Lord Abbett
Tax-Free
Income Trust
o Florida Series o Pennsylvania Series
o Michigan Series o Georgia Series
SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED APRIL 30, 1997
[PHOTO]
A fund to help
you keep more
of your investment
income
[LOGO](R)
<PAGE>
Report to Shareholders
For the Six Months Ended April 30, 1997
[PHOTO]
/s/ROBERT S. DOW
- ----------------------
ROBERT S. DOW
CHAIRMAN
MAY 12, 1997
"...the steady demand for
municipal issues, combined
with the relatively scarce
supply, should support
favorable near-term
performance..."
Lord Abbett Tax-Free Income Trust completed the first half of fiscal 1997 on
April 30 with aggregate net assets of $304.4 million. The net assets of each
Series were as follows:
Florida Series: $ 150.8 million
Pennsylvania Series: $ 91.2 million
Michigan Series: $ 50.5 million
Georgia Series: $ 11.9 million
The past six months have been volatile for the bond market. Yields on the
long-term, high-quality bonds on which your Series focuses ranged between 5
1/2%-6%. In mid-February of this year, the Fund shifted to a more defensive
posture in anticipation of upcoming market volatility, reducing long-term
holdings by about 6%. As a result, the Fund was better able to weather market
movements; each Series ended the period with a positive return. We expect the
Federal Reserve Board's decision to raise short-term interest rates to 5 1/2%
from 5 1/4% will encourage a continuation of the moderate growth environment in
which the Fund has operated and we anticipate that long-term interest rates will
decline.
Your Series continues to seek out undervalued bonds offering strong total return
potential. (Total return measures the percent change value, including income and
change in principal.) We believe our focus on higher yielding issues positions
us to benefit from the lower interest-rate environment we forecast. (A bond's
price and its yield move in opposite directions. As rates decline--as we
expect--prices increase.) Call protection (assurance by the issuer that a bond
will not be redeemed before a specific date) has become increasingly important
given both the lower rate environment we are anticipating and the continued
decrease in the supply of municipal bonds.
Our outlook for 1997 is for the economy to grow at a rate averaging less than 2
1/2%, with faster growth occurring in the first six months of the year.
Inflation should average about 3% or less. Progress toward a balanced budget and
the recent strength of the U.S. dollar are constructive influences on the
fixed-income markets. In addition, the steady demand for municipal issues,
combined with the relatively scarce supply, should support favorable near-term
performance for the market. Our research leads us to believe that the Bond Buyer
40 Index (an index that measures municipal bond yields) may dip as low as 5.5%,
over the next twelve months.
Thank you for your confidence in Lord Abbett Tax-Free Income Trust. We look
forward to helping you achieve your goals in the years ahead.
<PAGE>
Fund Facts
All tax-free
portfolios managed
by Lord Abbett
emphasize:
o High quality
o Total return
potential
o Call protection
Lord Abbett's Focus on Quality
On April 30, 1997, the portfolios in Lord Abbett Tax-Free Income Trust were
invested in a wide variety of high-quality issues.
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Florida Pennsylvania Michigan Georgia
Series Series Series Series
------ ------ ------ ------
AAA 80.3% 68.7% 66.6% 74.4%
AA 10.6% 10.5% 19.8% 17.5%
A 8.4% 16.4% 9.3% 7.6%
BBB 0.7% 4.4%(1) 4.3%(1) 0.5%
Lord Abbett's Tax-Free Record and SEC-Required Information
<TABLE>
<CAPTION>
Florida Pennsylvania Michigan Georgia
Series(2) 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(3) at Net Asset Value
(as of 4/30/97) 5.35% 5.58% 5.40% 5.55%
- ----------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return(4)
at Net Asset Value (as of 4/30/97):
- ----------------------------------------------------------------------------------------------------
6 Months(5) 0.95% 1.55% 1.86% 1.76%
- ----------------------------------------------------------------------------------------------------
1 Year 5.00% 5.91% 6.39% 7.16%
- ----------------------------------------------------------------------------------------------------
Life of Series 6.19% 6.89% 6.74% 9.17%
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
30-Day SEC Yield (as of 4/30/97) 4.64% 4.93% 5.00% 4.80%
- ----------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return at the
Maximum Offering Price (as of 3/31/97):
- ----------------------------------------------------------------------------------------------------
1 Year -1.30% 0.00% 0.30% 0.90%
- ----------------------------------------------------------------------------------------------------
5 Years 5.34% 6.00% -- --
- ----------------------------------------------------------------------------------------------------
Life of Series 5.19% 5.85% 5.46% 6.65%
- ----------------------------------------------------------------------------------------------------
</TABLE>
The results quoted above represent past performance for Class A shares 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
Class A share 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) Data shown represents Class A share performance. The Florida Series offers
an additional class of shares (Class C) with a distinct pricing option. For
Florida Series Class C share performance, please see the Series' Financial
Highlights table on page 11. For a full discussion of the differences in
pricing alternatives, please call Lord Abbett Distributor LLC at
800-874-3733 and ask for the Trust's current prospectus.
(3) 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.
(4) 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.
(5) Not annualized.
1
<PAGE>
Important Information
As of 4/30/97, no Series of the Trust had more than 10% of its net assets
invested in residual interest bonds ("RIBs"), although each portfolio may invest
up to 20% of its net assets in such securities. A RIB, sometimes referred to as
an inverse floater, is a debt instrument with a floating or variable interest
rate that moves in the opposite direction of the interest rate on another
security or the value of an index. Changes in the interest rate on the other
security or index inversely affect the residual interest paid on the RIB, with
the result that when interest rates rise, RIBs give lower interest payments and
their 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.
