<PAGE>
Lord Abbett
- --------------------------------------------------------------------------------
TAX-FREE INCOME TRUST
Florida Series . Pennsylvania Series . Michigan Series . Georgia Series
- --------------------------------------------------------------------------------
Semi-Annual Report for the Six Months Ended April 30, 1995
A mutual fund with the objective of providing you with high tax-free income.
[PHOTO - Older woman graduating from college]
<PAGE>
[PHOTO - Ronald. P. Lynch]
- -------------------------
Ronald P. Lynch, Chairman
May 12, 1995
- --------------------------------------------------------------------------------
REPORT TO SHAREHOLDERS For the Six Months Ended April 30, 1995
Lord Abbett Tax-Free Income Trust completed the first half of fiscal year 1995
on April 30 with aggregate net assets of $320.5 million. The net assets of each
Series were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Florida Series: $177.4 million
Pennsylvania Series: $ 89.7 million
Michigan Series: $ 50.5 million
Georgia Series
(established 12/27/94): $ 2.9 million
</TABLE>
- --------------------------------------------------------------------------------
The past six months have been among the most volatile on record for the
municipal bond market. The period can be divided into two distinct segments.
November was a continuation of the cycle which began in February 1994 when the
Federal Reserve began to raise short-term interest rates. Investors contributed
to the continued rise in interest rates and erosion of bond prices as they sold
their bonds.
The subsequent five months, the second segment of the period, saw the Federal
Reserve's actions, combined with indications of slower economic activity, cause
long-term interest rates to decline. This resulted in a solid rally in the
fixed-income markets. Municipal bonds, in particular, benefited. Prices
rebounded sharply from the oversold conditions of last fall.
The demand for municipal bonds, combined with a shortage of new issues and the
redemption of a large number of bonds with call dates between 1994 and 1996, has
provided an attractive supply/demand scenario. Given this attractive
supply/demand environment and a slowing economy, long-term municipal bonds
should be attractive to investors seeking tax-free income in the year ahead.
The Fund benefited from the decision to extend maturities last fall. Although
market sentiment for municipals was decidedly negative at that time, the
underlying fundamentals in the market (e.g., constricted future supply,
inflation under control and very cheap valuations relative to taxable bonds)
suggested municipal bond prices would increase.
Consistent with our value investment strategy, your Fund continues to focus on
high-quality issues. We believe that, although net asset values may fluctuate in
the interim, long-term investors will benefit from the Fund's management style.
We welcome any questions or comments you may have about your Fund and look
forward to helping you achieve your financial goals in the months ahead.
<PAGE>
- --------------------------------------------------------------------------------
Fund Facts
- --------------------------------------------------------------------------------
All tax-free portfolios managed by Lord Abbett emphasize:
. High quality
. Total return potential
. Call protection
LORD ABBETT'S FOCUS ON QUALITY
- --------------------------------------------------------------------------------
On April 30, 1995, the portfolios in Lord Abbett Tax-Free Income Trust were
invested in a wide variety of high-quality issues.
<TABLE>
<CAPTION>
Florida Series Pennsylvania Series Michigan Series Georgia Series
[GRAPH] [GRAPH] [GRAPH] [GRAPH]
<S> <C> <C> <C> <C> <C> <C> <C>
AAA 81.4% AAA 74.3% AAA 65.1% AAA 69.3%
AA 8.2% AA 9.3% AA 13.7% AA 28.9%
A 9.8% A 13.7% A 17.2% A 1.8%
BBB (1) .6% BBB (1) 2.7% BBB (1) 4.0%
</TABLE>
LORD ABBETT'S TAX-FREE RECORD AND SEC-REQUIRED INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Florida Pennsylvania Michigan Georgia
Series Series Series Series
<S> <C> <C> <C> <C>
Date of Inception 9/25/91 2/3/92 12/1/92 12/27/94
Distribution Rate(2) at Net Asset Value (as of 4/30/95) 5.62% 5.90% 5.79% 6.05%
Average Annual Rate of Total Return(3)
at Net Asset Value (as of 4/30/95):
1 Year 5.55% 6.19% 5.62% -
Life of Series 6.53% 7.13% 6.60% 6.40%(4)
(per yr.) (per yr.) (per yr.) (4 mos.)
30-Day SEC Yield (as of 4/30/95) 5.15% 5.21% 5.45% 5.34%
Average Annual Rate of Total Return at the
Maximum Offering Price (as of 3/31/95):
1 Year 0.70% 1.20% 1.00% -
Life of Series 5.27% 5.49% 4.57% 1.20%(4)
(per yr.) (per yr.) (per yr.) (3 mos.)
</TABLE>
The results quoted above represent past performance which is no indication of
future results. The investment return and principal value of a Series investment
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 maximum sales charge of
4.75%.
(1)Includes holdings which are not rated by an independent ratings service but
are, in Lord Abbett's opinion, of comparable quality.
(2)The Series' distribution rates differ from SEC yields because the SEC yield
takes into account the amortization of market premiums, whereas the Series'
distribution rates amortize only premiums on cost.
(3)Total return is the percent change in value with dividends and capital gains
reinvested. In the event a portfolio invests in private activity bonds, the
interest income derived therefrom may increase the alternative minimum tax
liability only for shareholders subject to that tax. In the event a portfolio
does not invest entirely in municipal bonds, federal, state and local taxes
(if any) may be applicable to that portion of interest income derived from
taxable sources.
(4)Not annualized.
1
<PAGE>
- --------------------------------------------------------------------------------
Important Information
- --------------------------------------------------------------------------------
As of 4/30/95, no Series of the Trust had more than 5% of its net assets
invested in residual interest bonds ("RIBs"), although each portfolio may invest
up to 20% of its net assets in such securities. A RIB, sometimes referred to as
an inverse floater, is a debt instrument with a floating or variable interest
rate that moves in the opposite direction of the interest rate on another
security or the value of an index. Changes in the interest rate on the other
security or index inversely affect the residual interest paid on the RIB, with
the result that when interest rates rise, RIBs give lower interest payments and
their value falls faster than other similar fixed-rate bonds. But when interest
rates fall, not only do RIBs give higher interest payments, their values also
rise faster than other similar fixed-rate bonds. The market for RIBs is
relatively new.
If used as sales material after 6/30/95, this report must be accompanied by Lord
Abbett's Performance Quarterly for the most recently completed calendar quarter.
See prospectus for a discussion of fees waived and expense subsidies.
