<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
b(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
LORD ABBETT TAX-FREE INCOME TRUST
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
LORD ABBETT TAX-FREE INCOME TRUST
INVESTMENT MANAGEMENT
THE GM BUILDING 767 FIFTH AVENUE NEW YORK NEW YORK 10153
Dear Shareholder:
You are cordially invited to attend the Special Meeting of
Shareholders of your Fund, Lord Abbett Tax-Free Income Trust, scheduled to be
held on June 19, 1996, at 11:00 a.m., at the General Motors Building, 767 Fifth
Avenue, New York, New York. Your Board of Trustees looks forward to greeting
those shareholders who are able to attend.
At the meeting, in addition to the election of trustees and approval
of the appointment of auditors, you will be asked to vote on a proposed revision
of your Series' investment objective, a proposed revision of your Series'
fundamental investment policies and restrictions, a new 12b-1 Plan and
Distribution Agreement for your Series and an amendment to the Fund's
Declaration of Trust.
Such proposals, if approved, are intended to provide for greater
flexibility in the future management of your Series' portfolio, as well as to
maintain the competitive position of the Fund.
All proposals are fully described in the enclosed proxy statement. I
encourage you to review the proxy statement for all the details regarding the
meeting agenda.
Your Board of Trustees believes these proposals are in the best
interest of the Fund and its shareholders and unanimously recommends a vote
"for" all proposals. Regardless of the number of shares you own, it is
important that they be represented and voted. Accordingly, please sign, date
and mail the enclosed proxy card in the postage paid return envelope.
Your prompt response will help save the Fund the expense of additional
solicitation.
Sincerely,
/s/ Ronald P. Lynch
Ronald P. Lynch
Chairman of the Board
April 17, 1996
<PAGE>
LORD ABBETT TAX-FREE INCOME TRUST
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
JUNE 19, 1996
PROXY STATEMENT
YOU ARE URGED TO SIGN AND MAIL THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE WHETHER YOU OWN A FEW OR MANY SHARES. YOUR PROMPT RETURN OF THE PROXY
MAY SAVE THE FUND THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO INSURE A
QUORUM AT THIS MEETING.
<PAGE>
LORD ABBETT TAX-FREE INCOME TRUST
767 Fifth Avenue
New York, New York 10153
Notice of Special Meeting of Shareholders
To Be Held June 19, 1996 April 17, 1996
Notice is given hereby of a special meeting of the shareholders of Lord Abbett
Tax-Free Income Trust (the "Fund"). The meeting will be held at the offices of
Lord, Abbett & Co., on the 11th floor of The General Motors Building, 767 Fifth
Avenue, New York, New York, on Wednesday, June 19, 1996, at 11:00 a.m., for the
following purposes and to transact such other business as may properly come
before the meeting and any adjournments thereof.
ITEM 1. To elect trustees;
ITEM 2. To ratify or reject the selection of Deloitte & Touche LLP as
independent public accountants of the Fund for the current fiscal
year;
ITEM 3. To approve or disapprove a change in the investment objective of
each of the Florida Series, the Georgia Series, the Michigan
Series and the Pennsylvania Series of the Fund (each, a "Series",
and collectively the "Series");
ITEM 4. To approve or disapprove certain changes in the fundamental
investment policies and restrictions of each of the Series;
ITEM 5. To approve or disapprove a new Distribution Plan and Agreement
for the existing class of shares of each Series pursuant to Rule
12b-1 under the Investment Company Act of 1940; and
ITEM 6. To approve or disapprove an amendment to the Fund's Declaration
of Trust authorizing the Board of Trustees to create new classes
within series of shares of beneficial interest of the Fund.
By order of the Board of Trustees
Kenneth B. Cutler
Vice President and Secretary
<PAGE>
The Board of Trustees has fixed the close of business on March 22, 1996 as the
record date for determination of shareholders of the Fund entitled to notice of
and to vote at the meeting. Shareholders are entitled to one vote for each share
held. As of March 22, 1996, there were 34,809,974 shares of the Florida Series,
1,572,644 shares of the Georgia Series, 11,057,749 shares of the Michigan
Series, 18,779,347 shares of the Pennsylvania Series and 66,219,714 shares of
the Fund issued and outstanding.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
SIGN, DATE AND RETURN IT IN THE ENVELOPE PROVIDED.
TO SAVE THE COST OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
2
<PAGE>
LORD ABBETT TAX-FREE INCOME TRUST
767 Fifth Avenue
New York, New York 10153
April 17, 1996
PROXY STATEMENT
---------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by and on behalf of the Board of Trustees of Lord Abbett Tax-Free
Income Trust, a diversified, open-end management investment company organized as
a Massachusetts business trust (the "Fund"), for use at a special meeting of
shareholders of the Fund to be held at 11:00 a.m. on Wednesday, June 19, 1996 at
the offices of Lord, Abbett & Co., the investment manager and principal
underwriter of the Fund ("Lord Abbett"), on the 11th floor of the General Motors
Building, 767 Fifth Avenue, New York, New York 10153, and at any adjournments
thereof. This proxy statement and the enclosed proxy card are first being
mailed to shareholders on or about April 17, 1996.
At the close of business on March 22, 1996 (the "Record Date"), there
were issued and outstanding 34,809,974 shares of the Florida Series, 1,572,644
shares of the Georgia Series, 11,057,749 shares of the Michigan Series,
18,779,347 shares of the Pennsylvania Series (each such series, a "Series", and
collectively the "Series") and 66,219,714 shares of the Fund. Only shareholders
of record at the close of business on the Record Date are entitled to notice of,
and to vote at, the special meeting or any adjournment thereof. Proxies will be
solicited by mail. Additional solicitations may be made by telephone, facsimile
or personal contact by officers or employees of Lord Abbett and its affiliates.
The Fund may also request brokerage houses, custodians, nominees, and
fiduciaries who are shareholders of record to forward proxy materials to
beneficial owners. D.F. King & Co. has been retained to assist in the
solicitation of proxies at an estimated cost of $11,000. The cost of the
solicitation will be borne by the Fund.
Shareholders are entitled to one vote for each full share, and a pro-
portionate vote for each fractional share, of the Fund held as of the Record
Date. Under Massachusetts law, a proxy with respect to shares held in the name
of two or more persons shall be valid if executed by any one of them unless at
or prior to the exercise of the proxy the Fund receives a specific written
notice to the contrary from any one of them. If the enclosed form of proxy is
properly executed and returned in time to be voted at the meeting, the proxies
named therein will vote the shares represented by the proxy in accordance with
the instructions marked thereon.
<PAGE>
Unmarked proxies will be voted FOR each of the items described in this Proxy
Statement and any other matters as deemed appropriate. A proxy may be revoked by
the signer at any time at or before the meeting by written notice to the Fund,
by execution of a later-dated proxy or by voting in person at the meeting.
1. ELECTION OF TRUSTEES
The nominees for election as trustees are Ronald P. Lynch, Robert S.
Dow, E. Thayer Bigelow, Stewart S. Dixon, John C. Jansing, C. Alan MacDonald,
Hansel B. Millican, Jr. and Thomas J. Neff, who have been nominated by the Board
of Trustees to succeed themselves. The individuals named as proxies intend to
vote the proxies, unless otherwise directed, in favor of the election of such
nominees, each of whom has agreed to continue to serve as a trustee of the Fund.
Management of the Fund has no reason to believe that any nominee will be unable
to serve as a trustee. If any nominee should be unable to serve as a trustee,
it is the intention of the individuals named as proxies to vote for the election
of such person or persons as the Board of Trustees may, in its discretion,
recommend.
Information about each person nominated for election as a trustee is
set forth in the following table. Except where indicated, each of the persons
listed in the table has held the principal occupation listed opposite his name
for the past five years.
Names and Ages of Principal Occupation and Trustee of the Fund
Trustees of the Fund Directorships Since
- --------------------------------------------------------------------------------
Ronald P. Lynch /1, 2/ Chairman of the Board of 1991
60 the Fund.
Partner of Lord Abbett.
Robert S. Dow /1, 2/ President of the Fund. 1991
51 Partner of Lord Abbett.
E. Thayer Bigelow /2/ President and Chief 1994
54 Executive of Time Warner
Cable Programming, Inc.
Formerly President and
Chief Operating Officer of
Home Box Office, Inc.
Stewart S. Dixon/ 2/ Partner in the law firm of 1991
65 Wildman, Harrold, Allen &
Dixon.
John C. Jansing/2/ Retired. Former Chairman 1991
70 of Independent Election
Corporation of America, a
proxy tabulating firm.
2
<PAGE>
Names and Ages of Principal Occupation and Trustee of the Fund
Trustees of the Fund Directorships Since
- --------------------------------------------------------------------------------
C. Alan MacDonald/2/ General Partner, The 1991
62 Marketing Partnership,
Inc., a full service
marketing consulting firm.
Formerly Chairman and
Chief Executive Officer of
Lincoln Snacks, Inc.,
manufacturer of branded
snack foods (1992-1994).
Formerly President and
Chief Executive Officer of
Nestle Foods Corp., and
prior to that, President
and Chief Executive
Officer of Stouffer Foods
Corp., both subsidiaries
of Nestle SA, Switzerland.
Currently serves as
Director of Den West
Restaurant Co., J. B.
Williams, and Fountainhead
Water Company.
Hansel B. Millican, Jr./2/ President and Chief 1991
67 Executive Officer of
Rochester Button Company.
Thomas J. Neff /2/ President, Spencer Stuart 1991
58 & Associates, an executive
search consulting firm.
1. "Interested person" of the Fund and Lord Abbett, within the meaning of the
Investment Company Act of 1940, as amended, because of his association with
Lord Abbett.
2. Also a director or trustee of other Lord Abbett-sponsored funds.
Listed below is the number of shares of the Fund owned beneficially by
each trustee as of March 22, 1996, together with the number of "phantom" shares
credited to the account of each trustee under a plan (the "Deferred Plan")
permitting independent trustees to defer their trustees' fees and to have the
deferred amounts deemed invested in shares of the Fund for later payment. Also
shown is the number of shares owned beneficially by the trustees and officers as
a group, together with such "phantom" shares credited to the accounts of
trustees as a group. In each case, the amounts shown are less than 1% of the
Fund's outstanding shares of beneficial interest.
3
<PAGE>
Number of Shares Beneficially Owned
Name and Phantom Shares/1/
- --------------------- -----------------------------------
Ronald P. Lynch 205
Robert S. Dow 3,036
E. Thayer Bigelow 285
Stewart S. Dixon 480
John C. Jansing 714
C. Alan MacDonald 463
Hansel B. Millican, Jr. 710
Thomas J. Neff 707
Trustees and Officers as a 28,238
group
___________________
1. Of the shares listed in the foregoing table, the following constitute
"phantom" shares credited to trustees under the Deferred Plan: Mr.
Bigelow, 285 shares; Mr. Dixon, 480 shares; Mr. Jansing, 714 shares; Mr.
MacDonald, 463 shares; Mr. Millican, 710 shares; Mr. Neff, 707 shares; and
trustees as a group: 3,359 shares.
The Board of Trustees has only one standing committee, an Audit Committee,
consisting of Messrs. Bigelow, MacDonald and Millican. The functions performed
by the Audit Committee include recommendation of the selection of independent
public accountants for the Fund to the Board of Trustees for approval, review of
the scope and results of audit and non-audit services, the adequacy of internal
controls and material changes in accounting principles and practices and other
matters when requested from time to time by the trustees (the "Independent
Trustees") who are not "interested persons" of the Fund within the meaning of
the Investment Company Act of 1940, as amended (the "Act"). The Audit Committee
held four meetings during the fiscal year ended October 31, 1995.