Statement of Net Assets
FLORIDA SERIES April 30, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investments or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded 25.09% Alachua Co FL Health Facs Auth Rev/Santa Fe Health Care
7.60% 11/15/2013 AAA $1,000M $ 1,112,500
Broward Co FL Wtr & Sewer Util Rev FGIC+ 6 1/2% 10/1/2017 AAA 3,250M 3,501,875
Charlotte Co FL Util Rev FGIC+ 6 3/4% 10/1/2013 AAA 1,100M 1,230,625
Dade Co FL Seaport Bd AMBAC+ 6 1/4% 10/1/2021 AAA 750M 800,625
Dade Co FL Seaport Bd AMBAC+ 6 1/2% 10/1/2026 AAA 6,350M 6,850,062
Dunedin FL Hosp Rev MBIA+ 6 3/4% 11/15/2021 AAA 1,000M 1,096,250
Florida St Bd of Ed Cap Outlay Ser A 7 1/4% 6/1/2023 AAA 3,160M 3,452,300
Hollywood FL Wtr & Sewer Rev FGIC+ 6 7/8% 10/1/2021 AAA 2,800M 3,080,000
Manatee Co FL Util Rev MBIA+ 6 3/4% 10/1/2013 AAA 1,000M 1,095,000
Melbourne FL Wtr & Sewer Rev Ser B FGIC+ 6.40% 10/1/2022 AAA 1,700M 1,821,125
Miami FL Health Facs Rev Mercy Hosp Prjt AMBAC+ 6 3/4% 8/1/2020 AAA 870M 948,300
Miami FL Sports & Exhibit FGIC+ 7.20% 10/1/2020 AAA 1,690M 1,837,875
Orlando & Orange Co FL Expwy Auth Rev FGIC+ 6 1/2% 7/1/2020 AAA 395M 425,613
Puerto Rico Commonwealth 7 5/8% 7/1/2010 AAA 1,100M 1,216,875
Puerto Rico Commonwealth Hwy Auth Rev Ser Q 7 3/4% 7/1/2016 AAA 325M 360,750
Puerto Rico Commonwealth Hwy Auth Rev Ser S 6 1/2% 7/1/2022 AAA 3,350M 3,655,687
Puerto Rico Elec Pwr Auth Rev Ser P 7% 7/1/2021 AAA 4,850M 5,353,188
Total 37,838,650
- --------------------------------------------------------------------------------------------------------------------------==========
General Obligation State 2.63% Puerto Rico Commonwealth RIBS MBIA+ 7.684% 7/1/2008++ AAA 1,100M 1,177,000
Puerto Rico Commonwealth MBIA+ 5 3/8% 7/1/2021 AAA 2,900M 2,784,000
Total 3,961,000
- --------------------------------------------------------------------------------------------------------------------------==========
General Obligation Local 1.71% Florida St Jacksonville Trans-SR Lien 6.40% 7/1/2022 AA 2,425M 2,579,593
- --------------------------------------------------------------------------------------------------------------------------==========
Education 2.17% Dade Co FL Ed Facs Auth Rev/Univ of Miami Ser B MBIA+ 5 3/4% 4/1/2020 AAA 2,000M 1,987,500
Florida St Bd Reg Univ Sys Rev MBIA+ 5 5/8% 7/1/2019 AAA 1,300M 1,285,375
Total 3,272,875
- --------------------------------------------------------------------------------------------------------------------------==========
Finance 3.44% Puerto Rico Muni Fin Agy Ser A 6 1/2% 7/1/2019 A 4,915M 5,191,469
- --------------------------------------------------------------------------------------------------------------------------==========
Health and Hospital 22.46% Alachua Co FL Health Facs Auth Health Facs Rev/Shands Ser A
MBIA+ 5.80% 12/1/2026 AAA 1,500M 1,494,375
Altamonte Springs FL Health Facs Auth Hosp Rev/Adventist Health
AMBAC+ 7% 11/15/2014 AAA 2,485M 2,680,693
Charlotte Co FL Health Care Facs Rev RIBS FSA+ 7.893% 8/26/2027++ AAA 7,500M 7,575,000
Lee Co FL Hosp Bd Directors Hosp Rev Ser A MBIA+ 5 3/4% 4/1/2022 AAA 4,300M 4,257,000
Miami FL Health Facs Auth Rev RIBS AMBAC+ 6.51% 8/15/2015++ AAA 2,200M 1,938,750
North Broward FL Hosp Dist Rev MBIA+ 5 3/8% 1/15/2024 AAA 2,200M 2,062,500
Palm Beach Co FL Health Facs Auth Rev Hosp/Good Samaritan
MBIA+ 6.30% 10/1/2022 AAA 7,935M 8,371,425
Tampa FL Health Rev/Allegheny Health Sys/St Joseph
MBIA+ 6.70% 12/1/2018 AAA 5,000 5,500,000
Total 33,879,743
- --------------------------------------------------------------------------------------------------------------------------==========
</TABLE>
2
<PAGE>
Statement of Net Assets
FLORIDA SERIES April 30, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investments or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Housing 1.96% Dade Co FL Hsg Fin Auth Sing Fam Mtge Rev GNMA+ AMT+++
6.70% 4/1/2028 AAA $1,000M $ 1,033,750
Dade Co FL Hsg Fin Auth Sing Fam Mtge Rev Ser E FNMA+ 7% 3/1/2024 Aaa 40M 41,650
Orange Co FL Hsg Fin Auth Sing Fam Mtge Rev Ser A GNMA+
AMT+++ 5.90% 9/1/2019 AAA 450M 445,500
Palm Beach Co FL Hsg Fin Auth Sing Fam Mtge Rev Ser A
GNMA+ AMT+++ 6.55% 4/1/2027 Aaa 1,400M 1,442,000
Total 2,962,900
- --------------------------------------------------------------------------------------------------------------------------==========
Industrial Revenue Bonds 3.55% Hillsborough Co FL Ind Dev Auth Rev Tampa Elec Prjt 8% 5/1/2022 Aa 2,000M 2,307,500
Puerto Rico Tel Auth Rev RIBS MBIA+ 6.667% 1/25/2007++ AAA 3,000M 3,048,750
Total 5,356,250
- --------------------------------------------------------------------------------------------------------------------------==========
Miscellaneous 5.73% Brevard Co FL Sales Tax Rev MBIA+ 7% 12/1/2018 AAA 1,000M 1,098,750