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
FLORIDA SERIES April 30, 1995
<TABLE>
<CAPTION>
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Prerefunded Broward Co FL Wtr & Sewer FGIC+ 6 1/2% 10/1/2017 AAA $3,250M $ 3,530,313
25.24% Dade Co FL Health Facs Auth Hosp Rev So Miami Hosp Prjt
MBIA+ 9 1/8% 7/1/2018 AAA 1,000M 1,071,250
Dunedin FL Hosp Rev MBIA+ 6 3/4% 11/15/2021 AAA 1,000M 1,107,500
Florida St Bd of Ed Cap Outlay 7 1/4% 6/1/2023 AAA 2,960M 3,307,800
Florida St Bd Regent Univ Sys Imp Rev MBIA+ 7 7/8% 7/1/2009 AAA 1,000M 1,107,500
Florida St Muni Pwr AMBAC+ 6 1/2% 10/1/2020 AAA 2,000M 2,197,500
Manatee Co FL MBIA+ 6 3/4% 10/1/2013 AAA 1,000M 1,106,250
Melbourne FL Wtr & Sewer Rev FGIC+ 6.40% 10/1/2022 AAA 1,700M 1,842,375
Miami FL Health Facs Auth AMBAC+ 6 3/4% 8/1/2020 AAA 870M 961,350
Miami FL Sports & Exhibit FGIC+ 7.20% 10/1/2020 AAA 1,690M 1,880,125
Orlando & Orange Co FL Expwy Auth Rev FGIC+ 6 1/2% 7/1/2020 AAA 395M 423,144
Orlando FL Util Comm Wtr 6 1/2% 10/1/2020 AAA 5,810M 6,347,425
Puerto Rico Commonwealth 8% 7/1/2006 AAA 600M 669,000
Puerto Rico Commonwealth 7 5/8% 7/1/2010 AAA 2,350M 2,687,813
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 1,000M 1,146,250
Puerto Rico Commonwealth 6.80% 7/1/2021 AAA 4,375M 4,905,469
Puerto Rico Commonwealth Hwy 8% 7/1/2003 AAA 250M 278,750
Puerto Rico Commonwealth Pub Imp 7 1/4% 7/1/2012 AAA 800M 860,000
Puerto Rico Elec Pwr Auth 8% 7/1/2008 AAA 3,250M 3,623,750
Puerto Rico Elec Pwr Auth 7 1/8% 7/1/2014 AAA 2,000M 2,202,500
Puerto Rico Pub Bldg Auth 7 7/8% 7/1/2007 AAA 1,200M 1,305,000
Puerto Rico Pub Bldg Auth 7% 7/1/2019 AAA 1,000M 1,082,500
Reedy Creek FL Imp Dist MBIA+ 6 1/2% 10/1/2016 AAA 1,050M 1,140,563
-----------
Total 44,784,127
===========
General Obligation Florida St Bd of Ed Cap Outlay 7% 6/1/2019 AA 1,000M 1,067,500
State Florida St Bd of Ed Cap Outlay 6 5/8% 6/1/2022 AA 1,500M 1,565,625
2.94% Florida St Bd of Ed Cap Outlay 6.70% 6/1/2022 AA 1,500M 1,578,750
Puerto Rico Commonwealth RIBS MBIA+ 7.484% 7/1/2008++ AAA 1,000M 1,003,750
-----------
Total 5,215,625
===========
General Obligation Florida St Jacksonville Trans-SR Lien
Local 6.40% 7/1/2022 AA 2,500M 2,550,000
1.44% ===========
Finance 2.54% Puerto Rico Muni Fin Agy 6 1/2% 7/1/2019 A 4,415M 4,514,337
===========
Health and Alachua Co FL Health/Santa Fe Health Care 7.60% 11/15/2013 BBB 1,000M 1,050,000
Hospital Charlotte Co FL Health Care Facs Rev LINK FSA+ 5.858% 8/26/2027 AAA 2,600M 2,554,500
13.35% Charlotte Co FL Health Care Facs Rev RIBS FSA+ 7.457%
8/26/2027++ AAA 6,200M 5,975,250
Miami FL Health Fac Auth Rev RIBS AMBAC+ 6.12% 8/15/2015++ AAA 1,600M 1,242,000
===========
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
FLORIDA SERIES April 30, 1995
<TABLE>
<CAPTION>
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Facs
MBIA+ 6 1/4% 7/1/2016 AAA $ 3,920M $ 4,008,200
St Petersburg FL Health/Allegheny Health Sys MBIA+ 7%
12/1/2021 AAA 2,000M 2,157,500
St Petersburg FL Health/Allegheny Health Sys MBIA+ 7%
12/1/2015 AAA 1,500M 1,620,000
Tampa FL Health Rev Allegheny Health Sys/St Joseph MBIA+ 6.70%
12/1/2018 AAA 4,750M 5,076,562
------------
Total 23,684,012
============
Housing Dade Co FL Hsg Fin Auth FNMA+ 7% 3/1/2024 Aaa 40M 41,200
4.20% Dade Co FL Hsg Fin Auth GNMA+ AMT 6.70% 10/1/2028 AAA 1,000M 1,001,250
Florida Hsg Fin Agy Sing Fam Mtge Ser B GNMA+ AMT 6.65%
7/1/2026 AAA 3,985M 4,029,830
Puerto Rico Hsg Fin Corp GNMA+ 6.85% 10/15/2024 AAA 2,300M 2,380,500
------------
Total 7,452,780
============
Miscellaneous Brevard Co FL Sales Tax MBIA+ 7% 12/1/2018 AAA 1,000M 1,081,250
7.89% Dade Co FL Professional Sports Franchise Facs Tax Rev Ser B
FGIC+ 6% 10/1/2022 AAA 4,000M 3,955,000
Jacksonville FL Cap Imp Rev Ctfs AMBAC+ 5 7/8% 10/1/2025 AAA 8,000M 7,760,000
Orange Co FL Tourist Dev AMBAC+ 6% 10/1/2016 AAA 1,200M 1,198,500
------------
Total 13,994,750
============
Pollution Control Citrus Co FL Poll Ctrl Rev FL Pwr Crystal MBIA+ 6.35% 2/1/2022 AAA 1,000M 1,021,250
Revenue Citrus Co FL Poll Ctrl Rev FL Pwr Crystal MBIA+ 6 5/8% 1/1/2027 AAA 8,530M 8,956,500
5.62% ------------
Total 9,977,750
============
Power Charlotte Co FL Util Rev FGIC+ 6 3/4% 10/1/2013 AAA 900M 966,375
12.51% Gainesville FL Util Sys 6 1/2% 10/1/2022 AA 3,675M 3,812,813
Port St Lucie FL Util Rev FGIC+ 6% 9/1/2024 AAA 1,800M 1,784,250
Puerto Rico Elec Pwr Auth 7% 7/1/2021 A 8,650M 9,352,813
Reedy Creek FL Imp Dist Util Rev MBIA+ AMT 8 1/2% 10/1/2009 AAA 4,750M 5,213,125
Stuart FL Util Rev FGIC+ 6.80% 10/1/2024 AAA 1,000M 1,061,250
------------
Total 22,190,626
============
Solid Waste 2.01% Orange Co FL Solid Waste Fac Rev FGIC+ 6 3/8% 10/1/2017 AAA 3,500M 3,574,375
============
Transportation Dade Co FL Aviation Rev MBIA+ AMT 6.60% 10/1/2022 AAA 12,400M 12,803,000
16.63% Dade Co FL Aviation Rev Ser C MBIA+ AMT 6 1/8% 10/1/2020 AAA 2,650M 2,606,937
Dade Co FL Seaport Bd AMBAC+ 6 1/4% 10/1/2021 AAA 1,850M 1,870,812
Dade Co FL Seaport Bd AMBAC+ 6 1/2% 10/1/2026 AAA 6,000M 6,202,500
Greater Orlando FL Aviation Auth Arpt Fac Rev AMT 8 3/8%
10/1/2016 A 3,150M 3,516,188
Osceola Co FL Trans Rev MBIA+ 6.10% 4/1/2017 AAA 2,500M 2,509,375
------------
Total 29,508,812
============
Water and Sewer Broward Co FL Wtr & Sewer FGIC+ 6% 10/1/2020 AAA 2,500M 2,481,250
5.67% Melbourne FL Wtr & Sewer Rev FGIC+ 6 1/2% 10/1/2014 AAA 2,000M 2,095,000
Orlando FL Util Comm Wtr 6 3/4% 10/1/2017 Aa 3,600M 3,991,500
Titusville FL Wtr & Sewer MBIA+ 6% 10/1/2024 AAA 1,500M 1,486,875
------------
Total 10,054,625
============
Total Municipal Bonds 100.04% (Cost $173,210,236) 177,501,819
============
OTHER ASSETS, LESS LIABILITIES (.04)%
Short-Term Security Los Angeles Co CA Tax & Rev Anticipation Notes 4 1/2% 6/30/1995
(Cost $749,992) MIG1 750M 749,948
============
Cash and Receivables, Net of Liabilities (822,302)
Total Other Assets, Less Liabilities (72,354)
Net Assets 100.00% (equivalent to $4.70 a share on 37,736,043 shares of
beneficial interest outstanding) $177,429,465
============
</TABLE>
+Insured or guaranteed by the indicated municipal bond insurance corporation or
Federal agency.