4
<PAGE>
The Board of Trustees of the Fund met twelve times during the fiscal year
ended October 31, 1995, and each trustee attended at least 75% of the total
number of meetings of the board and, if he was a member of the Audit Committee,
of such committee.
The second column of the following table sets forth the compensation
accrued by the Fund for the Independent Trustees. The third and fourth columns
set forth information with respect to the retirement plan for Independent
Trustees maintained by the Fund and the other Lord Abbett-sponsored funds. The
fifth column sets forth the total compensation accrued by the Fund and such
other funds for the Independent Trustees. The second, third and fourth columns
give information for the Fund's most recent fiscal year; the fifth column gives
information for the calendar year ended December 31, 1995. No trustee of the
Fund associated with Lord Abbett and no officer of the Fund received any
compensation from the Fund for acting as a trustee or officer.
<TABLE>
<CAPTION>
For the Fiscal Year Ended October 31, 1995 For Year Ended December
31, 1995
- ----------------------------------------------------------------------------------------------------------------------------------
(I) (II) (III) (IV) (V)
- ----------------------------------------------------------------------------------------------------------------------------------
Estimated Annual
Benefits Upon Re
Pension or Retirement tirement Proposed to
Benefits Accrued by the be Paid by the Fund Total Compensation Accrued
Aggregate Com Fund and Fifteen Other and Fifteen Other by the Fund and Fifteen
pensation Accrued Lord Abbett-sponsored Lord Abbett-spon Other Lord
Name of Trustee by the Fund/1/ Funds/2/ sored Funds/2/ Abbett-sponsored Funds/3/
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
E. Thayer Bigelow $1,014 $ 9,772 $33,600 $41,700
Stewart S. Dixon $1,032 $22,472 $33,600 $42,000
John C. Jansing $1,044 $28,480 $33,600 $42,960
C. Alan MacDonald $1,021 $27,435 $33,600 $42,750
Hansel B. Millican, Jr. $1,045 $24,707 $33,600 $43,000
Thomas J. Neff $1,021 $16,126 $33,600 $42,000
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Independent Trustees' fees, including attendance fees for board and
committee meetings, are allocated among all Lord Abbett-sponsored funds
based on net assets of each fund. A portion of the fees payable by the
Fund to its Independent Trustees is being deferred under a plan that deems
the deferred amounts to be invested in shares of the Fund for later
distribution to the trustees. The total amount accrued under the plan for
each Independent Trustee since the beginning of his tenure with the Fund,
including dividends reinvested and changes in net asset value applicable to
such deemed investments, as of October 31, 1995, were as follows: Mr.
Bigelow, $1,081, Mr. Dixon, $2,038, Mr. Jansing, $3,141, Mr. MacDonald,
$2,231, Mr. Millican, $3,122, and Mr. Neff, $3,659.
5
<PAGE>
2. Each Lord Abbett-sponsored fund has a retirement plan providing that
Independent Trustees will receive annual retirement benefits for life equal
to 80% of their final annual retainers following retirement at or after age
72 with at least 10 years of service. Each plan also provides for a reduced
benefit upon early retirement under certain circumstances, a pre-retirement
death benefit and actuarially reduced joint-and-survivor spousal benefits.
The amounts stated in column (IV) would be payable annually under such
retirement plans if the trustee were to retire at age 72 and the annual
retainers payable by such funds were the same as they are today. The
amounts set forth in column (III) were accrued by the Lord Abbett-sponsored
funds during the fiscal year ended October 31, 1995 with respect to the
retirement benefits set forth in column (IV).
(3) This column shows aggregate Independent Trustees' fees, including
attendance fees for board and committee meetings, of a nature referred to
in the first sentence of footnote (1), accrued by the Lord Abbett-sponsored
funds during the year ended December 31, 1995.
Listed below are the executive officers of the Fund, other than Messrs.
Lynch and Dow who are listed above in the table of nominees. Each executive
officer has been associated with Lord Abbett for over five years, except as
indicated. Messrs. Allen, Carper, Cutler, Henderson, Morris, Nordberg and Walsh
are partners of Lord Abbett; the others listed below are employees.
Stephen I. Allen, age 42, Vice President since 1994.
Daniel E. Carper, age 44, Vice President since 1991.
Kenneth B. Cutler, age 63, Vice President and Secretary since 1991.
Philip Fang, age 30, Executive Vice President since 1994.
John J. Gargana, Jr., age 64, Vice President since 1991.
Barbara A. Grummel, age 39, Executive Vice President since 1993.
Thomas S. Henderson, age 64, Vice President since 1991.
Paul A. Hilstad, age 53, Vice President since 1995 (with Lord Abbett since 1995;
formerly Senior Vice President and General Counsel of American Capital
Management & Research, Inc.).
Thomas F. Konop, age 54, Vice President since 1991.
Robert G. Morris, age 51, Vice President since 1995.
John R. Mousseau, age 39, Executive Vice President since 1994.
6
<PAGE>
E. Wayne Nordberg, age 59, Vice President since 1991.
Keith F. O'Connor, age 40, Treasurer since 1991.
Victor W. Pizzolato, age 63, Vice President since 1991.
John J. Walsh, age 60, Vice President since 1991.
Pursuant to the Fund's Declaration of Trust, the election of each trustee
of the Fund requires the affirmative vote of a plurality of the votes cast. If
a shareholder abstains from voting on this matter, then the shares held by such
shareholder shall be deemed present at the meeting for purposes of determining a
quorum, but shall not be deemed to have been voted on this matter. If a broker
returns a "non-vote" proxy, indicating a lack of authority to vote on this
matter, then the shares covered by such non-vote shall be deemed present at the
meeting for purposes of determining a quorum but shall not be deemed to have
been voted on this matter.
The Board of Trustees recommends that the shareholders vote FOR the
election of each of the nominees as a trustee of the Fund.
2. RATIFICATION OR REJECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Trustees has selected Deloitte & Touche LLP as the in
dependent public accountants of the Fund for the fiscal year ending October 31,
1996. The Act requires that such selection be submitted for ratification or
rejection at the next annual meeting of shareholders if such meeting be held.
Deloitte & Touche LLP (or a predecessor firm) acted as the Fund's independent
public accountants for the year ended October 31, 1995, and for a number of
years prior thereto. Based on information in the possession of the Fund, and
information furnished by Deloitte & Touche LLP, the firm has no direct financial
interest and no material indirect financial interest in the Fund. A
representative of Deloitte & Touche LLP is expected to attend the meeting and
will be provided with an opportunity to make a statement and answer appropriate
questions.
Ratification of the selection of Deloitte & Touche LLP requires the
affirmative vote of a majority of the votes cast. If a shareholder abstains
from voting on this matter, then the shares held by such shareholder shall be
deemed present at the meeting for purposes of determining a quorum, but shall
not be
7
<PAGE>
deemed to have been voted on this matter. If a broker returns a "non-
vote" proxy, indicating a lack of authority to vote on this matter, then the
shares covered by such non-vote shall be deemed present at the meeting for
purposes of determining a quorum but shall not be deemed to have been voted on
this matter.
The Board of Trustees recommends that shareholders vote to ratify the
selection of Deloitte & Touche LLP as the Fund's independent public accountants
for the fiscal year ending October 31, 1996.
3. PROPOSAL TO AMEND THE INVESTMENT OBJECTIVE OF EACH SERIES
The Board of Trustees has approved an amendment to the investment objective
of each Series. The amended objective of each Series states that the Series
seeks as high a level of interest income exempt from federal income tax as is
consistent with reasonable risk. The current investment objective of each
Series is to seek as high a level of interest income exempt from federal income
tax as is consistent with preservation of capital. Before the amendment may
become effective for any Series, it must be approved by the shareholders of that
Series.
If the proposed amendment is approved, the Series affected will continue to
seek a high level of interest income and will continue to invest in the same
types of securities. The proposed amendment is simply intended to make clear
that, because each Series invests in interest-rate-sensitive securities,
preservation of capital is not possible in a rising interest rate environment.
While preservation of capital has been, and remains, an important consideration,
it has never been guaranteed and is subject to reasonable risk in connection
with the objective of seeking a high level of interest income. For this
purpose, "reasonable risk" means that each Series over time will have a
volatility approximating the Lehman Brothers Current Coupon Long Index.
Approval of the proposed amendment to the investment objective with respect
to any Series requires the affirmative vote of a "majority" (as defined in the
Act) of the voting securities of such Series. A "majority" vote for a Series is
defined in the Act as the vote of the holders of the lesser of: (i) 67% or more
of the voting securities of such Series present or represented by proxy at the
shareholders meeting, if the holders of more than 50% of the outstanding voting
securities of such Series are present or represented by proxy, or (ii) more than
50% of the outstanding voting securities of such Series. The effect of an
abstention or broker non-vote is the same as a vote against this proposal.
8
<PAGE>
If the proposed amendment is not approved for one or more Series, the
current investment objective for each such Series will continue in effect.
The Board of Trustees recommends that shareholders of each Series vote in
favor of the proposed amendment to the investment objective of such Series.
4. PROPOSAL TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS OF
EACH SERIES
The Board of Trustees has approved various amendments to each Series'
investment policies and restrictions in order to provide greater uniformity
among the Lord Abbett-sponsored funds and greater flexibility in the future
management of the Series' portfolios. A Series' investment policies and
restrictions designated "fundamental" may be changed only by the vote of a
"majority" (as defined in the Act) of such Series' voting securities. Those
investment policies and restrictions designated "non-fundamental" may be changed
by the vote of the Board of Trustees alone. Therefore, the proposed amendments
to the fundamental policies and restrictions described below require shareholder
approval. Each Series' current fundamental investment policies and restrictions
and its proposed fundamental and certain non-fundamental investment policies and
restrictions are set forth in Exhibit A attached hereto.
The investment policies and restrictions of a Series govern generally the
investment activities of such Series and limit its ability to invest in certain
types of securities or engage in certain types of transactions. The proposed
changes are not expected to affect materially the current operations of the
Series. The proposed fundamental investment policies and restrictions of each
Series have been made less restrictive in order to provide greater uniformity
among the Lord Abbett-sponsored funds and greater flexibility in the future
management of the Series' portfolios as noted above. The Board of Trustees has
no present intention of approving actions permitted by these less restrictive
fundamental policies and restrictions. If it were to do so, the risks of
investing in the Series could be increased.
The proposed policies and restrictions restate many of the policies and
restrictions currently in effect for the Series. In some instances, certain
fundamental policies and restrictions have been modified or eliminated in
accordance with developments in Federal or state blue sky regulations or in the
securities markets since the inception of a Series. In other instances, as
illustrated in Exhibit A, certain policies and restrictions previously deemed
fundamental have been redesignated non-fundamental. By making certain policies
and restrictions non-
9
<PAGE>
fundamental, the board may amend a policy or restriction as it deems appropriate
and in the best interest of a Series and its shareholders, without incurring the
costs (normally borne by such Series and its shareholders) of seeking a
shareholder vote. Also, certain of the proposed fundamental investment policies
and restrictions are stated in terms of "to the extent permitted by applicable
law". Applicable law can change over time and may become more or less
restrictive as a result. The policies and restrictions have been drafted in this
manner so that a change in law would not require a Series to seek a shareholder
vote to amend the policy or restriction to conform to applicable law, as
revised.