Broward Co FL Professional Sports Facs Tax Rev MBIA+ 5 3/4% 9/1/2021 AAA 2,000M 1,990,000
Broward Co FL Professional Sports Facs Tax Rev Ser A
MBIA+ 5 5/8% 9/1/2028 AAA 200M 193,750
Cooper City FL Sales Tax Rev 7 1/4% 10/1/2011 A 1,000M 1,095,000
Jacksonville FL Sales Tax Rev River City Renaissance Prjt
FGIC+ 5 3/8% 10/1/2018 AAA 2,685M 2,564,175
Orange Co FL Tourist Dev Tax Rev AMBAC+ 6% 10/1/2016 AAA 1,200M 1,224,000
Tampa FL Sports Auth Rev GTD Pkg/Tampa Bay Arena Prjt
MBIA+ 6% 10/1/2015 AAA 450M 474,188
Total 8,639,863
- --------------------------------------------------------------------------------------------------------------------------==========
Pollution Control Revenue
5.50% Citrus Co FL Poll Ctrl Rev/FL Pwr Crystal Rivers MBIA+
6 5/8% 1/1/2027 AAA 6,780M 7,296,975
Escambia Co FL Poll Ctrl Rev Champion Intl Corp AMT+++ 6.40%
9/1/2030 Baa 1,000M 1,005,000
Total 8,301,975
- --------------------------------------------------------------------------------------------------------------------------==========
Power 8.57% Charlotte Co FL Util Rev Ref Ser A FGIC+ 5 5/8% 10/1/2021 AAA 2,250M 2,207,813
Gainesville FL Util Sys Rev Ref Ser A 5.20% 10/1/2022 AA 4,000M 3,675,000
Jacksonville FL Elec Auth Rev 5 1/4% 10/1/2020 Aa 3,000M 2,778,750
Okeechobee FL Util Auth Sys Rev Acquisition & Imp MBIA+ 5.60%
10/1/2025 AAA 825M 801,281
Puerto Rico Elec Pwr Auth Rev Ser X 5 1/2% 7/1/2025 Baa 1,965M 1,832,362
Stuart FL Util Rev FGIC+ 6.80% 10/1/2024 AAA 1,500M 1,633,125
Total 12,928,331
- --------------------------------------------------------------------------------------------------------------------------==========
Transportation 4.25% Florida Ports Fin Comm Rev St Trans Tr Fd MBIA+
AMT+++ 5 3/8% 6/1/2027 AAA 3,095M 2,870,613
Greater Orlando FL Aviation Auth Arpt Fac Rev
AMT+++ 8 3/8% 10/1/2016 A 2,500M 2,675,000
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser C 5% 7/1/2036 A 1,000M 867,500
Total 6,413,113
- --------------------------------------------------------------------------------------------------------------------------==========
Water and Sewer 11.56% Atlantic Beach FL Util Sys Rev MBIA+ 5 1/2% 10/1/2016 AAA 125M 122,031
Broward Co FL Wtr & Sewer Util Rev FGIC+ 6% 10/1/2020 AAA 2,500M 2,528,125
Callaway/Bay Co FL Wastewtr Rev FGIC+ 5 1/2% 9/1/2026 AAA 1,000M 956,250
Cocoa FL Wtr & Sewer Rev Ser 1997 FGIC+ 5 7/8% 10/1/2022 AAA 1,340M 1,345,025
Indian River Co FL Wtr & Sewer Rev FGIC+ 5 1/2% 9/1/2016 AAA 475M 466,094
Orlando FL Utils Comm Wtr & Elec Rev 5% 10/1/2023 Aa 5,000M 4,456,250
Panama City FL Wtr & Sewer Rev MBIA+ 5 5/8% 10/1/2016 AAA 1,000M 996,250
Puerto Rico Commonwealth Aqu & Sewer Rev 5% 7/1/2019 A 1,000M 890,000
St. John River Management Dist LD ACQ Rev FL FSA+ 5 1/8% 7/1/2016 AAA 4,000M 3,702,920
Sunrise FL Util Sys Rev AMBAC+ 5 3/4% 10/1/2026 AAA 2,000M 1,975,000
Total 17,437,945
-------------------------------------------------------------------------------------------==========
Total Municipal Bonds 98.62% (Cost $145,344,980) 148,763,707
====================================================================================================================================
Other Assets, Less Liabilities 1.38%
====================================================================================================================================
Short-Term Securities California St Ser A 4 1/2% 6/30/1997 MIG1 1,650M 1,651,254
</TABLE>
3
<PAGE>
Statement of Net Assets
FLORIDA SERIES April 30, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investments or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Texas St Tax & Rev Anticipation Notes 4 3/4% 8/29/1997 MIG1 $ 700M $ 701,897
Total (Cost $2,354,266) 2,353,151
- --------------------------------------------------------------------------------------------------------------------------==========
Cash and Receivables, Net of Liabilities (276,099)
-------------------------------------------------------------------------------------------==========
Total Other Assets, Less Liabilities 2,077,052
====================================================================================================================================
Net Assets 100.00% $150,840,759
====================================================================================================================================
Class A Shares-Net asset value ($143,017,357 / 30,350,065 shares outstanding) $4.71
Class C Shares-Net asset value ($7,823,402 / 1,660,657 shares outstanding) $4.71
+Insured or guaranteed by the indicated municipal bond insurance corporation or Federal
agency.
++The interest rate is subject to change periodically and inversely to the prevailing market
rate. The interest rate shown is the rate in effect at April 30, 1997.
