Lord Abbett
Tax-Free
Income Trust
. Florida Series . Pennsylvania Series
. Michigan Series . Georgia Series
1995 ANNUAL REPORT
[PICTURE OF CALCULATOR AND VARIOUS STATE TAX RETURN FORMS]
A fund to help you keep more
of your investment income
<PAGE>
Report to Shareholders
For the Fiscal Year Ended October 31, 1995
As we noted in our Report To Shareholders in both April 1995 and October 1994,
we thought the municipal bond market represented significant value. Indeed,
recent performance in the municipal market was strong and each Series in Lord
Abbett Tax-Free Income Trust performed very well. Performance information for
each Series appears on the facing page.
The Trust completed fiscal 1995 on October 31 with aggregate net assets of
$326.1 million. The net assets of each Series are as follows:
- --------------------------------------------------------------------------------
Florida Series: $173.2 million
Pennsylvania Series: $ 93.5 million
Michigan Series: $ 54.2 million
Georgia Series
(inception 12/27/94): $ 5.2 million
- --------------------------------------------------------------------------------
From the beginning of 1994 through early 1995, the Federal Reserve raised short-
term interest rates a total of six times in an attempt to slow economic
activity. The fixed-income markets responded negatively to this monetary policy
until, in early 1995, evidence of an economic slowdown finally surfaced and
perceived inflationary pressures began to recede. On July 6, 1995, the Federal
Reserve lowered the Federal Funds Rate for the first time in almost three years
from 6% to 5.75%; bond prices (which are inversely related to yields) continued
their rebound up from their November 1994 lows.
We have seen the fixed-income markets, particularly municipal bonds, experience
a period of extreme volatility over the past year. The Bond Buyer 40 Index,
which measures yields on long-term municipal bonds, stood at 5.9% on October 31,
1995, after having been as high as 7.4% in November of 1994. While talk of tax
reform has heightened investor concerns, the end result has been beneficial:
tax-exempt securities have become more attractive, relative to other securities.
Presently, municipal bonds yield more than 90% of the 30-year Treasury bond,
historically a very appealing level for investing in the tax-exempt sector.
Currently, the average maturity of the portfolios in the Trust is about 18
years. Given the recent decline in tax-free yields, call protection (assurance
by the issuer that a bond will not be redeemed before a specific date) is being
emphasized by institutional investors. Our strategy in fiscal 1995 has been
focused on high-quality, longer term issues with good call protection. The high
quality of these securities should enhance portfolio value as credit quality and
liquidity concerns remain in the marketplace.
We are pleased to announce that Lord Abbett Tax-Free Income Trust's Board of
Trustees has elected Robert S. Dow as President of the Trust. Mr. Dow, who has
been a partner of Lord, Abbett & Co. for nine years, also serves as the Firm's
Chief Investment Officer.
We continue to focus on value investing and manage the portfolios' risk from a
total return perspective. We believe that investors will benefit from our well-
diversified, high-quality portfolios. Going forward, we foresee more stable
interest rates, modest economic growth, low inflation and relatively attractive
valuations for municipal securities. The combination of these factors should
bode well for municipal bond investors. As always, we welcome any questions or
comments you may have regarding your Fund.
[PHOTO OF RONALD P. LYNCH]
/s/ Ronald P. Lynch
Ronald P. Lynch
Chairman
[PHOTO OF ROBERT S. DOW]
/s/ Robert S. Dow
Robert S. Dow
President
November 9, 1995
<PAGE>
FUND FACTS
Lord Abbett's Focus on Quality
On October 31, 1995, the portfolios in Lord Abbett Tax-Free Income Trust were
invested in a wide variety of high-quality issues.
All tax-free portfolios managed by Lord Abbett emphasize:
. High quality
. Total return potential
. Call protection
Florida Series Pennsylvania Series Michigan Series Georgia Series
AAA 83.8% AAA 75.2% AAA 74.5% AAA 75.3%
AA 3.9% AA 8.6% AA 14.6% AA 23.6%
A 11.7% A 13.5% A 7.0% A 1.1%
BBB 0.6% BBB(1) 2.7% BBB(1) 3.9%
Lord Abbett's Tax-Free Record and SEC-Required Information
<TABLE>
<CAPTION>
Florida Pennsylvania Michigan Georgia
Series Series Series Series
Date of Inception 9/25/91 2/3/92 12/1/92 12/27/94
<S> <C> <C> <C> <C>
Distribution Rate/(2)/at Net Asset
Value (as of 10/31/95) 5.44% 5.75% 5.60% 5.86%
Average Annual Rate of Total Return/(3)/
at Net Asset Value (as of 10/31/95):
1 Year 14.22% 15.02% 15.39% -
Life of Series 7.25% 7.73% 7.68% 13.15%/(4)/
(per yr.) (per yr.) (per yr.) (10 mos.)
30-Day SEC Yield (as of 10/31/95) 4.80% 4.86% 5.13% 4.98%
Average Annual Rate of Total Return at the
Maximum Offering Price (as of 9/30/95):
1 Year 4.70% 5.30% 5.90% -
Life of Series 5.65% 6.10% 5.60% 5.90%/(4)/
(per yr.) (per yr.) (per yr.) (9 mos.)
</TABLE>
The results quoted above represent past performance which is no indication of
future results. The investment return and principal value of a Series investment
will fluctuate so that shares, on any given day or when redeemed, may be worth
more or less than their original cost. The respective SEC-required uniformly
computed average annual rates of total return are at the maximum sales charge of
4.75%.
(1) Includes holdings which are not rated by an independent ratings service but
are, in Lord Abbett's opinion, of comparable quality.
(2) The Series' distribution rates differ from SEC yields because the SEC yields
take into account the amortization of premiums at market, whereas the
Series' distribution rates amortize premiums at cost.
(3) Total return is the percent change in value with dividends and capital gains
reinvested. In the event a portfolio invests in private activity bonds, the
interest income derived therefrom may increase the alternative minimum tax
liability only for shareholders subject to that tax. In the event a
portfolio does not invest entirely in municipal bonds, federal, state and
local taxes (if any) may be applicable to that portion of interest income
derived from taxable sources.
(4) Not annualized.
1
<PAGE>
================================================================================
Important Information
- --------------------------------------------------------------------------------
As of 10/31/95, no Series of the Trust had more than 6% of its net assets
invested in residual interest bonds ("RIBs"), although each portfolio may invest
up to 20% of its net assets in such securities. Currently, the Trust targets a
range of between 6% and 8% of each portfolio's net assets being invested in
these securities. A RIB, sometimes referred to as an inverse floater, is a debt
instrument with a floating or variable interest rate that moves in the opposite
direction of the interest rate on another security or the value of an index.
Changes in the interest rate on the other security or index inversely affect the
residual interest paid on the RIB, with the result that when interest rates
rise, RIBs give lower interest payments and their values fall faster than other
similar fixed-rate bonds. But when interest rates fall, not only do RIBs give
higher interest payments, their values also rise faster than other similar
fixed-rate bonds. The market for RIBs is relatively new.
If used as sales material after 12/31/95, this report must be accompanied by
Lord Abbett's Performance Quarterly for the most recently completed calendar
quarter.
See prospectus for a discussion of fees waived and expense subsidies.