The principal effect of the proposed amendments will be to permit each
Series to take certain actions not now permitted to it without obtaining
additional shareholder approval. Fund management either will not be permitted
to, or does not intend to, take any such action with respect to a Series unless
such action is approved by the Board of Trustees. The board does not now intend
to approve any such action or to do so in the future unless it deems such action
to be an appropriate means of seeking a Series' investment objective in the best
interests of such Series and its shareholders, in which case disclosure of the
change would be made in the Fund's then current prospectus or statement of
additional information or both. Such actions, none of which the board has a
present intention of approving, involve the following matters, among others:
(i) short sales of securities and purchases of securities on margin to the
extent permitted by applicable law; (ii) loans of portfolio securities to the
extent permitted by law; (iii) purchases and sales of securities directly or
indirectly secured by real estate or interests therein, commodities and
commodity contracts in accordance with applicable law so long as registration
would not be required as a commodity pool operator under the Commodity Exchange
Act; (iv) investments of up to 15% of gross assets in illiquid securities; (v)
pledges to secure borrowings or as permitted by other investment policies and
applicable law; (vi) investments in the securities of other investment companies
to the extent permitted by applicable law; and (vii) purchases and sales of puts
and calls. See Exhibit A hereto for a detailed comparison of the current
fundamental investment policies and restrictions and the proposed fundamental
and certain non-fundamental investment policies and restrictions of the Series.
Approval of the proposed amendments to a Series' fundamental investment
policies and restrictions requires the affirmative vote of a "majority" (as
defined in the Act) of the voting securities of such Series. A "majority" vote
of a Series is defined in the Act as the vote of the holders of the lesser of:
(i) 67% or more of the voting securities of such Series present or represented
by proxy at the shareholders meeting, if the holders of more than 50% of the
outstanding voting securities of such Series are present or represented by
proxy, or (ii) more than 50%
10
<PAGE>
of the outstanding voting securities of such Series. The effect of an abstention
or broker non-vote is the same as a vote against this proposal.
If the proposed amendments are not approved by the shareholders of one or
more Series, the current fundamental policies and restrictions for such Series
will continue in effect.
The Board of Trustees recommends that shareholders vote in favor of the
proposed amendments to the Series' fundamental investment policies and
restrictions.
5. NEW DISTRIBUTION PLAN AND AGREEMENT FOR THE
CLASS A SHARES OF EACH SERIES
At a meeting of the Board of Trustees of the Fund held on March 14, 1996,
the trustees of the Fund unanimously approved, subject to shareholder approval,
and determined to submit to the shareholders of each Series for approval, a new
Distribution Plan and Agreement pursuant to Rule 12b-1 under the Act (each a
"Proposed Plan") for the existing class of shares of each Series. The existing
class of shares for each Series is to be designated the Class A Shares -- see
Item 6 below. The text of the Proposed Plan for the Florida Series is attached
hereto as Exhibit B. This Proposed Plan is identical to the Proposed Plan for
each other Series except for the Name of the Series and as noted in Exhibit B.
The trustees who approved the Proposed Plans include all of the Independent
Trustees, none of whom is an "interested person" of the Fund within the meaning
of the Act or has a direct or indirect financial interest in the operations of
the Proposed Plans or in any agreements related thereto.
If approved by shareholders, the Proposed Plan for a Series will replace
the distribution plan and agreement for such Series (each a "Current Plan")
described below:
The Florida Series' Current Plan was approved by such Series' shareholders
on October 16, 1991 and became operative on October 1, 1992.
The Georgia Series' Current Plan was approved by such Series' shareholders
on December 15, 1994 and has not yet become operative.
The Michigan Series' Current Plan was approved by such Series' shareholders
on October 16, 1991 and has not yet become operative. The
11
<PAGE>
Michigan Series' Current Plan was last amended on June 10, 1992, by action of
the Board of Trustees.
The Pennsylvania Series' Current Plan was adopted by such Series'
shareholders on September 15, 1991 and has not yet become operative. The
Pennsylvania Series' Current Plan was last amended on October 9, 1991, by action
of the Board of Trustees.
The changes included in the Proposed Plans, which are described below, are
designed primarily to maintain the competitive position of the Class A Shares of
each Series.
Each of the Current Plans of the Georgia, Michigan and Pennsylvania Series
will become operative on the first day (the "Operative Date") of the quarter
subsequent to such Series' net assets reaching $100 million. As of March 22,
1996, the net assets of the Georgia Series totaled $7,941,195, the net assets of
the Michigan Series totaled $54,022,805, and the net assets of the Pennsylvania
Series totaled $93,387,796. The Florida Series pays, and upon the respective
Operative Dates of the Current Plans for the other Series they are to pay,
dealers through Lord Abbett (except as to certain accounts for which tracking
data is not available) (1) an annual service fee (payable quarterly) of 0.25% of
-
the average daily net asset value of shares sold by dealers and (2) a one-time
-
1% distribution fee, at the time of sale, on all shares sold at the $1 million
level by dealers, including sales qualifying at such level under the rights of
accumulation and statement of intention privileges described in the Fund's
prospectus in effect at such time. These service and distribution fees are
intended to provide additional incentives for dealers (a) to provide continuing
-
information and investment services to their shareholder accounts and otherwise
to encourage their accounts to remain invested in the Fund and (b) to sell
-
shares of the Fund.
Holders of shares of the Florida Series on which the 1% distribution fee
has been paid are required to pay to that Series a contingent deferred
reimbursement charge ("CDRC") of 1% of the original cost or the then net asset
value, whichever is less, of such shares if they are redeemed out of the Lord
Abbett-sponsored family of funds on or before the end of the twenty-fourth month
after the month in which the purchase occurred. (An exception is made for
certain redemptions by tax-qualified plans under Section 401 of the Internal
Revenue Code due to plan loans, hardship withdrawals, death, retirement or
separation from service with respect to plan participants.) If the shares are
exchanged into another Lord Abbett series or fund and are thereafter redeemed
out of the Lord Abbett family on or before the end of such twenty-fourth month,
the charge will be collected for the Florida Series by the other series or fund.
The Florida Series will collect such a
12
<PAGE>
charge for other Lord Abbett-sponsored series or funds in a similar situation.
Similar CDRC arrangements are to be implemented for the Georgia, Michigan and
Pennsylvania Series upon their respective Current Plans becoming operative.
Set forth below is a description of the principal changes to be effected
under the Proposed Plans:
(a) Distribution Fees. The Fund's Board of Trustees will be authorized
-----------------
under the Proposed Plans, without further shareholder vote, to increase the
amount of annual distribution fees (payable after their respective Operative
Dates, which will remain the same as under the Current Plans, in the case of the
Georgia, Michigan and Pennsylvania Series) up to 0.25% of the average annual net
assets attributable to the Class A Shares of each Series (the "Distribution Fee
Ceiling") (the annual distribution and service fees could total 0.50% of such
average annual net assets if approved by the board). This increased spending
limit is intended primarily to permit the trustees to increase the amount to be
spent for distribution to meet changing sales competition. The trustees believe
it is desirable to be able to make these changes without further shareholder
approval because additional shareholder meetings would be time-consuming and
costly to the Series and their shareholders. The Board of Trustees will approve
additional charges under this increased authority only if a majority of the
Independent Trustees conclude in their business judgment that there is a
reasonable likelihood that the increase will benefit the affected Series and its
shareholders.
The one-time 1% distribution fee, payable (after the Operative Dates in the
case of the Georgia, Michigan and Pennsylvania Series) at the time of certain
sales as described above, is to be charged against the Distribution Fee Ceiling.
During the Fund's last fiscal year, payments by the Florida Series of the one-
time 1% distribution fee under its Current Plan totaled 0.02% of such Series'
average net assets. Subject to shareholder approval of the Proposed Plans, the
Board of Trustees has authorized each Series to pay (after their respective
Operative Dates in the case of the Georgia, Michigan and Pennsylvania Series),
this one-time distribution fee with respect to sales of Class A Shares, subject
to three changes: First, the payments will be made in connection with sales to
-----
retirement plans with 100 or more eligible employees, in addition to sales at
the $1 million level as under the Current Plan; Second, the payments will be
------
scaled down at certain breakpoints, as follows: 1% of the first $5 million,
0.55% of the next $5 million, 0.50% of the next $40 million and 0.25% over $50
million of shares sold to a retirement plan or other qualifying purchaser within
a 12-month period (beginning when the first purchase is made at net asset
value); and Third, the payments will be made to institutions and persons
-----
permitted by applicable law and/or rules to receive such payments ("Authorized
Institutions"), rather than just to dealers as is the case under the Current
Plan.
13
<PAGE>
If shareholders approve the Proposed Plans for the Florida, Michigan and
Pennsylvania Series, the Board of Trustees has authorized such Series to pay
(after their respective Operative Dates in the case of the Michigan and
Pennsylvania Series), as an additional distribution fee, a supplemental payment
to dealers who have accounts comprising a significant percentage of such Series'
Class A Share assets and having a lower than average redemption rate and who
have a satisfactory program for the promotion of Class A Shares. Any such
payments will be 0.10% per annum of the average assets of the Series represented
by the Class A Share accounts of qualifying dealers, and will be charged against
the Distribution Fee Ceiling. This supplemental payment is intended by the
Board of Trustees to enhance the Fund's relationships with those dealers most
likely to have a significant impact on the growth of the Class A Shares.
(b) Service Fees. Service fee payments, which are to be continued under
------------
the Proposed Plans at an annual rate of 0.25% of the average daily net asset
value of shares sold on or after the Operative Date of such Series' Proposed
Plan, could be made to all Authorized Institutions (institutions and persons
permitted by applicable law and/or rules to receive such payments), rather than
just to dealers as is the case under the Current Plans.
(c) Use of Payments by Lord Abbett. Lord Abbett would be permitted to use
------------------------------
payments received under the Proposed Plans to provide continuing services to
shareholder accounts not serviced by Authorized Institutions and, with board
approval, to finance any activity which is primarily intended to result in the
sale of Class A Shares. Any such payments to finance activities primarily
intended to result in the sale of Class A Shares would be subject to the
Distribution Fee Ceiling.
(d) CDRC. The CDRC applicable to the Class A Shares would be substantially
----
similar to that payable under the Current Plans, except that no CDRC would be
payable in connection with redemptions by retirement plans (not just those
qualified under Section 401 of the Internal Revenue Code) attributable to any
benefit payment. In addition, no CDRC would apply if the plan sponsor requested
a redemption to correct an excess contribution in order to comply with
applicable IRS rules. Because CDRC payments will be made directly to the
Series, they will have the effect of reducing the amount of the distribution
fees paid by the Series for the purpose of complying with the Distribution Fee
Ceiling. As in the case of the specific distribution fees authorized by the
Board of Trustees of the Fund, the CDRC authorized from time to time by the
board for the Class A Shares of each Series will be described in the then
current prospectus of the Fund.
If the supplemental payment to dealers, the revised one-time distribution
fee and the other changes described above had been in effect for the Fund's
14
<PAGE>
last fiscal year, it is estimated that in the aggregate they would have
increased the ratio of expenses to average net assets of the Florida Series from
0.74% to approximately 0.77%, representing a difference of 0.03%.
(e) Lord Abbett Distributor. The other party to the Proposed Plans is to
-----------------------
be Lord Abbett Distributor LLC, a New York limited liability company, to be
formed as a subsidiary of Lord Abbett ("Lord Abbett Distributor"), rather than
Lord Abbett. Lord Abbett Distributor is to take on all the underwriting
functions currently performed directly by Lord Abbett.