+++Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
Statement of Net Assets
PENNSYLVANIA SERIES April 30, 1997
<TABLE>
<CAPTION>
Rating: S&P Principal
Investments or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded 25.50% Erie PA Higher Ed Bldg Auth Coll Rev Ser A 8 1/2% 6/1/2015 AAA $3,000M $ 3,285,000
Langhorne Manor Boro PA Higher Ed & Health/Woods Sch
8 3/4% 11/15/2014 AAA 1,000M 1,116,250
New York PA Hosp Auth Rev AMBAC+ 7% 7/1/2021 AAA 1,000M 1,090,000
Pennsylvania Conv Ctr Auth Ser A FGIC+ 6.70% 9/1/2016 AAA 540M 606,150
Pennsylvania Intergovernmental Coop Auth FGIC+ 6 3/4% 6/15/2021 AAA 2,000M 2,225,000
Pennsylvania St Tnpk Comm Tnpk Rev Ser E MBIA+ 7.55% 12/1/2017 AAA 1,000M 1,090,000
Philadelphia PA Gas Wks Rev 7.70% 6/15/2021 AAA 1,000M 1,123,750
Philadelphia PA Gas Wks Rev ETM Ser B MBIA+ 7% 5/15/2020 AAA 2,220M 2,480,850
Puerto Rico Commonwealth 7 5/8% 7/1/2010 AAA 1,615M 1,786,594
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 2,900M 3,215,375
Puerto Rico Commonwealth 7.30% 7/1/2020 AAA 700M 768,250
Puerto Rico Commonwealth Hwy Ser P 8 1/8% 7/1/2013 AAA 2,450M 2,609,250
Puerto Rico Commonwealth Pub Imp Ser A 7.70% 7/1/2008 AAA 300M 324,375
Puerto Rico Elec Pwr Auth Rev Ser M 8% 7/1/2008 AAA 250M 265,938
Washington Co PA Auth Lease Rev AMBAC+ 7.45% 12/15/2018 AAA 1,150M 1,272,188
Total 23,258,970
- -------------------------------------------------------------------------------------------------------------------------===========
General Obligation State 5.31% Puerto Rico Commonwealth 6% 7/1/2014 A 1,000M 1,013,750
Puerto Rico Commonwealth 6.45% 7/1/2017 A 1,900M 2,021,125
Puerto Rico Commonwealth MBIA+ 6.45% 7/1/2017 AAA 700M 744,625
Puerto Rico Commonwealth 6 1/2% 7/1/2023 A 1,000M 1,066,250
Total 4,845,750
- -------------------------------------------------------------------------------------------------------------------------===========
General Obligation Local 6.02% Bellefonte PA Area Sch Dist MBIA+ 5 1/2% 5/15/2026 AAA 455M 436,800
Bethlehem PA Area Sch Dist MBIA+ 6% 3/1/2016 AAA 1,000M 1,020,000
Bucks Co PA Wtr & Sewer Auth Rev FGIC+ 5.60% 12/1/2019 AAA 1,285M 1,254,481
Kiski PA Area Sch Dist FGIC+ 5.30% 3/1/2017 AAA 1,000M 935,000
Lower Providence Twp PA MBIA+ 5 1/4% 5/1/2022 AAA 1,355M 1,266,925
Norristown PA Area Sch Dist FGIC+ 5 1/2% 9/1/2018 AAA 600M 579,750
Total 5,492,956
- -------------------------------------------------------------------------------------------------------------------------===========
Education 8.85% Cumberland Co PA Muni Auth Coll Rev/Messiah Coll Prjt
AMBAC+ 5 1/8% 10/1/2015 AAA 1,180M 1,100,350
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
PENNSYLVANIA SERIES April 30, 1997
Rating: S&P Principal
Investments or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Northeastern PA Hosp & Ed/Luzerne Co Comm Coll AMBAC+
6 5/8% 8/15/2015 AAA $2,000M $ 2,127,500
Pennsylvania St Higher Ed 6 5/8% 8/15/2009 Aa 825M 894,094
Pennsylvania St Higher Ed RIBS AMBAC+ AMT+++ 8.27% 3/1/2022++ AAA 3,000M 2,981,250
Pennsylvania St Higher Ed MBIA+ 5 5/8% 12/1/2027 AAA 1,000M 970,000
Total 8,073,194
- -------------------------------------------------------------------------------------------------------------------------===========
Health and Hospital 10.43% Chester Co PA Health & Ed Fac Auth Sys Rev/Mainline Health
RIBS AMBAC+ 7.27% 5/15/2020++ AAA 2,600M 2,408,250
Lehigh Co PA Gen Purp Auth Rev/Lehigh Valley Hosp Ser A
MBIA+ 5 5/8% 7/1/2015 AAA 500M 488,125
Northeastern PA Hosp & Ed Auth AMBAC+ 5 1/4% 1/1/2026 AAA 2,500M 2,296,875
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Fac Gr A
MBIA+ 6 1/4% 7/1/2024 AAA 850M 886,125
Sayre PA Health Care Fac/Tioga Nursing AMBAC+ 7 1/4% 10/1/2018 AAA 1,500M 1,591,875
Scranton-Lackawanna PA Health & Welfare Auth/Univ Scran Prjt
AMBAC+ 6.80% 11/1/2014 AAA 500M 534,375
South Fork PA Muni Auth Rev Ref/Good Samaritan Med Ctr Ser B
MBIA+ 5 1/4% 7/1/2026 AAA 1,430M 1,308,450
Total 9,514,075
- -------------------------------------------------------------------------------------------------------------------------===========
Housing 6.94% Pennsylvania Hsg Fin Agy Ser 33 6.90% 4/1/2017 AA 1,235M 1,285,943
Pennsylvania Hsg Fin Agy Ser 43 AMT+++ 7.40% 10/1/2015 AA 1,000M 1,077,500
Pennsylvania Hsg Fin Agy Sing Fam Mtge Ser 41B
AMT+++ 6.65% 4/1/2025 AA 1,000M 1,032,500
Pennsylvania Hsg Fin Agy Sing Fam Mtge Ser 42 AMT+++ 6.85% 4/1/2025 AA 2,000M 2,100,000
Puerto Rico Pub Bldg Auth Ser J 6 1/2% 7/1/2003 A 770M 830,638
Total 6,326,581
- -------------------------------------------------------------------------------------------------------------------------===========
Industrial Revenue Bonds 9.36% Allegheny Co PA Ind Dev Auth Rev/USX Corp 6.10% 7/15/2020 Baa 1,000M 997,500
Beaver Co PA Ind Dev Auth/Ohio Edison FGIC+ 7 3/4% 9/1/2024 AAA 1,950M 2,101,125
Bradford Co PA Ind Dev Auth Solid Waste Disp Rev
AMT+++ 6.60% 3/1/2019 A 1,250M 1,307,813
Pennsylvania Economic Dev Fin Auth Exempt Facs Rev/Macmillan
AMT+++ 7.60% 12/1/2020 Baa 1,000M 1,112,500
