<PAGE>
ABT FLORIDA TAX-FREE FUND
ANNUAL REPORT
- --------------------------------------------------------------------------------
June 28, 1995
Dear Shareholder:
We are pleased to present to you the Annual Report for the ABT Florida Tax-
Free Fund. Included with this report is a list of portfolio holdings along with
audited financial statements for the period ended April 30, 1995.
Management's Discussion and Analysis
During the twelve months ended April 30, 1995, the Lehmann Brothers 20-year
Municipal Bond Index returned 10.31%. The Fund's total return for the same
period was 10.04%.
During the past year, the Fund's performance, like all other fixed income
investments, was the result of wide fluctuations in interest rates. From the
beginning of the Fund's fiscal year, April 30, interest rates rose in response
to seven Federal Funds increases by the Federal Reserve. During this time, the
portfolio met its most important objective of preserving capital. The Fund's
return, while negative, was much more favorable than our Lipper Peer Group
average.
Heading into 1995 the interest rate environment changed substantially.
Since November, 1994 long-term municipal rates have fallen dramatically as the
Bond Buyer 40 Index fell from 7.44% to 6.43% or almost 1%. During this rather
dramatic fall in interest rates, the portfolio lagged competitor returns as the
portfolio was defensively positioned during the interest rate uncertainty of
1994.
Beginning around the end of 1994, the portfolio was repositioned to more
fully participate in a falling interest rate environment. While we did not
capture some of the substantial performance at the beginning of this interest
rate move, the Fund met its objective of preserving capital in 1994 and paying a
competitive return. Even though our performance has not been as strong as our
competitors in 1995, we have consistently preferred a portfolio with more
downside protection in a rising interest rate market (falling bond prices), than
to place the portfolio at severe price risk when rates are falling (bond prices
rising).
Sincerely,
/s/ Edward W. Cook
Edward W. Cook
President
<PAGE>
ABT FLORIDA TAX-FREE FUND
VS LEHMAN BROTHERS MUNICIPAL BOND INDEX
Comparison of Change in Value of $10,000 Investment
[GRAPH APPEARS HERE SHOWING THE COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT MADE IN APRIL 1988 BETWEEN THE ABT FLORIDA TAX-FREE FUND AND THE
LEHMAN MUNICIPAL BOND INDEX.]
Date ABT Florida Lehman Muni
Tax-Free Fund* Bond Index**
April, 1988 9525 10000
Oct., 1988 10133 10590
April, 1989 10328 10925
Oct., 1989 10660 11449
April, 1990 10715 11712
Oct., 1990 11319 12299
April, 1991 12095 13058
Oct., 1991 12771 13795
April, 1992 13222 14298
Oct., 1992 13714 14953
April, 1993 15024 16108
Oct., 1993 15932 17059
April, 1994 15306 16456
Oct., 1994 15235 16376
April, 1995 18388 17119
* The past performance of ABT Florida Tax-Free Fund should not be construed as
a guarantee of future performance. The investment return and principal value of
an investment will fluctuate when redeemed, shares may be worth more or less
than their original cost. Returns for the Fund reflect the maximum sales charge
of 4.75%.
** The Lehman Brothers 20-Year Municipal Bond Index and the Lehman Brothers
Municipal Bond Index are unmanaged indices and do not take into account charges,
fees and expenses.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
ABT SOUTHERN MASTER TRUST
We have audited the accompanying statement of assets and liabilities of ABT
Florida Tax-Free Fund (a series of shares of beneficial interest of ABT Southern
Master Trust), including the schedule of investments as of April 30, 1995, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and 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 as of
April 30, 1995 by correspondence with the custodian and brokers. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position Tait,
Weller & Baker of ABT Florida Tax-Free Fund as of April 30, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
PHILADELPHIA, PENNSYLVANIA
JUNE 2, 1995
<PAGE>
ABT FLORIDA TAX-FREE FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT RATE (%) DATE VALUE
--------- -------- -------- ------
MUNICIPAL BONDS - 100.4%
<S> <C> <C> <C> <C>
EDUCATION - 2.6%
$ 4,505,000 Dade County Educ. Facilities Authority Rev.