In considering whether to recommend the Proposed Plans for approval, the
board considered, among other things, the factors set forth below:
(i) Flexibility in Adapting Distribution Fees to Meet Industry-Wide
---------------------------------------------------------------
Changes. During the last several years, there has been significantly increased
competition and pricing experimentation in the mutual fund industry. As the
pace of change increases, the Board of Trustees believes it will be useful to be
able to respond more quickly to marketplace pressures, and change in appropriate
cases the amount of the Class A 12b-1 distribution fees to be paid, without
unnecessarily burdening the shareholders with the costs of additional proxy
solicitations. The trustees believe that the increased distribution fees
described above are good examples of the desirability of this flexibility.
Based on advice received from Lord Abbett, the decision by the board to approve
the payment of distribution fees in connection with sales to retirement plans
with 100 or more eligible employees will enable the Class A Shares (once the
Proposed Plans become operative in the case of the Georgia, Michigan and
Pennsylvania Series) to compete more effectively in this growing and important
market. The 0.10% per annum supplemental payments to dealers who meet certain
criteria will permit the Series with operative plans to enhance relationships
with those dealers most likely to have a significant impact on the growth of the
Class A Shares.
(ii) Expanding Categories of Persons Eligible to Receive Payments. The
------------------------------------------------------------
Current Plans limit payments thereunder to dealers selling fund shares. Since
the Current Plans were adopted, different methods of distribution, using
different entities, have developed in the industry. The Board of Trustees sees
no reason to limit arbitrarily the categories of persons eligible to receive
payments under the Proposed Plans, and believes that the availability of
payments under the plans will induce such other entities to invest in Class A
Shares.
(iii) Flexibility in Distributor's Use of Payments. Lord Abbett has
--------------------------------------------
advised the Board of Trustees of the Fund that allowing Lord Abbett Distributor
to retain fees received from the Series to (i) provide continuing information
-
and in-
15
<PAGE>
vestment services to shareholder accounts and (ii) finance, with board
--
approval, any activity which is primarily intended to result in the sale of
Class A Shares, will provide useful flexibility and will be in line with common
practice in the industry.
In light of the anticipated benefits to each Series and its respective
shareholders as a result of adopting the Proposed Plans, and having reviewed a
comparison of the costs to each Series of the Current Plans and the Proposed
Plans, the trustees of the Fund have concluded, in the exercise of reasonable
business judgment and in light of their fiduciary duties, that there is a
reasonable likelihood that the Proposed Plans will benefit each such Series and
its shareholders. There can, however, be no assurance that the anticipated
benefits will be realized.
Payments by the Florida Series to dealers through Lord Abbett under its
Current Plan for the fiscal year ended October 31, 1995 were $411,000,
representing 0.26% of such Series' average net assets during that period.
Set forth in the tables below is a summary comparison of the expenses of
each Series, on a current and pro-forma basis. The annual operating expenses
shown in the second column are each Series' actual expenses for the fiscal year
ended October 31, 1995. The expenses shown in the third column represent, on a
pro-forma basis, such actual expenses of each Series adjusted to show the effect
of the maximum distribution fee the board would be authorized to approve under
the Proposed Plans. The fourth column shows such pro-forma annual operating
expenses based on, in the case of the Florida Series, the distribution fee rate
the board has approved subject to approval of the Proposed Plan by shareholders
of that Series and reflecting, in the case of the other Series, the fact that
their Proposal Plans would not have met the requirements for being operative
during such fiscal year. The example set forth below is not a representation of
past or future expenses. Actual expenses may be greater or less than those
shown.
16
<PAGE>
<TABLE>
<CAPTION>
I II III IV
- ----------------------------------------------------------------------------------------------------------------------------------
Pro-Forma (reflecting maximum Pro Forma (reflecting estimated
Current (reflecting the Current amounts payable under the amounts that would have been
FLORIDA SERIES Plan) Proposed Plan) paid under the Proposed Plan)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
(AS A PERCENTAGE OF
OFFERING PRICE)
- ----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load/1/ on 4.75% 4.75% 4.75%
Purchases
Deferred Sales Load/1 / None/2/ None/2/ None/2/
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
- ----------------------------------------------------------------------------------------------------------------------------------
Management Fee 0.36%/3/ 0.36%/3/ 0.36%/3/
12b-1 Fees 0.26% 0.50%/4/ 0.29%/6/
Other Expenses 0.12% 0.12% 0.12%
- ----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 0.74%/3/ 0.98%/3/ 0.77%/3/
- ----------------------------------------------------------------------------------------------------------------------------------
Example: Assume an annual return of 5% and there is no change in the level of
- -------
expenses described above. For every $1,000 invested, with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
CURRENT $55/7/ $70/7/ $87/7/ $135/7/
- ----------------------------------------------------------------
PRO-FORMA (MAXIMUM) $57/4,7/ $77/4,7/ $99/4,7/ $162/4,7/
- ----------------------------------------------------------------
PRO-FORMA (ESTIMATED) $55/6,7/ $71/6,7/ $88/6,7/ $138/6,7/
- ----------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
I II III IV
- ----------------------------------------------------------------------------------------------------------------------------------
Pro-Forma (reflecting maximum amounts payable
GEORGIA SERIES Current (reflecting the Current Plan) under the Proposed Plan) Pro-Forma
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
(AS A PERCENTAGE OF
OFFERING PRICE)
- ----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load/1/ on 4.75% 4.75% 4.75%
Purchases
Deferred Sales Load /1 / None/2/ None/2/ None/2/
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
- ----------------------------------------------------------------------------------------------------------------------------------
Management Fee 0.00%/3/ 0.00%/3/ 0.00%/3/
12b-1 Fees 0.00%/5/ 0.50%/4/ 0.00%/5/
Other Expenses 0.00%/3/ 0.00%/3/ 0.00%/3/
- ----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 0.00%/3/ 0.50%/3,4/ 0.00%/3/
- ----------------------------------------------------------------------------------------------------------------------------------
Example: Assume an annual return of 5% and there is no change in the level of
- -------
expenses described above. For every $1,000 invested, with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
CURRENT $48/7/ $48/7/ $48/7/ $48/7/
- ----------------------------------------------------------------
PRO-FORMA (MAXIMUM) $52/4,7/ $63/4,7/ $74/4,7/ $107/4,7/
- ----------------------------------------------------------------
PRO-FORMA (ESTIMATED) $48/7/ $48/7/ $48/7/ $48/7/
- ----------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
I II III IV
- ----------------------------------------------------------------------------------------------------------------------------------
Pro-Forma (reflecting maximum amounts payable
MICHIGAN SERIES Current (reflecting the Current Plan) under the Proposed Plan) Pro-Forma
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
(AS A PERCENTAGE OF
OFFERING PRICE)
- ----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load/1/ on 4.75% 4.75% 4.75%
Purchases
Deferred Sales Load/1 / None/2/ None/2/ None/2/
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
- ----------------------------------------------------------------------------------------------------------------------------------
Management Fee 0.00%/3/ 0.00%/3/ 0.00%/3/
12b-1 Fees 0.00%/5/ 0.50%/4/ 0.00%/5/
Other Expenses 0.25% 0.25% 0.25%
- ----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 0.25%/3/ 0.75%/3,4/ 0.25%/3/
- ----------------------------------------------------------------------------------------------------------------------------------
Example: Assume an annual return of 5% and there is no change in the level of
-------
expenses described above. For every $1,000 invested, with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
CURRENT $50/7/ $55/7/ $61/7/ $78/7/
- ----------------------------------------------------------------
PRO-FORMA (MAXIMUM) $55/4,7/ $70/4,7/ $87/4,7/ $136/4,7/
- ----------------------------------------------------------------
PRO-FORMA (ESTIMATED) $50/7/ $55/7/ $61/7/ $78/7/
- ----------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
I II III IV
- ----------------------------------------------------------------------------------------------------------------------------------
Pro-Forma (reflecting maximum amounts payable
PENNSYLVANIA SERIES Current (reflecting the Current Plan) under the Proposed Plan) Pro-Forma
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
(AS A PERCENTAGE OF
OFFERING PRICE)
- ----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load/1/ on 4.75% 4.75% 4.75%
Purchases
Deferred Sales Load /1/ None/2/ None/2/ None/2/
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)
- ----------------------------------------------------------------------------------------------------------------------------------
Management Fee 0.36%/3/ 0.36%/3/ 0.36%/3/
12b-1 Fees 0.00%/5/ 0.50%/4/ 0.00%/5/
Other Expenses 0.14% 0.14% 0.14%
- ----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 0.50%/3/ 1.00%/3,4/ 0.50%/3/
- ----------------------------------------------------------------------------------------------------------------------------------
Example: Assume an annual return of 5% and there is no change in the level of
-------
expenses described above. For every $1,000 invested, with reinvestment of all
distributions, you would pay the following total expenses if you closed your
account after the number of years indicated.
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
CURRENT $52/7/ $63/7/ $74/7/ $107/7/
- -----------------------------------------------------------------
PRO-FORMA (MAXIMUM) $57/4,7/ $78/4,7/ $100/4,7/ $164/4,7/
- -----------------------------------------------------------------
PRO-FORMA (ESTIMATED) $52/7/ $63/7/ $74/7/ $107/7/
- -----------------------------------------------------------------
</TABLE>
1. Sales "load" is referred to as sales "charge" and "deferred sales load" is
referred to as "contingent deferred reimbursement charge" or "CDRC"
throughout this Proxy Statement. Investors should be aware that long-term
shareholders may pay, as a front-end sales charge and under both the
Current Plans and the Proposed Plans, more than the economic equivalent of
the maximum front-end sales charge permitted by certain rules of the
National Association of Securities Dealers, Inc.
2. Under both the Current Plans and the Proposed Plans, redemptions of shares
on which a Series' Rule 12b-1 sales distribution fee has been paid are
subject to a CDRC of 1% of the
20
<PAGE>
original cost or the then net asset value, whichever is less, of all shares
so purchased which are redeemed out of the Lord Abbett-sponsored family of
funds on or before the end of the twenty-fourth month after the month in
which the purchase occurred, subject to certain exceptions described
herein.
3. Although not obligated to, Lord, Abbett & Co. may waive its management fee
and subsidize the operating expenses with respect to a Series. For the
fiscal year ended October 31, 1995, Lord Abbett waived portions of its
management fee for each Series and subsidized certain operating expenses
for the Georgia Series. Absent such waivers and subsidy, the management fee
for each Series would have been 0.50%, and the other expenses for the
Georgia Series would have been 0.50% (annualized).
4. Reflects the maximum annual 12b-1 fees of 0.50% that could be paid under
the Proposed Plans in any year, consisting of a distribution fee of 0.25%
and a service fee of 0.25%. This maximum amount would not be applicable
with respect to the Georgia, Michigan or Pennsylvania Series until such
Series' Proposed Plan became operative.
5. This figure omits Rule 12b-1 fees because the Current Plan for this Series
was not and the Proposed Plan for this Series would not have been
operative. The Proposed Plan for this Series is to become operative on the
first day of the calendar quarter subsequent to such Series' net assets
reaching $100 million.
6. Reflects the estimated level of distribution and service fees that would
have been paid under the Proposed Plan for this Series had it been
operative for the Fund's last fiscal year.
7. Based on total current and pro-forma operating expenses shown in the table
above.
If the shareholders approve the Proposed Plans, the Proposed Plans shall,
unless terminated as described below, become effective July 12, 1996 and
continue in effect until July 12, 1997 and from year to year thereafter only so
long as such continuance is specifically approved, at least annually, by the
Fund's Board of Trustees and its Independent Trustees by a vote cast in person
at a meeting called for the purpose of voting on such continuance.