Puerto Rico Ind Med & Environmental Ctrl/Motorola 6 3/4% 1/1/2014 AA 1,500M 1,625,625
Puerto Rico Ind Med & Environmental Ctrl/Upjohn 7 1/2% 12/1/2023 AA 1,300M 1,397,500
Total 8,542,063
- -------------------------------------------------------------------------------------------------------------------------===========
Power 13.27% Pennsylvania Economic Dev Res Recov Northhampton 6.60% 1/1/2019 Baa* 1,500M 1,479,375
Puerto Rico Elec Pwr Auth LINK FSA+ 5.929% 7/1/2023 AAA 6,000M 6,037,500
Puerto Rico Elec Pwr Auth Ser N 7 1/8% 7/1/2014 BBB 365M 386,900
Puerto Rico Elec Pwr Auth Ser T RIBS FSA+ 8.477% 7/1/2018++ AAA 1,500M 1,610,625
Puerto Rico Elec Pwr Auth Ser X 6% 7/1/2015 BBB 1,000M 1,008,750
York Co PA Ind Dev Auth Poll Ctrl Rev MBIA+ 6.45% 10/1/2019 AAA 1,475M 1,567,187
Total 12,090,337
- -------------------------------------------------------------------------------------------------------------------------===========
Transportation 9.47% Puerto Rico Commonwealth Hwy Ser V 6 5/8% 7/1/2012 A 2,615M 2,794,780
Puerto Rico Commonwealth Hwy Ser Y 5 1/2% 7/1/2018 A 5,000M 4,762,500
Puerto Rico Port Auth Rev Ser D FGIC+ AMT+++ 7% 7/1/2014 AAA 1,000M 1,080,000
Total 8,637,280
- -------------------------------------------------------------------------------------------------------------------------===========
Water and Sewer 3.05% Hazleton PA City Auth Wtr FGIC+ 5 1/4% 4/1/2017 Aaa 2,000M 1,885,000
Puerto Rico Commonwealth Aqu & Sewer Rev 5% 7/1/2015 A 500M 455,625
Puerto Rico Commonwealth Aqu & Sewer Rev 5% 7/1/2019 A 500M 445,000
Total 2,785,625
------------------------------------------------------------------------------------------===========
Total Municipal Bonds 98.20% (Cost $88,688,360) 89,566,831
====================================================================================================================================
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
PENNSYLVANIA SERIES April 30, 1997
Rating: S&P Principal
Investments or Moody's Amount Market Value
====================================================================================================================================
<S> <C>
Other Assets, Less Liabilities 1.80%
====================================================================================================================================
Cash and Receivables, Net of Liabilities $ 1,645,899
====================================================================================================================================
Net Assets 100.00% $91,212,730
====================================================================================================================================
Net asset value ($91,212,730 / 18,409,544 shares outstanding) $4.95
*This security has not been rated by an independent ratings service but is, in Lord Abbett's
opinion, of comparable quality.
+Insured or guaranteed by the indicated municipal bond insurance corporation or Federal
agency.
++The interest rate is subject to change periodically and inversely to the prevailing market
rate. The interest rate shown is the rate in effect at April 30, 1997.
+++Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Net Assets
MICHIGAN SERIES April 30, 1997
Rating: S&P Principal
Investments or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded 21.21% Detroit MI Ser A 8.70% 4/1/2010 AAA $1,405M $ 1,582,381
Grand Rapids MI Water Supply FGIC+ 7% 1/1/2012 AAA 500M 538,750
Lake Orion MI Comm Sch Dist AMBAC+ 7% 5/1/2020 AAA 1,050M 1,194,375
Michigan St Bldg Auth Rev 6 3/4% 10/1/2003 AAA 1,000M 1,078,750
Michigan St Hosp Fin Auth Rev 7 1/2% 2/15/2018 AAA 2,150M 2,389,188
Puerto Rico Commonwealth 7.70% 7/1/2020 AAA 250M 277,187
Puerto Rico Commonwealth Aqu & Sewer Auth Rev Ser A 7 7/8% 7/1/2017 AAA 700M 743,750
Puerto Rico Commonwealth Hwy Ser P 8 1/8% 7/1/2013 AAA 700M 745,500
Riverview MI Comm Sch Dist FGIC+ 6.55% 5/1/2014 AAA 500M 543,125
Romulus MI Co Schs Ser II FGIC+ 6.40% 5/1/2017 AAA 500M 541,875
Royal Oak MI Hosp Fin Auth Hosp Rev William Beaumont Ser C
7 3/8% 1/1/2020 AAA 500M 532,500
Royal Oak MI Hosp Fin Auth Hosp Rev William Beaumont Ser D
6 3/4% 1/1/2020 AAA 500M 540,625
Total 10,708,006
- -------------------------------------------------------------------------------------------------------------------------===========
General Obligation State 1.58% Puerto Rico Commonwealth 6 1/2% 7/1/2023 A 750M 799,688
- -------------------------------------------------------------------------------------------------------------------------===========
General Obligation
Local 10.83% Alpena MI Pub Sch MBIA+ 5 5/8% 5/1/2022 AAA 500M 486,250
Huron Valley MI Sch FGIC+ 5 3/4% 5/1/2022 AAA 250M 245,625
Lakeview MI Comm Sch FGIC+ 5.60% 5/1/2022 AAA 500M 478,750
Lincoln Pk MI Sch Dist FGIC+ 5.90% 5/1/2026 AAA 500M 502,500
Plymouth-Canton MI Comm Sch Dist Ser C 6 1/2% 5/1/2016 AA 1,000M 1,062,500
Saline MI Area Sch FGIC+ 5 1/2% 5/1/2015 AAA 1,250M 1,231,250
South Redford MI Sch Dist FGIC+ 5 1/2% 5/1/2022 AAA 500M 478,750