++The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at April
30, 1995.
See Notes to Financial Statements.
3
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
PENNSYLVANIA SERIES April 30, 1995
<TABLE>
<CAPTION>
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Prerefunded Allegheny Co PA Hosp Dev Auth/Magee Womens 8 1/4% 10/1/2013 AAA $ 455M $ 499,931
34.50% Bucks Co PA Wtr & Sewer Auth Rev FGIC+ 7 1/2% 12/1/2013 AAA 2,000M 2,175,000
Chester Co PA Health & Ed/Bryn Mawr 6 3/4% 7/1/2014 AAA 1,025M 1,139,031
Delaware River Joint Toll Bridge FGIC+ 7.80% 7/1/2018 AAA 2,180M 2,408,900
Erie PA Higher Ed Bldg Auth Coll Rev 8 1/2% 6/1/2015 AAA 3,000M 3,438,750
Hampton Township PA Sch Dist AMBAC+ 6.70% 11/15/2015 AAA 500M 555,625
Hampton Township PA Sch Dist AMBAC+ 6 3/4% 11/15/2021 AAA 1,000M 1,115,000
Lehigh Co PA FGIC+ 6.90% 8/1/2011 AAA 3,000M 3,315,000
Montgomery Co PA Higher Ed & Health/Bryn Mawr 7 3/8% 12/1/2019 AAA 1,000M 1,116,250
Pennsylvania Conv Ctr Auth 6.70% 9/1/2016 AAA 500M 554,375
Pennsylvania St Ind Dev Auth 7% 1/1/2011 AAA 1,000M 1,111,250
Pennsylvania St Tnpk Comm Tnpk Rev FGIC+ 7.30% 12/1/2010 AAA 1,275M 1,439,156
Pennsylvania St Tnpk Comm Tnpk Rev MBIA+ 7.55% 12/1/2017 AAA 1,000M 1,123,750
Pennsylvania St Univ 6 3/4% 7/1/2010 AAA 1,750M 1,920,625
Philadelphia PA Gas Wks Rev 7.70% 6/15/2021 AAA 1,000M 1,152,500
Philadelphia PA Gas Wks Rev ETM MBIA+ 7% 5/15/2020 AAA 2,150M 2,426,813
Puerto Rico Commonwealth FGIC+ 7.10% 7/1/2002 AAA 600M 672,000
Puerto Rico Commonwealth 7.30% 7/1/2020 AAA 1,000M 1,128,750
Puerto Rico Pub Bldg Auth 6 7/8% 7/1/2021 AAA 1,250M 1,406,250
Virgin Islands Pub Fin Auth 7.30% 10/1/2018 AAA 400M 449,000
Washington Co PA Auth Lease Rev AMBAC+ 7.45% 12/15/2012 AAA 1,575M 1,787,625
-----------
Total 30,935,581
===========
General Obligation Puerto Rico Commonwealth 6.45% 7/1/2017 A 1,500M 1,526,250
State Puerto Rico Commonwealth MBIA+ 6.45% 7/1/2017 AAA 700M 735,000
2.52% -----------
Total 2,261,250
===========
General Obligation Hampton Township PA Sch Dist Ref-Ser A AMBAC+ 5.90% 11/15/2015 AAA 600M 584,250
Local Hampton Township PA Sch Dist Ref-Ser A AMBAC+ 6% 11/15/2021 AAA 1,000M 976,250
2.83% Punxsutawney PA Area Sch Dist MBIA+ 5.85% 4/15/2015 AAA 1,000M 975,000
-----------
Total 2,535,500
===========
Education Northeastern PA Hosp & Ed Auth Coll Rev Luzerne Co Comm AMBAC+
8.23% 6 5/8% 8/15/2015 AAA 2,000M 2,085,000
Pennsylvania St Higher Ed 6 5/8% 8/15/2009 Aa 825M 863,156
Pennsylvania St Higher Ed 5.90% 9/1/2014 AA 1,000M 977,500
Pennsylvania St Higher Ed RIBS AMBAC+ AMT 7.833% 3/1/2022++ AAA 3,000M 2,842,500
University of Puerto Rico 6 1/2% 6/1/2013 A 600M 608,250
-----------
Total 7,376,406
===========
Finance Berks Co PA Muni Auth Co FGIC+ 7.10% 5/15/2022 AAA 1,530M 1,631,363
5.92% Pennsylvania Intergovernmental Coop Auth FGIC+ 7% 6/15/2014 AAA 1,450M 1,566,000
Pennsylvania Intergovernmental Coop Auth FGIC+ 6 3/4%
6/15/2021 AAA 2,000M 2,112,500
-----------
Total 5,309,863
===========
Health and Hospital Allegheny Co PA Hosp Dev Auth MBIA+ 6.20% 9/1/2015 AAA 400M 400,500
9.17% Chester Co PA Health & Ed Facs Auth LINK AMBAC+ 5.055%
5/15/2020 AAA 5,200M 4,881,500
Puerto Rico Pub Bldg Auth 6 1/2% 7/1/2003 A 770M 824,863
Sayre PA Health Care Fac/Tioga Nursing AMBAC+ 7 1/4% 10/1/2018 AAA 1,500M 1,590,000
Scranton-Lackawanna PA Health & Welfare Auth/Univ Scran Prjt
AMBAC+ 6.80% 11/1/2014 AAA 500M 525,625
-----------
Total 8,222,488
===========
Housing Pennsylvania Hsg Fin Agy 7.40% 10/1/2015 AA 1,000M 1,063,750
4.02% Pennsylvania Hsg Fin Agy 6.90% 4/1/2017 AA 1,500M 1,543,125
Pennsylvania Hsg Fin Auth AMT 6.65% 4/1/2025 AA 1,000M 997,500
-----------
Total 3,604,375
===========
</TABLE>
4
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
PENNSYLVANIA SERIES April 30, 1995
<TABLE>
<CAPTION>
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Industrial Revenue Bradford Co PA Ind Dev Auth Solid Waste Disp Rev AMT 6.60%
Bonds 3/1/2019 A $1,250M $ 1,264,063
7.33% Pennsylvania Economic Dev Fin Auth Exempt Facs Rev/Macmillan
AMT 7.60% 12/1/2020 Baa 1,000M 1,052,500
Philadelphia PA Gas Wks Rev FSA+ 5 1/4% 8/1/2024 AAA 250M 220,312
Philadelphia PA Gas Wks Rev 14th Ser-FSA-Cr FSA+
6 1/4% 7/1/2008 AAA 1,000M 1,030,000
Puerto Rico Ind Med & Environmental/Motorola 6 3/4% 1/1/2014 AA 1,500M 1,599,375
Puerto Rico Ind Med & Environmental/Upjohn 7 1/2% 12/1/2023 AA 1,300M 1,408,875
-----------
Total 6,575,125
===========
Pollution Control Beaver Co PA Ind Dev Auth/Ohio Edison FGIC+ 7 3/4% 9/1/2024 AAA 1,950M 2,113,313
Revenue 2.36% ===========
Power Pennsylvania Economic Dev Res Recov Northhampton 6.60% 1/1/2019 Baa* 1,500M 1,383,750
11.95% Puerto Rico Elec Pwr Auth 7 1/8% 7/1/2014 A 365M 390,093
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.181% 7/1/2018++ AAA 1,500M 1,552,500
Puerto Rico Elec Pwr Auth LINK FSA+ 5.789% 7/1/2023 AAA 6,000M 5,880,000
York Co PA Ind Dev Auth Poll Ctrl Rev MBIA+ 6.45% 10/1/2019 AAA 1,475M 1,513,718
-----------
Total 10,720,061
===========
Transportation Puerto Rico Commonwealth Hwy 6 5/8% 7/1/2012 A 1,750M 1,806,875
5.02% Puerto Rico Commonwealth Hwy 6 5/8% 7/1/2012 A 1,000M 1,032,500
Puerto Rico Commonwealth Hwy 5 3/4% 7/1/2018 A 650M 610,187