Notwithstanding the foregoing, the Proposed Plans for the Georgia, Michigan and
Pennsylvania Series will not become operative until their respective Operative
Dates (as defined above). Each Proposed Plan may be terminated at any time by a
vote of a majority of the Independent Trustees or by a shareholder vote in
compliance with Rule 12b-1 under the Act. The Plan may not be amended to
increase materially the amount to be spent for distribution above the maximum
amounts set forth in the Proposed Plans without a shareholder vote in compliance
with Rule 12b-1 under the Act. All material amendments must be approved by a
majority of the Independent Trustees.
Each Proposed Plan provides that while it is in effect, the selection and
nomination of Independent Trustees is committed to the discretion of the
Independent Trustees then sitting on the board. This does not prevent the
involvement of
21
<PAGE>
others in such selection and nomination if the final decision on any such
selection or nomination is approved by a majority of the Independent Trustees.
Pursuant to Rule 12b-1 under the Act, approval of the Proposed Plan with
respect to any Series requires the affirmative vote of a "majority" (as defined
in the Act) of the voting securities of such Series. A "majority" vote for a
Series is defined in the Act as the vote of the holders of the lesser of: (i)
-
67% or more of the voting securities of such Series present or represented by
proxy at the shareholders meeting, if the holders of more than 50% of the
outstanding voting securities of such Series are present or represented by
proxy, or (ii) more than 50% of the outstanding voting securities of such
--
Series. The effect of an abstention or broker non-vote is the same as a vote
against this proposal.
If the Proposed Plan is not approved for one or more Series, the Current
Plan for each such Series will continue in effect according to its terms.
The Board of Trustees recommends that shareholders of each Series vote in
favor of adoption of the Proposed Plan for that Series.
6. AMENDMENT OF THE DECLARATION OF TRUST TO AUTHORIZE CLASSES WITHIN SERIES OF
SHARES
On March 14, 1996, the Fund's Board of Trustees unanimously voted to approve
an amendment to the Declaration of Trust of the Fund providing that the Fund's
Board of Trustees may classify the Fund's shares into classes within series, and
voted to submit such amendment to the Fund's shareholders for approval. The full
text of the amendment is attached hereto as Exhibit C.
The Board of Trustees believes that the Fund's best interests will be served
if the Board of Trustees is able to create new classes of shares within a
series, with each share of a series, regardless of class, sharing pro rata
(based on net asset value) in the portfolio and income of the series and in the
series' expenses, except for differences in expenses resulting from different
Rule 12b-1 plans for the various classes and possibly other class-specific
expenses. It is expected that implementation of such a multi-class fund
structure will (i) enable investors in a Series to choose the distribution
-
option that best suits their individual situations, (ii) facilitate distribution
--
of the Fund's shares, and (iii) maintain the competitive position of the Fund
---
in relation to other funds that have implemented or are seeking to implement
similar distribution arrangements.
22
<PAGE>
The Board of Trustees has approved for the Florida Series, subject to
shareholder approval, two classes of shares which are to share in the portfolio
of the Florida Series but are to have different distribution arrangements. The
existing class of shares of the Florida Series, to be designated the "Class A
Shares," will continue to be offered as described in the Fund's current
prospectus, except that the Board of Trustees is recommending that shareholders
approve a new Distribution Plan and Agreement pursuant to Rule 12b-1 under the
Act that, if approved, will be applicable to the Class A Shares. See Item 5
above.
The second class of shares of the Florida Series, to be designated the
"Class C Shares," will be offered at net asset value without an initial sales
charge, but if redeemed for cash before the first anniversary of purchase, will
be subject to a CDRC, or contingent deferred reimbursement charge, equal to 1%
of the lower of their cost or then net asset value. The Class C Shares are to be
subject to a Rule 12b-1 plan that involves annual distribution and service fee
payments for the account of such class equal to 1% of the average net asset
value of the Class C shares. None of these charges will be allocated to the
Class A Shares.
It is expected that Class C Shares will also be issued to shareholders
of the Florida Tax-Free Income Trust Series (the "Acquired Series") of Lord
Abbett Securities Trust (the "Trust") in connection with an acquisition by the
Florida Series of the assets of the Acquired Series. This transaction, which is
subject to certain conditions, has been approved by the Board of Trustees of the
Fund, including a majority of the Independent Trustees, as in the best interests
of the shareholders of the Florida Series. Shareholders of the Florida Series
are not required to approve this proposed transaction. As of December 31, 1995,
the Acquired Series' net assets were approximately $10,298,677, and the Fund's
net assets were approximately $176,705,507.
If the proposed amendment to the Fund's Declaration of Trust is
approved, the Board of Trustees will be authorized to create and issue one or
more additional classes of shares within series. Even though the board has not
approved at this time additional classes for the Georgia, Michigan and
Pennsylvania Series, the existing class of each such Series will be designated
the "Class A Shares".
Shares of all classes will vote together on all matters affecting a
Series or the Fund, except for matters, such as approval of a Rule 12b-1 plan or
a related service plan, affecting only a particular class or classes. All shares
voting on a matter will have identical voting rights. All issued shares will be
fully paid and non-assessable, and shareholders will have no pre-emptive or
other right to subscribe to any additional shares. All shares within a series
will have the same rights and be
23
<PAGE>
subject to the same limitations set forth in the Declaration of Trust with
respect to dividends, redemptions and liquidation except for differences
resulting from class-specific Rule 12b-1 plans and related service plans and
certain other class-specific expenses.
Approval of the proposed amendment to the Declaration of Trust requires
an affirmative vote of the holders of the lesser of: (i) 67% or more of the
-
shares of the Fund present or represented by proxy at the shareholders meeting,
if the holders of more than 50% of the outstanding shares of the Fund are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
--
of the Fund. The effect of an abstention or broker non-vote is the same as a
vote against this proposal.
The Board of Trustees recommends that shareholders vote in favor of this
proposed amendment to the Declaration of Trust.
7. OTHER INFORMATION
Management is not aware of any matters to come before the meeting other
than those set forth in the notice. If any such other matters do come before the
meeting, the individuals named as proxies will vote, act, and consent with
respect thereto in accordance with their best judgment.
a. Timeliness of Shareholder Proposals.
-----------------------------------
Any shareholder proposals to be presented for action at the Fund's next
shareholder meeting pursuant to the provisions of Rule 14a-8 under the
Securities Exchange Act of 1934, as amended, must be received at the Fund's
principal executive offices within a reasonable time in advance of the date
solicitation is made for such meeting. The Fund does not intend to hold another
annual or special meeting of shareholders unless required to do so by the Act.
b. Investment Adviser and Underwriter.
----------------------------------
Lord, Abbett & Co., 767 Fifth Avenue, New York, New York, 10153, acts as
investment adviser and principal underwriter with respect to the Fund.
24
<PAGE>
c. Annual Report Available Upon Request.
------------------------------------
The Fund will furnish, without charge, a copy of the Fund's most recent
annual report and the most recent semi-annual report succeeding the annual
report, if any, to a shareholder upon request. A shareholder may obtain such
report(s) by writing to the Fund or by calling 800-874-3733.
d. Portfolio Transactions.
----------------------
Purchases and sales of portfolio securities usually will be principal
transactions and normally such securities will be purchased directly from the
issuer or from an underwriter or purchased from or sold to a market maker for
the securities. Therefore, the Fund usually will pay no brokerage commissions on
such transactions. Purchases from underwriters of portfolio securities will
include a commission or concession paid by the issuer to the underwriter and
purchases from or sales to dealers serving as market makers will include a
dealer's markup or markdown. Principal transactions, including riskless
principal transactions, are not afforded the protection of the safe harbor in
Section 28(e) of the Securities Exchange Act of 1934.
The Fund's policy is to obtain best execution on all portfolio
transactions, which means that the Fund seeks to have purchases and sales of
portfolio securities executed at the most favorable prices, considering all
costs of the transaction including dealer markups and markdowns and any
brokerage commissions. This policy governs the selection of dealers and brokers
and the market in which the transaction is executed. To the extent permitted by
law, the Fund may, if considered advantageous, make a purchase from or sale to
another Lord Abbett-sponsored fund without the intervention of any broker-
dealer.
The Fund selects broker-dealers on the basis of their professional
capability and the value and quality of their brokerage and research services.
Normally, the selection is made by traders who are officers of the Fund and also
are employees of Lord Abbett. These traders do the trading as well for other
accounts -- investment companies (of which they are also officers) and other
investment clients -- managed by Lord Abbett. They are responsible for the
negotiation of prices and any commissions.
The Fund may pay a brokerage commission on the purchase or sale of a
security that could be purchased from or sold to a market maker if the Fund's
net cost of the purchase or the net proceeds to the Fund of the sale are at
least as favorable as the Fund could obtain on a direct purchase or sale.
Brokers who receive such commissions may also provide research services at least
some of which are useful to Lord Abbett in their overall responsibilities with
respect to the Fund and the
25
<PAGE>
other accounts they manage. Research includes trading equipment and computer
software packages, acquired from third-party suppliers, that enable Lord Abbett
to access various information bases and may include the furnishing of analyses
and reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts. Such services may be
used by Lord Abbett in servicing all their accounts, and not all of such
services will necessarily be used by Lord Abbett in connection with their
management of the Fund; conversely, such services furnished in connection with
brokerage on other accounts managed by Lord Abbett may be used in connection
with their management of the Fund, and not all of such services will necessarily
be used by Lord Abbett in connection with their advisory services to such other
accounts. The Fund has been advised by Lord Abbett that research services
received from brokers cannot be allocated to any particular account, are not a
substitute for Lord Abbett's services but are supplemental to their own research
effort and, when utilized, are subject to internal analysis before being
incorporated by Lord Abbett into their investment process. As a practical
matter, it would not be possible for Lord Abbett to generate all of the
information presently provided by brokers. While receipt of research services
from brokerage firms has not reduced Lord Abbett's normal research activities,
the expenses of Lord Abbett could be materially increased if it purchased such
equipment and software packages directly from the suppliers and attempted to
generate such additional information through its own staff. No commitments are
made regarding the allocation of brokerage business to or among brokers and
trades are executed only when they are dictated by investment decisions of the
Fund to purchase or sell portfolio securities.
If two or more broker-dealers are considered capable of offering the
equivalent likelihood of best execution, the broker-dealer who has sold the
Fund's shares and/or shares of other Lord Abbett-sponsored funds may be
preferred.
If other clients of Lord Abbett buy or sell the same security at the
same time as the Fund, transactions will, to the extent practicable, be
allocated among all participating accounts in proportion to the amount of each
order and will be executed daily until filled so that each account shares the
average price and commission cost of each day. Other clients who direct that
their brokerage business be placed with specific brokers or who invest through
wrap accounts introduced to Lord Abbett by certain brokers may not participate
with the Fund in the buying and selling of the same securities as described
above. If these clients wish to buy or sell the same security as the Fund does,
they may have their transactions executed at times different from the Fund's
transactions and thus may not receive the same price or incur the same
commission cost as the Fund does.
26
<PAGE>
The Fund will not seek "reciprocal" dealer business (for the purpose of
applying commissions in whole or in part for the Fund's benefit or otherwise)
from broker-dealers as consideration for the direction to them of portfolio
business.
For the fiscal years ended October 31, 1995, 1994 and 1993, the Fund
paid no commissions to independent broker-dealers.
LORD ABBETT TAX-FREE INCOME TRUST
Kenneth B. Cutler
Vice President and Secretary
27
<PAGE>
EXHIBIT A
COMPARISON OF CURRENT FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS AND
PROPOSED FUNDAMENTAL AND CERTAIN NON-FUNDAMENTAL INVESTMENT POLICIES AND
RESTRICTIONS
CURRENT PROPOSED
POLICY/RESTRICTION POLICY/RESTRICTION
- --------------------------- -------------------------------------------------
SHORT SALES/MARGIN.