Traverse MI Area Dist Library MBIA+ 5% 5/1/2017 AAA 555M 507,825
Wayne Co MI MBIA+ 5 1/4% 6/1/2016 AAA 500M 472,500
Total 5,465,950
- -------------------------------------------------------------------------------------------------------------------------===========
Education 6.16% Central MI Univ Revs FGIC+ 5 1/2% 10/1/2026 AAA 500M 473,750
Oxford MI Area Co Schs FGIC+ 5 1/2% 5/1/2021 AAA 1,250M 1,206,250
Pinckney MI Comm Schs 5 1/2% 5/1/2027 AAA 1,500M 1,428,750
Total 3,108,750
- -------------------------------------------------------------------------------------------------------------------------===========
Health and Hospital 21.19% Farmington Hills MI Hosp/Botsford Gen Hosp MBIA+ 6 1/2% 2/15/2011 AAA 1,000M 1,062,500
Kalamazoo MI Hosp Fin Auth/Borgess Hosp RIBS FGIC+ 6.608% 6/1/2011++ AAA 3,000M 2,752,500
Kalamazoo MI Hosp Fin Auth Reg Lkd Arcs & Levrs
LINK FGIC+ 5.244% 6/1/2011 AAA 2,000M 1,902,500
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
MICHIGAN SERIES April 30, 1997
Rating: S&P Principal
Investments or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Kent Hosp Fin Auth/Butterworth Health Ser A MBIA+ 5 5/8% 1/5/2026 AAA $1,300M $ 1,252,875
Michigan St Hosp Fin Auth Rev AMBAC+ 5 3/8% 8/15/2026 AAA 500M 464,375
Michigan St Hosp Fin Auth Rev AMBAC+ 5 5/8% 1/1/2028 AAA 250M 239,062
Michigan St Hosp Fin Auth Rev Ser S 5 1/2% 8/15/2020 AA 1,000M 950,000
Puerto Rico Ind Tourist Ed Med & Environmental Ctrl Facs
6.70% 5/1/2024 BBB 1,575M 1,606,500
Royal Oak MI Hosp Fin Auth/William Beaumont Hosp 5 1/4% 1/1/2020 AA 500M 467,500
Total 10,697,812
- -------------------------------------------------------------------------------------------------------------------------===========
Housing 7.03% Michigan St Hsg Dev Auth Ser B 6.95% 12/1/2020 AA 1,050M 1,120,875
Michigan St Hsg Dev Auth Ser B AMT+++ 7.05% 6/1/2026 AA 895M 933,037
Michigan St Hsg Dev Auth Ser D 5.95% 12/1/2016 AA 500M 500,000
Michigan St Hsg Dev Auth Ser E 6.20% 12/1/2027 AA 1,000M 996,250
Total 3,550,162
- -------------------------------------------------------------------------------------------------------------------------===========
Industrial Revenue Bonds 9.14% Michigan St Strategic Fd Ltd/Waste Mgmt Inc AMT+++ 6 5/8% 12/1/2012 AA 1,000M 1,075,000
Puerto Rico Ind Med & Environmental/Upjohn 7 1/2% 12/1/2023 AA 1,500M 1,612,500
Puerto Rico Ind Med & Environmental/Warner Lambert 7.60% 5/1/2014 Aa 1,000M 1,081,250
Puerto Rico Tel Auth Rev RIBS MBIA+ 6.976% 1/16/2015++ AAA 900M 848,250
Total 4,617,000
- -------------------------------------------------------------------------------------------------------------------------===========
Miscellaneous 3.22% Michigan Muni Bd Auth AMBAC+ 6 3/4% 11/1/2014 AAA 1,500M 1,627,500
- -------------------------------------------------------------------------------------------------------------------------===========
Power 8.20% Michigan St Strategic Fd Ltd Detroit Edison MBIA+ 7% 7/15/2008 AAA 500M 572,500
Michigan St Strategic Fd Ltd Detroit Edison AMBAC+ 7% 5/1/2021 AAA 500M 586,875
Michigan St Strategic Fd Rev/Genesee Pwr Prjt AMT+++
7 1/2% 1/1/2021 BBB* 500M 508,750
Puerto Rico Elec Pwr Auth Ser T RIBS FSA+ 8.477% 7/1/2018++ AAA 500M 536,875
Puerto Rico Elec Pwr Auth Ser X 6 1/8% 7/1/2021 A 500M 506,250
Puerto Rico Elec Pwr Auth Ser Z 5 1/2% 7/1/2016 A 1,500M 1,430,625
Total 4,141,875
- -------------------------------------------------------------------------------------------------------------------------===========
Transportation 7.42% Puerto Rico Commonwealth Hwy Ser V 6 5/8% 7/1/2012 A 1,500M 1,603,125
Wayne Charter Co MI Arpt Rev MBIA+ AMT+++ 6 3/4% 12/1/2021 AAA 2,000M 2,145,000
Total 3,748,125
- -------------------------------------------------------------------------------------------------------------------------===========
Water and Sewer 2.27% Detroit MI Sewer Disp Rev Ser A MBIA+ 5% 7/1/2025 AAA 1,000M 878,750
Puerto Rico Commonwealth Aqu & Sewer Rev 5% 7/1/2019 A 300M 267,000
Total 1,145,750
- -------------------------------------------------------------------------------------------------------------------------===========
Total Municipal Bonds 98.25% (Cost $49,575,283) 49,610,618
====================================================================================================================================
Other Assets, Less Liabilities 1.75%
====================================================================================================================================
Cash and Receivables, Net of Liabilities 884,323
====================================================================================================================================
Net Assets 100.00% $50,494,941
====================================================================================================================================
Net asset value ($50,494,941 / 10,336,558 shares outstanding) $4.89
*This security has not been rated by an independent ratings service but is, in Lord Abbett's
opinion, of comparable quality.