Puerto Rico Port Auth Rev FGIC+ AMT 7% 7/1/2014 AAA 1,000M 1,058,750
Total 4,508,312
===========
Water and Sewer Philadelphia PA Wtr & Waste Wtr Rev MBIA+ 5 1/2% 8/1/2014 AAA 1,100M 1,032,625
7.58% Philadelphia PA Wtr & Waste Wtr Rev MBIA+ 5.60% 8/1/2018 AAA 1,500M 1,410,000
Puerto Rico Commonwealth Aqu & Sewer 7 7/8% 7/1/2017 A 4,000M 4,355,000
-----------
Total 6,797,625
===========
Total Municipal Bonds 101.43% (Cost $90,346,651) 90,959,900
===========
OTHER ASSETS, LESS LIABILITIES (1.43)%
Cash and Receivables, Net of Liabilities (1,284,305)
===========
Net Assets 100.00% (equivalent to $4.88 a share on 18,386,573 shares of beneficial interest outstanding) $89,675,595
===========
</TABLE>
*This security has not been rated by an independent ratings service but is, in
Lord Abbett's opinion, of comparable quality.
+Insured or guaranteed by the indicated municipal bond insurance corporation or
Federal agency.
++The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at April
30, 1995.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
MICHIGAN SERIES April 30, 1995
<TABLE>
<CAPTION>
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Prerefunded Detroit MI Sewer Disp Rev MBIA+ 7 1/8% 7/1/2019 AAA $ 485M $ 531,075
21.73% Detroit MI Wtr Supply MBIA+ 7 7/8% 7/1/2019 AAA 985M 1,090,887
Michigan St Hosp Fin Auth/McLaren 7% 9/15/2015 AAA 1,000M 1,111,250
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 1,000M 1,146,250
Puerto Rico Commonwealth Hwy 6 5/8% 7/1/2018 AAA 500M 555,000
Puerto Rico Commonwealth Hwy 6 5/8% 7/1/2018 AAA 870M 965,700
Puerto Rico Pub Bldg Auth 6 7/8% 7/1/2012 AAA 1,000M 1,125,000
Puerto Rico Pub Bldg Auth 8 7/8% 7/1/2012 AAA 500M 514,025
Puerto Rico Pub Bldg Auth 6 7/8% 7/1/2021 AAA 1,000M 1,125,000
Puerto Rico Pub Bldg Auth 6 7/8% 7/1/2021 AAA 530M 596,250
Riverview MI Comm Sch Dist FGIC+ 6.55% 5/1/2014 AAA 1,500M 1,642,500
Virgin Islands Pub Fin Auth 7.30% 10/1/2018 AAA 500M 561,250
-----------
Total 10,964,187
===========
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
MICHIGAN SERIES April 30, 1995
<TABLE>
<CAPTION>
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
General Obligation Byron Center MI Pub Schs Ref MBIA+ 5 7/8% 5/1/2024 AAA $ 500M $ 486,760
Local Goodrich MI Area Sch Dist AMBAC+ 5.70% 5/1/2015 AAA 600M 576,000
5.31% Lake Orion MI Comm Sch Dist AMBAC+ 7% 5/1/2020 AAA 1,500M 1,614,375
-----------
Total 2,677,135
===========
Education .90% University of Michigan Hosp 5 1/2% 12/1/2021 AA 500M 452,500
Health and Farmington Hills MI Hosp/Botsford Gen Hosp MBIA+ 6 1/2%
Hospital 16.82% 2/15/2011 AAA 1,000M 1,037,500
Kalamazoo MI Hosp Fin Auth/Borgess Hosp RIBS 5.958% 6/1/2011++ AAA 2,000M 1,700,000
Kalamazoo MI Hosp Fin Auth Reg LINK FGIC+ 5.244% 6/1/2011 AAA 4,000M 3,710,000
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Facs 6.70%
5/1/2024 BBB 1,575M 1,529,719
Royal Oak MI Hosp Fin Auth/Wm Beaumont 6 3/4% 1/1/2020 AA 500M 513,125
-----------
Total 8,490,344
===========
Housing Michigan St Hsg Dev Auth 5.70% 4/1/2012 A 1,000M 952,500
6.23% Michigan St Hsg Dev Auth 6.95% 12/1/2020 AA 1,130M 1,162,488
Michigan St Hsg Dev Auth AMT 7.05% 6/1/2026 AA 1,000M 1,030,000
-----------
Total 3,144,988
===========
Industrial Revenue Michigan St Strategic Fd Ltd/Waste Mgmt Inc AMT 6 5/8%
Bonds 12/1/2012 AA 1,000M 1,038,750
13.36% Puerto Rico Ind Med & Environmental/Warner Lambert 7.60%
5/1/2014 Aa 1,000M 1,101,250
Puerto Rico Ind Med & Environmental/Baxter Lab 8% 9/1/2012 A 1,000M 1,105,000
Puerto Rico Ind Med & Environmental/Upjohn 7 1/2% 12/1/2023 AA 1,500M 1,625,625
Puerto Rico Tel Auth Rev LINK MBIA+ 5.51% 1/16/2015 AAA 2,000M 1,870,000
-----------
Total 6,740,625
===========
Miscellaneous Michigan Muni Bd Auth AMBAC+ 6 3/4% 5/1/2014 AAA 2,000M 2,110,000
4.18% ===========
Power Michigan St Strategic Fd Ltd/Detroit Edison MBIA+ 7% 7/15/2008 AAA 500M 558,750
13.57% Michigan St Strategic Fd Ltd/Detroit Edison AMBAC+ 7% 5/1/2021 AAA 500M 558,750
Michigan St Strategic Fd Rev/Genesee Pwr Prjt AMT 7 1/2%
1/1/2021 BBB* 500M 483,750
Monroe Co MI Poll Ctrl Rev/Detroit Edison Prjt AMBAC+ 7 1/2%
12/1/2019 AAA 3,340M 3,648,950
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.181% 7/1/2018++ AAA 500M 517,500
Puerto Rico Elec Pwr Auth 7% 7/1/2021 A 1,000M 1,081,250
-----------
Total 6,848,950
===========
Transportation Puerto Rico Commonwealth Hwy 6 5/8% 7/1/2012 A 2,365M 2,441,863
11.98% Puerto Rico Commonwealth Hwy 5 3/4% 7/1/2018 A 550M 516,312
Wayne Charter Co MI Arpt Rev MBIA+ AMT 6 3/4% 12/1/2021 AAA 3,000M 3,090,000
-----------
Total 6,048,175
===========
Water and Sewer Lansing MI Sewer Disp Sys Rev FGIC+ 5.85% 5/1/2014 AAA 400M 389,500
5.86% Puerto Rico Commonwealth Aqu & Sewer 7 7/8% 7/1/2017 A 2,000M 2,177,500
Saginaw-Midland MI Muni Wtr 5 1/2% 9/1/2012 A 425M 388,343
-----------
Total 2,955,343
===========
Total Municipal Bonds 99.94% (Cost $51,210,275) 50,432,247
===========
OTHER ASSETS, LESS LIABILITIES .06%
Cash and Receivables, Net of Liabilities 30,634
===========
Net Assets 100.00% (equivalent to $4.77 a share on 10,578,262 shares of beneficial interest outstanding) $50,462,881
===========
</TABLE>
*This security has not been rated by an independent ratings service but is, in
Lord Abbett's opinion, of comparable quality.