FUNDAMENTAL FUNDAMENTAL
Each Series may not sell Each Series may purchase securities on margin to
short or buy on margin the extent permitted by appli cable law.
(good faith deposits made
in connection with NON-FUNDAMENTAL
entering into options and Each Series may not make short sales of securities
financial futures or maintain a short position except to the extent
transactions are not permitted by applicable law.
deemed to be margin),
although it may obtain
short-term credit
necessary for the
clearance of purchases of
securities.
- --------------------------------------------------------------------------------
BORROWING.
FUNDAMENTAL FUNDAMENTAL
Each Series may not borrow Each Series may not borrow money, except that (i)
money unless such each Series may borrow from banks (as defined in
borrowing does not exceed the Act) in amounts up to 33 1/3% of its total
the asset coverage assets (including the amount borrowed), (ii) each
requirement of Section Series may borrow up to an additional 5% of its
18(f) of the Investment total assets for temporary purposes, and (iii) each
Company Act, as amended, Series may obtain such short-term credit as may be
from time to time, and necessary for the clearance of purchases and sales
unless such borrowing on of portfolio securities.
behalf of a Series, or a
class of that Series, NON-FUNDAMENTAL
shall be a liability only Each Series may not borrow in excess of 5% of its
of such Series or class, gross assets taken at cost or market value,
as the case may be. whichever is lower at the time of borrowing, and
then only as a temporary measure for extraordinary
or emergency purposes
- --------------------------------------------------------------------------------
<PAGE>
CURRENT PROPOSED
POLICY/RESTRICTION POLICY/RESTRICTION
- --------------------------- --------------------------------------------------
UNDERWRITING.
FUNDAMENTAL FUNDAMENTAL
Each Series may not act as Each Series may not engage in the underwriting of
underwriter of securities securities, except pursuant to a merger or
issued by others, except acquisition or to the extent that, in connection
to the extent that in with the disposition of its portfolio securities,
connection with the it may be deemed to be an underwriter under
disposition of its federal securities laws.
portfolio securities it
may be deemed to be an
underwriter under federal
securities laws.
- --------------------------------------------------------------------------------
LENDING.
FUNDAMENTAL FUNDAMENTAL
Each Series may not make Each Series may not make loans to other persons,
loans, except for the except that the acquisition of bonds, debentures
purchase of debt or other corporate debt securities and investment
securities in which it in government obligations, commercial paper,
may invest consistent pass-through instruments, certificates of deposit,
with its investment bankers acceptances, repurchase agreements or any
objective and policies. similar instruments shall not be subject to this
limitation, and except further that each Series
may lend its portfolio securities, provided that
the lending of portfolio securities may be made
only in accordance with applicable law.
- --------------------------------------------------------------------------------
2
<PAGE>
CURRENT PROPOSED
POLICY/RESTRICTION POLICY/RESTRICTION
- --------------------------- --------------------------------------------------
REAL ESTATE/COMMODITIES.
FUNDAMENTAL FUNDAMENTAL
Each Series may not buy or Each Series may not buy or sell real estate
sell real estate, (except that each Series may invest in securities
including real estate directly or indirectly secured by real estate or
mortgages in the ordinary interests therein or issued by companies which
course of its business, invest in real estate or interests therein) or
except that it may invest commodities or commodity contracts (except to the
in marketable securities extent each Series may do so in accordance with
secured by real estate or appli cable law and without registering as a
interests therein. Each commodity pool operator under the Commodity
Series may not buy or Exchange Act as, for example, with futures
sell oil, gas, or other contracts).
mineral leases,
commodities or commodity NON-FUNDAMENTAL
contracts (for this Each Series may not invest in real estate limited
purpose options and partnership interests or interests in oil, gas or
financial futures other mineral leases, or exploration or other
contracts are not deemed development programs, except that each Series may
to be commodities or invest in securities issued by companies that
commodity contracts). engage in oil, gas or other mineral exploration or
development activities.
- --------------------------------------------------------------------------------
DIVERSIFICATION.
FUNDAMENTAL NON-FUNDAMENTAL
Each Series may not buy No policy/restriction stated (but each Series will
voting securities if the be required to meet the diversification rules
purchase would then cause under Subchapter M of the Internal Revenue Code).
it to own more than 10%
of the voting securities
of any issuer.
Notwithstanding the
foregoing, in the future,
upon shareholder
approval, each of the
Series may seek to
achieve its investment
objective by investing
all of its assets in
another investment
company (or series or
class thereof) having the
same investment
objective. Shareholders
will be notified thirty
days in advance of such
conversion.
- --------------------------------------------------------------------------------
3
<PAGE>
CURRENT PROPOSED
POLICY/RESTRICTION POLICY/RESTRICTION
- --------------------------- --------------------------------------------------
INVESTMENT IN A SINGLE
INDUSTRY.
FUNDAMENTAL
FUNDAMENTAL Each Series may not invest more than 25% of its
Each Series may not invest assets, taken at market value, in the securities
more than 25% of its of issuers in any particular industry (excluding
gross assets taken at tax-exempt securities, such as tax-exempt
market value in any one securities financing facilities in the same
industry (except that industry or issued by nongovernmental users and
each Series may invest securities of the U.S. Government, its agencies
more than 25% of such and instrumentalities).
gross assets in
tax-exempt securities).
- --------------------------------------------------------------------------------
RESTRICTED/ILLIQUID
SECURITIES.
NON-FUNDAMENTAL
FUNDAMENTAL Each Series may not invest knowingly more than 15%
Each Series may not invest of its net assets (at the time of investment) in
knowingly more than 10% illiquid securities, except for securities
of its net assets in qualifying for resale under Rule 144A of the
illiquid securities Securities Act of 1933, deemed to be liquid by the
(securities qualifying Board of Trustees.
for resale under Rule
144A that are determined
by the trustees, or by
Lord Abbett pursuant to
delegated authority, to
be liquid are considered
liquid securities).
- --------------------------------------------------------------------------------
MORTGAGING AND PLEDGING OF
ASSETS.
FUNDAMENTAL FUNDAMENTAL
Each Series may not Each Series may not pledge its assets (other than
pledge, mortgage or to secure borrowings, or to the extent permitted
hypothecate its assets by such Series' investment policies, as permitted
except to secure by applicable law.
permitted borrowings
(neither a deposit
required to enter into or
to maintain municipal
bond index futures
contracts nor an
allocation or segregation
of portfolio assets to
collateralize a position
in such options or
futures contracts is
deemed to be a pledge,
mortgage or
hypothecation).
- --------------------------------------------------------------------------------
4
<PAGE>
CURRENT PROPOSED
POLICY/RESTRICTION POLICY/RESTRICTION
- --------------------------- --------------------------------------------------
INVESTMENTS IN SECURITIES
OF OTHER INVESTMENT
COMPANIES.
NON-FUNDAMENTAL
FUNDAMENTAL Each Series may not invest in the securities of
Each Series may not buy other investment companies, except as permitted by
securities issued by any applicable law.
other open-end investment
company, except pursuant
to a merger, acquisition
or consolidation.
Notwithstanding the
foregoing, in the future,
upon shareholder
approval, each of the
Series may seek to
achieve its investment
objective by investing
all of its assets in
another investment
company (or series or
class thereof) having the
same investment
objective. Shareholders
will be notified thirty
days in advance of such
conversion.
- --------------------------------------------------------------------------------
OPTIONS.
FUNDAMENTAL NON-FUNDAMENTAL
Each Series may not buy or Each Series may not write, purchase or sell puts,
sell put, call, straddle calls, straddles, spreads or combinations thereof,
or spread options, except to the extent permitted in the Fund's
although it may buy, hold prospectus and statement of additional
or sell options and information, as they may be amended from time to
financial futures. time.
- --------------------------------------------------------------------------------
5
<PAGE>
CURRENT PROPOSED
POLICY/RESTRICTION POLICY/RESTRICTION
- --------------------------- --------------------------------------------------
INVESTMENTS IN SECURITIES
OF ISSUERS IN OPERATION
FOR LESS THAN THREE YEARS.
No policy/restriction NON-FUNDAMENTAL
stated. Each Series may not invest in securities of
issuers which, with their predecessors, have a
record of less than three years continuous
operations, if more than 5% of such Series' total
assets would be invested in such securities (this
restriction shall not apply to mortgage-backed
securities, asset-backed securities or obligations
issued or guaranteed by the U.S. Government, its
agencies or instrumentalities).
- --------------------------------------------------------------------------------
OWNERSHIP OF PORTFOLIO
SECURITIES BY OFFICERS
AND DIRECTORS.
FUNDAMENTAL NON-FUNDAMENTAL
Each Series may not own Each Series may not hold securities of any issuer
securities of an issuer if more than 1/2 of 1% of the securities of such
if, to the Fund's issuer are owned beneficially by one or more
knowledge, the Fund's officers or trustees of the Fund or by one or more
officers and Trustees or partners or members of the underwriter or
partners of the Fund's investment advisor if these owners in the
investment adviser, who aggregate own beneficially more than 5% of the
beneficially own more securities of such issuer.
than 1/2 of 1% of the
securities of that issuer
together own more than 5%
of such securities.
- --------------------------------------------------------------------------------
6
<PAGE>
CURRENT PROPOSED
POLICY/RESTRICTION POLICY/RESTRICTION
- --------------------------- --------------------------------------------------
TRANSACTIONS WITH CERTAIN
PERSONS.
FUNDAMENTAL NON-FUNDAMENTAL
Each Series may not buy Each Series may not buy from or sell to any of its
securities from or sell officers, trustees, employees, or its investment
them to the Fund's adviser or any of its officers, directors,
officers, Trustees, partners or employees, any securities other than
employees, or to the shares of beneficial interest in such Series.
Fund's investment adviser
or to its partners and
employees, other than
shares of the Series.
- --------------------------------------------------------------------------------
SENIOR SECURITIES.
FUNDAMENTAL FUNDAMENTAL
Each Series may not issue Each Series may not issue senior securities to the
senior securities as extent such issuance would violate applicable law.
defined in the Act
(neither a purchase or
sale of options nor
collateral arrangements
with respect to either
financial futures
transactions or the
writing of options are
deemed to be the issuance
of a senior security).
- --------------------------------------------------------------------------------
PURCHASE OF WARRANTS.
FUNDAMENTAL NON-FUNDAMENTAL
No policy/restriction Each Series may not invest in warrants if, at the
stated. time of the acquisition, its investment in
warrants, valued at the lower of cost or market,
would exceed 5% of such Series' total assets
(included within such limitation, but not to
exceed 2% of such Series' total assets, are
warrants which are not listed on the New York or
American Stock Exchange or a major foreign
exchange).
- --------------------------------------------------------------------------------
7
<PAGE>
EXHIBIT B
Rule 12b-1 Distribution Plan and Agreement -- Lord Abbett Tax-Free Income Trust
Florida Series -- Class A Shares
------------------------------------------------------------
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and
between LORD ABBETT TAX-FREE INCOME TRUST, a Delaware business trust (the
"Fund"), on behalf of the FLORIDA SERIES (the "Series"), and LORD ABBETT
DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Act"); and the
Distributor is the exclusive selling agent of the Fund's shares of beneficial
interest, including the Series' Class A shares (the "Shares") pursuant to the
Distribution Agreement between the Fund and the Distributor, dated as of the
date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the
"Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under
the Act, pursuant to which the Series may make certain payments to the
Distributor to be used by the Distributor or paid to institutions and persons
permitted by applicable law and/or rules to receive such payments ("Authorized
Institutions") in connection with sales of Shares and/or servicing of accounts
of shareholders holding Shares.