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets October 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
FLORIDA SERIES Rating*: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Prerefunded Broward Co FL Wtr & Sewer Util Rev FGIC+ 6 1/2% 10/1/2017 AAA $3,250M $ 3,619,687
19.57% Dade Co FL Health Facs Auth Hosp Rev/So Miami Hosp Prjt
MBIA+ 9 1/8% 7/1/2018 AAA 1,000M 1,053,990
Dunedin FL Hosp Rev MBIA+ 6 3/4% 11/15/2021 AAA 1,000M 1,136,250
Florida St Bd of Ed Cap Outlay Ser A 7 1/4% 6/1/2023 AAA 2,960M 3,359,600
Florida St Bd of Ed Cap Outlay Ser B 7% 6/1/2019 AAA 1,000M 1,107,500
Florida St Bd Regent Univ Sys Imp Rev MBIA+ 7 7/8% 7/1/2009 AAA 1,000M 1,112,500
Manatee Co FL Util Rev MBIA+ 6 3/4% 10/1/2013 AAA 1,000M 1,133,750
Melbourne FL Wtr & Sewer Rev Ser B FGIC+ 6.40% 10/1/2022 AAA 1,700M 1,880,625
Miami FL Health Facs Rev/Mercy Hosp Prjt AMBAC+ 6 3/4% 8/1/2020 AAA 870M 984,187
Miami FL Sports & Exhibit FGIC+ 7.20% 10/1/2020 AAA 1,690M 1,909,700
Orlando & Orange Co FL Expwy Auth Rev FGIC+ 6 1/2% 7/1/2020 AAA 395M 433,512
Puerto Rico Commonwealth 8% 7/1/2006 AAA 600M 670,500
Puerto Rico Commonwealth 7 5/8% 7/1/2010 AAA 1,000M 1,157,500
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 2,000M 2,322,500
Puerto Rico Commonwealth Hwy Auth Rev Ser N 8% 7/1/2003 AAA 250M 279,375
Puerto Rico Commonwealth Pub Imp 7 1/4% 7/1/2012 AAA 800M 858,000
Puerto Rico Elec Pwr Auth Rev Ser L 8.40% 7/1/2015 AAA 2,000M 2,180,000
Puerto Rico Elec Pwr Auth Rev Ser M 8% 7/1/2008 AAA 3,250M 3,631,875
Puerto Rico Elec Pwr Auth Rev Ser P 7% 7/1/2021 AAA 2,350M 2,684,875
Puerto Rico Pub Bldg Auth Ser H 7 7/8% 7/1/2007 AAA 1,200M 1,299,000
Puerto Rico Pub Bldg Auth Ser H 7% 7/1/2019 AAA 1,000M 1,088,750
-----------
Total 33,903,676
===========
- -----------------------------------------------------------------------------------------------------------------------------------
General Obligation Florida St Bd of Ed Cap Outlay Public Educ Ser C MBIA+ 5.60% 6/1/2025 AAA 8,500M 8,340,625
State Puerto Rico Commonwealth RIBS MBIA+ 7.434% 7/1/2008++ AAA 1,100M 1,179,750
5.49% -----------
Total 9,520,375
===========
- -----------------------------------------------------------------------------------------------------------------------------------
General Obligation Florida St Jacksonville Trans-SR Lien
Local 1.24% 6.40% 7/1/2022 AA 2,025M 2,149,030
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Finance 2.71% Puerto Rico Muni Fin Agy Ser A 6 1/2% 7/1/2019 A 4,415M 4,690,937
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Health and Hospital Alachua Co FL Health Facs Auth Rev/Santa Fe Health Care
17.95% 7.60% 11/15/2013 BBB 1,000M 1,085,000
Altamonte Springs FL Health Fac Auth Hosp Rev/Adventist Health
AMBAC+ 7% 11/15/2014 AAA 2,135M 2,364,513
Charlotte Co FL Health Care Facs Rev RIBS FSA+ 7.826% 8/26/2027++ AAA 6,200M 6,417,000
Charlotte Co FL Health Care Facs Rev Reg Linked Savrs & Ribs
LINK FSA+ 6% 8/26/2027 AAA 2,600M 2,632,500
Miami FL Health Facs Auth Rev RIBS AMBAC+ 6.37% 8/15/2015++ AAA 1,600M 1,418,000
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets October 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
FLORIDA SERIES Rating*: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Palm Beach Co FL Health Facs Auth Rev Hosp/Good Samaritan
MBIA+ 6.30% 10/1/2022 AAA $7,585M 7,983,212
St Petersburg FL Health Facs Auth Rev/Allegheny Health Sys
MBIA+ 7% 12/1/2015 AAA 1,500M 1,678,125
St Petersburg FL Health Facs Auth Rev/Allegheny Health Sys
MBIA+ 7% 12/1/2021 AAA 2,000M 2,232,500
Tampa FL Health Rev Allegheny Health Sys/St Joseph
MBIA+ 6.70% 12/1/2018 AAA 4,750M 5,290,313
-----------
Total 31,101,163
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Housing Dade Co FL Hsg Fin Auth Sing Fam Mtge Rev GNMA+
4.02% AMT+++ 6.70% 4/1/2028 AAA 1,000M 1,040,000
Dade Co FL Hsg Fin Auth Sing Fam Mtge Rev Ser E FNMA+ 7% 3/1/2024 Aaa 40M 41,800
Florida Hsg Fin Agy Homeowner Mtge Rev Ser 1B 6% 1/1/2017 AA 500M 501,250
Florida Hsg Fin Agy Sing Fam Mtge Rev Ser B
GNMA+ AMT+++ 6.65% 7/1/2026 AAA 3,955M 4,128,031
Palm Beach Co FL Hsg Fin Auth Sing Fam Mtge Rev Ser A
GNMA+ AMT+++ 6.55% 4/1/2027 Aaa 1,200M 1,246,500
-----------
Total 6,957,581
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Brevard Co FL Sales Tax Rev MBIA+ 7% 12/1/2018 AAA 1,000M 1,116,250
1.62% Orange Co FL Tourist Dev Tax Rev AMBAC+ 6% 10/1/2016 AAA 1,200M 1,216,500
Tampa FL Sports Auth Rev GTD Pkg Tampa Bay Arena Prjt
MBIA+ 6% 10/1/2015 AAA 450M 473,625
-----------
Total 2,806,375
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Pollution Control Citrus Co FL Poll Ctrl Rev/FL Pwr Crystal Rivers
Revenue MBIA+ 6 5/8% 1/1/2027 AAA 8,530M 9,201,738
11.26% Hillsborough Co FL Ind Dev Auth Poll Ctrl Rev MBIA+ 6 1/4% 12/1/2034 AAA 5,945M 6,227,388
Pasco Co FL Poll Ctrl/Rev FL Pwr-Anclote MBIA+ 6.35% 2/1/2022 AAA 3,850M 4,071,375
-----------
Total 19,500,501
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Power Charlotte Co FL Util Rev FGIC+ 6 3/4% 10/1/2013 AAA 900M 1,003,500