+Insured or guaranteed by the indicated municipal bond insurance corporation or
Federal agency.
++The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at April
30, 1995.
See Notes to Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets
- --------------------------------------------------------------------------------
GEORGIA SERIES April 30, 1995
<TABLE>
<CAPTION>
Rating: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Prerefunded Puerto Rico Commonwealth 8% 7/1/2007 AAA $320M $ 356,800
32.62% Puerto Rico Commonwealth Hwy 6 5/8% 7/1/2018 AAA 250M 277,500
Puerto Rico Pub Bldg Auth 7 7/8% 7/1/2007 AAA 300M 326,250
----------
Total 960,550
==========
General Obligation Chatman Co GA Sch Dist MBIA+ 6 3/4% 8/1/2020 AAA 250M 265,625
Local De Kalb Co GA 6% 1/1/2020 AA 50M 49,438
23.24% Fulton Co GA Sch Dist 6 3/8% 5/1/2016 AA 350M 369,250
----------
Total 684,313
==========
Housing De Kalb Co GA Hsg Auth FSA+ AMT 7.15% 1/1/2025 AAA 100M 102,375
13.64% Georgia St Hsg & Fin Auth Rev AMT 6.40% 12/1/2015 AA 250M 247,500
Puerto Rico Hsg Fin Corp GNMA+ 6.85% 10/15/2024 AAA 50M 51,750
----------
Total 401,625
==========
Miscellaneous Atlanta GA Downtown Dev Auth Ref-Underground Atlanta Prjt
9.82% 6 1/4% 10/1/2016 AA 100M 101,500
Cobb-Marietta GA Coliseum & Exhibit Hall Auth Rev MBIA+
5 5/8% 10/1/2023 AAA 200M 187,750
----------
Total 289,250
==========
Pollution Control Burke Co GA Dev Auth Poll Ctrl Rev MBIA+ 6.60% 7/1/2024 AAA 50M 51,187
Revenue 1.74% ==========
Power Effingham Co GA Dev Auth MBIA+ 6 3/4% 2/1/2022 AAA 50M 51,000
3.55% Puerto Rico Elec Pwr Auth 7 1/8% 7/1/2014 A 50M 53,438
----------
Total 104,438
==========
Solid Waste 3.44% Cobb Co GA Solid Waste Mgmt Auth AMT 6.40% 1/1/2015 Aa 100M 101,500
==========
Transportation Metropolitan Atlanta Rapid Trans Auth GA Sales Tax Rev AMBAC+
10.53% 6 1/4% 7/1/2020 Aaa 300M 310,125
==========
Water and Sewer Albany GA Sewer Sys Rev MBIA+ 6 5/8% 7/1/2017 AAA 100M 105,750
3.59% ==========
Total Municipal Bonds 102.17% (Cost $2,963,252) 3,008,738
==========
OTHER ASSETS, LESS LIABILITIES (2.17)%
Cash and Receivables, Net of Liabilities (63,798)
==========
Net Assets 100.00% (equivalent to $4.96 a share on 593,650 shares of beneficial interest outstanding) $2,944,940
==========
</TABLE>
+Insured or guaranteed by the indicated municipal bond insurance corporation or
Federal agency.
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Period
12/27/94
(Commencement
of
Operations)
Six Months Ended 4/30/95 to 4/30/95
------------------------------------------- -----------
Florida Pennsylvania Michigan Georgia
Investment Income Series Series Series Series
- ----------------- ------------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Income Interest $ 5,979,795 $ 2,745,095 $ 1,497,587 $ 32,450
------------ ----------- ------------ ----------
Expenses Management fee 435,160 208,474 117,350 3,255
(Note 3) ------------ ----------- ------------ ----------
12b-1 distribution plan (Note 3) 215,876 - - -
------------ ----------- ------------ ----------
Shareholder servicing 28,000 36,000 26,500 800
------------ ----------- ------------ ----------
Audit and tax 22,500 11,250 9,750 2,000
------------ ----------- ------------ ----------
Reports to shareholders 8,500 5,850 5,100 500
------------ ----------- ------------ ----------
Legal 10,500 4,000 900 50
------------ ----------- ------------ ----------
Registration - 500 4,500 500
------------ ----------- ------------ ----------
Organization (Note 1e) 3,768 1,206 1,992 300
------------ ----------- ------------ ----------
Other 18,245 7,115 7,942 758
------------ ----------- ------------ ----------
Management fees waived and expenses assumed
by Lord, Abbett & Co. (130,513) (63,173) (117,350) (8,163)
------------ ----------- ------------ ----------
Net expenses 612,036 211,222 56,684 -
------------ ----------- ------------ ----------
Net investment income 5,367,759 2,533,873 1,440,903 32,450
------------ ----------- ------------ ----------
Realized and Unrealized Gain (Loss) on Investments (Note 6)
Realized gain (loss) from security transactions
Proceeds from sales 184,388,052 95,555,256 51,214,905 1,108,450
------------ ----------- ----------- ----------
Cost of securities sold 190,173,526 97,877,278 51,697,516 1,094,548
------------ ----------- ----------- ----------
Net realized gain (loss) (5,785,474) (2,322,022) (482,611) 13,902
------------ ----------- ----------- ----------
Unrealized appreciation (depreciation) of investments
Beginning of period (9,076,076) (6,259,098) (3,583,924) -
------------ ----------- ----------- ----------
End of period 4,291,539 613,249 (778,028) 45,486
------------ ----------- ----------- ----------
Net unrealized appreciation 13,367,615 6,872,347 2,805,896 45,486
------------ ----------- ----------- ----------
Net realized and unrealized 7,582,141 4,550,325 2,323,285 59,388
gain on investments ------------ ----------- ----------- ----------
Net Increase in Net Assets Resulting from Operations $ 12,949,900 $ 7,084,198 $ 3,764,188 $ 91,838
============ =========== =========== ==========
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Period
12/27/94
(Commencement
of
Operations)
Six Months Ended 4/30/95 to 4/30/95 Year Ended 10/31/94
-------------------------------------- ---------- ---------------------------------------
Florida Pennsylvania Michigan Georgia Florida Pennsylvania Michigan
Increase (Decrease) in Net Assets Series Series Series Series Series Series Series
- --------------------------------- ------------ ------------ ----------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operations Net investment
income $ 5,367,759 $ 2,533,873 $ 1,440,903 $ 32,450 $ 11,420,101 $ 5,126,654 $ 2,452,256
------------ ----------- ----------- ---------- ------------ ----------- -----------
Net realized gain
(loss) from security
transactions (5,785,474) (2,322,022) (482,611) 13,902 (6,388,904) (257,737) (1,281,773)
------------ ----------- ----------- ---------- ------------ ----------- -----------
Net unrealized
appreciation
(depreciation)
of investments 13,367,615 6,872,347 2,805,896 45,486 (20,799,243) (11,851,791) (4,522,615)
------------ ----------- ----------- ---------- ------------ ----------- -----------
Net increase (decrease)
in net assets resulting