WHEREAS, the Plan will succeed a Rule 12b-1 Distribution Plan and Agreement
between the Fund and Lord, Abbett & Co. ("Lord Abbett"), an affiliate of the
Distributor.
WHEREAS, the Fund's Board of Trustees has determined that there is a
reasonable likelihood that the Plan will benefit the Series and the holders of
the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good
and valuable consideration, receipt of which is hereby acknowledged, and subject
to the provisions of paragraph 8 of this Plan, it is agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into agreements
with Authorized Institutions (the "Agreements") which may provide for the
payment to such Authorized Institutions of distribution and service fees which
the Distributor receives from the Series in order to provide additional
incentives to such Authorized Institutions (i) to sell Shares and (ii) to
- --
provide continuing information and
<PAGE>
investment services to their accounts holding Shares and otherwise to encourage
their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments
received hereunder from the Series in order to (a) finance any activity which is
-
primarily intended to result in the sale of Shares and (b) provide continuing
-
information and investment services to shareholder accounts not serviced by
Authorized Institutions receiving a service fee from the Distributor hereunder
and otherwise to encourage such accounts to remain invested in the Shares;
provided that (i) any payments referred to in the foregoing clause (a) shall not
- -------- -
exceed the distribution fee permitted to be paid at the time under paragraph 3
of this Plan and shall be authorized by the Board of Trustees of the Fund by a
vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments
--
referred to in clause (b) shall not exceed the service fee permitted to be paid
at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for
remittance to Authorized Institutions and/or use by the Distributor pursuant to
this Plan (a) service fees and (b) distribution fees, each at an annual rate not
- -
to exceed .25 of 1% of the average annual net asset value of Shares outstanding,
except that service fees payable with respect to Shares that were initially
issued, or are attributable to shares that were initially issued, by the Fund
prior to October 1, 1992/1/ shall not exceed .15 of 1% of the average net asset
value of such Shares. The Board of Trustees of the Fund shall from time to time
determine the amounts, within the foregoing maximum amounts, that the Series may
pay the Distributor hereunder. Any such fees (which may be waived by the
Authorized Institutions in whole or in part) may be calculated and paid
quarterly or more frequently if approved by the Board of Trustees of the Fund.
Such determinations and approvals by the Board of Trustees shall be made and
given by votes of the kind referred to in paragraph 10 of this Plan. Payments
by holders of Shares to the Series of contingent deferred reimbursement charges
relating to distribution fees paid by the Series hereunder shall reduce the
amount of distribution fees for purposes of the annual 0.25% distribution fee
limit. The Distributor will monitor the payments hereunder and shall reduce such
payments or take such other steps as may be necessary to assure that (i) the
-
payments pursuant to this Plan shall be consistent with Article III, Section 26,
subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service
- --------------------
/1/. The proposed Distribution Plans and Agreements of the Georgia, Michigan
and Pennsylvania Series shall include the following reference in lieu of a
reference to October 1, 1992:
"the first day of the calendar quarter subsequent to the Series' net
assets reaching $100 million"
2
<PAGE>
fees, as the same may be in effect from time to time and (ii) the Series shall
--
not pay with respect to any Authorized Institution service fees equal to more
than .25 of 1% of the average annual net asset value of Shares sold by (or
attributable to Shares or shares sold by) such Authorized Institution and held
in an account covered by an Agreement.
4. The net asset value of the Shares shall be determined as provided in
the Declaration of Trust of the Fund. If the Distributor waives all or a
portion of the fees which are to be paid by the Series hereunder, the
Distributor shall not be deemed to have waived its rights under this Agreement
to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial
Officer, is hereby authorized to direct the disposition of monies paid or
payable by the Series hereunder and shall provide to the Fund's Board of
Trustees, and the Trustees shall review at least quarterly, a written report of
the amounts so expended pursuant to this Plan and the purposes for which such
expenditures were made.
6. Neither this Plan nor any other transaction between the parties hereto
pursuant to this Plan shall be invalidated or in any way affected by the fact
that any or all of the trustees, officers, shareholders, or other
representatives of the Fund are or may be "interested persons" of the
Distributor, or any successor or assignee thereof, or that any or all of the
directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may
otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's
best judgment and good faith efforts in rendering services under this Plan.
Other than to abide by the provisions hereof and render the services called for
hereunder in good faith, the Distributor assumes no responsibility under this
Plan and, having so acted, the Distributor shall not be held liable or held
accountable for any mistake of law or fact, or for any loss or damage arising or
resulting therefrom suffered by the Fund, the Series or any of the shareholders,
creditors, trustees, or officers of the Fund; provided however, that nothing
herein shall be deemed to protect the Distributor against any liability to the
Fund or the Series' shareholders by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder, or by reason of the
reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall
continue in effect for a period of more than one year from that date only so
long as such continuance is specifically approved at least annually by a vote of
the Board of Trustees of the Fund, including the vote of a majority of the
trustees who are not "interested persons" of the Fund and who have no direct or
indirect financial
3
<PAGE>
interest in the operation of this Plan or in any agreement related to this Plan,
cast in person at a meeting called for the purpose of voting on such renewal./2/
9. This Plan may not be amended to increase materially the amount to be
spent by the Series hereunder above the maximum amounts referred to in paragraph
3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule
18f-3 under the Act as in effect at such time, and each material amendment must
be approved by a vote of the Board of Trustees of the Fund, including the vote
of a majority of the trustees who are not "interested persons" of the Fund and
who have no direct or indirect financial interest in the operation of this Plan
or in any agreement related to this Plan, cast in person at a meeting called for
the purpose of voting on such amendment. Amendments to this Plan which do not
increase materially the amount to be spent by the Series hereunder above the
maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to
paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind
referred to in the foregoing paragraph 9 may be adopted by a vote of the Board
of Trustees of the Fund, including the vote of a majority of the trustees who
are not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement related to
this Plan. The Board of Trustees of the Fund may, by such a vote, interpret
this Plan and make all determinations necessary or advisable for its
administration.
11. This Plan may be terminated at any time without the payment of any
penalty (a) by the vote of a majority of the trustees of the Fund who are not
-
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreement related to the Plan,
or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under
-
the Act as in effect at such time. This Plan shall automatically terminate in
the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and
nomination of those trustees of the Fund who are not "interested persons" of the
Fund are committed to the discretion of such disinterested trustees. The terms
"interested persons," "assignment" and "vote of a majority of the outstanding
voting securities" shall have the same meanings as those terms are defined in
the Act.
- ------------------
/2/. The proposed Distribution Plans and Agreements of the Georgia, Michigan
and Pennsylvania Series shall include the following sentence at the end of
paragraph 8:
Notwithstanding the foregoing, no payments may be made by the Series
hereunder prior to or with respect to any period prior to the first day
of the calendar quarter subsequent to the Series' net assets reaching
$100 million."
4
<PAGE>
13. The obligations of the Fund and the Series, including those imposed
hereby, are not personally binding upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees or agents of
the Fund or Series individually, but are binding only upon the assets and
property of the Series. Any and all personal liability, either at common law or
in equity, or by statute or constitution, of every such Trustee, shareholder,
officer, employee or agent for any breach of the Fund or Series of any
agreement, representation or warranty hereunder is hereby expressly waived as a
condition of and in consideration for the execution of this Agreement by the
Fund.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by its duly authorized representative as
of the date first above written.
LORD ABBETT TAX-FREE INCOME TRUST
By: ___________________________
President
ATTEST:
Assistant Secretary
LORD ABBETT DISTRIBUTOR LLC
By: _____________________________
5
<PAGE>
EXHIBIT C
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION OF THE FUND
AUTHORIZING THE BOARD OF TRUSTEES TO CREATE
NEW CLASSES OF SHARES OF BENEFICIAL INTEREST OF THE FUND
The following text shows those provisions of the Declaration of Trust of the
Fund that are to be amended; the text that is lined through shows deletions and
the text that is double underlined indicates additions.
ARTICLE V
* * *
Section 5.3. Additional Series; Classes. The Trustees may, without
--------------------------
Shareholder approval, from time to time authorize additional Series with
separate investment objectives and policies and distinct investment purposes and
one or more separate classes of any Series. The Trustees shall have full power
and authority in their sole discretion, and without obtaining any prior
authorization or vote of the Shareholders of any Series or class of the Trust,
to establish and designate and to change in any manner any such Series, or any
classes thereof, to fix such preferences, voting powers, rights and privileges
of such Series, or classes thereof, as the Trustees may from time to time
determine, and to classify or reclassify any issued Shares of any Series, or
classes thereof, into one or more Series or classes. The establishment and
designation of any Series additional to the initial Series of Shares or the
establishment and designation of any class of a Series additional to the initial
class shall be effective upon the execution by a majority of the Trustees of an
instrument setting forth the establishment and designation of such Series or
class thereof (which instrument shall have the status of an amendment to this
Declaration). Such instrument shall also set forth any rights and preferences
of such Series or class which are in addition to the rights and preferences of
Shares set forth in this Declaration. Each reference to "Shares" in this
Declaration shall be deemed to be a reference to Shares of any Series or class
or all Series and classes, as the context may require. All Shares of any Series
or any classes thereof shall have equal voting, distribution, redemption,
liquidation and other rights and shall be entitled to a preference over Shares
of other Series or any classes thereof with respect to the assets of or
allocated (pursuant to subsection 5.4.2) to such Series or any classes thereof.
Notwithstanding the foregoing, the Trustees may establish variations between
different Series, and classes of any Series, as to purchase price, determination
of net asset value, the price, terms and manner of redemption, special and
relative rights as to dividends and on liquidation, conditions under which the
several Series (and classes of any Series) shall have separate voting rights and
such other matters as the Trustees may determine. The Trustees may from time to
time divide or combine the Shares of any Series or class thereof into a greater
or
<PAGE>
lesser number of Shares of such Series or class thereof without thereby
changing the proportionate beneficial interests of holders of Shares in such
Series or class thereof. The number of Shares of each Series and each class
that may be issued shall be unlimited.
* * *
Section 5.11. Voting Powers. The Shareholders shall have power to vote
-------------
only: (a) for the election of Trustees as provided in Section 2.4 hereof; (b)
- -
with respect to any investment advisory or management contract entered into
pursuant to Section 3.2 hereof; (c) with respect to the removal of Trustees
-
pursuant to Section 5.14 hereof; (d) with respect to any termination of the
-
Trust, as provided in Section 8.1 hereof; (e) with respect to any amendment of
-
this Declaration to the extent and as provided in Section 8.2 hereof; (f) with
-
respect to any merger, consolidation or sale of assets of the Trust as provided
in Section 8.3 hereof; (g) with respect to incorporation of the Trust to the
-
extent and as provided in Section 8.4 hereof; (h) to the same extent as the
-
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders;
and (i) with respect to such additional matters relating to the Trust as may be
-
required by this Declaration or the By-Laws or by reason of the registration of
the Trust or the Shares with the Commission or any State or by any applicable
law or any regulation or order of the Commission or any State or as the Trustees
may consider necessary or desirable. On any matter submitted to a vote of
Shareholders, all Shares issued and outstanding shall, subject to applicable
law, be voted as a single class in the aggregate and not by Series, except with
respect to the following matters: (i) any investment advisory or management
-
contract pertaining to any particular Series entered into pursuant to Section
3.2 hereof; (ii) any amendment of this Declaration affecting the Shareholders of
--
any particular Series differently from the Shareholders of other Series; and
(iii) such additional matters relating to a particular Series as may be required
by this Declaration or by the By-Laws or by reason of the registration of the
Trust or the Shares of such Series with the Commission or any State or by any
applicable law (including the 1940 Act) or any regulation or order of the
Commission or any State or as the Trustees may consider necessary or desirable.