13.00% Gainesville FL Util Sys Rev Ser A 6 1/2% 10/1/2022 AA 3,675M 3,955,219
Puerto Rico Elec Pwr Auth Pwr Rev Ser Z 5 1/4% 7/1/2021 AAA 3,450M 3,230,063
Puerto Rico Elec Pwr Auth Rev Ser X 6 1/8% 7/1/2021 A 3,590M 3,702,188
Puerto Rico Elec Pwr Auth Rev Ser X 5 1/2% 7/1/2025 A 4,500M 4,320,000
Reedy Creek FL Imp Dist Util Rev MBIA+ AMT+++ 8 1/2% 10/1/2009 AAA 4,750M 5,213,125
Stuart FL Util Rev FGIC+ 6.80% 10/1/2024 AAA 1,000M 1,102,500
-----------
Total 22,526,595
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation Dade Co FL Aviation Rev Ser B MBIA+ AMT+++ 6.60% 10/1/2022 AAA 7,400M 7,871,750
13.67% Dade Co FL Seaport Bd AMBAC+ 6 1/4% 10/1/2021 AAA 1,340M 1,396,950
Dade Co FL Seaport Bd AMBAC+ 6 1/2% 10/1/2026 AAA 6,000M 6,420,000
Greater Orlando FL Aviation Auth Arpt Fac Rev AMT+++ 8 3/8% 10/1/2016 A 3,150M 3,528,000
Lee Co FL Trans Facs Rev MBIA+ 5 3/4% 10/1/2027 AAA 1,850M 1,850,000
Osceola Co FL Trans Rev MBIA+ 6.10% 4/1/2017 AAA 1,000M 1,027,500
Puerto Rico Commonwealth Hwy Auth Rev 6 5/8% 7/1/2018 A 1,500M 1,593,750
-----------
Total 23,687,950
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer Broward Co FL Wtr & Sewer Util Rev FGIC+ 6% 10/1/2020 AAA 2,500M 2,543,750
8.45% Dade Co FL Wtr & Sewer Rev FGIC+ 5 3/4% 10/1/2022 AAA 1,800M 1,804,500
Melbourne FL Wtr & Sewer Rev Ser A FGIC+ 6 1/2% 10/1/2014 AAA 2,000M 2,167,500
Miami FL San Sewer Sys FGIC+ 6 1/2% 1/1/2015 AAA 5,500M 5,898,750
Puerto Rico Commonwealth Aqu & Sewer Rev Ser A 7 7/8% 7/1/2017 A 2,000M 2,220,000
Total 14,634,500
-----------
Total Municipal Bonds 98.98% (Cost $164,868,503) 171,478,683
===========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets October 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
FLORIDA SERIES Rating*: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
OTHER ASSETS, LESS LIABILITIES 1.02%
- -----------------------------------------------------------------------------------------------------------------------------------
Short-Term Securities Texas St Tax & Rev Anticipation Notes Ser A 4 3/4% 8/30/1996 MIG1 $ 950M $ 957,686
University MO Prjt Notes Ser FY 4 3/4% 6/28/1996 MIG1 150M 150,983
------------
Total (Cost $1,108,508) 1,108,669
============
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 654,177
------------
Total Other Assets, Less Liabilities 1,762,846
============
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% (equivalent to $4.85 a share on 35,711,513 shares of beneficial
interest outstanding) $173,241,529
============
</TABLE>
* Ratings have not been audited by Deloitte & Touche LLP.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
October 31, 1995. See page 2 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets October 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA SERIES Rating*: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Prerefunded Allegheny Co PA Hosp Dev Auth/Magee Womens 8 1/4% 10/1/2013 AAA $ 455M $ 497,656
35.16% Bucks Co PA Wtr & Sewer Auth Rev FGIC+ 7 1/2% 12/1/2013 AAA 2,000M 2,185,000
Delaware River Joint Toll Bridge FGIC+ 7.80% 7/1/2018 AAA 2,180M 2,414,350
Erie PA Higher Ed Bldg Auth Coll Rev Ser A 8 1/2% 6/1/2015 AAA 3,000M 3,457,500
Hampton Township PA Sch Dist AMBAC+ 6.70% 11/15/2015 AAA 500M 566,875
Hampton Township PA Sch Dist AMBAC+ 6 3/4% 11/15/2021 AAA 1,000M 1,137,500
Langhorne Manor Boro PA Higher Ed & Health/Woods Sch
8 3/4% 11/15/2014 AAA 1,000M 1,176,250
Lehigh Co PA FGIC+ 6.90% 8/1/2011 AAA 3,000M 3,360,000
Montgomery Co PA Higher Ed & Health/Bryn Mawr 7 3/8% 12/1/2019 AAA 1,000M 1,128,750
Pennsylvania Conv Ctr Auth Ser A 6.70% 9/1/2016 AAA 500M 566,875
Pennsylvania St Tnpk Comm Tnpk Rev Ser E MBIA+ 7.55% 12/1/2017 AAA 1,000M 1,135,000
Pennsylvania St Tnpk Comm Tnpk Rev Ser H FGIC+ 7.30% 12/1/2010 AAA 1,275M 1,458,281
Pennsylvania St Univ 6 3/4% 7/1/2010 AAA 1,750M 1,962,188
Philadelphia PA Gas Wks Rev 7.70% 6/15/2021 AAA 1,000M 1,170,000
Philadelphia PA Gas Wks Rev ETM Ser B MBIA+ 7% 5/15/2020 AAA 2,150M 2,485,938
Puerto Rico Commonwealth FGIC+ 7.10% 7/1/2002 AAA 100M 113,625
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 300M 348,375
Puerto Rico Commonwealth Hwy Auth Rev Ser P 8 1/8% 7/1/2013 AAA 1,700M 1,904,000
Puerto Rico Commonwealth Pub Imp Ser A 7.70% 7/1/2008 AAA 800M 904,000
Puerto Rico Elec Pwr Auth Rev Ser M 8% 7/1/2008 AAA 900M 1,005,750
University Pittsburgh PA 8 3/8% 6/1/2005 AAA 1,500M 1,625,625
Virgin Islands Pub Fin Auth 7.30% 10/1/2018 AAA 400M 456,000
Washington Co PA Auth Lease Rev AMBAC+ 7.45% 12/15/2012 AAA 1,575M 1,809,281
-----------
Total 32,868,819
===========
- ----------------------------------------------------------------------------------------------------------------------------------
General Obligation Puerto Rico Commonwealth 6.45% 7/1/2017 A 1,900M 2,006,875
State Puerto Rico Commonwealth MBIA+ 6.45% 7/1/2017 AAA 700M 750,750
5.37% Puerto Rico Commonwealth MBIA+ 5 3/8% 7/1/2022 AAA 1,250M 1,200,000
Puerto Rico Commonwealth 6 1/2% 7/1/2023 A 1,000M 1,061,250
-----------
Total 5,018,875
===========
- ----------------------------------------------------------------------------------------------------------------------------------