(St. Thomas University), LOC - Sun Bank 6.125 01/01/19 $ 4,448,687
------------
GENERAL OBLIGATIONS - 4.7%
3,200,000 Florida State Board of Education
Capital Outlay 5.800 06/01/24 3,036,000
3,000,000 Florida State Board of Education
Capital Outlay 7.000 06/01/19 3,202,500
2,000,000 Florida State Board of Education
Capital Outlay 5.250 06/01/23 1,752,500
------------
7,991,000
------------
HEALTH & MEDICAL FACILITIES - 12.1%
6,500,000 Dade County Public Facilities Rev.
(Jackson Memorial Hospital) 5.250 06/01/23 5,728,125
250,000 Dade County Health Facilities Authority Rev.
(South Shore Hospital) 7.600 08/01/24 265,937
1,500,000 Jacksonville Health Facilities Authority Rev.
(St. Luke's Hospital) 6.750 11/15/13 1,565,625
1,500,000 Jacksonville Health Facilities Authority Rev.
(St. Luke's Hospital) 7.125 11/15/20 1,588,125
6,200,000 Palm Beach Health Facilities Authority Rev.
(Good Samaritan Hospital) 6.300 10/01/22 6,029,500
5,000,000 Pensacola Health Facilities 5.250 08/01/23 4,593,750
540,000 University Florida Community Hospital 7.500 09/01/11 612,225
------------
20,383,287
------------
HOUSING - 10.6%
205,000 Broward County HFA, Home Mortgage Rev.,
GNMA Collateralized 7.750 03/01/15 217,300
1,375,000 Broward County HFA, Home Mortgage Rev.,
GNMA/FNMA Collateralized 7.125 03/01/17 1,428,281
275,000 Dade County HFA, Single Family Mortgage Rev.,
GNMA Collateralized 7.500 09/01/13 283,250
135,000 Dade County HFA, Single Family Mortgage Rev.,
GNMA/FNMA Collateralized 7.100 03/01/17 140,569
215,000 Duval County HFA, Single Family Mortgage Rev.,
GNMA Collateralized 7.500 06/01/15 226,825
3,990,000 Florida HFA 8.000 12/01/20 4,259,325
1,895,000 Florida HFA, Multi-Family Housing Rev.
(Bloomingdale Woods Project) 6.875 10/01/12 1,975,537
1,000,000 No. Tampa Housing, MFM Rev., (Country Oaks Apts...)
FHA Insured, FNMA Collateralized 6.900 01/01/24 1,028,750
4,440,000 Palm Beach County HFA, Single Family Mortgage Reeev
GNMA Collateralized 7.600 03/01/23 4,678,650
860,000 Polk County HFA, Single Family Mortgage Rev.,
GNMA Collateralized 7.000 09/01/15 890,100
1,750,000 Winter Haven Housing Authority, MFHR,
FHA Insured (Abbey Lane Apts.) 7.000 07/01/24 1,822,188
850,000 Winter Haven Housing Authority, MFHR,
FHA Insured (Abbey Lane Apts.) 7.000 07/01/12 891,438
------------
17,842,213
------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ABT FLORIDA TAX-FREE FUND
SCHEDULE OF INVESTMENTS - (CONTINUED)
APRIL 30, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT RATE (%) DATE VALUE
--------- -------- -------- ------
<S> <C> <C> <C> <C>
INSURED - 31.0%
$ 1,500,000 Alachua County Health Facilities Authority Rev.,
(Mental Health Services Project) - CGIC 7.750 07/01/10 1,672,500
2,000,000 Altamonte Springs Health Facilities - AMBAC 5.125 11/15/10 1,760,000
875,000 Brevard County HFA, Single Family Mortgage Rev. - FSA 7.000 03/01/13 906,719
2,925,000 Broward County Health Facilities Authority Rev.
(North Beach Hospital) - MBIA 7.000 08/15/11 3,151,687
2,000,000 Charlotte County Health Facilities Authority Rev.
(Bon Secours Hospital) - FSA 5.858 08/15/27 1,970,000
105,000 Charlotte County Special Assessment Rev.
(Peachland Municipal Taxing Unit) - MBIA 7.250 10/01/10 114,450
500,000 Dade County HFA, Single Family Mortgage Rev. - FSA 6.950 12/15/12 520,000
3,815,000 Dade County Public Facilities Rev.