+Insured or guaranteed by the indicated municipal bond insurance corporation or Federal
agency.
++The interest rate is subject to change periodically and inversely to the prevailing market
rate. The interest rate shown is the rate in effect at April 30, 1997.
+++Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Statement of Net Assets
GEORGIA SERIES April 30, 1997
Rating: S&P Principal
Investments or Moody's Amount Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Prerefunded 15.72% Albany GA Sewer Sys Rev MBIA+ 6 5/8% 7/1/2017 AAA $ 100M $ 109,625
Chatham Co GA Sch Dist MBIA+ 6 3/4% 8/1/2020 AAA 1,035M 1,155,319
Puerto Rico Commonwealth 8% 7/1/2007 AAA 570M 606,337
Total 1,871,281
- -------------------------------------------------------------------------------------------------------------------------===========
General Obligation State 5.33% Georgia St Ser C 6 1/4% 8/1/2013 Aaa 350M 382,812
Puerto Rico Commonwealth RIBS FSA+ 7.899% 7/1/2020++ AAA 250M 250,938
Total 633,750
- -------------------------------------------------------------------------------------------------------------------------===========
General Obligation Local 4.35% Atlanta GA Ser A 6.10% 12/1/2019 AA 250M 258,125
De Kalb Co GA 6% 1/1/2020 AA 250M 259,687
Total 517,812
- -------------------------------------------------------------------------------------------------------------------------===========
Education 4.39% Marietta GA Dev Auth Rev Ser B CGIC+ 6 1/4% 9/1/2025 AAA 500M 521,875
- -------------------------------------------------------------------------------------------------------------------------===========
Health and Hospital 6.35% Crisp Co GA Hosp Auth Rev Crisp Regl Hosp Prjt FSA+ 5.45% 7/1/2015 AAA 250M 245,625
Glynn-Brunswick Mem Hosp Auth GA Rev Antic Ctfs Southeast GA
MBIA+ 6% 8/1/2016 AAA 500M 511,250
Total 756,875
- -------------------------------------------------------------------------------------------------------------------------===========
Housing 8.33% De Kalb Co Hsg Auth FSA+ AMT+++ 7.15% 1/1/2025 AAA 500M 529,375
Georgia St Hsg & Fin Auth Rev Ser A Sub Ser A-2 AMT+++
6.40% 12/1/2015 AA 200M 205,750
Georgia St Hsg & Fin Auth Rev Sing Fam Mtge Ser A Sub Ser A-2
6.45% 12/1/2027 AA 250M 255,625
Total 990,750
- -------------------------------------------------------------------------------------------------------------------------===========
Miscellaneous 17.62% Cartersville GA Dev Auth Rev AMT+++ 5 5/8% 5/1/2009 AA 500M 503,750
Cartersville GA Dev Auth Rev AMT+++ 6 1/8% 5/1/2027 AA 500M 501,250
Cobb-Marietta GA Coliseum & Exhibit Hall Auth Rev
MBIA+ 5 5/8% 10/1/2026 AAA 600M 601,500
Georgia Muni Assn 5.65% 12/1/2017 AAA 500M 489,565
Total 2,096,065
- -------------------------------------------------------------------------------------------------------------------------===========
Pollution Control
Revenue .44% Burke Co GA Dev Auth Poll Ctrl Rev MBIA+ 6.60% 7/1/2024 AAA 50M 52,438
- -------------------------------------------------------------------------------------------------------------------------===========
Power 4.96% Puerto Rico Elec Pwr Auth Ser D 7 1/8% 7/1/2014 Baa 50M 53,063
Puerto Rico Elec Pwr Auth Ser T RIBS FSA+ 8.477% 7/1/2018++ AAA 500M 536,875
Total 589,938
- -------------------------------------------------------------------------------------------------------------------------===========
Solid Waste .90% Cobb Co GA Solid Waste Mgmt Auth AMT+++ 6.40% 1/1/2015 Aaa 100M 106,500
- -------------------------------------------------------------------------------------------------------------------------===========
Transportation 12.68% Metropolitan Atlanta Rapid Trans Auth GA Sales Tax Rev Ser P
AMBAC+ 6 1/4% 7/1/2020 AAA 600M 641,250
Puerto Rico Commonwealth Hwy & Trans Auth Hwy Rev Ser C
5% 7/1/2036 A 1,000M 867,500
------------------------------------------------------------------------------------------===========
Total 1,508,750
- -------------------------------------------------------------------------------------------------------------------------===========
Water and Sewer 14.19% Cherokee Co GA Wtr & Sewer Auth Rev MBIA+ 5.20% 8/1/2025 AAA 750M 705,938
Milledgeville GA Wtr & Sewer Rev FSA+ 6% 12/1/2021 AAA 500M 520,625
Richmond Co GA Wtr & Sewer Rev Ser A FGIC+ 5 1/4% 10/1/2028 AAA 500M 461,250
Total 1,687,813
Total Municipal Bonds 95.26% (Cost $11,264,180) 11,333,847
====================================================================================================================================
Other Assets, Less Liabilities 4.74%
====================================================================================================================================
Cash and Receivables, Net of Liabilities 563,375
====================================================================================================================================
Net Assets 100.00% $11,897,222
====================================================================================================================================
Net asset value ($11,897,222 / 2,342,696 shares outstanding) $5.08
+Insured or guaranteed by the indicated municipal bond insurance corporation or Federal
agency.