General Obligation Allegheny Co PA Ser C-44 FGIC+ 5 3/8% 6/1/2015 AAA 500M 496,250
Local Delaware Co PA 5 1/2% 10/1/2015 AA 500M 495,000
4.01% Lawrence Co PA FGIC+ 5% 8/1/2018 AAA 835M 761,938
West Mifflin PA Area Sch Dist FGIC+ 5 5/8% 2/15/2015 AAA 2,000M 1,995,000
-----------
Total 3,748,188
===========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets October 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA SERIES Rating*: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Education Northeastern PA Hosp & Ed Auth College Rev Luzerne Co Comm
7.14% AMBAC+ 6 5/8% 8/15/2015 AAA $2,000M $ 2,147,500
Pennsylvania St Higher Ed 6 5/8% 8/15/2009 Aa 825M 892,031
Pennsylvania St Higher Ed RIBS AMBAC+ AMT+++ 8.138% 3/1/2022++ AAA 3,000M 3,003,750
University of Puerto Rico Ser J 6 1/2% 6/1/2013 A 600M 636,000
-----------
Total 6,679,281
===========
- ----------------------------------------------------------------------------------------------------------------------------------
Finance Berks Co PA Muni Auth Co GTD FGIC+ 7.10% 5/15/2022 AAA 1,530M 1,786,275
5.94% Pennsylvania Intergovernmental Coop Auth FGIC+ 7% 6/15/2014 AAA 1,450M 1,602,250
Pennsylvania Intergovernmental Coop Auth FGIC+ 6 3/4% 6/15/2021 AAA 2,000M 2,162,500
-----------
Total 5,551,025
===========
- ----------------------------------------------------------------------------------------------------------------------------------
Health and Hospital Allegheny Co PA Hosp Dev Auth MBIA+ 6.20% 9/1/2015 AAA 100M 104,125
9.73% Chester Co PA Health & Ed Facs Auth Health Sys Rev
LINK AMBAC+ 5.65% 5/15/2020 AAA 5,200M 5,109,000
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Facs
MBIA+ 6 1/4% 7/1/2024 AAA 850M 887,188
Puerto Rico Pub Bldg Auth Ser J 6 1/2% 7/1/2003 A 770M 850,850
Sayre PA Health Care Fac/Tioga Nursing AMBAC+ 7 1/4% 10/1/2018 AAA 1,500M 1,608,750
Scranton-Lackawanna PA Health & Welfare Auth/Univ Scranton Prjt
AMBAC+ 6.80% 11/1/2014 AAA 500M 536,875
-----------
Total 9,096,788
===========
- ----------------------------------------------------------------------------------------------------------------------------------
Housing Pennsylvania Hsg Fin Agy AMT+++ 6.65% 4/1/2025 AA 1,000M 1,031,250
3.94% Pennsylvania Hsg Fin Agy Ser 33 6.90% 4/1/2017 AA 1,500M 1,567,500
Pennsylvania Hsg Fin Agy Ser 43 7.40% 10/1/2014 AA 1,000M 1,083,750
-----------
Total 3,682,500
===========
- ----------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue Bradford Co PA Ind Dev Auth Solid Waste Disp Rev
Bonds AMT+++ 6.60% 3/1/2019 A 1,250M 1,284,375
5.81% Pennsylvania Econ Dev Fin Auth Exempt Facs Rev/Macmillan
AMT+++ 7.60% 12/1/2020 Baa 1,000M 1,107,500
Puerto Rico Ind Med & Environmental Ctrl/Motorola 6 3/4% 1/1/2014 AA 1,500M 1,612,500
Puerto Rico Ind Med & Environmental Ctrl/Upjohn 7 1/2% 12/1/2023 AA 1,300M 1,428,375
-----------
Total 5,432,750
===========
- ----------------------------------------------------------------------------------------------------------------------------------
Pollution Control Beaver Co PA Ind Dev Auth/Ohio Edison
Revenue 2.28% FGIC+ 7 3/4% 9/1/2024 AAA 1,950M 2,130,375
===========
- ----------------------------------------------------------------------------------------------------------------------------------
Power Pennsylvania Econ Dev Res Recov Northhampton 6.60% 1/1/2019 Baa** 1,500M 1,473,750
13.50% Puerto Rico Elec Pwr Auth 7 1/8% 7/1/2014 A 365M 400,588
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.366% 7/1/2018++ AAA 1,500M 1,655,625
Puerto Rico Elec Pwr Auth LINK FSA+ 5.929% 7/1/2023 AAA 6,000M 6,075,000
Puerto Rico Elec Pwr Auth Ser Z 5 1/2% 7/1/2016 A 1,500M 1,449,375
York Co PA Ind Dev Auth Poll Ctrl Rev MBIA+ 6.45% 10/1/2019 AAA 1,475M 1,565,344
-----------
Total 12,619,682
===========
- ----------------------------------------------------------------------------------------------------------------------------------
Transportation Philadelphia PA Airport Rev Philadelphia Arpt Sys Ser A
6.38% AMBAC+ 6.10% 6/15/2025 AAA 1,000M 1,016,250
Puerto Rico Commonwealth Hwy Ser T 6 5/8% 7/1/2012 A 1,000M 1,068,750
Puerto Rico Commonwealth Hwy Ser V 6 5/8% 7/1/2012 A 2,615M 2,794,780
Puerto Rico Port Auth Rev Ser D FGIC+ AMT+++ 7% 7/1/2014 AAA 1,000M 1,086,250
-----------
Total 5,966,030
===========
- ----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer 1.18% Puerto Rico Commonwealth Aqu & Sewer Rev Ser A 7 7/8% 7/1/2017 A 1,000M 1,110,000
-----------
Total Municipal Bonds 100.44% (Cost $91,106,025) 93,904,313
===========
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets October 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA SERIES Market Value
(Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER ASSETS, LESS LIABILITIES (.44)%
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (410,389)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% (equivalent to $5.01 a share on 18,652,902 shares of
beneficial interest outstanding) $93,493,924
</TABLE>
* Ratings have not been audited by Deloitte & Touche LLP.
