000
====================================================================================================================================
General Obligation 6.58% Missouri St Fourth State Bldg Ser A 4 1/2% 6/1/2020 AAA 2,865 2,438,831
Platte Cnty MO Sch Dist 5 1/4% 3/1/2015 Aa1 105 102,244
Puerto Rico Comwlth RIBs MBIA+ 8.08% 7/1/2008++ AAA 1,000 1,071,250
Puerto Rico Comwlth RIBs FSA+ 8.28% 7/1/2020++ AAA 4,000 4,065,000
St. Louis MO Pub Safety FGIC+ 5.00% 2/15/2015 AAA 625 593,750
Total 8,271,075
====================================================================================================================================
Healthcare 13.60% Cape Girardeau Cnty MO Ind Dev Auth Hlth Care Fac Rev Hosp
MBIA+ 5 1/4% 6/1/2016 AAA 825 800,250
Hannibal MO Ind Dev Auth Hlth Fac Rev Regl Hosp Ser A
FSA+ 5 5/8% 3/1/2012 AAA 2,170 2,218,825
Hannibal MO Ind Dev Auth Hlth Fac Rev Regl Hosp Ser A
FSA+ 5 3/4% 3/1/2022 AAA 1,250 1,250,000
Jackson Cnty MO Ind Dev Auth Hlth Care Rev St Joseph Ctr
7.00% 7/1/2022 Baa1 1,500 1,586,250
Lees Summit MO Ind Dev Auth Hlth Fac Rev 6.00% 8/15/2017 A-** 1,000 992,500
21
<PAGE>
Statement of Net Assets
Missouri Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Missouri St Hlth & Ed Fac Auth Rev Heartland Hlth Sys Proj
AMBAC+ 6.35% 11/15/2017 AAA $3,600 $ 3,780,000
Missouri St Hlth & Ed Fac Auth Rev Hlth Midwest Ser B
MBIA+ 6 1/4% 2/15/2022 AAA 2,175 2,256,563
North Kansas City MO Hosp Rev AMBAC+ 4 3/4% 11/15/2023 Aaa 4,570 3,867,363
Puerto Rico Ind Tourist Ed Mennonite General Hosp Ser A BBB- 370 351,038
5 5/8% 7/1/2017
Total 17,102,789
====================================================================================================================================
Housing 8.96% Missouri St Dev Fin Brd Multi Fam Rev Quality Hill Proj Ser A
ASSET GTY+ 5.60% 9/15/2028 AA 3,170 3,094,713
Missouri St Hsg Dev Cmnty Mtg Rev Cap Apprec Sing Fam Ser E-1
GNMA/FNMA+ AMT+++ Zero Coupon 3/1/2029 AAA 4,975 864,406
Missouri St Hsg Dev Cmnty Mtg Rev Sing Fam Mtg Ser A
GNMA/FHA+ AMT+++ 6.22% 3/1/2026 AAA 4,855 4,939,963
Missouri St Hsg Dev Cmnty Mtg Rev Sing Fam Mtg Ser A
GNMA+ AMT+++ 6 3/4% 6/1/2024 AAA 305 315,675
Missouri St Hsg Dev Cmnty Mtg Rev Sing Fam Mtg Ser B
GNMA+ AMT+++ 6.40% 12/1/2024 AAA 2,000 2,040,000
Puerto Rico Hsg Fin Corp Sing Fam Mtg Rev Portfolio 1 Ser B
GNMA+ 7.65% 10/15/2022 AAA 15 15,501
Total 11,270,258
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial 6.05% Missouri St Dev Fin Brd Solid Waste Disp Rev Procter & Gamble Proj
AMT+++ 5.20% 3/15/2029 AA 8,300 7,604,875
- -----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 11.28% Columbia MO Sp Oblig Cap Impt 5 1/2% 2/1/2016 A 500 493,750
Fort Zumwalt MO Sch Dist Impt Corp Lease Hold Rev
AMBAC+ 5.60% 3/1/2017 Aaa 500 500,625
Kansas City MO Muni Assistance Corp Rev Ser A 5 1/8% 3/1/2019 A3 1,250 1,146,875
Missouri Sch Brds Assoc Lease Partn INSD-NIXA Reorg Sch Dist R-2
ASSET GTY+ 5.40% 3/1/2020 AA 1,000 946,250
Missouri St Ctfs Partn Bonne Terre Prison Proj Ser A
AMBAC+ 5.15% 6/1/2019 AAA 1,455 1,353,150
Missouri St Ctfs Partn Bonne Terre Prison Proj Ser A
AMBAC+ 5.15% 6/1/2018 AAA 1,440 1,342,800
Puerto Rico Tel Auth Rev RIBs MBIA+ 7.07% 1/25/2007++ AAA 2,000 2,165,000
St Louis MO Ind Dev Auth Rev Kiel Ctr Multi Purp Arena
AMT+++ 7 7/8% 12/1/2024 BBB* 2,000 2,135,000
St Louis MO Ld Clearance Redev Auth Rev Kiel Site Lease Ser B
MBIA+ 5.30% 7/1/2016 AAA 500 488,125
St Louis MO Mun Fin Corp Lease Hold Rev City Justice Ctr Ser A
AMBAC+ 6.00% 2/15/2019 AAA 3,500 3,613,750
Total 14,185,325
====================================================================================================================================
Pollution 10.23% Missouri St Env Impt & Enrg Res Auth Wtr Poll Ctrl Ser A Aa1 3,000 3,183,750
6.55% 7/1/2014
Missouri St Env Impt & Enrg Res Auth Wtr Poll Ctrl Ser A Aa1 2,400 2,433,000
5 3/4% 1/1/2016
Missouri St Env Impt & Enrg Res Auth Wtr Poll Ctrl Ser B Aa1 2,250 2,497,500
7.20% 7/1/2016
Missouri St Env Impt & Enrg Res Auth Wtr Poll Ctrl Ser D Aa1 2,100 2,144,625
5.90% 1/1/2019
Missouri St Env Impt & Enrg Res Auth Wtr Poll Ctrl Ser E Aa1 900 905,625
5 5/8% 7/1/2016
Missouri St St Wtr Poll Ctrl Ser A 4 1/2% 6/1/2020 AAA 2,005 1,706,756
Total 12,871,256
====================================================================================================================================
Prerefunded 22.35% Cape Girardeau MO Wtr Wks Sys Rev FGIC+ 6.40% 3/1/2012 AAA 1,150 1,204,625
Central MO St Univ Rev Hsg Sys MBIA+ 7.00% 7/1/2014 AAA 150 159,937
Clay Cnty MO Pub Bldg Auth Lease Hold Rev FGIC+ 7.00% 5/15/2014 AAA 1,000 1,102,500
Kansas City MO Arpt Rev Gen Impt Ser B FSA+ 6 7/8% 9/1/2014 AAA 1,490 1,655,762
Kansas City MO Wtr Rev 7th Issue Ser D 6.65% 12/1/2013 AAA 2,800 3,066,000
Missouri St Hlth & Ed Fac Auth Rev Bjc Hlth Sys Ser A AAA 4,900 5,371,625
6 1/2% 5/15/2020
22
<PAGE>
Statement of Net Assets
Missouri Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Missouri St Hlth & Ed Fac Auth Rev SSM Hlth Care Ser AA
MBIA+ 6 1/4% 6/1/2016 Aaa $ 345 $ 367,856
Missouri St Hlth & Ed Fac Auth Rev St Louis Univ High School
6.35% 10/1/2014 AAA 2,000 2,175,000
Missouri St Hlth & Ed Fac Auth Rev St Lukes Hosp KC Proj
MBIA+ 7.00% 11/15/2013 AAA 1,030 1,108,537
Missouri St Regl Convention & Sports Complex Auth Ser A
6.90% 8/15/2021 AAA 5,000 5,418,750
Puerto Rico Elec Pwr Auth Pwr Rev RIBs FSA+ 8.41% 7/1/2023++ AAA 2,500 2,784,375
Puerto Rico Tel Auth Rev RIBs MBIA+ 7.27% 1/16/2015++ AAA 1,000 1,095,000
Springfield MO Sch Dist No 12 Ser A FGIC+ 6 3/4% 3/1/2011 AAA 1,225 1,267,875
St Louis MO Pkg Fac Rev MBIA+ 5 3/8% 12/15/2021 AAA 10 9,650
St Louis MO Sch Dist FGIC+ 6.00% 4/1/2012 AAA 1,275 1,324,406
Total 28,111,898
====================================================================================================================================
Transportation 13.96% Lake Of The Ozarks Cmnty Brdg Corp MO Brdg Sys Rev 5 1/4% 12/1/2020 BBB* 1,500 1,383,750
Lake Of The Ozarks Cmnty Brdg Corp MO Brdg Sys Rev 5 1/4% 12/1/2026 BBB* 3,000 2,718,750
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser Y 5 1/2% 7/1/2036 A 1,250 1,195,313
Puerto Rico Comwlth Hwy & Transn Auth Transn Rev Ser A
MBIA+ 4 3/4% 7/1/2038 AAA 11,330 9,488,875
St Louis MO Arpt Rev Lambert St Louis Intl Ser B AAA 2,000 1,855,000
FGIC+ AMT+++ 5 1/4% 7/1/2022
St Louis MO Arpt Rev Lambert St Louis Intl Ser B AAA 1,000 917,500
FGIC+ AMT+++ 5 1/4% 7/1/2027
Total 17,559,188
====================================================================================================================================
Water/Sewer 1.32% Missouri St Env Impt & Enrg Res Auth Wtr Fac Henry Cnty Wtr Ser A
MBIA+ AMT+++ 5.95% 11/1/2019 AAA 1,500 1,546,875
St Charles Cnty MO Pub Wtr Supp Dist #2 Ctfs Partn Ser A
MBIA+ 5.00% 12/1/2020 Aaa 130 117,000
Total 1,663,875
- -----------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 97.46% (Cost $123,057,261) 122,578,539
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 2.54% 3,196,098
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% $125,774,637
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value ($125,774,637 / 25,222,549 shares outstanding) $4.99
Maximum offering price (net asset value plus sales charge of 3.25% of the offering price) $5.16
Ratings are unaudited
* This investment has not been rated by an independent ratings service but
is, in Lord Abbett's opinion, of comparable quality.
** This investment has been rated by Fitch Investors Service only.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency. See page 32 for Glossary of Terms.
++ 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, 1999. See page 1 for additional important information.
+++ Income from these investments may be subject to the Alternative Minimum
Tax. See Notes to Financial Statements.