from operations 12,949,900 7,084,198 3,764,188 91,838 (15,768,046) (6,982,874) (3,352,132)
------------ ----------- ----------- ---------- ------------ ----------- -----------
Distributions to shareholders from
Net investment
income (4,951,761) (2,524,320) (1,417,035) (36,073) (11,154,659) (5,007,567) (2,549,530)
------------ ----------- ----------- ---------- ------------ ----------- -----------
Net realized gain from
security transactions - - - - (3,805,846) (320,841) (312,927)
------------ ----------- ----------- ---------- ------------ ----------- -----------
Total distributions (4,951,761) (2,524,320) (1,417,035) (36,073) (14,960,505) (5,328,408) (2,862,457)
============ =========== =========== ========== ============ =========== ===========
Share transactions (Note 4)
Net proceeds from
sales of shares 16,901,325 7,781,889 5,142,768 2,880,098 43,830,527 20,549,304 20,489,416
------------ ----------- ----------- ---------- ------------ ----------- -----------
Net asset value of
shares issued to
shareholders in
reinvestment of net
investment income
and realized gain from
security transactions 1,600,862 1,177,936 751,279 13,100 4,769,963 2,464,814 1,377,372
------------ ----------- ----------- ---------- ------------ ----------- -----------
Total 18,502,187 8,959,825 5,894,047 2,893,198 48,600,490 23,014,118 21,866,788
============ =========== =========== ========== ============ =========== ===========
Cost of shares
reacquired (23,915,081) (5,101,957) (3,381,155) (5,023) (34,490,402) (11,558,288) (5,006,862)
------------ ----------- ----------- ---------- ------------ ----------- -----------
Increase (Decrease) in
net assets derived from
share transactions (5,412,894) 3,857,868 2,512,892 2,888,175 14,110,088 11,455,830 16,859,926
------------ ----------- ----------- ---------- ------------ ----------- -----------
Total increase (decrease) in net assets 2,585,245 8,417,746 4,860,045 2,943,940 (16,618,463) (855,452) 10,645,337
Net Assets
Beginning of period 174,844,220 81,257,849 45,602,836 1,000 191,462,683 82,113,301 34,957,499
------------ ----------- ----------- ---------- ------------ ----------- -----------
End of period+ $177,429,465 $89,675,595 $50,462,881 $2,944,940 $174,844,220 $81,257,849 $45,602,836
============ =========== =========== ========== ============ =========== ===========
</TABLE>
+Includes (overdistributed) undistributed net investment income of $123,689,
$40,550, $(142,185) and $(3,623), respectively, as of April 30, 1995 and
(overdistributed) undistributed net investment income of $(292,309), $30,997
and $(166,053), respectively, as of October 31, 1994.
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Florida Series
For the
Period
9/25/91
(Commencement
Six Months Year Ended 10/31, of
Ended ------------------------------------ Operations)
Per Share Operating Performance: 4/30/95 1994 1993 1992 to 10/31/91
- -------------------------------- ---------- ---------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.49 $ 5.28 $ 4.75 $ 4.76 $ 4.76
--------- ---------- --------- --------- ---------
Income from investment operations
Net investment income .1405+ .291 .297 .308 .027+
--------- ---------- --------- --------- ---------
Net realized and unrealized gain (loss)
on investments .1992 (.695) .549 .002 .000
--------- ---------- --------- --------- ---------
Total from investment operations .3397 (.404) .846 .310 .027
========= ========== ========= ========= =========
Distributions
Dividends from net investment income (.1297) (.2835) (.301) (.320) (.027)
--------- ---------- --------- --------- ---------
Distributions from net realized gain -- (.1025) (.015) -- --
--------- ---------- --------- --------- ---------
Net asset value, end of period $ 4.70 $ 4.49 $ 5.28 $ 4.75 $ 4.76
========= ========== ========= ========= =========
Total Return* 7.67%+ (8.03)% 18.24% 6.65% .57%+
========= ========== ========= ========= =========
Ratios/Supplemental Data:
Net assets, end of period (000) $ 177,429 $ 174,844 $ 191,463 $ 121,408 $ 108,550
========= ========== ========= ========= =========
Ratios to Average Net Assets:
Expenses, including waiver .35%+ .32% .38% .29% .00%+
--------- ---------- --------- --------- ---------
Expenses, excluding waiver .43%+ .82% .88% .78% 5.10%+
--------- ---------- --------- --------- ---------
Net investment income 3.08%+ 5.98% 5.71% 5.84% .55%+
--------- ---------- --------- --------- ---------
Portfolio turnover rate 80.20% 122.36% 89.32% 94.90% 100.00%
========= ========== ========= ========= =========
</TABLE>
*Total return does not consider the effects of sales loads. +Not annualized.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pennsylvania Series
For the
Period
2/3/92
(Commencement
Six Months Year Ended 10/31, of
Ended ------------------- Operations)
Per Share Operating Performance: 4/30/95 1994 1993 to 10/31/92
- -------------------------------- ---------- ------- ------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.62 $ 5.33 $ 4.75 $ 4.76
======= ======= ======= =======
Income from investment operations
Net investment income .1414+ .300 .299 .228+
------- ------- ------- -------
Net realized and unrealized gain (loss)
on investments .2600 (.6975) .582 (.006)
------- ------- ------- -------
Total from investment operations .4014 (.3975) .881 .222
======= ======= ======= =======
Distributions
Dividends from net investment income (.1414) (.2925) (.301) (.232)
------- ------- ------- -------
Distribution from net realized gain -- (.02) -- --
------- ------- ------- -------
Net asset value, end of period $ 4.88 $ 4.62 $ 5.33 $ 4.75
======= ======= ======= =======
Total Return* 8.83%+ (7.73)% 18.95% 4.68%+
======= ======= ======= =======
Ratios/Supplemental Data:
Net assets, end of period (000) $89,675 $81,258 $82,113 $41,207
======= ======= ======= =======
Ratios to Average Net Assets:
Expenses, including waiver .25%+ .33% .31% .00%+
------- ------- ------- -------
Expenses, excluding waiver .33%+ .68% .81% .61%+
------- ------- ------- -------
Net investment income 3.01%+ 5.98% 5.70% 4.42%+
------- ------- ------- -------
Portfolio turnover rate 92.16% 137.22% 7.71% 32.66%
======= ======= ======= =======
</TABLE>
*Total return does not consider the effects of sales loads. +Not annualized.