** This security has not been rated by an independent ratings service but is,
in Lord Abbett's opinion, of comparable quality.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
October 31, 1995. See page 2 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets October 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN SERIES Rating*: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Prerefunded Detroit MI Ser A 8.70% 4/1/2010 AAA $1,755M $ 2,077,481
31.56% Detroit MI Wtr Supply MBIA+ 7 7/8% 7/1/2019 AAA 985M 1,094,581
Lake Orion MI Comm Sch Dist AMBAC+ 7% 5/1/2020 AAA 1,500M 1,745,625
Michigan St Hosp Fin Auth/McLaren 7% 9/15/2015 AAA 1,000M 1,128,750
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 4,175M 4,848,219
Puerto Rico Commonwealth Hwy 6 5/8% 7/1/2018 AAA 970M 1,100,950
Puerto Rico Commonwealth Hwy Ser S 6 5/8% 7/1/2018 AAA 500M 566,250
Puerto Rico Elec Pwr Auth Rev Ser P 7% 7/1/2021 AAA 1,000M 1,142,500
Puerto Rico Pub Bldg Auth Ser L 6 7/8% 7/1/2012 AAA 1,000M 1,150,000
Riverview MI Comm Sch Dist FGIC+ 6.55% 5/1/2014 AAA 1,500M 1,680,000
Virgin Islands Pub Fin Auth 7.30% 10/1/2018 AAA 500M 570,000
-----------
Total 17,104,356
===========
- -----------------------------------------------------------------------------------------------------------------------------------
General Obligation
State 2.52% Michigan St 5.40% 11/1/2019 AA 1,405M 1,362,850
===========
- -----------------------------------------------------------------------------------------------------------------------------------
General Obligation Grand Ledge MI Pub Schs Dist MBIA+ 5 3/8% 5/1/2024 AAA 1,000M 950,000
Local Saline MI Area Sch FGIC+ 5 1/2% 5/1/2015 AAA 1,250M 1,212,500
3.99% -----------
Total 2,162,500
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Health and Hospital Dearborn MI Econ Dev Corp Hosp Rev
19.98% FGIC+ 5 3/4% 11/15/2015 AAA 500M 499,375
Farmington Hills MI Hosp/Botsford Gen Hosp MBIA+ 6 1/2% 2/15/2011 AAA 1,000M 1,062,500
Jackson Co MI Hosp Fin Auth Rev/Foote Hosp FGIC 5 1/4% 6/1/2023 AAA 1,500M 1,385,625
Kalamazoo MI Hosp Fin Auth/Borgess Hosp RIBS FGIC+ 6.358% 6/1/2011++ AAA 2,000M 1,875,000
Kalamazoo MI Hosp Fin Auth Reg Lkd Arcs & Levrrs
LINK FGIC+ 5.244% 6/1/2011 AAA 4,000M 3,865,000
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Facs
6.70% 5/1/2024 BBB 1,575M 1,610,438
Royal Oak MI Hosp Fin Auth/Wm Beaumont 6 3/4% 1/1/2020 AA 500M 527,500
-----------
Total 10,825,438
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Housing Michigan St Hsg Dev Auth Ser B 6.95% 12/1/2020 AA 1,130M 1,197,800
4.15% Michigan St Hsg Dev Auth Ser B AMT+++ 7.05% 6/1/2026 AA 1,000M 1,051,250
-----------
Total 2,249,050
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue Michigan St Strategic Fd Ltd/Waste Mgmt Inc AMT+++ 6 5/8% 12/1/2012 AA 1,000M 1,081,250
Bonds Puerto Rico Ind Med & Environmental Ctrl/Upjohn 7 1/2% 12/1/2023 AA 1,500M 1,648,125
10.71% Puerto Rico Ind Med & Environmental Ctrl/Warner Lambert 7.60% 5/1/2014 Aa 1,000M 1,113,750
Puerto Rico Tel Auth Rev LINK MBIA+ 5.51% 1/16/2015 AAA 2,000M 1,960,000
-----------
Total 5,803,125
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 4.02% Michigan Muni Bd Auth AMBAC+ 6 3/4% 11/1/2014 AAA 2,000M 2,180,000
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Power Michigan St Strategic Fd Ltd Detroit Edison MBIA+ 7% 7/15/2008 AAA 500M 583,125
10.96% Michigan St Strategic Fd Ltd Detroit Edison AMBAC+ 7% 5/1/2021 AAA 500M 585,625
Michigan St Strategic Fd Rev/Genesee Pwr Prjt AMT+++ 7 1/2% 1/1/2021 BBB** 500M 506,250
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets October 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN SERIES Rating*: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Monroe Co MI Poll Ctrl Rev/Detroit Edison Prjt Ser CC
AMBAC+ 7 1/2% 12/1/2019 AAA $3,340M $ 3,711,575
Puerto Rico Elec Pwr Auth RIBS FSA+ 8.366% 7/1/2018++ AAA 500M 551,875
-----------
Total 5,938,450
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation Puerto Rico Commonwealth Hwy Ser V 6 5/8% 7/1/2012 A 1,500M 1,603,125
8.84% Wayne Charter Co MI Arpt Rev MBIA+ AMT+++ 6 3/4% 12/1/2021 AAA 3,000M 3,187,500
-----------
Total 4,790,625
===========
- -----------------------------------------------------------------------------------------------------------------------------------
Water and
Sewer 4.10% Puerto Rico Commonwealth Aqu & Sewer Rev Ser A 7 7/8% 7/1/2017 A 2,000M 2,220,000
-----------
Total Municipal Bonds 100.83% (Cost $53,862,495) 54,636,394
===========
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES (.83)%
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities (450,539)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% (equivalent to $4.93 a share on 10,999,029 shares of
beneficial interest outstanding) $54,185,855
</TABLE>
* Ratings have not been audited by Deloitte & Touche LLP.
** This security has not been rated by an independent ratings service but is,
in Lord Abbett's opinion, of comparable quality.
+ Insured or guaranteed by the indicated municipal bond insurance
corporation or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
October 31, 1995. See page 2 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets October 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
GEORGIA SERIES Rating*: S&P Principal Market Value
Security or Moody's Amount (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Prerefunded Puerto Rico Commonwealth 8% 7/1/2007 AAA $320M $ 357,600
19.87% Puerto Rico Pub Bldg Auth Ser G 7 7/8% 7/1/2007 AAA 625M 676,563
----------
Total 1,034,163
==========
- -----------------------------------------------------------------------------------------------------------------------------------
General Obligation Puerto Rico Commonwealth
State 4.85% LINK MBIA+ 5.831% 7/1/2020++ AAA 250M 252,500
==========
- -----------------------------------------------------------------------------------------------------------------------------------
General Obligation Chatman Co GA Sch Dist MBIA+ 6 3/4% 8/1/2020 AAA 175M 191,188
Local 8.63% De Kalb Co GA 6% 1/1/2020 AA 250M 258,125
----------
Total 449,313
==========
- -----------------------------------------------------------------------------------------------------------------------------------
Education 10.05% Marietta GA Dev Auth Rev CGIC+ 6 1/4% 9/1/2025 AAA 500M 523,125
==========
- -----------------------------------------------------------------------------------------------------------------------------------
Health and Hospital Medical Ctr Hosp Auth GA Rev Antic Ctfs Columbus Regl
1.87% MBIA+ 5 1/2% 8/1/2015 AAA 100M 97,500
==========
- -----------------------------------------------------------------------------------------------------------------------------------
Housing De Kalb Co Hsg Auth FSA+ AMT+++ 7.15% 1/1/2025 AAA 200M 212,250
8.03% Georgia St Hsg & Fin Auth Rev Ser A-2 AMT+++ 6.40% 12/1/2015 AA 200M 205,500
----------
Total 417,750
==========
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Revenue
Bonds 4.17% Cartersville GA Dev Auth Rev AMT+++ 6 3/4% 2/1/2012 AA 200M 216,750
==========
- -----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Atlanta GA Downtown Dev Auth Ref/Underground Atlanta Prjt
21.55% 6 1/4% 10/1/2016 AA 500M 520,625
Cobb-Marietta GA Coliseum & Exhibit Hall Auth Rev
MBIA+ 5 5/8% 10/1/2026 AAA 600M 600,750
----------
Total 1,121,375
==========
- -----------------------------------------------------------------------------------------------------------------------------------
Pollution Control Burke Co GA Dev Auth Poll Ctrl Rev
Revenue 1.00% MBIA+ 6.60% 7/1/2024 AAA 50M 52,187
==========
- -----------------------------------------------------------------------------------------------------------------------------------
Power Effingham Co GA Dev Auth MBIA+ 6 3/4% 2/1/2022 AAA 150M 156,187
4.07% Puerto Rico Elec Pwr Auth 7 1/8% 7/1/2014 A 50M 54,875
----------
Total 211,062
==========
- -----------------------------------------------------------------------------------------------------------------------------------
Solid Waste 2.05% Cobb Co GA Solid Waste Mgmt Auth AMT+++ 6.40% 1/1/2015 Aaa 100M 106,500
==========
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation Metropolitan Atlanta Rapid Trans Auth GA Sales Tax Rev Ser P
9.45% AMBAC+ 6 1/4% 7/1/2020 AAA 450M 491,625
==========
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer 2.08% Albany GA Sewer Sys Rev MBIA+ 6 5/8% 7/1/2017 AAA 100M 108,375
----------
Total Municipal Bonds 97.67% (Cost $4,921,116) 5,082,225
==========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Statement of Net Assets October 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
GEORGIA SERIES Market Value
(Note 1a)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER ASSETS, LESS LIABILITIES 2.33%
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net of Liabilities 121,240
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.00% (equivalent to $5.12 a share on 1,016,625 shares of
beneficial interest outstanding) $5,203,465
</TABLE>
* Ratings have not been audited by Deloitte & Touche LLP.