23
<PAGE>
Statement of Net Assets
Hawaii Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Education .40% University HI Univ Sys Rev Ser G AMBAC+ 5.45% 10/1/2006 AAA $ 275 $ 283,938
- -----------------------------------------------------------------------------------------------------------------------------------
General Obligation 29.02% Hawaii Cnty HI Ser A FGIC+ 5.60% 5/1/2013 AAA 1,780 1,822,275
Hawaii Cnty HI Ser A FSA+ 5 5/8% 5/15/2019 AAA 610 601,612
Hawaii St Ser BZ 6.00% 10/1/2010 A+ 500 533,750
Hawaii St Ser BZ 6.00% 10/1/2012 A+ 500 533,125
Hawaii St Ser CA FGIC+ 8.00% 1/1/2013 AAA 2,000 2,497,500
Hawaii St Ser CP FGIC+ 5.00% 10/1/2016 AAA 900 839,250
Hawaii St Ser CR MBIA+ 4 3/4% 4/1/2018 AAA 3,000 2,651,250
Hawaii St Ser CT FSA+ 5 7/8% 9/1/2019 AAA 1,000 1,008,750
Honolulu HI City & Cnty Ser A MBIA+ 5.00% 11/1/2015 AAA 1,095 1,027,931
Honolulu HI City & Cnty Ser A FGIC+ 5 1/2% 9/1/2016 AAA 5 5,019
Honolulu HI City & Cnty Ser B FGIC+ 5.00% 11/1/2016 AAA 265 247,112
Honolulu HI City & Cnty Ser B FGIC+ 5.00% 7/1/2023 AAA 1,000 897,500
Honolulu HI City & Cnty Wtr FGIC+ 6.00% 12/1/2015 AAA 1,000 1,060,000
Kauai Cnty HI Pub Impt Ser B MBIA+ 5 1/4% 8/1/2017 AAA 195 186,469
Maui Cnty HI Ser A MBIA+ 5 3/4% 6/1/2016 AAA 1,035 1,062,169
Maui Cnty HI Ser A FGIC+ 5.10% 3/1/2019 AAA 300 278,250
Puerto Rico Comwlth 5.00% 7/1/2027 A 500 445,625
Puerto Rico Comwlth Pub Impt 4 1/2% 7/1/2023 A 2,500 2,040,625
Puerto Rico Comwlth RIBs FSA+ 8.28% 7/1/2020++ AAA 3,000 3,048,750
Total 20,786,962
====================================================================================================================================
Healthcare 14.32% Hawaii St Dept Bdg & Fin Sp Purp Rev 6.20% 7/1/2016 A 1,000 1,031,250
Hawaii St Dept Bdg & Fin Sp Purp Rev 6 1/4% 7/1/2021 A 2,000 2,062,500
Hawaii St Dept Bdg & Fin Sp Purp Mtg Rev St Francis Med Ctrs
FSA+ 6 1/2% 7/1/2022 AAA 1,200 1,269,000
Hawaii St Dept Bdg & Fin Sp Purp Rev Kaiser Permanente Ser A
5.15% 3/1/2015 A 2,000 1,842,500
Hawaii St Dept Bdg & Fin Sp Purp Rev The Queens Hlth Sys Ser B
MBIA+ 5.00% 7/1/2028 AAA 2,000 1,745,000
Hawaii St Dept Bdg & Fin Sp Purp Rev Wilcox Mem Hosp Proj
5 1/4% 7/1/2013 BBB+ 1,200 1,116,000
Hawaii St Dept Bdg & Fin Sp Purp Rev Wilcox Mem Hosp Proj
5 1/2% 7/1/2028 BBB+ 1,350 1,189,687
Total 10,255,937
====================================================================================================================================
Housing 4.83% Hawaii St Hsg Fin & Dev Corp Rev Univ Of HI Faculty Hsg Proj
AMBAC+ 5.65% 10/1/2016 AAA 1,000 1,007,500
Hawaii St Hsg Fin & Dev Corp Rev Univ Of HI Faculty Hsg Proj
AMBAC+ 5.70% 10/1/2025 AAA 500 496,250
Hawaii St Hsg Fin & Dev Corp Sing Fam Mtg Purp Rev Ser A
FNMA+ AMT+++ 7.10% 7/1/2024 Aa1 960 996,000
Hawaii St Hsg Fin & Dev Corp Sing Fam Mtg Purp Rev Ser B
5.30% 7/1/2028 Aa1 1,000 940,000
Puerto Rico Hsg Fin Corp Sing Fam Mtg Rev Portfolio 1 Ser B
GNMA+ 7.65% 10/15/2022 AAA 20 20,668
Total 3,460,418
====================================================================================================================================
Miscellaneous 1.79% Hawaii St Ctfs Partn Kapolei St Office Bldg Ser A AAA 725 656,125
AMBAC+ 5.00% 5/1/2018
Puerto Rico Ind Tourist Ed Med Ana G Mendez Univ Sys Proj
5 3/8% 2/1/2019 BBB 500 467,500
Puerto Rico Ind Tourist Ed Mutuo Oblig Grp Ser A AAA 150 158,813
MBIA+ 6 1/4% 7/1/2024
Total 1,282,438
- -----------------------------------------------------------------------------------------------------------------------------------
Pollution 2.16% Puerto Rico Ind Med & Envirml Poll Ctrl Warner Lambert Proj
7.60% 5/1/2014 Aa3 1,500 1,549,245
- -----------------------------------------------------------------------------------------------------------------------------------
24
<PAGE>
Statement of Net Assets
Hawaii Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Power 17.49% Hawaii St Dept Bdg & Fin Sp Purp Mtg Rev HI Elec Co Ser A
MBIA+ AMT+++ 6.60% 1/1/2025 AAA $2,795 $ 2,955,713
Hawaii St Dept Bdg & Fin Sp Purp Mtg Rev HI Elec Co Ser C
MBIA+ AMT+++ 7 3/8% 12/1/2020 AAA 2,000 2,100,000
Hawaii St Dept Bdg & Fin Sp Purp Mtg Rev
RIBs AMT+++ 6.74% 12/15/2023++ AAA 5,000 4,450,000
Hawaii St Dept Bdg & Fin Sp Purp Rev HI Elec Co Ser A
MBIA+ 4.95% 4/1/2012 AAA 1,000 962,500
Puerto Rico Elec Pwr Auth Pwr Rev Ser EE 4 3/4% 7/1/2024 BBB+ 1,500 1,273,125
Puerto Rico Elec Pwr Auth Pwr Rev Ser U 6.00% 7/1/2014 BBB+ 750 786,563
Total 12,527,901
====================================================================================================================================
Prerefunded 18.87% Hawaii St Dept Bdg & Fin Sp Purp Mtg Rev Pali Momi Med Ctr Proj
7.65% 7/1/2019 AAA 1,000 1,077,500
Honolulu HI City & Cnty Ser A MBIA+ 5.00% 11/1/2015 AAA 405 409,556
Honolulu HI City & Cnty Ser A FGIC+ 5 1/2% 9/1/2016 AAA 440 465,850
Honolulu HI City & Cnty Ser A FGIC+ 5 1/2% 9/1/2016 AAA 555 577,894
Honolulu HI City & Cnty Ser B FGIC+ 5.00% 11/1/2016 AAA 235 239,112
Puerto Rico Comwlth 6.35% 7/1/2010 AAA 1,285 1,411,894
Puerto Rico Comwlth 6.45% 7/1/2017 AAA 2,575 2,838,938
Puerto Rico Comwlth 6 1/2% 7/1/2023 AAA 1,250 1,381,250
Puerto Rico Comwlth 6.00% 7/1/2026 AAA 1,000 1,098,750
Puerto Rico Elec Pwr Auth Pwr Rev RIBs FSA+ 8.41% 7/1/2023++ AAA 1,500 1,670,625
Puerto Rico Ind Med & Envirml Poll Ctrl St Lukes Hosp Proj Ser A
6 1/4% 6/1/2010 AAA 1,390 1,468,187
Puerto Rico Tel Auth Rev RIBs MBIA+ 7.27% 1/16/2015++ AAA 800 876,000
Total 13,515,556
====================================================================================================================================
Transportation 6.54% Hawaii St Arpt Sys Rev 2nd Ser MBIA+ AMT+++ 7.00% 7/1/2018 AAA 2,000 2,117,500
Hawaii St Hbr Cap Impt Rev FGIC+ AMT+++ 6 1/4% 7/1/2015 AAA 500 526,250
Hawaii St Hbr Cap Impt Rev FGIC+ AMT+++ 6 3/8% 7/1/2024 AAA 500 525,625
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser V 6 5/8% 7/1/2012 A 500 531,875
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser Y 5 1/2% 7/1/2026 A 1,000 961,250
Puerto Rico Comwlth Hwy & Transn Auth Transn Rev 5.00% 7/1/2022 A- 20 17,875
Total 4,680,375
====================================================================================================================================
Water/Sewer 2.52% Honolulu HI City & Cnty Bd Wtr Supply Wtr Sys Rev 5.80% 7/1/2021 AA 1,000 1,002,500
Honolulu HI City & Cnty Waste Wtr Sys Rev 2nd Bd Resolution
FGIC+ 4 1/2% 7/1/2028 AAA 1,000 800,000
Total 1,802,500
- -----------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 97.94% (Cost $70,382,179) 70,145,270
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 2.06% 1,474,077
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% $71,619,347
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value ($71,619,347 / 14,790,998 shares outstanding) $4.84
Maximum offering price (net asset value plus sales charge of 3.25% of the offering price) $5.00
Ratings are unaudited.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency. See page 32 for Glossary of Terms.
++ 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, 1999. See page 1 for additional important information.
+++ Income from these investments may be subject to the Alternative Minimum
Tax. See Notes to Financial Statements.
25
<PAGE>
Statement of Net Assets
Washington Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Education 2.85% Washington St Higher Ed Fac Auth Rev Whitman College Proj
5 7/8% 10/1/2029 AA- $1,500 $ 1,477,500
- -----------------------------------------------------------------------------------------------------------------------------------
General Obligation 26.06% King Cnty WA RIBs 7.66% 12/1/2013++ AA* 3,000 3,213,750
King Cnty WA Ser B 4 1/2% 1/1/2024 Aa1 320 254,400
Seattle WA Ser F 5 1/8% 12/15/2028 Aa1 3,000 2,688,750
Washington St Ser A 5 3/4% 9/1/2019 Aa1 3,680 3,675,400
Washington St Ser B 5 3/4% 5/1/2016 Aa1 3,550 3,563,313
Whatcom Cnty WA 5 3/4% 12/1/2012 A1 115 117,300
Total 13,512,913
====================================================================================================================================
Housing 8.70% Skagit Cnty WA Hsg Auth Low Income Hsg Assist Rev Mtg Ln
GNMA+ 7.00% 6/20/2035 AAA 750 806,250
Snohomish Cnty WA Hsg Auth Rev Cedar Str Apts Proj Sr Lien Ser A
AMT+++ 6.40% 5/1/2027 A 500 515,000
Washington St Hsg Fin Cmnty Nonprofit Hsg Rev Kline Galland Ctr Proj
ASSET GTY+ 5 7/8% 7/1/2019 AA 800 783,000
Washington St Hsg Fin Cmnty Sing Fam Mtg Rev Ser A
GNMA/FNMA+ AMT+++ 6.65% 7/1/2016 AAA 255 257,247
Washington St Hsg Fin Cmnty Sing Fam Mtg Rev Ser A
GNMA/FNMA+ AMT+++ 7.05% 7/1/2022 AAA 1,135 1,188,913
Washington St Hsg Fin Cmnty Sing Fam Proj Ser 2A
AMT+++ 6.30% 12/1/2027 Aaa 935 959,544
Total 4,509,954
====================================================================================================================================
Miscellaneous 2.04% Bellevue WA Convention Ctrl Auth Sp Oblig Rev Comp Int
MBIA+ Zero Coupon 2/1/2024 AAA 1,400 334,250
CDP-King Cnty III WA Lease Rev King Street Ctr Proj
MBIA+ 5 1/4% 6/1/2026 AAA 500 461,250
Spokane WA Pub Fac Dist Hotel Motel & Sales Use Tax Multi-Purpose
Arena Proj AMBAC+ 6 1/2% 1/1/2018 AAA 250 260,937
Total 1,056,437
====================================================================================================================================
Power 30.78% Chelan Cnty WA Pub Util Dist #001 Cons Rev Chelan Hydroelec Ser A
MBIA+ AMT+++ 6.40% 7/1/2017 AAA 1,000 1,055,000
Chelan Cnty WA Pub Util Dist #001 Cons Rev Chelan Hydroelec Ser D
MBIA+ AMT+++ 6.35% 7/1/2028 AAA 2,425 2,549,281
Chelan Cnty WA Pub Util Dist #1 Cap Apprec Columbia Riv Rock
IS Hwy Ser A MBIA+ Zero Coupon 6/1/2024 AAA 1,860 437,100
Chelan Cnty WA Pub Util Dist #1 Cap Apprec Columbia Riv Rock
IS Hwy Ser A MBIA+ Zero Coupon 6/1/2028 AAA 14,985 2,753,494
Douglas Cnty WA Pub Util Dist #1 Wells Hydroelec 2 Tier Ser B
AMBAC+ 8 3/4% 9/1/2006 AAA 4,535 5,130,219
Douglas Cnty WA Pub Util Dist #1 Wells Hydroelec 8 3/4% 9/1/2018 Aa3 350 423,937
Grant Cnty WA Pub Util Dist #2 Priest Rapids Hydroelec 2nd Ser B
MBIA+ AMT+++ 5 3/8% 1/1/2018 AAA 500 473,125
Lewis Cnty WA Pub Util Dist #1 Cowlitz Falls Hydroelec Aa1 755 723,856
5 1/2% 10/1/2022
Seattle WA Mun Lt & Pwr Rev Ser A MBIA+ 5 5/8% 9/1/2015 AAA 1,000 1,003,750
Snohomish Cnty WA Pub Util No 001 Elec Rev FSA+ 5 3/8% 12/1/2024 AAA 1,500 1,408,125
Total 15,957,887
====================================================================================================================================
Prerefunded 18.51% Douglas Cnty WA Pub Util Dist #1 Wells Hydroelec 8 3/4% 9/1/2018 Aaa 150 191,625
Mason Cnty WA Pub Util Dist #3 Elec Rev 6.35% 1/1/2013 AAA 1,040 1,098,500
Mount Vernon WA AMBAC+ 6.85% 12/1/2014 AAA 1,285 1,421,531
Pike Place Mkt Preservation & Dev Auth WA Sp Olig Rev Ser A
6.60% 12/1/2021 AAA 1,000 1,048,750
Port Seattle WA Rev Ser B AMT+++ 6.70% 11/1/2010 AAA 20 21,600
Puerto Rico Elec Pwr Auth Pwr Rev RIBs FSA+ 8.41% 7/1/2023++ AAA 3,500 3,898,125
26
<PAGE>
Statement of Net Assets
Washington Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Tel Auth Rev RIBs MBIA+ 7.27% 1/16/2015++ AAA $ 500 $ 547,500
Renton WA Wtr & Swr Rev 6.55% 11/1/2013 AAA 1,000 1,091,250
Washington St Higher Ed Fac Auth Rev Whitworth College
CONNIE LEE+ 7.00% 10/1/2015 AAA 250 277,500
Total 9,596,381
====================================================================================================================================
Transportation 4.16% Port Kalama WA Rev Ser B AMT+++ 5 5/8% 12/1/2015 Baa1 400 394,000
Port Seattle WA Rev Ser A FGIC+ 5 1/2% 9/1/2021 AAA 1,000 967,500
Port Seattle WA Rev Ser B AMBAC+ AMT+++ 7.60% 12/1/2009 Aa3 525 551,906
Port Seattle WA Rev Ser B AMT+++ 6.70% 11/1/2010 Aa3 230 243,800
Total 2,157,206
====================================================================================================================================
Water/Sewer 10.24% King Cnty WA Swr Rev FGIC+ 5 1/2% 1/1/2022 AAA 2,000 1,920,000
Seattle WA Drain & Wst Wtr Util Rev 5 3/4% 12/1/2022 Aa2 1,500 1,500,000
Seattle WA Wtr Sys Rev 5 1/4% 12/1/2023 Aa2 1,040 958,100
Seattle WA Wtr Sys Rev FGIC+ 5 3/8% 3/1/2029 AAA 1,000 932,500
Total 5,310,600
- -----------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 103.34% (Cost $54,471,873) 53,578,878
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (3.34)% (1,730,220)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% $51,848,658
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value ($51,848,658/10,562,641 shares outstanding) $4.91
Maximum offering price (net asset value plus sales charge of 3.25% of the offering price) $5.07
Ratings are unaudited.