With respect to such matters, the Shareholders of each affected Series shall
have the power to vote as a separate Series or as a class of a separate Series,
as determined by the Trustees, and other shareholders shall not be entitled to
vote.
* * *
ARTICLE VII
* * *
2
<PAGE>
Section 7.3.1 Net Asset Value Per Share. The net asset value of each
-------------------------
Share of each Series as of any particular time shall be the quotient obtained by
dividing the value of the net assets of such Series (determined in accordance
with Section 7.3.2) by the total number of outstanding Shares of that Series.
If any Series is divided into classes, the net asset value of Shares of each
class of such Series may be otherwise determined in any manner, to the extent
permitted by applicable law, determined by the Trustees and disclosed in a
prospectus relating to such class.
* * *
3
<PAGE>
LORD ABBETT TAX-FREE INCOME TRUST
FLORIDA SERIES
SPECIAL MEETING OF SHAREHOLDERS
JUNE 19, 1996
767 Fifth Avenue
New York, New York 10153
The undersigned hereby appoints KENNETH B. CUTLER, ROBERT S. DOW and RONALD
P. LYNCH and each of them proxies, with full power of substitution, to vote
(according to the number of votes which the undersigned would be entitled to
cast if then personally present) at the special meeting of shareholders of LORD
ABBETT TAX-FREE INCOME TRUST (the "Fund") on June 19, 1996, including all
adjournments, as specified below, and in their discretion upon such other
business as may properly be brought before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WHICH RECOMMENDS THAT
YOU VOTE FOR PROPOSALS 1-6.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE VOTE OF THE UNDERSIGNED
IS TO BE CAST FOR ALL PROPOSALS LISTED BELOW.
1. Election of Trustees:
For [ ] Without Authority [ ] For All Except [ ]
(NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
CHECK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE
NOMINEE'S NAME BELOW.)
Ronald P. Lynch, Robert S. Dow, E. Thayer Bigelow, Stewart S.
Dixon, John C. Jansing, C. Alan MacDonald, Hansel B. Millican,
Jr. and Thomas J. Neff.
2. For [ ] Against [ ] Abstain [ ] To ratify the selection of
Deloitte & Touche LLP as independent public accountants of the
Fund for the fiscal year ending October 31, 1996.
3. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed change in the Series' investment objective, as
described in the proxy statement.
4. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed changes in the Series' fundamental investment
policies and restrictions, as described in the proxy statement.
<PAGE>
5. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed new Distribution Plan and Agreement for the Series'
existing class of shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as described in the proxy
statement.
6. For [ ] Against [ ] Abstain [ ] To approve or disapprove an
amendment to the Fund's Declaration of Trust authorizing the
Board of Trustees to create new classes within series of shares
of beneficial interest of the Fund, as described in the proxy
statement.
2
<PAGE>
ACCOUNT NUMBER SHARES PROXY NUMBER
LORD ABBETT TAX-FREE INCOME TRUST
FLORIDA SERIES
PLEASE SIGN, DATE AND MAIL THIS PROXY IN THE POSTAGE
PAID RETURN ENVELOPE PROVIDED.
For information as to the voting of stock registered in more
than one name, see page 1 of the proxy statement. When
signing the proxy as attorney, executor, administrator,
trustee or guardian, please indicate the capacity in which
you are acting. Only authorized officers should sign for
corporations.
Date:......................................................
Signature(s) of Shareholder(s) as shown at left
............................................................
............................................................
(Please read other side)
3
<PAGE>
LORD ABBETT TAX-FREE INCOME TRUST
GEORGIA SERIES
SPECIAL MEETING OF SHAREHOLDERS
JUNE 19, 1996
767 Fifth Avenue
New York, New York 10153
The undersigned hereby appoints KENNETH B. CUTLER, ROBERT S. DOW and RONALD
P. LYNCH and each of them proxies, with full power of substitution, to vote
(according to the number of votes which the undersigned would be entitled to
cast if then personally present) at the special meeting of shareholders of LORD
ABBETT TAX-FREE INCOME TRUST (the "Fund") on June 19, 1996, including all
adjournments, as specified below, and in their discretion upon such other
business as may properly be brought before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WHICH RECOMMENDS THAT
YOU VOTE FOR PROPOSALS 1-6.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE VOTE OF THE UNDERSIGNED
IS TO BE CAST FOR ALL PROPOSALS LISTED BELOW.
1. Election of Trustees:
For [ ] Without Authority [ ] For All Except [ ]
(NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
CHECK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE
NOMINEE'S NAME BELOW.)
Ronald P. Lynch, Robert S. Dow, E. Thayer Bigelow, Stewart S.
Dixon, John C. Jansing, C. Alan MacDonald, Hansel B. Millican,
Jr. and Thomas J. Neff.
2. For [ ] Against [ ] Abstain [ ] To ratify the selection of
Deloitte & Touche LLP as independent public accountants of the
Fund for the fiscal year ending October 31, 1996.
3. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed change in the Series' investment objective, as
described in the proxy statement.
4. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed changes in the Series' fundamental investment
policies and restrictions, as described in the proxy statement.
1
<PAGE>
5. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed new Distribution Plan and Agreement for the Series'
existing class of shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as described in the proxy
statement.
6. For [ ] Against [ ] Abstain [ ] To approve or disapprove
an amendment to the Fund's Declaration of Trust authorizing the
Board of Trustees to create new classes within series of shares
of beneficial interest of the Fund, as described in the proxy
statement.
2
<PAGE>
ACCOUNT NUMBER SHARES PROXY NUMBER
LORD ABBETT TAX-FREE INCOME TRUST
GEORGIA SERIES
PLEASE SIGN, DATE AND MAIL THIS PROXY IN THE POSTAGE
PAID RETURN ENVELOPE PROVIDED.
For information as to the voting of stock registered in more
than one name, see page 1 of the proxy statement. When
signing the proxy as attorney, executor, administrator,
trustee or guardian, please indicate the capacity in which
you are acting. Only authorized officers should sign for
corporations.
Date:......................................................
Signature(s) of Shareholder(s) as shown at left
............................................................
............................................................
(Please read other side)
3
<PAGE>
LORD ABBETT TAX-FREE INCOME TRUST
MICHIGAN SERIES
SPECIAL MEETING OF SHAREHOLDERS
JUNE 19, 1996
767 Fifth Avenue
New York, New York 10153
The undersigned hereby appoints KENNETH B. CUTLER, ROBERT S. DOW and RONALD
P. LYNCH and each of them proxies, with full power of substitution, to vote
(according to the number of votes which the undersigned would be entitled to
cast if then personally present) at the special meeting of shareholders of LORD
ABBETT TAX-FREE INCOME TRUST (the "Fund") on June 19, 1996, including all
adjournments, as specified below, and in their discretion upon such other
business as may properly be brought before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WHICH RECOMMENDS THAT
YOU VOTE FOR PROPOSALS 1-6.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE VOTE OF THE UNDERSIGNED
IS TO BE CAST FOR ALL PROPOSALS LISTED BELOW.
1. Election of Trustees:
For [ ] Without Authority [ ] For All Except [ ]
(NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
CHECK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE
NOMINEE'S NAME BELOW.)
Ronald P. Lynch, Robert S. Dow, E. Thayer Bigelow, Stewart S.
Dixon, John C. Jansing, C. Alan MacDonald, Hansel B. Millican,
Jr. and Thomas J. Neff.
2. For [ ] Against [ ] Abstain [ ] To ratify the selection of
Deloitte & Touche LLP as independent public accountants of the
Fund for the fiscal year ending October 31, 1996.
3. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed change in the Series' investment objective, as
described in the proxy statement.
4. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed changes in the Series' fundamental investment
policies and restrictions, as described in the proxy statement.
1
<PAGE>
5. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed new Distribution Plan and Agreement for the Series'
existing class of shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as described in the proxy
statement.
6. For [ ] Against [ ] Abstain [ ] To approve or disapprove
an amendment to the Fund's Declaration of Trust authorizing the
Board of Trustees to create new classes within series of shares
of beneficial interest of the Fund, as described in the proxy
statement.
2
<PAGE>
ACCOUNT NUMBER SHARES PROXY NUMBER
LORD ABBETT TAX-FREE INCOME TRUST
MICHIGAN SERIES
PLEASE SIGN, DATE AND MAIL THIS PROXY IN THE POSTAGE
PAID RETURN ENVELOPE PROVIDED.
For information as to the voting of stock registered in more
than one name, see page 1 of the proxy statement. When
signing the proxy as attorney, executor, administrator,
trustee or guardian, please indicate the capacity in which
you are acting. Only authorized officers should sign for
corporations.
Date:......................................................
Signature(s) of Shareholder(s) as shown at left
............................................................
............................................................
(Please read other side)
3
<PAGE>
LORD ABBETT TAX-FREE INCOME TRUST
PENNSYLVANIA SERIES
SPECIAL MEETING OF SHAREHOLDERS
JUNE 19, 1996
767 Fifth Avenue
New York, New York 10153
The undersigned hereby appoints KENNETH B. CUTLER, ROBERT S. DOW and RONALD
P. LYNCH and each of them proxies, with full power of substitution, to vote
(according to the number of votes which the undersigned would be entitled to
cast if then personally present) at the special meeting of shareholders of LORD
ABBETT TAX-FREE INCOME TRUST (the "Fund") on June 19, 1996, including all
adjournments, as specified below, and in their discretion upon such other
business as may properly be brought before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WHICH RECOMMENDS THAT
YOU VOTE FOR PROPOSALS 1-6.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE VOTE OF THE UNDERSIGNED
IS TO BE CAST FOR ALL PROPOSALS LISTED BELOW.
1. Election of Trustees:
For [ ] Without Authority [ ] For All Except [ ]
(NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
CHECK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE
NOMINEE'S NAME BELOW.)
Ronald P. Lynch, Robert S. Dow, E. Thayer Bigelow, Stewart S.
Dixon, John C. Jansing, C. Alan MacDonald, Hansel B. Millican,
Jr. and Thomas J. Neff.
2. For [ ] Against [ ] Abstain [ ] To ratify the selection of
Deloitte & Touche LLP as independent public accountants of the
Fund for the fiscal year ending October 31, 1996.
3. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed change in the Series' investment objective, as
described in the proxy statement.
4. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed changes in the Series' fundamental investment
policies and restrictions, as described in the proxy statement.
1
<PAGE>
5. For [ ] Against [ ] Abstain [ ] To approve or disapprove
the proposed new Distribution Plan and Agreement for the Series'
existing class of shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as described in the proxy
statement.
6. For [ ] Against [ ] Abstain [ ] To approve or disapprove
an amendment to the Fund's Declaration of Trust authorizing the
Board of Trustees to create new classes within series of shares
of beneficial interest of the Fund, as described in the proxy
statement.
2
<PAGE>
ACCOUNT NUMBER SHARES PROXY NUMBER
LORD ABBETT TAX-FREE INCOME TRUST
PENNSYLVANIA SERIES
PLEASE SIGN, DATE AND MAIL THIS PROXY IN THE POSTAGE
PAID RETURN ENVELOPE PROVIDED.
For information as to the voting of stock registered in more
than one name, see page 1 of the proxy statement. When
signing the proxy as attorney, executor, administrator,
trustee or guardian, please indicate the capacity in which
you are acting. Only authorized officers should sign for
corporations.
Date:......................................................
Signature(s) of Shareholder(s) as shown at left
............................................................
............................................................
(Please read other side)
3