+ Insured or guaranteed by the indicated municipal bond insurance corporation
or Federal agency.
++ The interest rate is subject to change periodically and inversely to the
prevailing market rate. The interest rate shown is the rate in effect at
October 31, 1995. See page 2 for additional information.
+++ Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
<TABLE>
<CAPTION>
==================================================================================================================================
Statements of Operations
- ----------------------------------------------------------------------------------------------------------------------------------
For the Period
12/27/94
(Commencement
of Operations)
Year Ended 10/31/95 to 10/31/95
Florida Pennsylvania Michigan Georgia
Investment Income Series Series Series Series
- ----------------- ------- ------------ -------- ------
<S> <C> <C> <C> <C>
Income Interest $ 11,443,825 $ 5,564,189 $ 3,091,362 $ 151,818
Expenses Management fee 874,245 439,853 249,286 13,900
(Note 3) Management fee waived (248,100) (126,160) (249,286) (13,900)
12b-1 distribution plan 452,235 - - -
Shareholder servicing 76,000 72,000 62,500 2,948
Audit and tax 45,000 19,500 18,750 7,500
Legal 19,500 5,500 2,100 275
Reports to shareholders 17,500 10,950 10,200 -
Organization (Note 1e) 7,536 2,412 3,990 600
Trustees' fees 4,950 1,725 2,550 -
Registration - 500 7,500 2,750
Other 36,807 15,536 17,963 2,027
Expenses assumed by Lord, Abbett & Co. - - - (16,100)
Net expenses 1,285,673 441,816 125,553 -
Net investment income 10,158,152 5,122,373 2,965,809 151,818
Net Realized and Unrealized Gain (Loss) on Investments (Note 6)
Net realized gain (loss) from security transactions
Proceeds from sales 331,363,130 128,775,772 53,140,035 4,435,674
Cost of securities sold 333,877,523 130,697,246 53,511,184 4,412,857
Net realized gain (loss) (2,514,393) (1,921,474) (371,149) 22,817
Net unrealized appreciation (depreciation) of investments
Beginning of period (9,076,076) (6,259,098) (3,583,924) -
End of period 6,610,341 2,798,288 773,899 161,109
Net unrealized appreciation 15,686,417 9,057,386 4,357,823 161,109
Net realized and unrealized gain on investments 13,172,024 7,135,912 3,986,674 183,926
Net Increase in Net Assets Resulting from Operations $ 23,330,176 $ 12,258,285 $ 6,952,483 $ 335,744
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
12/27/94
(Commencement
of Operations) to
Year Ended 10/31/95 10/31/95
Florida Pennsylvania Michigan Georgia
Increase (Decrease) in Net Assets Series Series Series Series
- --------------------------------- ------- ------------ -------- --------
<S> <C> <C> <C> <C>
Operations Net investment
income $ 10,158,152 $ 5,122,373 $ 2,965,809 $ 151,818
Net realized gain (loss)
from security
transactions (2,514,393) (1,921,474) (371,149) 22,817
Net unrealized
appreciation
(depreciation)
of investments 15,686,417 9,057,386 4,357,823 161,109
Net increase (decrease)
in net assets resulting
from operations 23,330,176 12,258,285 6,952,483 335,744
Distributions to shareholders from
Net investment
income (9,846,284) (5,212,008) (2,926,051) (162,339)
Net realized gain from
security transactions - - - -
Total distributions (9,846,284) (5,212,008) (2,926,051) (162,339)
Share transactions (Note 4)
Net proceeds from
sales of shares 25,862,215 13,898,977 9,430,585 5,495,709
Net asset value of
shares issued to
shareholders in
reinvestment of net
investment income
and realized gain from
security transactions 3,171,329 2,396,987 1,519,290 65,163
Total 29,033,544 16,295,964 10,949,875 5,560,872
Cost of shares
reacquired (44,120,127) (11,106,166) (6,393,288) (531,812)
Increase (Decrease) in
net assets derived from
share transactions (15,086,583) 5,189,798 4,556,587 5,029,060
Total increase (decrease) in net assets (1,602,691) 12,236,075 8,583,019 5,202,465
Net Assets
Beginning of period 174,844,220 81,257,849 45,602,836 1,000
End of period+ $173,241,529 $93,493,924 $54,185,855 $5,203,465
<CAPTION>
Year Ended 10/31/94
Florida Pennsylvania Michigan
Series Series Series
------- ------------ --------
<S> <C> <C> <C>
Operations Net investment
income $ 11,420,101 $ 5,126,654 $ 2,452,256
Net realized gain (loss)
from security
transactions (6,388,904) (257,737) (1,281,773)
Net unrealized
appreciation
(depreciation)
of investments (20,799,243) (11,851,791) (4,522,615)
Net increase (decrease)
in net assets resulting
from operations (15,768,046) (6,982,874) (3,352,132)
Distributions to shareholders from
Net investment
income (11,154,659) (5,007,567) (2,549,530)
Net realized gain from
security transactions (3,805,846) (320,841) (312,927)
Total distributions (14,960,505) (5,328,408) (2,862,457)
Share transactions (Note 4)
Net proceeds from
sales of shares 43,830,527 20,549,304 20,489,416
Net asset value of
shares issued to
shareholders in
reinvestment of net
investment income
and realized gain from
security transactions 4,769,963 2,464,814 1,377,372
Total 48,600,490 23,014,118 21,866,788
Cost of shares
reacquired (34,490,402) (11,558,288) (5,006,862)
Increase (Decrease) in
net assets derived from
share transactions 14,110,088 11,455,830 16,859,926
Total increase (decrease) in net assets (16,618,463) (855,452) 10,645,337
Net Assets
Beginning of period 191,462,683 82,113,301 34,957,499
End of period+ $174,844,220 $ 81,257,849 $ 45,602,836
</TABLE>
+Includes (overdistributed) undistributed net investment income of $19,559,
$(58,638), $(126,295) and $(10,521), respectively, as of October 31, 1995 and
(overdistributed) undistributed net investment income of $(292,309), $30,997
and $(166,053), respectively, as of October 31, 1994.
See Notes to Financial Statements.