* This investment has not been rated by an independent ratings service but
is, in Lord Abbett's opinion, of comparable quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency. See page 32 for Glossary of Terms.
++ 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, 1999. See page 1 for additional important information.
+++ Income from these investments may be subject to the Alternative Minimum
Tax. See Notes to Financial Statements.
Statement of Net Assets
Minnesota Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Education 7.54% Minnesota St Higher Ed Fac Auth Rev Hamline Univ Ser 5-B
6.00% 10/1/2029 Baa1 $ 500 $ 495,625
Minnesota St Higher Ed Fac Auth Rev Macalester College Ser 4-J
5.55% 3/1/2017 Aa3 260 257,725
Minnesota St Higher Ed Fac Auth Rev Univ of St Thomas Ser 4-A1
5 5/8% 10/1/2016 A2 250 247,813
Minnesota St Higher Ed Fac Auth Rev Univ of St Thomas Ser 4-M
5.35% 4/1/2017 A2 250 238,750
University MN Ser A 5 3/4% 7/1/2018 Aa2 250 256,563
Total 1,496,476
====================================================================================================================================
General Obligation 16.54% Farmington MN Indpt Sch Dist #192 Ser A FSA+ 5.20% 2/1/2023 Aaa 500 467,500
Lakeville MN Indpt Sch Dist #194 Ser A 5 1/8% 2/1/2022 Aa1 500 462,500
Minneapolis MN Sp Sch Dist #1 FGIC+ 5 3/8% 2/1/2014 AAA 250 250,312
Minneapolis MN Sp Sch Dist #1 Ctfs Partn Ser B 5 1/8% 2/1/2018 Aa1 500 469,375
Minnesota St 5 1/4% 8/1/2014 AAA 265 260,694
North St Paul Maplewood MN Indpt Sch Dist #622 Ser A 5 1/8% 2/1/2020 Aa1 550 512,875
27
<PAGE>
Statement of Net Assets
Minnesota Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Park Rapids MN Indpt Sch Dist #309 4 3/4% 2/1/2018 Aa1 $ 250 $ 219,687
St Cloud MN Ctfs Partn 5.90% 12/1/2017 BBB+ 200 195,250
St Michael MN Indpt Sch Dist #885 5.00% 2/1/2025 Aa1 250 224,063
Windom MN Indpt Sch Dist #177 4 3/4% 2/1/2019 Aa1 250 218,750
Total 3,281,006
====================================================================================================================================
Healthcare 24.34% Hastings MN Hlth Care Fac Rev Regina Med Ctr ACA+ 5.30% 9/15/2028 A 500 456,250
Minneapolis & St Paul MN Hsg & Redev Auth Hlth Care Sys Group Hlth
Plan Proj 6.90% 10/15/2022 BBB+ 300 316,875
Minneapolis & St Paul MN Hsg & Redev Auth Hlth Care Sys Childrens
Hlth Care Ser A FSA+ 5.70% 8/15/2016 AAA 150 150,750
Minnesota Agric & Econ Dev Brd Rev Evangelical Lutheran Proj
AMBAC+ 5.00% 12/1/2015 AAA 250 234,375
Minnesota Agric & Econ Dev Brd Rev Evangelical Lutheran Proj
AMBAC+ 5.00% 12/1/2023 AAA 350 311,062
Minnesota Agric & Econ Dev Brd Rev Hlth Care Benedictine Ser A
MBIA+ 5 1/8% 2/15/2029 AAA 1,000 900,000
Minnesota Agric & Econ Dev Brd Rev Hlth Care Fairview Hosp Ser A
MBIA+ 5 1/2% 11/15/2017 AAA 220 215,600
Rochester MN Hlth Care Fac Rev Mayo Foundation Ser A AA+ 500 483,125
5 1/2% 11/15/2027
Rochester MN Hlth Care Fac Rev Mayo Foundation Ser B AA+ 500 483,125
5 1/2% 11/15/2027
Rochester MN Hlth Care Fac Rev Ser H RIBs 7.76% 11/15/2015++ AA+ 1,000 1,051,250
St Paul MN Hsg & Redev Auth Hosp Rev Hltheast Proj Ser A
5.70% 11/1/2015 BBB- 250 226,875
Total 4,829,287
====================================================================================================================================
Housing 12.15% Champlin MN Economic Dev Auth Hsg Dev MBIA+ 5.60% 2/1/2021 AAA 250 246,562
Fairbault MN Hsg & Redev Auth Govt Trails Edge Apts Ser A A3 500 461,250
5 1/4% 2/1/2028
Minneapolis & St Paul MN Met Arpts Cmnty Ser 13 AAA 250 221,562
AMT+++ 4 1/2% 1/1/2014
Minnesota St Hsg Fin Agy Sing Fam Mtg Ser B AMT+++ 5.65% 7/1/2022 AA+ 250 241,875
Minnesota St Hsg Fin Agy Sing Fam Mtg Ser B-1 AMT+++ 6 3/4% 1/1/2026 AA+ 95 98,087
Minnesota St Hsg Fin Agy Sing Fam Mtg Ser D AMT+++ 6.40% 7/1/2015 AA+ 250 258,437
Minnesota St Hsg Fin Agy Sing Fam Mtg Ser D AMT+++ 5.85% 7/1/2019 Aa 205 204,744
Minnesota St Hsg Fin Agy Sing Fam Mtg Ser E 5.90% 7/1/2025 AA+ 235 237,056
Minnesota St Hsg Fin Agy Sing Fam Mtg Ser G AMT+++ 6 1/4% 7/1/2026 AA+ 230 234,312
Scott Cnty Minn Hsg & Redev Savage City Hamilton Apts Proj
AMBAC+ 5.60% 2/1/2019 AAA 105 103,819
St Louis Park MN Multi Fam Hsg Mtg Cmnty Hsg FHA+ 6.15% 12/1/2016 Aa 100 103,375
Total 2,411,079
====================================================================================================================================
Miscellaneous 4.50% Minneapolis MN Sports Arena Proj 5 1/8% 10/1/2020 AAA 500 466,250
St Paul MN Tax Increment Block 39 Ser A 4 3/4% 2/1/2019 AA+ 250 217,813
St Paul MN Tax Increment Block 39 Ser A 4 3/4% 2/1/2025 AA+ 250 209,688
Total 893,751
- -----------------------------------------------------------------------------------------------------------------------------------
Pollution 1.34% Minnesota Pub Fac Auth Wtr Poll Ctrl Rev Ser A 4 3/4% 3/1/2017 AAA 300 265,875
- -----------------------------------------------------------------------------------------------------------------------------------
Power 4.90% Puerto Rico Elec Pwr Auth Pwr Rev Ser DD FSA+ 4 1/2% 7/1/2019 AAA 250 211,875
S MN Muni Pwr Agy Pwr Supply Sys Rev Cap Apprec Ser A
MBIA+ Zero Coupon 1/1/2021 AAA 1,000 292,500
S MN Muni Pwr Agy Pwr Supply Sys Rev Ser A MBIA+ 5.00% 1/1/2016 AAA 500 467,500
Total 971,875
====================================================================================================================================
Prerefunded 13.88% Brainerd MN Hlth Care Fac Rev Benedictine Hlth St Joseph Proj
8 3/8% 2/15/2020 AAA 775 803,032
Marshall MN Elec & Wtr Util Rev FSA+ 6.45% 7/1/2011 AAA 150 159,375
28
<PAGE>
Statement of Net Assets
Minnesota Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Minneapolis & St Paul MN Hsg & Redev Auth Hlth Care Sys Hlth One
Obligated Group Ser A MBIA+ 6 3/4% 8/15/2014 AAA $ 245 $ 255,751
Minneapolis & St Paul MN Hsg & Redev Auth Hlth Care Sys Hlth One
Obligated Group Ser B 8.00% 8/15/2014 AAA 650 685,334
Minneapolis MN Hosp Rev Childrens Med Ctr Proj Ser C 7.30% 12/1/2006 AAA 200 213,750
Minneapolis MN Hosp Rev Childrens Med Ctr Proj Ser C 7.00% 12/1/2020 AAA 200 212,750
Minnesota Pub Fac Auth Wtr Poll Ctrl Rev Ser A 6 1/4% 3/1/2016 AAA 100 107,625
St Louis Park MN Hlth Care Fac Rev Park Nicollet Med Ctr Proj
9 1/4% 1/1/2020 Aaa 100 103,271
Western MN Muni Pwr Agy 1977 Ser A 6 3/8% 1/1/2016 AAA 200 212,750
Total 2,753,638
====================================================================================================================================
Transportation 9.08% Minneapolis & St Paul MN Met Arpts Cmnty Arpt Rev Ser A
AMBAC+ 5.00% 1/1/2022 AAA 1,000 896,250
Minneapolis & St Paul MN Met Arpts Cmnty Arpt Rev Ser A
FGIC+ 5 1/8% 1/1/2025 AAA 1,000 906,250
Total 1,802,500
- -----------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 94.27% (Cost $19,706,796) 18,705,487
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities 5.73%
- -----------------------------------------------------------------------------------------------------------------------------------
Cash 1,003,645
====================================================================================================================================
Receivable for: Interest 231,471
Capitalstock sold 604
Total Other Assets 1,235,720
- -----------------------------------------------------------------------------------------------------------------------------------
Payable for: Dividends 75,957
Capital stock reacquired 15,000
Other 6,971
Total Liabilities 97,928
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 1,137,792
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% $19,843,279
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value ($19,843,279/4,153,249 shares outstanding) $4.78
Maximum offering price (net asset value plus sales charge of 3.25% of the offering price) $4.94
Ratings are unaudited.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency. See page 32 for Glossary ofTerms.