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Michigan Series Michigan Series Georgia Series
Georgia Series ------------------------------------------ -----------------
For the Period For the Period
12/1/92 12/27/94
Six Months (Commencement (Commencement
Ended Year Ended of Operations) to of Operations) to
Per Share Operating Performance: 4/30/95 10/31/94 10/31/93 4/30/95
- -------------------------------- ---------- ---------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.53 $ 5.23 $ 4.76 $ 4.76
------- ------- ------- ------
Income from investment operations
Net investment income .1428+ .286 .266+ .0972+
------- ------- ------- ------
Net realized and unrealized gain (loss)
on investments .2369 (.651) .480 .2065
------- ------- ------- ------
Total from investment operations .3797 (.365) .746 .3037
======= ======= ======= ======
Distributions
Dividends from net investment income (.1397) (.2925) (.276) (.1037)
------- ------- ------- ------
Distribution from net realized gain - (.0425) -- --
Net asset value, end of period $ 4.77 $ 4.53 $ 5.23 $ 4.96
======= ======= ======= ======
Total Return* 8.53%+ (7.29)% 16.01%+ 6.40%+
======= ======= ======= ======
Ratios/Supplemental Data:
Net assets, end of period (000) $50,463 $45,603 $34,957 $2,945
======= ======= ======= ======
Ratios to Average Net Assets:
Expenses, including waiver .12%+ .34% .00%+ .00%+
------- ------- ------- ------
Expenses, excluding waiver .37%+ .84% .75%+ .45%+
------- ------- ------- ------
Net investment income 3.07%+ 5.69% 4.75%+ 1.80%+
------- ------- ------- ------
Portfolio turnover rate 101.57% 137.31% 68.10% 64.09%
======= ======= ======= ======
</TABLE>
*Total return does not consider the effects of sales loads. +Not annualized.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES The Company was organized as a Massachusetts
business trust on September 11, 1991, and is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company. On
February 3, 1992, the Pennsylvania Series commenced operations when the Company
received an initial capital contribution of $117,125 and issued 24,606 shares of
the Pennsylvania Series to the partners of Lord, Abbett & Co. On December 1,
1992, the Michigan Series commenced operations when the Company received an
initial capital contribution of $120,083 and issued 25,228 shares of the
Michigan Series to the partners of Lord, Abbett & Co. On December 22, 1994, the
Georgia Series received an initial capital contribution of $1,000 and issued 210
shares of the Georgia Series to the partners of Lord, Abbett & Co. The following
is a summary of significant accounting policies consistently followed by the
Company. The policies are in conformity with generally accepted accounting
principles.
(a) Market value is determined as follows: Securities are valued at latest
prices on the basis of valuations furnished by an independent pricing service
or, in their absence, fair value as determined under procedures approved by the
Board of Trustees. (b) It is the policy of the Company to meet the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all net investment income and net realized gains.
Therefore, there is no provision for federal income tax. (c) Security
transactions are accounted for on the date that the securities are purchased or
sold (trade date). Interest income is recorded on the accrual basis. (d)
Dividends from net investment income are declared daily and paid monthly. (e)
The organization expenses of the Company are amortized evenly over a period of
five years.
2. DISTRIBUTIONS Dividends from net investment income are declared daily and
paid monthly. Taxable net realized gain from security transactions, if any, will
be distributed to shareholders in December 1995. At April 30, 1995, accumulated
net realized gain (loss) for financial reporting purposes, which is
substantially the same as for federal income tax purposes, aggregated
$(12,223,104) for the Florida Series, $(2,604,755) for the Pennsylvania Series,
$(1,780,781) for the Michigan Series, and $13,902 for the Georgia Series. 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.
3. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES Lord, Abbett & Co.
provides the Company with investment management services and executive and other
personnel, pays the remuneration of officers, provides office space and pays for
ordinary and necessary office and clerical expenses relating to research,
statistical work and the supervision of the Company's investment portfolios. The
management fee is based on average daily net assets for each month at the annual
rate of 1/2 of 1%. Lord, Abbett & Co. may waive its management fees and pay or
reimburse the Trust for certain of its other expenses. Any such expenses paid
are subject to repayment by each Series, pursuant to a formula based on the
asset size and expense ratio of each Series. Each Series shall not be obligated
to repay Lord Abbett after five full fiscal years after the commencement of the
repayment formula or the termination of the Management Agreement, whichever is
earlier. For the Florida, Pennsylvania and Michigan Series, all expenses assumed
pursuant to the aforementioned formula have been accrued. For the six months
11
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
ended April 30, 1995, with respect to the Florida, Pennsylvania and Michigan
Series, Lord Abbett waived $130,513, $63,173 and $117,350, respectively, in
management fees. With respect to the Georgia Series, for the period December 22,
1994 to April 30, 1995, Lord, Abbett & Co. waived the Georgia Series management
fee of $3,255 and assumed expenses of $4,908. Lord, Abbett & Co. received the
following commissions on sales of shares of the Company after concessions were
paid to authorized distributors:
<TABLE>
<CAPTION>
Lord, Abbett & Co. Distributors'
Series Commissions Concessions
- ------ ------------------ -------------
<S> <C> <C>
Florida $27,300 $176,628
Pennsylvania $31,357 $195,514
Michigan $26,448 $176,631
Georgia -- $ 99,237
</TABLE>
The Company has adopted a plan of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Each Series' Plan will go into effect on the
first day ("effective date") of the calendar quarter subsequent to each Series'
net assets reaching $100 million. The Plan provides for the payment through
Lord, Abbett & Co. to dealers of (1) an annual service fee (payable quarterly)
of .15% of the average daily net asset value of shares sold prior to the Plan's
effective date and .25% of the average daily net asset value of the shares sold
by dealers on or after that date and (2) a one-time 1% distribution fee, at the
time of sale, on such shares sold of $1 million or more on or after the
effective date.
Certain of the Company's officers and Trustees have an interest in Lord, Abbett
& Co.
4. Share Transactions Transactions in shares were as follows:
<TABLE>
<CAPTION>
For the
Period
12/27/94
(Commencement
of
Operations)
to
Six Months Ended 4/30/95 4/30/95 Year Ended 10/31/94
--------------------------------------- --------- ------------------------------------
Florida Pennsylvania Michigan Georgia Florida Pennsylvania Michigan
Series Series Series Series Series Series Series
---------- ------------ ---------- --------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales of shares 3,763,477 1,656,844 1,105,390 591,822 8,834,007 4,034,948 4,124,391
---------- ---------- --------- ------- ---------- ---------- ----------
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 351,406 251,087 163,391 2,639 965,339 490,558 279,805
---------- ---------- --------- ------- ---------- ---------- ----------
Total 4,114,883 1,907,931 1,268,781 594,461 9,799,346 4,525,506 4,404,196
---------- ---------- --------- ------- ---------- ---------- ----------
Shares reacquired (5,320,352) (1,110,598) (748,629) (1,021) (7,130,840) (2,342,447) (1,029,543)
---------- ---------- --------- ------- ---------- ---------- ----------
Increase (decrease) in shares (1,205,469) 797,333 520,152 593,440 2,668,506 2,183,059 3,374,653
---------- ---------- --------- ------- ---------- ---------- ----------
</TABLE>
5. Capital Paid In At April 30, 1995, capital paid in aggregated $185,237,373
for the Florida Series, $91,626,551 for the Pennsylvania Series, $53,163,876 for
the Michigan Series and $2,889,177 for the Georgia Series.