9
<PAGE>
Financial Highlights
Florida Series
<TABLE>
<CAPTION>
For the Period
9/25/91
(Commencement
Year Ended 10/31, of Operations)
Per Share Operating Performance: 1995 1994 1993 1992 to 10/31/91
- -------------------------------- ---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.49 $ 5.28 $ 4.75 $ 4.76 $ 4.76
Income from investment operations
Net investment income .271 .291 .297 .308 .027+
Net realized and unrealized gain (loss)
on investments .352 (.695) .549 .002 .000
-------- -------- -------- -------- ---------
Total from investment operations .623 (.404) .846 .310 .027
======== ======== ======== ======== =========
Distributions
Dividends from net investment income (.2630) (.2835) (.301) (.320) (.027)
Distributions from net realized gain - (.1025) (.015) - -
-------- -------- -------- -------- ---------
Net asset value, end of period $ 4.85 $ 4.49 $ 5.28 $ 4.75 $ 4.76
======== ======== ======== ======== =========
Total Return* 14.22% (8.03)% 18.24% 6.65% .57%+
Ratios/Supplemental Data:
Net assets, end of period (000) $173,242 $174,844 $191,463 $121,408 $108,550
Ratios to Average Net Assets:
Expenses, including waiver .74% .32% .38% .29% .00%+
Expenses, excluding waiver .88% .82% .88% .78% 5.10%+
Net investment income 5.81% 5.98% 5.71% 5.84% .55%+
Portfolio turnover rate 142.04% 122.36% 89.32% 94.90% 100.00%
*Total return does not consider the effects of sales loads.
</TABLE>
+ Not annualized.
See Notes to Financial Statements.
Financial Highlights
Pennsylvania Series
<TABLE>
For the Period
2/3/92
(Commencement
Year Ended 10/31, of Operations)
<S> <C> <C> <C> <C>
Per Share Operating Performance: 1995 1994 1993 to 10/31/92
Net asset value, beginning of period $ 4.62 $ 5.33 $ 4.75 $ 4.76
Income from investment operations
Net investment income .282 .300 .299 .228+
Net realized and unrealized gain (loss)
on investments .395 (.6975) .582 (.006)
-------- -------- -------- --------
Total from investment operations .677 (.3975) .881 .222
======== ======== ======== ========
Distributions
Dividends from net investment income (.2870) (.2925) (.301) (.232)
Distribution from net realized gain - (.02) - -
Net asset value, end of period $ 5.01 $ 4.62 $ 5.33 $ 4.75
-------- -------- -------- --------
Total Return* 15.02% (7.73)% 18.95% 4.68%+
======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (000) $93,494 $81,258 $82,113 $41,207
Ratios to Average Net Assets:
Expenses, including waiver .50% .33% .31% .00%+
Expenses, excluding waiver .65% .68% .81% .61%+
Net investment income 5.83% 5.98% 5.70% 4.42%+
Portfolio turnover rate 126.11% 137.22% 7.71% 32.66%
</TABLE>
* Total return does not consider the effects of sales loads.
+ Not annualized.
See Notes to Financial Statements.
10
<PAGE>
Financial Highlights
Michigan Series
Georgia Series
<TABLE>
Michigan Series Georgia Series
For the Period For the Period
12/1/92 12/27/94
(Commencement (Commencement
Year Ended 10/31, of Operations) of Operations) to
Per Share Operating Performance: 1995 1994 10/31/93 10/31/95
---- ---- ------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.53 $ 5.23 $ 4.76 $ 4.76
Income from investment operations
Net investment income .284 .286 .266+ .245+
Net realized and unrealized gain (loss)
on investments .395 (.651) .480 .370
-------- -------- -------- --------
Total from investment operations .679 (.365) .746 .615
======== ======== ======== ========
Distributions
Dividends from net investment income (.279) (.293) (.276) (.255)
Distribution from net realized gain - (.042) .- .-
Net asset value, end of period $ 4.93 $ 4.53 $ 5.23 $ 5.12
-------- -------- -------- --------
Total Return* 15.39% (7.29)% 16.01%+ 13.15%+
======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (000) $54,186 $45,603 $34,957 $ 5,203
Ratios to Average Net Assets:
Expenses, including waiver .25% .34% .00%+ .00%+
Expenses, excluding waiver .75% .84% .75%+ 1.08%+
Net investment income 5.95% 5.69% 4.75%+ 5.44%+
Portfolio turnover rate 98.89% 137.31% 68.10% 142.69%
</TABLE>
* Total return does not consider the effects of sales loads. +Not annualized.
See Notes to Financial Statements.
================================================================================
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies The Company was organized as a Massachusetts
business trust on September 11, 1991, and is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
Effective December 22, 1994, the Georgia Series was added to the Trust, and the
Company received an initial contribution of $1,000 and issued 210 shares to the
partners of Lord, Abbett & Co. The following is a summary of significant
accounting policies consistently followed by the Company. The policies are in
conformity with generally accepted accounting principles.
(a) Market value is determined as follows: Securities are valued at latest
prices on the basis of valuations furnished by an independent pricing service
or, in their absence, fair value as determined under procedures approved by the
Board of Trustees. (b) It is the policy of the Company to meet the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all net investment income and net realized gains.
Therefore, there is no provision for federal income tax. (c) Security
transactions are accounted for on the date that the securities are purchased or
sold (trade date). Interest income is recorded on the accrual basis. (d)
Dividends from net investment income are declared daily and paid monthly. (e)
The organization expenses of the Company are amortized evenly over a period of
five years.
2. Distributions Dividends from net investment income are declared daily and
paid monthly. Taxable net realized gain from security transactions, if any, will
be distributed to shareholders in December 1995. At October 31, 1995,
accumulated net realized gain (loss) for financial reporting purposes, which is
substantially the same as for federal income tax purposes, aggregated
$(8,952,023) for the Florida Series, $(2,204,207) for the Pennsylvania Series,
$(1,669,319) for the Michigan Series, and $22,817 for the Georgia Series. The
losses expire in 2002 and 2003. Income and capital gains distributions are
determined in accordance with income tax regulations which may differ from
methods used to determine the corresponding income and capital gains amounts in
accordance with generally accepted accounting principles. These differences are
primarily caused by differences in the timing of recognition of certain
components of income, expenses or capital gains and losses. Where such
differences are permanent in nature, they are reclassified based upon their
ultimate characterization for federal income tax purposes. Any such
reclassifications will have no effect on net assets, results of operations or
net asset value of the Fund.
3. Management Fee and Other Transactions with Affiliates Lord, Abbett & Co.
provides the Company with investment management services and executive and other
personnel, pays the remuneration of officers, provides office space and pays for
ordinary and necessary office and clerical expenses relating to research,
statistical work and the supervision of the Company's investment portfolios. The
management fee is based on average daily net assets for each month at the annual
rate of 1/2 of 1%. Lord, Abbett & Co. may waive its management fees and pay or
reimburse the Trust for certain of its other expenses. Any such expenses paid
are subject to repayment
11
<PAGE>
================================================================================
Notes to Financial Statements
- --------------------------------------------------------------------------------
by each Series, pursuant to a formula based on the asset size and expense ratio
of each Series. Each Series shall not be obligated to repay Lord Abbett after
five full fiscal years after the commencement of the repayment formula or the
termination of the Management Agreement, whichever is earlier. For the Florida,
Pennsylvania and Michigan Series, all expenses assumed pursuant to the
aforementioned formula have been accrued. For the year ended October 31, 1995,
with respect to the Florida, Pennsylvania and Michigan Series, Lord Abbett
waived $248,100, $126,160 and $249,286, respectively, in management fees. With
respect to the Georgia Series, for the period December 22, 1994 to October 31,
1995, Lord, Abbett & Co. waived the Georgia Series' management fee of $13,900
and assumed expenses of $16,100. Lord, Abbett & Co. received the following
commissions on sales of shares of the Company after concessions were paid to
authorized distributors:
<TABLE>
<CAPTION>
Lord, Abbett & Co. Distributors'
Series Commissions Concessions
- ------ ------------------ -------------
<S> <C> <C>
Florida $58,221 $371,872
Pennsylvania 53,420 393,598
Michigan 49,277 326,718
Georgia 12,139 173,659
</TABLE>
The Company has adopted a plan of distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Each Series' Plan will go into effect on the
first day ("effective date") of the calendar quarter subsequent to each Series'
net assets reaching $100 million. The Plan provides for the payment through
Lord, Abbett & Co. to dealers of (1) an annual service fee (payable quarterly)
of .15% of the average daily net asset value of shares sold prior to the Plan's
effective date and .25% of the average daily net asset value of the shares sold
by dealers on or after that date and (2) a one-time 1% distribution fee, at the
time of sale, on such shares sold of $1 million or more on or after the
effective date.