++ 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, 1999. See page 1 for additional important information.
+++ Income from these investments may be subject to the Alternative Minimum
Tax. See Notes to Financial Statements.
29
<PAGE>
Statement of Net Assets
California Tax-Free Income Fund September 30, 1999
Education 17.94% California Ed Fac Auth Rev CA Institute of Technology AAA $10,245 $ 8,362,481
4 1/2% 10/1/2027
California Ed Fac Auth Rev Cap Apprec Univ San Diego
AMBAC+ Zero Coupon 10/1/2022 Aaa 2,360 616,550
California Ed Fac Auth Rev Cap Apprec Univ San Diego
AMBAC+ Zero Coupon 10/1/2024 Aaa 1,330 307,562
California Ed Fac Auth Rev Pomona College Ser B 5 7/8% 7/1/2019 AAA 800 822,000
California Ed Fac Auth Rev Pooled College & Univ Projs Ser B
6 1/8% 4/1/2013 Baa2 1,340 1,381,875
California Ed Fac Auth Rev Pooled College & Univ Projs Ser B
6.30% 4/1/2021 Baa2 1,000 1,020,000
California Ed Fac Auth Rev Residual Ctfs Ser 113 AAA 5,025 4,334,062
RIBs 6.58% 12/1/2027++
California Ed Fac Auth Rev Univ of San Francisco AAA 1,500 1,563,750
MBIA+ 6.00% 10/1/2016
California Ed Fac Auth Rev Univ of San Francisco AAA 10,500 10,828,125
MBIA+ 6.00% 10/1/2026
California Ed Fac Auth Rev Univ of Southern CA 5 1/2% 10/1/2027 Aa2 2,425 2,358,312
California St Pub Wks Brd Lease Rev Cmnty College Proj Ser B
AMBAC+ 5 5/8% 3/1/2019 AAA 3,000 3,003,750
California St Univ Rev & Colleges Hsg Sys FGIC+ 5.90% 11/1/2021 AAA 4,725 4,837,219
Total 39,435,686
====================================================================================================================================
Finance 3.88% Orange Cnty CA Recovery Ctfs Partn Residual Ctfs Ser 128
RIBs MBIA+ 7.93% 7/1/2019++ AAA* 5,000 5,212,500
Orange Cnty CA Recovery Ctfs Partn Ser A MBIA+ 6.00% 7/1/2026 AAA 3,205 3,305,156
Total 8,517,656
====================================================================================================================================
General Obligation 5.62% California St FGIC+ 4 3/4% 4/1/2020 AAA 1,300 1,144,000
California St FGIC+ 5 5/8% 10/1/2023 AAA 3,500 3,478,125
California St 4 3/4% 12/1/2028 Aa3 4,985 4,231,019
California St Ser BR AMT+++ 5 1/4% 12/1/2026 Aa3 190 174,800
Oak Grove CA Sch Dist Cap Apprec FGIC+ Zero Coupon 8/1/2022 AAA 2,515 647,612
Oak Grove CA Sch Dist Cap Apprec FGIC+ Zero Coupon 8/1/2023 AAA 1,270 307,975
Oak Grove CA Sch Dist Cap Apprec FGIC+ Zero Coupon 8/1/2024 AAA 1,130 257,075
Puerto Rico Comwlth Pub Impt 4 1/2% 7/1/2023 A 2,600 2,122,250
Total 12,362,856
====================================================================================================================================
Healthcare 5.15% University CA Rev Hosp UC Med Ctr AMBAC+ 6.00% 7/1/2026 AAA 6,175 6,344,813
Valley Hlth Sys CA Hosp Rev Impt Proj Ser A ACA+ 6 1/2% 5/15/2025 A 575 602,313
Valley Hlth Sys CA Hosp Rev RIBs ACA+ 8.84% 5/15/2025++ A* 4,000 4,375,000
Total 11,322,126
====================================================================================================================================
Housing 5.01% California Hsg Fin Agy Rev Home Mtg Ser A FHA+ 7 3/8% 8/1/2017 Aa2 4,470 4,592,925
California St Hsg Fin Agy Home Mtg Rev Ser L
MBIA+ AMT+++ 6.40% 8/1/2027 AAA 6,235 6,429,844
Total 11,022,769
====================================================================================================================================
Miscellaneous 5.75% Concord CA Redev Agy Tax Alloc Ser 3 BIG+ 8.00% 7/1/2018 AAA 35 35,651
Corona CA Pub Fin Auth Rev Superior Lien Ser A FSA+ 5.00% 9/1/2020 AAA 1,200 1,099,500
Grossmont CA Un High Sch Dist Ctfs Partn FSA+ 5 3/4% 9/1/2026 AAA 1,655 1,661,206
Inglewood CA Pub Fin Auth Rev Ser A AMBAC+ 5 1/4% 8/1/2021 AAA 2,000 1,902,500
Los Angeles CA Pkg Rev Ser A AMBAC+ 4 3/4% 5/1/2020 AAA 1,935 1,700,381
Midpeninsula Regl Open Space Dist CA Fin Auth Rev
AMBAC+ Zero Coupon 9/1/2024 AAA 3,335 754,544
Oakland CA JT Pwrs Fing Auth Reassmt Rev 5 1/2% 9/2/2024 A- 620 589,000
Pomona CA Pub Fin Auth Rev S W Pomona Redev Proj Ser W
MBIA+ 5.00% 2/1/2030 AAA 750 665,625
San Francisco CA St Bldg Auth Lease Rev SF Civic Ctr Complex Ser A
AMBAC+ 5 1/4% 12/1/2021 AAA 2,490 2,368,613
30
<PAGE>
Statement of Net Assets
California Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Santa Fe Springs CA Cmnty Dev Cons Redev Proj Ser A
MBIA+ 5 1/8% 9/1/2022 AAA $2,020 $ 1,871,025
Total 12,648,045
- -----------------------------------------------------------------------------------------------------------------------------------
Pollution 3.99% California Poll Ctrl Fin Auth Rev Southern CA Ser B
AMBAC+ AMT+++ 6.40% 12/1/2024 AAA 8,310 8,777,438
- -----------------------------------------------------------------------------------------------------------------------------------
Power 9.98% Los Angeles CA Dept Wtr & Pwr Elec Rev 5 3/8% 9/1/2023 Aa3 1,500 1,451,250
Northern CA Transmission Rev CA Ore Transmission Ser A
MBIA+ 6 1/2% 5/1/2016 AAA 4,250 4,510,312
Northern CA Transmission Rev RIBs MBIA+ 7.34% 4/29/2024++ AAA 8,500 7,766,875
Palo Alto CA Util Rev Ser A 6 1/4% 6/1/2020 AA+ 1,610 1,710,625
Sacramento CA Muni Util Dist Elec Rev RIBs FGIC+ 9.48% 8/15/2018++ AAA 6,000 6,502,500
Total 21,941,562
====================================================================================================================================
Prerefunded 14.62% California Ed Fac Auth Rev Loyola Marymount Univ Ser B
6.60% 10/1/2022 AAA 1,400 1,526,000
California Hlth Fac Fin Auth Rev Cedarknoll Ser B 7 1/2% 8/1/2020 AAA 1,000 1,051,340
California Hlth Fac Fin Auth Rev San Diego Assn Ser A
MBIA+ 6.95% 10/1/2021 AAA 1,600 1,724,000
East Bay CA Muni Util Dist Wtr Sys Rev Sub AMBAC+ 6 1/2% 6/1/2017 AAA 7,935 8,827,688
Metrp Wtr Dist Southern CA Wtr Wks Rev RIBs 7.76% 8/5/2022++ AAA 7,300 8,221,625
San Francisco CA Bay Area Rapid Tran Dist Sales Tax Rev
FGIC+ 6.60% 7/1/2012 AAA 1,540 1,640,100
Santa Clara CA Elec Rev Ser A MBIA+ 6 1/4% 7/1/2019 AAA 3,890 4,118,538
Vallejo CA Rev Wtr Impt Proj Ser B FGIC+ 6 1/2% 11/1/2014 AAA 4,565 5,038,619
Total 32,147,910
====================================================================================================================================
Transportation 12.98% Alameda Corridor Transn Auth CA Rev Cap Apprec Ser 1999 A
MBIA+ Zero Coupon 10/1/2033 AAA 6,000 810,000
Alameda Corridor Transn Auth CA Rev Cap Apprec Ser 1999 A
MBIA+ Zero Coupon 10/1/2034 AAA 20,155 2,569,762
Foothill/Eastern Corridor Agy CA Toll Rd Rev MBIA+ 5 1/8% 1/15/2019 AAA 2,500 2,346,875
Foothill/Eastern Corridor Agy Convertible Cap Apprec
Zero Coupon 1/15/2026 BBB- 5,000 2,675,000
Los Angeles CA Dept Arpt Rev Ontario Intl Arpt Ser A
FGIC+ AMT+++ 6.00% 5/15/2026 AAA 2,750 2,784,375
Los Angeles CA Hbr Dept Rev Ser B AMT+++ 6 5/8% 8/1/2025 AA 1,000 1,058,750
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev Ser Y 5 1/2% 7/1/2036 A 1,600 1,530,000
Puerto Rico Comwlth Hwy & Transn Auth Transn Rev Ser A
MBIA+ 4 3/4% 7/1/2038 AAA 2,125 1,779,687
San Francisco CA City & Cnty Arpt Cmnty Intl Rev Issue 2
MBIA+ 6 3/4% 5/1/2020 AAA 3,230 3,504,550
San Francisco CA City & Cnty Arpt Cmnty Intl Rev 2nd Ser I2-B
FGIC+ 5 5/8% 5/1/2021 AAA 1,500 1,496,250
San Francisco CA City & Cnty Arpt Cmnty Intl Rev 2nd Ser Iss 20
MBIA+ 4 1/2% 5/1/2023 AAA 1,925 1,600,156
San Francisco CA City & Cnty Arpt Cmnty Intl Rev 2nd Ser Iss 6
AMBAC+ AMT+++ 6 1/2% 5/1/2018 AAA 4,500 4,803,750
San Joaquin Hills CA Transn Cap Apprec Ser A
MBIA+ Zero Coupon 1/15/2031 AAA 10,000 1,587,500
Total 28,546,655
====================================================================================================================================
Water/Sewer 11.99% California St Dept Wtr Res Cent VY Proj Rev Ser S 5.00% 12/1/2029 Aa2 3,115 2,772,350
California Statewide Cmntys Pooled Fin Prog Ser B
FSA+ 5.70% 10/1/2024 AAA 1,135 1,136,419
East Bay CA Muni Util Dist Wst Wtr Treatment Sys Rev
RIBs AMBAC+ 7.37% 6/1/2020++ AAA 1,750 1,697,500
31
<PAGE>
Statement of Net Assets
California Tax-Free Income Fund September 30, 1999
Rating: Principal
S&P or Amount
Investments Moody's (000) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Los Angeles CA Wst Wtr Sys Rev Ser C MBIA+ 4.00% 6/1/2019 AAA $3,500 $ 2,786,875
Metrp Wtr Dist Southern CA Wtrwks Rev Ser A 5.00% 7/1/2026 Aa2 5,750 5,146,250
San Diego Cnty CA Wtr Rev Ctfs Partn Ser A FGIC+ 4 1/2% 5/1/2024 AAA 3,975 3,289,313
San Diego CA Pub Fac Fin Ser B FGIC+ 5.00% 5/15/2029 AAA 5,000 4,456,250
Vallejo CA Rev Wtr Impt Proj Ser A FSA+ 5 7/8% 5/1/2026 AAA 5,000 5,075,000
Total 26,359,957
- -----------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds 96.91% (Cost $214,068,538) 213,082,660
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 3.09% 6,797,501
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% $219,880,161
- -----------------------------------------------------------------------------------------------------------------------------------
Class A Shares-Net asset value ($207,113,025/20,393,759 shares outstanding) $10.16
Class A Shares-Maximum offering price (net asset value plus sales charge of
3.25% of the offering price) $10.50
Class C Shares-Net asset value ($12,767,136/1,257,108 shares outstanding) $10.16
Ratings are unaudited.