6. Purchases and Sales of Securities Purchases and sales of investment
securities (other than short-term investments) were as follows:
<TABLE>
<CAPTION>
Series Purchases Sales
- ------ ------------ ------------
<S> <C> <C>
Florida $137,954,765 $145,262,968
Pennsylvania $ 79,048,178 $ 77,596,062
Michigan $ 51,170,814 $ 47,201,182
Georgia $ 4,058,481 $ 1,108,450
</TABLE>
Security gains and losses are computed on the identified cost basis.
As of April 30, 1995, unrealized appreciation and depreciation of investments
based on cost for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
Series Unrealized Appreciation Unrealized Depreciation
- ------ ----------------------- -----------------------
<S> <C> <C>
Florida $5,859,844 $1,568,305
Pennsylvania $1,903,996 $1,290,747
Michigan $ 634,144 $1,412,172
Georgia $ 50,503 $ 5,017
</TABLE>
The cost of investments for federal income tax purposes is the same as that used
for financial statement purposes.
7. Trustees' Remuneration The Trustees of the Company associated with Lord,
Abbett & Co. and all officers of the Company receive no compensation from the
Company for acting as such. Outside Trustees' fees, including attendance fees
for board and committee meetings, and outside Trustees' retirement costs, are
allocated among all funds in the Lord Abbett group based on net assets of each
fund. The direct remuneration accrued during the period for outside Trustees of
the Company as a group was $2,552 (exclusive of expenses), which has been deemed
invested in shares of the Company under a deferred compensation plan
contemplating future payment of the value of those shares. As of April 30, 1995,
the aggregate amount in Trustees' accounts maintained under the plan was
$12,238. Retirement costs accrued during the period amounted to $2,014.
Copyright (C) 1995 by Lord Abbett Tax-Free Income Trust, 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 Trust, is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning each
Series' investment objective and policies, sales charges and other matters.
All rights reserved. Printed in the U.S.A.
12
<PAGE>
Successful investing requires an experienced, professional team.
"In today's complex municipal bond market, our strategy focuses on quality with
the goal of providing competitive total returns over time."
John R. Mousseau
Director of Municipal Bond Management and Portfolio Manager
Identifying value and reducing risk require a disciplined approach and a
talented and experienced investment team. At Lord, Abbett & Co., a staff of 42
investment professionals, averaging 19 years of industry experience and 9 years
of tenure with the Firm, performs research to determine an overall view of the
economy and discover opportunities with the potential for high total return.
Searching for Value By:
. Anticipating economic changes and their impact on fixed-income securities;
. Taking advantage of security combinations that result from the interaction of
credit markets; and
. Understanding the historical yield relationship among securities.
[PHOTO - of Lord Abbett personnel described below]
(from left to right)
Zane E. Brown is director of Lord, Abbett & Co.'s fixed-income area and also
serves as a portfolio manager. Mr. Brown earned his MBA in investment management
at Colorado State University. He has over 18 years of investment experience.
John R. Mousseau is director of Lord, Abbett & Co.'s municipal bond area and
also serves as a portfolio manager. He has over 14 years of investment
experience. Mr. Mousseau earned his M.A. in economics from Brown University.
Robert S. Dow, partner in charge of the fixed-income group, has 23 years of
investment experience. In addition to portfolio management, Mr. Dow is a member
of Lord Abbett's Executive Office of Investments. He earned his MBA at Columbia
Graduate School of Business Administration.
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THE LORD ABBETT FAMILY Meeting Investor Needs Since 1929
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Lord, Abbett & Co. manages a spectrum of mutual funds to meet the investment
goals of its shareholders. Assets may be allocated or transferred among these
funds as described in the relevant prospectus. The exchange privilege may be
modified or terminated. For more information about a Lord Abbett fund, including
charges and expenses, please call us at 800-874-3733 for a prospectus. Please
read the prospectus carefully before investing.
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Equity Portfolios
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Affiliated Fund
Established 1934
Seeks long-term growth of capital and income without excessive fluctuations in
market value. Portfolio emphasis: The stocks of large, well-seasoned companies.
Lord Abbett Developing Growth Fund
Established 1973
Seeks aggressive, long-term capital appreciation. Price volatility is not
uncommon. Portfolio emphasis: The stocks of small growth companies mostly traded
over the counter.
Lord Abbett Fundamental Value Fund
Established 1986
Seeks growth of capital and growth of income consistent with reasonable risk.
Portfolio emphasis: The stocks of large and midsized companies with strong
underlying fundamentals.
Lord Abbett Global Fund
Equity Series
Established 1988
Seeks long-term growth of capital and, secondarily, production of current
income. Portfolio: A diversified portfolio of stocks from around the world.
Lord Abbett Value Appreciation Fund
Established 1983
Seeks capital appreciation. Portfolio emphasis: The stocks of midsized
companies.
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Balanced Portfolio
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Lord Abbett Balanced Series
Established 1994
Seeks current income and capital growth. Portfolio: A blend of stocks and fixed-
income securities.
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Fixed-Income Portfolios
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Lord Abbett Bond-Debenture Fund
Established 1971
Seeks high current income and capital growth to produce a high total return.
Portfolio emphasis: Convertible issues and lower rated debt.
Lord Abbett Global Fund
Income Series
Established 1988
Seeks high current income and, secondarily, capital appreciation. Portfolio:
High-quality international and U.S. debt.
Lord Abbett Limited Duration U.S. Government Securities Series
Established 1993
Seeks a high level of income, relative to money market instruments, with less
fluctuations in principal than long-term U.S. Government securities. Portfolio
emphasis: Limited duration fixed-income securities (primarily U.S. Government
securities).
Lord Abbett U.S. Government Securities Fund
Established 1932
Seeks high current income. Portfolio: Since 1985, U.S. Government securities
exclusively.
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Tax-Free Portfolios
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Lord Abbett Tax-Free Income Funds
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National and New York Series Established 1984
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California Fund Established 1985
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Texas Series Established 1987
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New Jersey, Connecticut, Missouri, Hawaii, Florida and Pennsylvania Series
Established 1991
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Washington and Michigan Series Established 1992
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Georgia and Minnesota Series Established 1994
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Seek high tax-free income. Portfolios' emphasis: High-quality municipal bonds.
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Money Market Portfolio
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Lord Abbett U.S. Government Securities
Money Market Fund
Established 1979
Seeks high current income and preservation of capital. Portfolio: U.S.
Government money market instruments.
An investment in this Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that this Fund will be able to maintain
a stable net asset value of $1.00 per share. This Fund is managed to maintain,
and has maintained, its stable $1.00 per share price.
LOGO Lord, Abbett & Co.
Investment Management
A Tradition of Performance Through Disciplined Investing
The GM Building . 767 Fifth Avenue . New York NY 10153-0203