Certain of the Company's officers and Trustees have an interest in Lord,
Abbett & Co.
4. Share Transactions Transactions in shares were as follows:
<TABLE>
<CAPTION>
For the Period
12/27/94
(Commencement
of Operations) to
Year Ended 10/31/95 10/31/95 Year Ended 10/31/94
Florida Pennsylvania Michigan Georgia Florida Pennsylvania Michigan
Series Series Series Series Series Series Series
------- ----------- -------- ------- ------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales of shares 5,629,804 2,888,918 1,986,337 1,109,544 8,834,007 4,034,948 4,124,391
Shares issued to shareholders in
reinvestment of net investment
income and realized gain from
security transactions 678,583 496,215 320,827 12,922 965,339 490,558 279,805
Total 6,308,387 3,385,133 2,307,164 1,122,466 9,799,346 4,525,506 4,404,196
Shares reacquired (9,538,386) (2,321,471) (1,366,245) (106,051) (7,130,840)) (2,342,447) (1,029,543)
Increase (decrease) in shares (3,229,999) 1,063,662 940,919 1,016,415 2,668,506 2,183,059 3,374,653
</TABLE>
5. Capital Paid In At October 31, 1995, capital paid in aggregated $175,563,652
for the Florida Series, $92,958,481 for the Pennsylvania Series, $55,207,570 for
the Michigan Series and $5,030,060 for the Georgia Series.
6. Purchases and Sales of Securities Purchases and sales of investment
securities (other than short-term investments) were as follows:
<TABLE>
<CAPTION>
Series Purchases Sales
- ------ --------- -----
<S> <C> <C>
Florida $245,100,151 $260,884,686
Pennsylvania 115,256,850 110,408,014
Michigan 55,500,150 48,926,168
Georgia 9,337,951 4,435,674
</TABLE>
Security gains and losses are computed on the identified cost basis. As of
October 31, 1995, unrealized appreciation and depreciation of investments based
on cost for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
Unrealized Unrealized
Series Appreciation Depreciation
- ------ ------------ ------------
<S> <C> <C>
Florida $7,255,519 $645,178
Pennsylvania 3,307,784 509,496
Michigan 1,401,205 627,306
Georgia 164,061 2,952
</TABLE>
The cost of investments for federal income tax purposes is the same as that used
for financial reporting purposes.
7. Trustees' Remuneration The Trustees of the Company associated with Lord,
Abbett & Co. and all officers of the Company receive no compensation from the
Company for acting as such. Outside Trustees' fees, including attendance fees
for board and committee meetings, and outside Trustees' retirement costs, are
allocated among all funds in the Lord Abbett group based on net assets of each
fund. The direct remuneration accrued during the period for outside Trustees of
the Company as a group was $5,772 (exclusive of expenses), a portion of which
has been deemed invested in shares of the Company under a deferred compensation
plan contemplating future payment of the value of those shares. As of October
31, 1995, the aggregate amount in Trustees' accounts maintained under the plan
was $16,140. Retirement costs accrued during the period amounted to $3,964.
12
<PAGE>
Lord, Abbett & Co.
A Tradition of Performance Through
Disciplined
Investing
[PHOTO]
(from left to right)
Zane E. Brown, director of fixed income
Barbara A. Grummel, portfolio manager -- Lord Abbett Tax-Free Income Trust
John R. Mousseau, director of municipal bond management and portfolio manager --
Lord Abbett Tax-Free Income Trust
Robert S. Dow, partner, chief investment officer and president of all Lord
Abbett's tax-free portfolios
A successful long-term track record is evidence of a successful investment
strategy. For decades we, at Lord, Abbett & Co., have believed that investing
with a disciplined, value approach is the best way to achieve competitive
returns and reduce portfolio risk. This commitment and the dedication of our
team of 42 investment professionals have helped us earn the trust of financial
professionals and investors for over 65 years.
About Your Trust's
Board of
Trustees
The Securities and Exchange Commission (SEC) views the role of the independent
Board of Trustees as one of the most important components in overseeing a mutual
fund. The Board of Trustees watches over your Trust's general operations and
represents your interests. Board members review and approve every contract
between your Trust and Lord, Abbett & Co. (the Trust's investment manager). They
meet regularly to review a wide variety of information and issues regarding your
Trust. Every member of the Board possesses extensive business experience; Lord
Abbett Tax-Free Income Trust's shareholders are indeed fortunate to have a group
of independent trustees with diverse backgrounds to provide a variety of
viewpoints in the oversight of their Trust.
John C. Jansing,
Trustee -- Lord Abbett
Tax-Free Income Trust
[PHOTO OF JOHN C. JANSING]
An alumnus of Dartmouth College, Mr. Jansing is the founder and retired Chairman
of Independent Election Corporation of America, a proxy tabulating firm. His
diversified business career has spanned 40 years and includes extensive
experience in the investment company industry.
Mr. Jansing has served on the American Stock Exchange Board of Governors as well
as on a Securities and Exchange Commission Special Advisory Committee on
Investment Advisors. He has been an independent director/trustee for all of Lord
Abbett's funds since 1978.
<PAGE>
================================================================================
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders,
Lord Abbett Tax-Free Income Trust:
We have audited the accompanying statements of net assets of Lord Abbett Tax-
Free Income Trust--Florida Series, Pennsylvania Series, Michigan Series and
Georgia Series as of October 31, 1995, the related statements of operations and
of changes in net assets and the financial highlights for each of the periods
presented. These financial statements and the financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1995 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Lord Abbett Tax-Free
Income Trust--Florida Series, Pennsylvania Series, Michigan Series and Georgia
Series at October 31, 1995, the results of their operations, the changes in
their net assets and the financial highlights for each of the periods presented,
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
December 8, 1995
Copyright (C) 1995 by Lord Abbett Tax-Free Income Trust, 767 Fifth Avenue,
New York, NY 10153-0203
This publication, when not used for the general information of shareholders of
Lord Abbett Tax-Free Income Trust, is to be distributed only if preceded or
accompanied by a current prospectus which includes information concerning each
Series' investment objective and policies, sales charges and other matters.
All rights reserved. Printed in the U.S.A.
This report to shareholders inaugurates a new procedure whereby a single
copy of the report is sent to an address to which more than one registered
shareholder of the Trust with the same last name has indicated mail is to be
delivered, unless additional reports are specifically requested in writing or by
telephone.
[LOGO] LORD, ABBETT & CO.
Investment Management
A Tradition of Performance Through Disciplined Investing
The GM Building . 767 Fifth Avenue . New York, NY 10153-0203
LATFIT-21095
(12/95)