* This investment has not been rated by an independent ratings service but
is, in Lord Abbett's opinion, of comparable quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency. See Glossary of Terms.
++ 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, 1999. See page 1 for additional important information.
+++ Income from these investments may be subject to the Alternative Minimum
Tax. See Notes to Financial Statements.
GLOSSARY OF TERMS:
AMBAC American Municipal Bond Assurance Corporation
ACA American Capital Assets
ASSETGTY Asset Guaranty
BIG Bond Investors Guaranty
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Adminstration
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
MBIA Municipal Bond Investors Assurance
32
</TABLE>
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Year Ended 9/30/99
- -----------------------------------------------------------------------------------------------------------------------------------
National New York Texas New Jersey Connecticut
Investment Income Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income
Interest $ 38,864,990 $ 17,156,715 $ 5,471,842 $ 10,847,897 $ 7,213,744
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fee 3,227,020 1,402,154 452,087 899,247 595,813
12b-1 distribution plan 2,474,539 931,947 291,692 555,969 381,625
Shareholder servicing 423,438 161,920 56,363 108,771 61,732
Reports to shareholders 95,332 42,599 13,368 26,888 17,690
Professional 83,804 44,198 20,749 45,490 24,135
Registration 50,604 4,245 2,400 5,969 9,235
Directors' fees 20,170 9,292 2,844 7,857 3,695
Other 108,639 42,869 13,575 24,048 30,773
Total expenses 6,483,546 2,639,224 853,078 1,674,239 1,124,698
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 32,381,444 14,517,491 4,618,764 9,173,658 6,089,046
Realized and Unrealized Loss on Investments
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized loss (6,453,149) (247,046) (2,194,752) (1,091,791) (78,227)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation of investments (50,382,900) (23,097,350) (6,921,083) (14,686,316) (9,571,217)
Net realized and unrealized loss on investments (56,836,049) (23,344,396) (9,115,835) (15,778,107) (9,649,444)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations $(24,454,605) $ (8,826,905) $(4,497,071) $ (6,604,449) $(3,560,398)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 9/30/99
- -----------------------------------------------------------------------------------------------------------------------------------
Missouri Hawaii Washington Minnesota California
Investment Income Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Income
Interest $ 7,967,115 $ 4,577,020 $ 3,595,842 $981,523 $ 14,581,500
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fee 683,840 381,871 296,855 82,444 1,244,343
Management fee waived - - - (82,444) -
12b-1 distribution plan 492,459 254,116 - - 897,448
Shareholder servicing 104,983 44,270 49,044 12,766 106,362
Reports to shareholders 20,865 11,868 9,234 2,063 38,460
Professional 25,957 18,563 10,924 10,918 40,911
Registration 3,584 883 1,183 1,839 3,584
Directors' fees 4,341 2,441 2,048 358 8,444
Other 21,072 27,505 21,160 11,472 60,347
Total expenses 1,357,101 741,517 390,448 39,416 2,399,899
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 6,610,014 3,835,503 3,205,394 942,107 12,181,601
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 1,347,189 (486,199) 109,993 12,207 286,600
- -----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation of investments (11,024,090) (5,845,381) (5,739,926) (1,551,262) (22,493,114)
Net realized and unrealized loss on investments (9,676,901) (6,331,580) (5,629,933) (1,539,055) (22,206,514)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations $ (3,066,887) $(2,496,077) $(2,424,539) $ (596,948) $(10,024,913)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
33
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended 9/30/99 Year Ended 9/30/98
------------------ ------------------
- -----------------------------------------------------------------------------------------------------------------------------------
National New York Texas National New York Texas
Increase (Decrease) in Net Assets Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income $ 32,381,444 $ 14,517,491 $ 4,618,764 $ 33,238,902 $ 14,824,081 $ 4,398,309
Net realized gain (loss) from investment
transactions (6,453,149) (247,046) (2,194,752) 16,842,543 2,831,621 972,620
Net change in unrealized depreciation
of investments (50,382,900) (23,097,350) (6,921,083) 9,010,370 7,560,811 2,583,620
Net increase (decrease) in net assets
resulting from operations (24,454,605) (8,826,905) (4,497,071) 59,091,815 25,216,513 7,954,549
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income (31,197,508) (14,166,280) (4,626,876) (31,523,634) (14,940,983) (4,665,612)
Net realized gain from investment transactions (10,518,533) - (962,026) - - (776,439)
Total distributions (41,716,041) (14,166,280) (5,588,902) (31,523,634) (14,940,983) (5,442,051)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital share transactions
Net proceeds from sales of shares 59,929,700 11,967,741 8,191,331 44,173,162 10,675,106 4,536,385
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 27,589,196 8,196,054 3,727,256 17,571,273 8,689,637 3,071,896
Total 87,518,896 20,163,795 11,918,587 61,744,435 19,364,743 7,608,281
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (82,595,438) (32,394,646) (9,949,181) (77,738,659) (39,873,429) (8,814,383)
Increase (decrease) in net assets derived from
capital share transactions 4,923,458 (12,230,851) 1,969,406 (15,994,224) (20,508,686) (1,206,102)
Increase (decrease) in net assets (61,247,188) (35,224,036) (8,116,567) 11,573,957 (10,233,156) 1,306,396
Net Assets
Beginning of year 658,310,171 290,256,742 92,607,270 646,736,214 300,489,898 91,300,874
- -----------------------------------------------------------------------------------------------------------------------------------
End of year+ $597,062,983 $255,032,706 $84,490,703 $658,310,171 $290,256,742 $92,607,270
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Includes (overdistributed) undistributed net investment income of $904,900,
$(547,068) and $(245,011), respectively, at September 30, 1999 and
(overdistributed) net investment income of $(583,567), $(1,066,471) and
$(285,405), respectively, at September 30, 1998. See Notes to Financial
Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended 9/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey Connecticut Missouri Hawaii Washington Minnesota
Increase (Decrease) in Net Assets Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Operations
<S> <C> <C> <C> <C> <C> <C>
Net investment income $ 9,173,658 $ 6,089,046 $ 6,610,014 $ 3,835,503 $ 3,205,394 $ 942,107
Net realized gain (loss) from investment
transactions (1,091,791) (78,227) 1,347,189 (486,199) 109,993 12,207
Net change in unrealized depreciation of
investments (14,686,316) (9,571,217) (11,024,090) (5,845,381) (5,739,926) (1,551,262)
Net decrease in net assets resulting
from operations (6,604,449) (3,560,398) (3,066,887) (2,496,077) (2,424,539) (596,948)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income (9,017,246) (6,007,093) (6,637,087) (3,617,258) (2,874,908) (913,056)
Net realized gain from investment
transactions (3,695,316) - - - - -
Total distributions (12,712,562) (6,007,093) (6,637,087) (3,617,258) (2,874,908) (913,056)
- ------------------------------------------------------------------------------------------------------------------------------------
Capital share transactions
Net proceeds from sales of shares 12,758,881 13,939,413 11,685,863 4,060,791 2,052,719 8,299,061
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 7,542,942 2,689,871 4,683,324 1,536,085 1,877,380 647,287
Total 20,301,823 16,629,284 16,369,187 5,596,876 3,930,099 8,946,348
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (23,874,345) (16,286,208) (25,045,944) (8,834,623) (9,535,733) (1,992,279)
Increase (decrease) in net assets
derived from capital share transactions (3,572,522) 343,076 (8,676,757) (3,237,747) (5,605,634) 6,954,069
Increase (decrease) in net assets (22,889,533) (9,224,415) (18,380,731) (9,351,082) (10,905,081) 5,444,065
Net Assets
Beginning of year 186,126,670 120,982,645 144,155,368 80,970,429 62,753,739 14,399,214
- ------------------------------------------------------------------------------------------------------------------------------------
End of year+ $163,237,137 $111,758,230 $125,774,637 $71,619,347 $51,848,658 $19,843,279
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Year Ended 9/30/99
- --------------------------------------------------------------------------------
California
Increase (Decrease) in Net Assets Fund
- -------------------------------------------------------------------------------
Operations
Net investment income $ 12,181,601
Net realized gain (loss) from investment
transactions 286,600
Net change in unrealized depreciation of
investments (22,493,114)
Net decrease in net assets resulting
from operations (10,024,913)
-------------
Distributions to shareholders from
Net investment income (11,801,694)
Net realized gain from investment
transactions -
Total distributions (11,801,694)
-------------
Capital share transactions
Net proceeds from sales of shares 15,242,324
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 5,540,482
Total 20,782,806
-------------
Cost of shares reacquired (43,480,555)
Increase (decrease) in net assets
derived from capital share transactions (22,697,749)
Increase (decrease) in net assets (44,524,356)
Net Assets
Beginning of year 264,404,517
-------------
End of year+ $ 219,880,161
- --------------------------------------------------------------------------------
+ Includes (overdistributed) undistributed net investment income of
$(231,617), $(9,671), $(446,551), $113,854, $303,793, $30,745 and
$(149,904), respectively, at September 30, 1999. See Notes to Financial
Statements.
34
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended 9/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey Connecticut Missouri Hawaii Washington Minnesota California
Increase (Decrease) in Net Assets Fund Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Operations
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income $ 8,925,491 $ 5,942,699 $ 6,783,611 $ 3,819,314 $ 3,328,193 $ 667,751 $ 13,176,118
Net realized gain from investment
transactions 3,349,076 503,065 1,394,815 531,420 2,031,986 50,220 2,426,131
Net change in unrealized appreciation
of investments 4,328,361 3,153,894 2,519,866 2,286,184 497,515 286,094 6,911,727
Net increase in net assets resulting
from operations 16,602,928 9,599,658 10,698,292 6,636,918 5,857,694 1,004,065 22,513,976
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income (8,988,994) (6,083,771) (6,829,012) (3,809,143) (3,139,347) (675,087) (12,811,949)
- ------------------------------------------------------------------------------------------------------------------------------------
Capital share transactions
Net proceeds from sales of shares 16,357,474 9,080,419 13,109,806 6,212,354 2,936,679 4,660,360 17,098,182
Net asset value of shares issued to
shareholders in reinvestment of net
investment income and realized gain
from investment transactions 4,921,185 2,905,858 3,869,083 1,666,332 1,897,157 433,426 5,714,052
Total 21,278,659 11,986,277 16,978,889 7,878,686 4,833,836 5,093,786 22,812,234
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (27,230,768) (14,428,322) (16,973,059) (8,815,520) (11,013,654) (1,533,977) (41,118,778)
Increase (decrease) in net assets derived
from capital share transactions (5,952,109) (2,442,045) 5,830 (936,834) (6,179,818) 3,559,809 18,306,544)
Increase (decrease) in net assets 1,661,825 1,073,842 3,875,110 1,890,941 (3,461,471) 3,888,787 (8,604,517)
Net Assets
Beginning of year 84,464,845 119,908,803 140,280,258 79,079,488 66,215,210 10,510,427 273,009,034
- ------------------------------------------------------------------------------------------------------------------------------------
End of year+ $186,126,670 $120,982,645 $144,155,368 $80,970,429 $62,753,739 $14,399,214 $264,404,517
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Includes (overdistributed) undistributed net investment income of
$(441,750), $(112,932), $(559,970), $(149,866), $(52,467), $1,754 and
$(507,212), respectively, at September 30, 1998. See Notes to Financial
Statements.