(Jackson Memorial Hospital) - MBIA 4.875 06/01/15 3,276,131
840,000 Duval County HFA, Single Family Mortgage Rev.,
GNMA Collateralized - FGIC 7.350 07/01/24 883,050
2,000,000 Florida Department of Natural Resources,
Preservation 2000 Rev. - AMBAC 6.750 07/01/13 2,120,000
6,350,000 Florida Municipal Power Agency Rev.
(Stanton II Project) - AMBAC 4.500 10/01/27 4,873,625
2,500,000 Florida State Board of Regents
(Univ. System Imp. Rev.) - AMBAC 6.700 07/01/12 2,650,000
1,000,000 Hillsborough County Aviation Rev.
(Tampa International Airport) - AMBAC 6.900 10/01/11 1,062,500
1,000,000 Homestead Excise Tax Rev. - MBIA 7.150 10/01/11 1,090,000
1,000,000 Manatee County Community Redevelopment Rev. - MBIA 7.000 04/01/08 1,080,000
1,510,000 Manatee County General Obligation - FGIC 4.750 10/01/13 1,285,387
1,500,000 Martin County Health Facilities Authority Rev.
(Martin Memorial Hospital) - MBIA 7.100 11/15/20 1,605,000
3,000,000 Palm Beach County Criminal Justice 7.200 06/01/15 3,431,250
Facilities Rev. - FGIC
6,250,000 Palm Beach County Health Facilities
Authority Rev.
(Jupiter Med. Center, Inc.) - FSA 5.250 08/01/23 5,523,437
10,500,000 Plantation Water & Sewer - MBIA - 03/01/07 5,341,875
2,250,000 Puerto Rico General Obligation 5.275 07/01/22 2,067,188
750,000 St. John's County Solid Waste 7.250 11/01/10 825,938
Disposal Rev. - FGIC
1,000,000 St. Petersburg Health Facilities
Authority Rev.
(St. Mary's Hospital) - MBIA 7.000 12/01/21 1,078,750
1,955,000 Sanford Water & Sewer - AMBAC 4.500 10/01/21 1,554,225
1,650,000 Sanford Water & Sewer - AMBAC 4.750 10/01/18 1,388,063
750,000 Tampa Guaranteed Entitlement Rev. - AMBAC 7.050 10/01/07 820,313
---------------
52,052,088
---------------
POLLUTION CONTROL & WASTE MANAGEMENT
FACILITIES - 2.5%
1,000,000 Dade County Solid Waste System Rev. 7.125 10/01/06 1,037,500
3,000,000 Escambia County PCR (Gulf Power Co. 8.250 06/01/17 3,210,000
Project) ---------------
4,247,500
---------------
PREREFUNDED - 14.7%
1,600,000 Boynton Beach Water & Sewer Rev. - AMBAC 7.400 11/01/15 1,810,000
1,000,000 Charlotte County Utility System Rev. - FGIC 7.000 10/01/14 1,120,000
2,600,000 Dade County Educ. Facilities Authority Rev.
(St. Thomas University), LOC - Sun Bank 7.650 01/01/14 2,918,500
2,070,000 Dade County Educ. Facilities Authority Rev.
(Florida International Univ.) - MBIA 7.100 10/01/16 2,328,750
1,500,000 Florida State G.O. 7.375 07/01/19 1,663,125
2,000,000 Florida State University Financial
Assistance, Inc.
Educational Rev., LOC - Sun Bank 6.750 10/01/16 2,202,500
2,135,000 Jacksonville Electric Authority Rev.,
(Bulk Power Supply) 7.000 10/01/12 2,364,512
2,000,000 Jacksonville Health Facilities Authority Rev.