35
<PAGE>
Financial Highlights
National Tax-Free Income Fund
<TABLE>
<CAPTION>
Class A Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Year
Ended 9/30,
Per Share Operating Performance: 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.98 $11.48 $11.08 $11.00 $10.62
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .59 .604 .587 .603 .626
Net realized and unrealized gain (loss)on investments (1.03) .470 .415 .075 .382
Total from investment operations (.44) 1.074 1.002 .678 1.008
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.56) (.574) (.602) (.598) (.628)
Distributions from net realized gain (.19) - - - -
Total distributions (.75) (.574) (.602) (.598) (.628)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $10.79 $11.98 $11.48 $11.08 $11.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return(a) (3.85)% 9.60% 9.30% 6.31% 9.84%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses .95% .88% .87% .90% .82%
Net investment income 5.10% 5.18% 5.27% 5.63% 5.92%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Class C Shares
- ----------------------------------------------------------------------------------------------------------------------------------
Year Year
Ended 9/30, 8/1/96(c) Ended 9/30, 7/15/96(c)
Per Share Operating Performance: 1999 1998 1997 to 9/30/96 1999 1998 1997 to 9/30/96
- -------------------------------------------------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.98 $11.50 $11.08 $11.05 $11.99 $11.49 $11.08 $10.90
- -------------------------------------------------------------------------------------- -------------------------------------------
Income from investment
operations
Net investment income .51 .518 .553 .089 .50 .520 .507 .106
Net realized and unrealized
gain (loss) on investments (.99) .466 .413 .033 (1.01) .471 .423 .190
Total from investment operations (.48) .984 .966 .122 (.51) .991 .930 .296
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment (.49) (.504) (.546) (.092) (.48) (.491) (.520) (.116)
income
Distributions from net realized (.19) - - - (.19) - - -
gain
Total distributions (.68) (.504) (.546) (.092) (.67) (.491) (.520) (.116)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $10.82 $11.98 $11.50 $11.08 $10.81 $11.99 $11.49 $11.08
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return(a) (4.30)% 8.85% 8.95% 1.16%(b) (4.45)% 8.80% 8.61% 2.71%(b)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.54% 1.47% 1.37% .20%(b) 1.63% 1.61% 1.59% .34%(b)
Net investment income 4.41% 4.49% 4.65% .68%(b) 4.38% 4.44% 4.54% .96%(b)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year
Ended 9/30,
Supplemental Data for AllClasses: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets, end of year (000) $597,063 $658,310 $646,736 $672,344 $650,699
Portfolio turnover rate 254.13% 304.15% 232.64% 205.35% 225.39%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(b) Not annualized.
(c) Commencement of offering class shares.
See Notes to Financial Statements.
36
<PAGE>
Financial Highlights
New York Tax-Free Income Fund
<TABLE>
<CAPTION>
Class A Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Year
Ended 9/30,
Per Share Operating Performance: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.43 $11.03 $10.78 $10.85 $10.54
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .58 .562 .578 .597 .610
Net realized and unrealized gain (loss)on investments (.94) .408 .262 (.081) .316
Total from investment operations (.36) .970 .840 .516 .926
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.56) (.570) (.590) (.586) (.616)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $10.51 $11.43 $11.03 $10.78 $10.85
Total Return(a) (3.23)% 9.03% 8.01% 4.87% 9.12%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses .93% .85% .85% .81% .82%
Net investment income 5.21% 5.06% 5.35% 5.54% 5.83%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Year
Ended 9/30, 7/15/96(c)
Per Share Operating Performance: 1999 1998 1997 to 9/30/96
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $11.42 $11.02 $10.78 $10.63
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .50 .485 .483 .111
Net realized and unrealized gain (loss) on investments (.93) .402 .267 .152
Total from investment operations (.43) .887 .750 .263
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.48) (.487) (.510) (.113)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $10.51 $11.42 $11.02 $10.78
Total Return(a) (3.93)% 8.34% 7.13% 2.48%(b)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.62% 1.57% 1.57% .34%(b)
Net investment income 4.49% 4.32% 4.60% 1.04%(b)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year
Ended 9/30,
Supplemental Data for AllClasses: 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets, end of year (000) $255,033 $290,257 $300,490 $319,553 $331,618
Portfolio turnover rate 52.67% 64.63% 110.28% 64.25% 105.62%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(b) Not annualized.
(c) Commencement of offering class shares.
See Notes to Financial Statements.
37
<PAGE>
Financial Highlights
Texas Tax-Free Income Fund
<TABLE>
<CAPTION>
Year
Ended 9/30,
Per Share Operating Performance: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.69 $10.40 $10.11 $10.05 $ 9.59
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .52 .507 .548 .567 .571
Net realized and unrealized gain (loss)
on investments (1.03) .407 .367 .045 .452
Total from investment operations (.51) .914 .915 .612 1.023
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.52) (.534) (.555) (.552) (.563)
Distributions from net realized gain (.11) (.090) (.070) - -
Total distributions (.63) (.624) (.625) (.552) (.563)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $9.55 $10.69 $10.40 $10.11 $10.05
Total Return(a) (4.96)% 9.24% 9.25% 6.11% 11.14%
Ratios/Supplemental Data:
Net assets, end of year (000) $84,491 $92,607 $91,301 $94,414 $100,304
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .94% .91% .88% .69% .62%
Expenses, excluding waiver .94% .91% .88% .87% .87%
Net investment income 5.12% 4.85% 5.38% 5.58% 5.90%
Portfolio turnover rate 168.04% 143.78% 127.88% 112.34% 108.00%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions. See Notes to Financial Statements.
Financial Highlights
New Jersey Tax-Free Income Fund
<TABLE>
<CAPTION>
Year
Ended 9/30,
Per Share Operating Performance: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 5.54 $ 5.32 $ 5.18 $ 5.14 $ 4.95
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .27 .262 .272 .277 .287
Net realized and unrealized gain (loss)
on investments (.47) .223 .144 .041 .192
Total from investment operations (.20) .485 .416 .318 .479
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.26) (.265) (.276) (.278) (.289)
Distributions from net realized gain (.11) - - - -
Total distributions (.37) (.265) (.276) (.278) (.289)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 4.97 $ 5.54 $ 5.32 $ 5.18 $ 5.14
Total Return(a) (3.73)% 9.34% 8.25% 6.29% 9.98%
Ratios/Supplemental Data:
Net assets, end of year (000) $163,237 $186,127 $184,465 $186,402 $191,562
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .93% .86% .82% .79% .72%
Expenses, excluding waiver .93% .86% .86% .86% .87%
Net investment income 5.11% 4.85% 5.21% 5.31% 5.73%
Portfolio turnover rate 185.16% 118.38% 154.80% 171.63% 133.11%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions. See Notes to Financial Statements.
38
<PAGE>
Financial Highlights
Connecticut Tax-Free Income fund
<TABLE>
<CAPTION>
Year
Ended 9/30,
Per Share Operating Performance: 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.73 $10.42 $10.13 $10.12 $ 9.71
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .54 .521 .556 .576 .579
Net realized and unrealized gain (loss)
on investments (.86) .322 .287 (.013) .407
Total from investment operations (.32) .843 .843 .563 .986
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.52) (.533) (.553) (.553) (.576)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $9.89 $10.73 $10.42 $10.13 $10.12
Total Return(a) (3.04)% 8.32% 8.56% 5.70% 10.52%
Ratios/Supplemental Data:
Net assets, end of year (000) $111,758 $120,983 $119,909 $122,885 $113,436
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .95% .81% .59% .38% .41%
Expenses, excluding waiver .95% .81% .78% .80% .86%
Net investment income 5.12% 4.95% 5.45% 5.66% 5.89%
Portfolio turnover rate 53.76% 61.06% 37.09% 63.61% 54.19%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions. See Notes to Financial Statements.
Financial Highlights
Missouri Tax-Free Income Fund
<TABLE>
<CAPTION>
Year
Ended 9/30,
Per Share Operating Performance: 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $5.36 $ 5.22 $ 5.08 $ 5.08 $ 4.88
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .25 .253 .268 .267 .277
Net realized and unrealized gain (loss)
on investments (.37) .142 .138 .008 .204
Total from investment operations (.12) .395 .406 .275 .481
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.25) (.255) (.266) (.275) (.281)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $4.99 $ 5.36 $ 5.22 $ 5.08 $ 5.08
Total Return(a) (2.25)% 7.75% 8.22% 5.54% 10.21%
Ratios/Supplemental Data:
Net assets, end of year (000) $125,775 $144,155 $140,280 $134,144 $131,823
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .99% .92% .70% .77% .74%
Expenses, excluding waiver .99% .93% .94% .92% .89%
Net investment income 4.84% 4.80% 5.22% 5.21% 5.61%
Portfolio turnover rate 78.85% 72.89% 27.34% 93.17% 58.17%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions. See Notes to Financial Statements.
39
<PAGE>
Financial Highlights
Hawaii Tax-Free Income fund
<TABLE>
<CAPTION>
Year
Ended 9/30,
Per Share Operating Performance: 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 5.25 $ 5.07 $ 4.93 $ 4.91 $4.72
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .26 .245 .266 .273 .271
Net realized and unrealized gain (loss)
on investments (.43) .180 .138 .015 .198
Total from investment operations (.17) .425 .404 .288 .469
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.24) (.245) (.264) (.268) (.279)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $4.84 $ 5.25 $ 5.07 $ 4.93 $4.91
Total Return(a) (3.31)% 8.59% 8.42% 5.94% 10.30%
Ratios/Supplemental Data:
Net assets, end of year (000) $71,619 $80,970 $79,079 $85,344 $86,105
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .97% .92% .58% .57% .58%
Expenses, excluding waiver .97% .93% .87% .87% .87%
Net investment income 5.03% 4.78% 5.39% 5.46% 5.74%
Portfolio turnover rate 27.63% 52.65% 29.09% 59.46% 70.64%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions. See Notes to Financial Statements.
Financial Highlights
Washington Tax-Free Income Fund
<TABLE>
<CAPTION>
Year
Ended 9/30,
Per Share Operating Performance: 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $5.38 $5.16 $4.96 $4.91 $4.72
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .28 .273 .268 .271 .277
Net realized and unrealized gain (loss)
on investments (.50) .206 .206 .056 .200
Total from investment operations (.22) .479 .474 .327 .477
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.25) (.259) (.274) (.277) (.287)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $4.91 $5.38 $5.16 $4.96 $4.91
Total Return(a) (4.17)% 9.48% 9.82% 6.80% 10.48%
Ratios/Supplemental Data:
Net assets, end of year (000) $51,849 $62,754 $66,215 $71,295 $74,359
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .66% .65% .57% .60% .53%
Expenses, excluding waiver .66% .65% .62% .68% .68%
Net investment income 5.42% 5.20% 5.36% 5.47% 5.84%
Portfolio turnover rate 180.42% 141.56% 132.37% 78.02% 92.85%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions. See Notes to Financial Statements.
40
<PAGE>
Financial Highlights
Minnesota Tax-Free Income fund
<TABLE>
<CAPTION>
Year
Ended 9/30, 12/27/94(c)
Per Share Operating Performance: 1999 1998 1997 1996 to 9/30/95
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of yea $5.18 $5.05 $4.90 $5.01 $4.76
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .27 .265 .273 .294 .230
Net realized and unrealized gain (loss) (.41) .134 .155 (.078) .249
on investments
Total from investment operations (.14) .399 .428 .216 .479
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.26) (.269) (.278) (.286) (.229)
Distribution from net realized gain - - - (.040) -
Total distributions (.26) (.269) (.278) (.326) (.229)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $4.78 $5.18 $5.05 $4.90 $5.01
Total Return(a) (2.72)% 8.11% 8.97% 4.44% 10.22%(b)
Ratios/Supplemental Data:
Net assets, end of year (000) $19,843 $14,399 $10,510 $ 8,047 $ 4,315
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .23% .27% .36% .00% .00%(b)
Expenses, excluding waiver .73% .77% .86% .91% .64%(b)
Net investment income 5.43% 5.19% 5.51% 5.91% 4.58%(b)
Portfolio turnover rate 22.87% 40.65% 41.45% 43.08% 121.41%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(b) Not annualized.
(c) Commencement of operations.
See Notes to Financial Statements.
41
<PAGE>
Financial Highlights
CALIFORNIA SERIES
<TABLE>
<CAPTION>
Class A Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Year One Month Year
Ended 9/30, Ended 9/30, Ended 8/31,
Per Share Operating Performance: 1999 1998 1997 1996 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.12 $10.72 $10.43 $10.32 $10.41 $10.45
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .54 .538 .560 .046 .566 .588
Net realized and unrealized gain (loss)
on investments (.98) .388 .290 .112 (.089) (.038)
Total from investment operations (.44) .926 .850 .158 .477 .550
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.52) (.526) (.560) (.048) (.567) (.590)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $10.16 $11.12 $10.72 $10.43 $10.32 $10.41
Total Return(a) (4.09)% 8.86% 8.39% 1.53%(b) 4.65% 5.58%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .93% .87% .72% .07%(b) .75% .76%
Expenses, excluding waiver .93% .87% .85% .07%(b) .86% .86%
Net investment income 4.96% 4.98% 5.38% 0.44%(b) 5.41% 5.84%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Shares
- ------------------------------------------------------------------------------------------------------------------------------------
Year One Month
Ended 9/30, Ended 9/30, 7/15/96(c)
Per Share Operating Performance: 1999 1998 1997 1996 to 8/31/96
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.12 $10.72 $10.43 $10.32 $10.28
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .46 .465 .485 .039 .068
Net realized and unrealized gain (loss)
on investments (.98) .383 .287 .113 .041
Total from investment operations (.52) .848 .772 .152 .109
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.44) (.448) (.482) (.042) (.069)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $10.16 $11.12 $10.72 $10.43 $10.32
Total Return(a) (4.77)% 8.09% 7.59% 1.47%(b) 1.16%(b)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver 1.60% 1.59% 1.46% .13%(b) .17%(b)
Expenses, excluding waiver 1.60% 1.59% 1.59% .13%(b) .21%(b)
Net investment income 4.28% 4.26% 4.64% .38%(b) .65%(b)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year One Month Year
Ended 9/30, Ended 9/30, Ended 8/31,
Supplemental Data for AllClasses: 1999 1998 1997 1996 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of year (000) $219,880 $264,405 $273,009 $294,837 $291,611 $296,274
Portfolio turnover rate 185.43% 187.26% 121.97% 2.74% 132.37% 100.20%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(b) Not annualized.
(c) Commencement of offering class shares.
See Notes to Financial Statements.
42
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Lord Abbett Tax-Free Income Fund, Inc. (the "Company") is an open-end management
investment company. The Company consists of ten separate portfolios ("Funds").
Each Fund is non-diversified as defined under the Investment Company Act of 1940
except for the National Fund. The financial statements have been prepared in
conformity with generally accepted accounting principles, which require
management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Company.
(a) Security valuation 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, no
federal income tax provision is required.
(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) The organization expenses of the Min ne sota Fund are being amortized evenly
over a period of five years from its commencement date of operations.
2. Management Fee and Other Transactions With Affiliates
The Company has a management agreement with Lord, Abbett & Co. ("Lord Abbett")
pursuant to which Lord Abbett supplies the Company with investment management
services and executive and other personnel, pays the remuner ation 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 waive management fees or reimburse any Fund for certain of its other
expenses. Any such other expenses reimbursed are subject to repayment pursuant
to a formula based on the expense ratio and size of the Fund until five years
from the commencement of its operations or the termination of the management
agreement, whichever is earlier. As of September 30, 1999, other expenses
reimbursed by Lord Abbett and not repaid by the Minnesota Fund amounted to
$43,830.
Each Fund 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 Fund makes payments to Distributor which uses or passes on such
payments to authorized institutions. Pursuant to the Class A Plan, the Funds 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 Funds 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 Funds; (2) a one-time distribution
fee of up to 1% on certain qualifying purchases and (3) an annual distribution
fee of 0.10% of the average daily net asset value of Class A shares serviced by
certain qualifying institutions. The Class A Plan of the Washington and
Minnesota Funds will not go into effect until the quarter subsequent to the net
assets of each Fund reaching $100 million. Pursuant to the Class B Plan of the
National Fund, the Fund 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 Funds, the Funds pay Distributor (1) a service fee and a distribution
fee, at the time shares are sold, not to exceed 0.25% and 0.75%, respectively,
of the net asset value of such shares and (2) at each quarter-end after the
first anniversary of the sale of shares, a service fee and a distribution fee at
an annual rate not to exceed 0.25% and 0.75%, respectively, of the average daily
net asset value of such shares outstanding.
12b-1 distribution plan expenses for the multiple share class Funds were as
follows:
12b-1 Expenses
- --------------------------------------------------------------------------------
Fund Class A Class B Class C
- --------------------------------------------------------------------------------
National $1,919,897 $127,144 $427,498
- --------------------------------------------------------------------------------
New York 860,500 - 71,447
California 757,075 - 140,373
- --------------------------------------------------------------------------------
Distributor received the following commissions on sales of capital stock of the
Company after concessions were paid to authorized dealers:
Distributor Dealers'
Fund Commissions Concessions
- --------------------------------------------------------------------------------
National-Class A $105,244 $658,950
- --------------------------------------------------------------------------------
New York-Class A 28,922 176,446
Texas 35,259 210,057
New Jersey 37,633 243,668
Connecticut 34,049 209,387
Missouri 46,715 269,994
Hawaii 10,968 65,974
Washington 10,242 60,574
Minnesota 32,908 186,498
California-Class A 40,236 256,916
- --------------------------------------------------------------------------------
Certain of the Company's officers and directors have an interest in Lord Abbett.
43
<PAGE>
Notes to Financial Statements
3. Capital Share Transactions. Transactions in shares of capital stock for the
single class Funds were as follows:
<TABLE>
<CAPTION>
Year Ennded 9/30/99
------------------------------------------------------------------------------------------
Texas New Jersey Connecticut Missouri Hawaii Washington Minnesota
Fund Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales of shares 800,026 2,390,789 1,319,866 2,223,451 796,560 389,460 1,638,218
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of dividends and
distributions 361,537 1,410,888 256,280 894,762 300,269 358,276 127,846
- -----------------------------------------------------------------------------------------------------------------------------------
Total 1,161,563 3,801,677 1,576,146 3,118,213 1,096,829 747,736 1,766,064
Shares reacquired (974,822) (4,548,695) (1,552,956) (4,783,618) (1,723,055) (1,843,141) (391,138)
Increase (decrease) 186,741 (747,018) 23,190 (1,665,405) (626,226) (1,095,405) 1,374,926
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 9/30/98
------------------------------------------------------------------------------------------
Texas New Jersey Connecticut Missouri Hawaii Washington Minnesota
Fund Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Sales of shares 433,676 3,019,528 862,094 2,485,406 1,211,315 560,837 913,418
- ------------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of dividends and
distributions 294,101 910,326 276,538 735,101 324,937 362,420 85,054
- ------------------------------------------------------------------------------------------------------------------------------------
Total 727,777 3,929,854 1,138,632 3,220,507 1,536,252 923,257 998,472
Shares reacquired (844,011) (5,031,851) (1,371,829) (3,224,796) (1,716,377) (2,097,870) (299,990)
Increase (decrease) (116,234) (1,101,997) (233,197) (4,289) (180,125) (1,174,613) 698,482
</TABLE>
44
<PAGE>
Notes to Financial Statements
Transactions in Funds with multiple classes (both shares and dollars) were as
follows:
<TABLE>
<CAPTION>
Year Ended 9/30/99
- -----------------------------------------------------------------------------------------------------------------------------------
National Fund New York Fund California Fund
Class A Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 3,553,093 $ 41,120,760 962,807 $ 10,721,047 1,200,714 $ 12,975,648
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in reinvestment of
dividends and distributions 2,202,784 25,529,495 718,857 7,998,946 484,951 5,243,714
- -----------------------------------------------------------------------------------------------------------------------------------
Total 5,755,877 66,650,255 1,681,664 18,719,993 1,685,665 18,219,362
Shares reacquired (6,125,009) (70,108,828) (2,855,684) (31,414,585)( (3,813,581) (40,951,155)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease (369,132)$ (3,458,573) (1,174,020) $(12,694,592) (2,127,916) $(22,731,793)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
National Fund New York Fund California Fund
Class A Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Sales of shares 2,744,018 $ 32,066,617 829,121 $ 9,270,220 1,378,536 $ 15,009,494
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in reinvestment of
dividends 1,406,485 16,408,699 763,823 8,523,670 501,108 5,431,587
- -----------------------------------------------------------------------------------------------------------------------------------
Total 4,150,503 48,475,316 1,592,944 17,793,890 1,879,644 20,441,081
Shares reacquired (5,961,842) (69,583,131) (3,449,206) (38,570,889) (3,473,545) (37,715,369)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease (1,811,339)$(21,107,815) (1,856,262) $(20,776,999) (1,593,901) $(17,274,288)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended 9/30/99 Year Ended 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
National Fund National Fund
Class B Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of shares 916,903 $10,609,930 570,285 $6,662,760
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in reinvestment of
dividends 36,662 425,255 10,179 119,121
Total 953,565 11,035,185 580,464 6,781,881
Shares reacquired (260,671) (2,964,850) (45,118) (527,894)
Increase 692,894 $ 8,070,335 535,346 $6,253,987
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
Notes to Financial Statements
<TABLE>
<CAPTION>
Year Ended 9/30/99
---------------------------------------------------------------------------
National Fund New York Fund California Fund
Class C Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 703,876 $8,199,010 110,588 $1,246,694 208,570 $2,266,676
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in reinvestment of
dividends and distributions 140,566 1,634,446 17,744 197,108 27,360 296,768
- -----------------------------------------------------------------------------------------------------------------------------------
Total 844,442 9,833,456 128,332 1,443,802 235,930 2,563,444
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (828,590) (9,521,760) (89,612) (980,061) (235,865) (2,529,400)
Increase 15,852 $ 311,696 38,720 $ 463,741 65 $ 34,044
Year Ended 9/30/98
- -----------------------------------------------------------------------------------------------------------------------------------
NationalFund New York Fund California Fund
Class C Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
Sales of shares 463,595 $ 5,443,785 125,857 $1,404,886 192,070 $ 2,088,688
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders in
reinvestment of dividends 89,380 1,043,453 14,878 165,967 26,069 282,465
- -----------------------------------------------------------------------------------------------------------------------------------
Total 552,975 6,487,238 140,735 1,570,853 218,139 2,371,153
Shares reacquired (652,758) (7,627,634) (116,597) (1,302,540) (314,445) (3,403,409)
Increase (decrease) (99,783) $(1,140,396) 24,138 $ 268,313 (96,306) $(1,032,256)
</TABLE>
The Company has 1,000,000,000 authorized shares (par value $.001) allocated as
follows: 150,000,000 to the National Fund, 110,000,000 to each of the New York,
New Jersey and California Fund, and 70,000,000 to each of the Texas,
Connecticut, Missouri, Hawaii, Washington and Minnesota Fund.
4. Distributions
Dividends from net investment income are declared daily and paid monthly.