(Daughters of Charity, Inc.) 7.500 11/01/15 2,272,500
3,500,000 Manatee County Public Utility System Rev. - MBIA 6.750 10/01/13 3,871,875
2,400,000 Miami Sports & Exhibition Rev. - FGIC 7.200 10/01/20 2,670,000
1,460,000 Orlando Utility Commission Water & Electric Rev. 7.000 10/01/23 1,604,175
---------------
24,825,937
---------------
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ABT FLORIDA TAX-FREE FUND
SCHEDULE OF INVESTMENTS - (CONTINUED)
APRIL 30, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT RATE (%) DATE VALUE
--------- --------- -------- ------
<S> <C> <C> <C> <C>
SALES TAX REVENUE - .6%
1,000,000 Cooper City Sales Tax Rev. 7.250 10/01/11 1,072,500
------------
SPECIAL ASSESSMENTS - .6%
1,000,000 Fort Myers Special Assessment 7.050 07/01/05 1,063,750
District Rev. ------------
STATE APPROPRIATIONS - .3%
200,000 Florida State Department of General Services,
Facilities Management Rev. 7.250 09/01/10 216,250
200,000 Florida State Department of General Services,
Facilities Management Rev. 7.000 09/01/20 212,500
------------
428,750
------------
TRANSPORTATION - 7.0%
9,500,000 Orlando/Orange County Expressway 5.950 07/01/23 9,084,375
Authority Rev.
2,975,000 Puerto Rico 5.500 07/01/13 2,748,156
------------
11,832,531
------------
UTILITY PROJECTS - 13.4%
3,000,000 Jacksonville Electric Authority Rev.
(St. John's River Power System) 5.250 10/01/28 2,613,750
8,750,000 Orlando Utility Commission Water & Electric Rev. 6.750 10/01/17 9,701,563
3,500,000 Puerto Rico Electric Authority Rev. (Power Rev.) 5.500 07/01/20 3,158,750
3,590,000 Seacoast Utilities 5.500 03/01/18 3,392,550
3,500,000 Tallahassee Consolidated Utility 6.900 10/01/14 3,718,750
System Rev. ------------
22,585,363
------------
OTHER - .3%
425,000 Tampa Capital Improvement Program Rev. 8.250 10/01/18 448,375
------------
TOTAL INVESTMENTS (COST $162,792,463) - 100.4% 169,221,981
OTHER ASSETS, lESS LIABILITIES - (.4)% (679,484)
------------
TOTAL NET ASSETS - 100.0% $168,542,497
============
</TABLE>
ABBREVIATIONS
AMBAC - AMBAC Indemnity Corporation
CGIC - Capital Guaranty Insurance Company
CLIC - Connie lee Insurance Company
FGIC - Financial Guaranty Insurance Company
FHA - Federal Housing Authority
FNMA - Federal National Mortgage Association
FSA - Financial Security Assurance
GNMA - Government National Mortgage Association
G.O. - General Obligation
HFA - Housing Finance Authority
HFC - Housing Finance Commission
IDA - Industrial Development Authority
LOC - Letter of Credit
MBIA - Municipal Bond Investors Assurance Corporation
MFHR - Multi-Family Housing Revenue
MFM - Multi-Family Mortgage
PCR - Pollution Control Revenue
PFR - Public Facility Revenue
VRDN - Variable Rate Demand Notes
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ABT FLORIDA TAX-FREE FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities at value (NOTES 1A AND 4)
(Cost $162,792,463) $ 169,221,981
Cash 442,089
Receivables
Capital stock sold 26,122
Interest 2,613,472
Other assets 21,768
--------------------------------------------------------------------------------
TOTAL ASSETS 172,325,432
---------------
LIABILITIES
Payables
Investment securities purchased 2,119,493
Capital stock redeemed 1,567,601
Advisory fees (NOTE 3) 41,876
Accrued expenses 53,965
---------------
TOTAL LIABILITIES 3,782,935
---------------
NET ASSETS
Source of net assets
Paid-in capital 161,574,400
Undistributed net realized gains on investments 538,579
Unrealized appreciation of investments 6,429,518
---------------
NET ASSETS $ 168,542,497
===============
Shares outstanding (NOTE 2) 15,470,064
Net asset value and redemption price per share
(Total net assets/shares outstanding) $10.89
Maximum public offering price per share (Net asset value/95.25%)* $11.43
</TABLE>
* The sales charge is 4.75% on a single sale of less than $100,000, and reduced
on sales of $100,000 or more and certain other sales.