Taxable net realized gains from securities transactions, if any, reduced by
capital loss carryforwards will be distributed to shareholders annually. Income
and capital gains distributions are determined in accordance with income tax
regulations which may differ from methods used to determine the corresponding
income and capital gains amounts in accordance with generally accepted
accounting principles. At September 30, 1999, accumulated net realized gain
(loss) for financial reporting purposes was as follows:
National $ (7,762,119) Missouri $ (1,629,842)
- --------------------------------------------------------------------------------
New York (10,665,690) Hawaii (2,129,939)
- --------------------------------------------------------------------------------
Texas (2,203,152) Washington (470,961)
- --------------------------------------------------------------------------------
New Jersey (1,605,621) Minnesota 1,034
- --------------------------------------------------------------------------------
Connecticut (1,486,589) California (18,793,480)
- --------------------------------------------------------------------------------
At September 30, 1999, the capital loss carryforwards were as follows:
Expiration Date
---------------
- --------------------------------------------------------------------------------
Fund 2003 2004 2005 2007 Total
- --------------------------------------------------------------------------------
New York $8,259,602 $1,668,796 $ - $ - $ 9,928,398
- --------------------------------------------------------------------------------
Connecticut 721,307 537,856 - - 1,259,163
- --------------------------------------------------------------------------------
Missouri 495,713 1,103,066 31,063 - 1,629,842
- --------------------------------------------------------------------------------
Hawaii 68,514 1,575,226 - 37,384 1,681,124
- --------------------------------------------------------------------------------
Washington - 470,961 - - 470,961
- --------------------------------------------------------------------------------
California 11,890,149 5,761,785 - - 17,651,934
Notes to Financial Statements
Dividends and capital gains declared by class for the multiple share class Funds
were as follows:
Year Ended 9/30/99
Dividends
---------
Fund Class A Class B Class C
- --------------------------------------------------------------------------------
National $28,839,888 $591,671 $1,765,949
- --------------------------------------------------------------------------------
New York 13,857,824 - 308,456
California 11,225,807 - 575,887
- --------------------------------------------------------------------------------
Capital Gains
-------------
- --------------------------------------------------------------------------------
Fund Class A Class B Class C
- --------------------------------------------------------------------------------
National $9,645,280 $182,252 $691,001
- --------------------------------------------------------------------------------
Year Ended 9/30/98
Dividends
---------
- --------------------------------------------------------------------------------
Fund Class A Class B Class C
- --------------------------------------------------------------------------------
National $29,528,872 $256,967 $1,737,795
- --------------------------------------------------------------------------------
New York 14,658,617 - 282,366
California 12,279,923 - 532,026
- --------------------------------------------------------------------------------
5. Paid In Capital
At September 30, 1999, paid in capital for each Fund was as follows:
National $618,106,577 Missouri $128,329,752
- --------------------------------------------------------------------------------
New York 268,109,879 Hawaii 73,872,341
- --------------------------------------------------------------------------------
Texas 86,856,643 Washington 52,908,821
- --------------------------------------------------------------------------------
New Jersey 167,099,103 Minnesota 20,812,809
- --------------------------------------------------------------------------------
Connecticut 114,844,229 California 239,809,423
- --------------------------------------------------------------------------------
46
<PAGE>
6. Purchases and Sales of Securities
Purchases and sales of investment securities (other than short-term investments)
were as follows:
Fund Purchases Sales
- --------------------------------------------------------------------------------
National $1,715,027,506 $1,690,239,264
- --------------------------------------------------------------------------------
New York 146,930,852 158,545,372
- --------------------------------------------------------------------------------
Texas 152,726,229 152,606,476
- --------------------------------------------------------------------------------
New Jersey 331,789,740 334,430,164
- --------------------------------------------------------------------------------
Connecticut 64,421,405 63,670,306
- --------------------------------------------------------------------------------
Missouri 107,773,485 123,602,544
- --------------------------------------------------------------------------------
Hawaii 20,889,285 24,564,593
- --------------------------------------------------------------------------------
Washington 111,929,804 118,407,807
- --------------------------------------------------------------------------------
Minnesota 9,908,399 3,886,093
- --------------------------------------------------------------------------------
California 455,221,331 485,638,216
- --------------------------------------------------------------------------------
Security gains and losses are computed on the identified cost basis. As of
September 30, 1999, net unrealized appreciation, unrealized appreciation and
unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized
Appreciation Unrealized Unrealized
Fund (Depreciation) Appreciation Depreciation
- --------------------------------------------------------------------------------
National $(14,186,375) $9,332,085 $(23,518,460)
- --------------------------------------------------------------------------------
New York (1,864,415) 6,021,978 (7,886,393)
- --------------------------------------------------------------------------------
Texas 82,223 1,715,277 (1,633,054)
- --------------------------------------------------------------------------------
New Jersey (2,024,728) 4,580,197 (6,604,925)
- --------------------------------------------------------------------------------
Connecticut (1,589,739) 2,411,382 (4,001,121)
- --------------------------------------------------------------------------------
Missouri (478,722) 3,350,488 (3,829,210)
- --------------------------------------------------------------------------------
Hawaii (236,909) 1,786,788 (2,023,697)
- --------------------------------------------------------------------------------
Washington (892,995) 1,154,864 (2,047,859)
- --------------------------------------------------------------------------------
Minnesota (1,001,309) 79,368 (1,080,677)
- --------------------------------------------------------------------------------
California (985,878) 6,196,420 (7,182,298)
- --------------------------------------------------------------------------------
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 payable at
September 30, 1999, under a deferred compensation plan, were $547,922.
Copyright 1999 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.
Please read the prospectus carefully before you invest. There is no guarantee
that the forecasts contained within this publication will come to pass.
All rights reserved.
47
<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 Fund,
New York Fund, Texas Fund, New Jersey Fund, Connecticut Fund, Missouri Fund,
Hawaii Fund, Washington Fund, Minnesota Fund, and California Fund of Lord Abbett
Tax-Free Income Fund, Inc. as of September 30, 1999, the related statements of
operations for the year ended and of changes in net assets for each of the years
in the two-year period then ended, and the financial highlights for each of the
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, 1999 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 Fund,
New York Fund, Texas Fund, New Jersey Fund, Connecticut Fund, Missouri Fund,
Hawaii Fund, Washington Fund, Minnesota Fund, and California Fund of Lord Abbett
Tax-Free Income Fund, Inc. at September 30, 1999, the results of their
operations, the changes in their net assets and their financial highlights for
the respective periods presented, in conformity with generally accepted
accounting principles.
[GRAPHIC OMITTED]
Deloitte & Touche LLP
New York, New York
November 22,1999
Our Management
Board of Directors
Robert S. Dow
E. Thayer Bigelow*
William H.T. Bush*+
Robert B. Calhoun, Jr.*
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
Paul A. Hilstad, Vice President
and Secretary
Daniel E. Carper, Vice President
Philip Fang, Vice President
Robert G. Morris, Vice President
John R. Mousseau, Vice President
Lawrence H. Kaplan, Vice President
and Assistant Secretary
A. Edward Oberhaus III, Vice President
Joan Binstock, Vice President
Tracie Richter, Vice President
Donna McManus, 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
Wilmer, Cutler & Pickering
Washington, DC
<PAGE>
LORD, ABBETT & CO.
A TRADITION OF PERFORMANCE THROUGH
DISCIPLINED
INVESTING
[GRAPHIC OMITTED]
(STANDING, LEFT TO RIGHT)
LISA D'EMIC, MUNICIPAL PORTFOLIO MANAGER
RICHARD SMOLA, MUNICIPAL PORTFOLIO MANAGER
PHILIP FANG, FUND PORTFOLIO MANAGER
(SEATED, LEFT TO RIGHT)
ZANE E. BROWN, PARTNER IN CHARGE OF
FIXED INCOME AND FUND PORTFOLIO MANAGER
JOHN R. MOUSSEAU, DIRECTOR OF MUNICIPAL
BOND MANAGEMENT AND FUND 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
witha disciplined, value approach is the best way to achieve competitive returns
and reduce portfolio risk. This commitment and the dedication of our team of 68
investment professionals have helped us earn the trust of financial
professionals and investors for the past 70 years.
ABOUT YOUR FUND'S
BOARD OF DIRECTORS
The Securities and Exchange Commission (SEC) views the role of the independent
Board of Directors as one of the most important components in overseeing a
mutual fund. The Board of Directors watches over your Fund's general operations
and represents your interests. Board members review and approve every contract
between your Fund and Lord, Abbett & Co. (the Fund's investment manager) AND
LORD ABBETT DISTRIBUTOR LLC (the Fund's underwriter). They meet regularly to
review a wide variety of information and issues 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 backgrounds to provide a variety of
viewpoints in the oversight of their Fund. Below, we feature one of our
independent directors, William Bush.
William Bush
Director - Lord Abbett
Tax-Free Income Fund
[GRAPHIC OMITTED]
Mr. Bush received his BA degree from Yale University in 1960. He co-founded the
financial advisory firm of Bush-O'Donnell & Company which provides investment
management and financial advisory services to corporations and individuals
throughout the United States and abroad.
Mr. Bush serves as a member of the Board of Directors of Right Choice Managed
Care Inc., Maritz Inc., Mississippi Valley Bancshares, Inc. and INTRAV, Inc.,
all of St. Louis, and DT Industries Inc. of Springfield, Missouri. He was named
an independent director for all of Lord Abbett's funds in 1998.
<PAGE>
INVESTING IN THE
LORD ABBETT
FAMILY OF FUNDS
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND GROWTH FUNDS GROWTH & BALANCED FUND INCOME FUNDS TAX-FREE MONEY
INCOME FUNDS INCOME FUNDS MARKET FUND
<S> <C> <C> <C> <C> <C>
Developing Growth Fund* Research Fund - Research Fund - Balanced Series^ World Bond- o National U.S. Government
Small-Cap Value Large-Cap Debenture Series o California Securities Money
Series Series o Connecticut Market Fund+++
Global Fund - o Florida
Alpha Series** Growth & Income Series o Georgia
Income Series o Hawaii
International High Yield Fund o Michigan
Series Affiliated Fund o Minnesota
Bond-Debenture Fund o Missouri
Mid-Cap o New Jersey
Value Fund Limited Duration o New York
U.S. Government o Pennsylvania
Growth Securities Series+ o Texas
Opportunities o Washington
Fund U.S. Government
Securities Series+
Global Fund -
Equity Series
</TABLE>
Finding the right mutual fund can be confusing. At Lord, Abbett & Co., we
believe your investment professional provides value in helping you identify and
understand 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 current prospectus for the fund(s) covered by this
report.
For more complete information about any Lord Abbett fund, including risks,
charges and ongoing expenses, call your investment professional or Lord Abbett
Distributor LLC at 800-874-3733 for a prospectus. Read it carefully before
investing.
The Lord Abbett Family of Funds lets you access more than 30 portfolios designed
to meet a variety of investment needs.
DIVERSIFICATION. You and your investment professional can diversify your
investments between equity and income funds.
FLEXIBILITY. As your investment goals change, your investment professional can
help you reallocate your portfolio.
You may reallocate assets among our funds at any time. Speak with your
investment professional to help you customize your investment plan.
NUMBERS TO KEEP HANDY
FOR SHAREHOLDER ACCOUNT OR STATEMENT
INQUIRIES: 800-821-5129
FOR LITERATURE ONLY: 800-874-3733
24-HOUR AUTOMATED SHAREHOLDER SERVICE LINE: 800-865-7582
VISIT OUR WEB SITE: WWW.LORDABBETT.COM
*Lord Abbett Developing Growth Fund Classes A, B and C are closed to new
investors.
**Lord Abbett Securities Trust - Alpha Series is a fund of funds investing in
shares of Lord Abbett Developing Growth Fund, Lord Abbett Research Fund -
Small-Cap Value Series and Lord Abbett Securities Trust - International Series.
^ Lord Abbett Balanced Series is a fund of funds investing in shares of
certain other Lord Abbett funds.
+ An investment in this Fund is neither insured nor guaranteed by the U.S.
Government.
++ An investment in this Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund. This Fund is managed to
maintain, and has maintained its stable $1.00 price per share.
[Graphic Omitted]
LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
Lord Abbett mutual fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC
- --------------------------- LATFI-2-999
The GM Building . 767 Fifth Avenue . New York, NY 10153-0203 (11/99)