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ABT FLORIDA TAX-FREE FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Interest $ 11,739,563
-------------
EXPENSES
Advisory fees (NOTE 3) 555,493
Transfer agent fees and expenses 142,958
Administration fees 137,943
Accounting services 88,948
Custodian fees 38,587
Registration and filing fees 24,374
Trustees' fees and expenses 29,999
Insurance 34,077
Audit fees 14,001
Reports to shareholders 16,002
legal fees 38,300
Other 15,262
---------------------------------------------------------------------------
TOTAL EXPENSES 1,135,944
-------------
NET INVESTMENT INCOME 10,603,619
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTES 1B AND 4)
Net realized gain on investments $ 911,219
Increase in unrealized appreciation on investments 658,645
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,569,864
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 12,173,483
==============
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ABT FLORIDA TAX-FREE FUND
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED APRIL 30,1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS
Net investment income $ 10,603,619 $ 11,200,922
Net realized gain on investments 911,219 1,494,615
Unrealized appreciation (depreciation)
on investments during the year 658,645 (8,890,579)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 12,173,483 3,804,958
------------ ------------
Net equalization (NOTE 1D) - 21,742
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income
($.61 and $.63 per share, respectively) (10,603,619) (11,200,922)
Net realized gains on investments
($.02 and $.08 per share, respectively) (372,640) (1,494,615)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (10,976,259) (12,695,537)
------------ ------------
FUND SHARE TRANSACTIONS (NOTE 2)
Proceeds from sale of shares 10,432,999 35,258,108
Proceeds from distributions reinvested 3,441,954 4,048,552
Cost of shares redeemed (46,142,147) (29,111,105)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM FUND SHARE TRANSACTIONS (32,267,194) 10,195,555
------------ ------------
INCREASE (DECREASE) IN NET ASSETS (31,069,970) 1,326,718
NET ASSETS
Beginning of year 199,612,467 198,285,749
------------ ------------
END OF YEAR $ 168,542,497 $ 199,612,467
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ABT FLORIDA TAX-FREE FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED APRIL 30,
-----------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE AT BEGINNING OF YEAR $ 10.79 $ 11.27 $ 10.59 $ 10.43 $ 9.97
----------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .61 .63 .63 .69 .74
Net realized and unrealized gain (loss) on investments .12 (.40 ) .76 .25 .49
----------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS .73 .23 1.39 .94 1.23
----------- ---------- ---------- ---------- ----------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.61) (.63) (.63) (.69) (.77)
Distributions from net realized gains on investments (.02) (.08) (.08) (.05) -
Distribution from paid-in capital - - - (.04) -
----------- ---------- ---------- ---------- ----------
TOTAL DIVIDENDS AND DISTRIBUTIONS (.63) (.71) (.71) (.78) (.77)
----------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 10.89 $ 10.79 $ 11.27 $ 10.59 $ 10.43
=========== ========== ========== ========== ==========
TOTAL RETURN* 1.98% 1.87% 13.62% 9.34% 12.87%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS AT END OF YEAR (000'S OMITTED) $ 168,542 $ 199,612 $ 198,286 $ 147,996 $ 75,791
RATIO OF EXPENSES TO AVERAGE NET ASSETS
Prior to fee waiver and expense reimbursement .61% .56% .58% .68% .88%
After fee waiver and expense reimbursement .61% .56% .58% .41% .10%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS
Prior to fee waiver and expense reimbursement 5.73% 5.37% 5.66% 5.85% 5.77%
After fee waiver and expense reimbursement 5.73% 5.37% 5.66% 6.12% 6.55%
PORTFOLIO TURNOVER RATE 53% 32% 24% 24% 66%
</TABLE>
* TOTAL RETURN DOES NOT CONSIDER THE EFFECT OF THE SALES LOAD.
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ABT FLORIDA TAX-FREE FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1995
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ABT Florida Tax-Free Fund (the "FUND") is a non-diversified series of ABT
Southern Master Trust (the "TRUST"), a Massachusetts business trust. The
Trust is registered under the Investment Company Act of 1940 as an open-end
management investment company. The following is a summary of significant
accounting policies followed by the Fund in the preparation of its
financial statements.
A. VALUATION OF INVESTMENTS
Investments in municipal bonds are valued at the mean between bid and
asked quotations obtained from a recognized statistical valuation
service determined by reference to stated interest rates, maturity
dates, bond ratings, and current market conditions. The Fund invests
primarily in debt instruments in the State of Florida, and the ability
of the issuers to meet their obligation may be affected by economic
developments within this State.
B. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME
Investment transactions are accounted for on the trade date basis.
Interest income is accrued on a daily basis. Premiums and discounts on
investments purchased are amortized in accordance with the provisions
of the Internal Revenue Code.
C. INCOME TAXES
It is the Fund's intention to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income to its shareholders.
Therefore, no provision has been made for federal income taxes.
Distributions to shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations.
D. EQUALIZATION
The Fund has used the accounting practice of equalization by which a
portion of the proceeds from sales and costs of redemptions of capital
shares, equivalent on a per share basis to the amount of undistributed
net investment income on the date of the transactions, is credited or
charged to undistributed income. As a result, undistributed net
investment income per share is unaffected by sales or redemptions of
capital shares. Effective May 1, 1994, the Fund will no longer follow
this practice.
(2) TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
As of April 30, 1995, there were an unlimited number of shares at $0.01 per
value authorized. Transactions are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
Shares sold 984,064 3,100,280
Shares issued on reinvestment of distributions 323,930 357,363
Shares redeemed (4,338,794) (2,558,563)
------------ ------------
Net increase (decrease) in shares outstanding (3,030,800) 899,080
============ ============
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
ABT FLORIDA TAX-FREE FUND
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
APRIL 30, 1995
- --------------------------------------------------------------------------------
(3) INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund pays monthly an investment advisory fees to Palm Beach Capital
Management, ltd. (the "ADVISER") equal on an annual basis to .30% of the
average daily net assets of the Fund up to $200 million, reduced to .25% of
such average daily net assets in excess of $200 million.
ABT Financial Services, Inc. ("ABT"), an affiliate of the Adviser, serves
as the Fund's principal Underwriter and Distributor. During the year ended
April 30, 1995, ABT received $51,787 for underwriting concessions on
sales of shares and $1,660 in commissions as broker.
The Fund has adopted a distribution plan ("12B-1 PLAN") pursuant to which
ABT may be reimbursed for expenses incurred during the year in connection
with the distribution of Fund shares. The aggregate amount payable annually
by the Fund as provided in the 12b-1 Plan may not exceed .25% of the Fund's
average daily net assets. During the year ended April 30, 1995, there were
no payments made by the Fund pursuant to the 12b-1 Plan.
During the six months ended October 31, 1994, the Bank of New York provided
administrative and accounting services for the Fund, for which they
received the fees shown in the Statement of Operations. Effective November
1, 1994, administrative and accounting services were provided by the
Adviser, and all fees for these services were paid to the Adviser.
Certain officers and a trustee of the Trust are also officers and/or
directors of the Adviser and ABT.
(4) PURCHASES AND SALES OF INVESTMENTS
During the year ended April 30, 1995, the cost of investments purchased and
the proceeds from investments sold, excluding short-term investments,
aggregated $96,284,823 and $123,434,015, respectively.
For federal income tax purposes, the identified cost of investments owned
at April 30, 1995 was $162,792,463 and unrealized appreciation on
investments consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 7,489,076
Gross unrealized depreciation (1,059,558)
------------
Net unrealized appreciation $ 6,429,518
============
</TABLE>
At April 30, 1995, investments with a market value of $9,872,875 were held
in a segregated account at the Fund's custodian bank to cover certain
securities purchased on a when- issued basis.
<PAGE>
ABT FLORIDA TAX-FREE FUND
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
APRIL 30, 1995
- --------------------------------------------------------------------------------
(5) REORGANIZATION
On March 3, 1995, the Adviser and certain of its affiliates entered into an
Asset Purchase Agreement with First Union National Bank ("FIRST UNION")
pursuant to which First Union would acquire substantially all of the assets
of the Adviser (the "ACQUISITION"). On March 15, 1995, in connection with
the Acquisition, the Trust, on behalf of the Fund, entered into an
Agreement and Plan of Reorganization (the "PLAN") with First Union Funds,
on behalf of First Union Florida Municipal Bond Portfolio (the
"PORTFOLIO"). The Plan provides that the Fund will transfer substantially
all of its assets in exchange for Class A shares of beneficial interest of
the Portfolio, a diversified series of First Union Funds, on a tax-free
basis. It is anticipated that the Plan will be consummated at the close of
business on June 30, 1995.