++The interest rate is subject to change periodically and inversely to the prevailing market
rate. The interest rate shown is the rate in effect at April 30, 1997.
+++Income from these securities may be subject to the Alternative Minimum Tax.
See Notes to Financial Statements.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Statements of Operations
Six Months Ended April 30, 1997
----------------------------------------------------------------------
Florida Pennsylvania Michigan Georgia
Investment Income Series Series Series Series
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Income Interest $ 4,656,342 $ 2,832,911 $ 1,567,415 $ 309,410
---------------------------------------------------------------------------------------------------------------------------
Expenses Management fee 392,485 231,924 128,831 27,485
Management fee waived -- (23,147) (38,935) (27,485)
12b-1 distribution plan-Class A 172,528 -- -- --
12b-1 distribution plan-Class C 41,712 -- -- --
Shareholder servicing 43,200 33,000 27,000 7,000
Registration 1,500 3,000 3,000 1,000
Reports to shareholders 12,000 9,000 5,100 1,000
Audit and tax 22,200 13,200 9,000 4,000
Legal 3,000 3,000 3,000 500
Trustees 2,100 1,740 750 50
Organization -- 603 1,992 396
Other 14,948 10,290 9,258 2,169
---------------------------------------------------------------------------------------------------------------------------
Total expenses 705,673 282,610 148,996 16,115
---------------------------------------------------------------------------------------------------------------------------
Net investment income 3,950,669 2,550,301 1,418,419 293,295
---------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
====================================================================================================================================
Net realized gain (loss) from investment transactions
Proceeds from sales 98,763,224 40,347,793 19,331,654 5,942,638
Cost of investments sold 98,773,248 39,902,607 19,342,152 5,889,287
Net realized gain (loss) (10,024) 445,186 (10,498) 53,351
---------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation of investments (2,336,540) (1,430,609) (501,260) (160,637)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized (loss) on investments (2,346,564) (985,423) (511,758) (107,286)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $ 1,604,105 $ 1,564,878 $ 906,661 $ 186,009
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
Copyright (C) 1997 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 the
Trust's investment objective and policies, sales charges and other matters.
There is no guarantee that the forecasts contained within this publication will
come to pass.
All rights reserved. Printed in the U.S.A.
9
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended April 30, 1997
-------------------------------------------------------------
Increase (Decrease) Florida Pennsylvania Michigan Georgia
in Net Assets Series Series Series Series
===============================================================================================
<S> <C> <C> <C> <C>
Operations
Net investment income $ 3,950,669 $ 2,550,301 $ 1,418,419 $ 293,295
Net realized gain (loss)
from investment transactions (10,024) 445,186 (10,498) 53,351
Net unrealized appreciation
(depreciation) of investments (2,336,540) (1,430,609) (501,260) (160,637)
Net increase in net assets
resulting from operations 1,604,105 1,564,878 906,661 186,009
- -----------------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income (4,102,700) (2,544,680) (1,384,491) (300,187)
Net realized gain from
investment transactions -- -- -- (20,485)
Total distributions (4,102,700) (2,544,680) (1,384,491) (320,672)
- -----------------------------------------------------------------------------------------------
Share transactions
Net proceeds from sales of share 5,611,614 4,979,133 1,539,010 2,129,331
Net asset value of shares
issued to shareholders
in reinvestment of net
investment income and
realized gain from
investment transactions 1,672,972 1,197,283 731,645 172,813
Net asset value of shares
issued in exchange for
assets acquired in tax-free
acquisition -- -- -- --
Total 7,284,586 6,176,416 2,270,655 2,302,144
- -----------------------------------------------------------------------------------------------
Cost of shares reacquired (16,014,952) (6,588,575) (4,273,052) (957,928)
- -----------------------------------------------------------------------------------------------
Increase (decrease) in
net assets derived from
share transactions (8,730,366) (412,159) (2,002,397) 1,344,216
- -----------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets (11,228,961) (1,391,961) (2,480,227) 1,209,553
- -----------------------------------------------------------------------------------------------
Net Assets
Beginning of period 162,069,720 92,604,691 52,975,168 10,687,669
- -----------------------------------------------------------------------------------------------
End of period+ $ 150,840,759 $ 91,212,730 $ 50,494,941 $ 11,897,222
===============================================================================================
<CAPTION>
Year Ended October 31, 1996
-------------------------------------------------------------
Increase (Decrease) Florida Pennsylvania Michigan Georgia
in Net Assets Series Series Series Series
===============================================================================================
<S> <C> <C> <C> <C>
Operations
Net investment income $ 8,629,401 $ 5,162,782 $ 2,997,735 $ 451,062
Net realized gain (loss)
from investment transactions (1,035,870) 365,030 170,393 9,656
Net unrealized appreciation
(depreciation) of investments (910,194) (489,207) (237,304) 69,195
Net increase in net assets
resulting from operations 6,683,337 5,038,605 2,930,824 529,913
- -----------------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income (8,752,598) (5,141,277) (2,885,696) (455,345)
Net realized gain from
investment transactions -- -- -- (26,021)
Total distributions (8,752,598) (5,141,277) (2,885,696) (481,366)
- -----------------------------------------------------------------------------------------------
Share transactions
Net proceeds from sales of share 12,098,560 8,524,777 5,262,977 5,902,867
Net asset value of shares
issued to shareholders
in reinvestment of net
investment income and
realized gain from
investment transactions 3,449,991 2,408,760 1,532,165 254,773
Net asset value of shares
issued in exchange for
assets acquired in tax-free
acquisition 9,480,186 -- -- --
Total 25,028,737 10,933,537 6,795,142 6,157,640
- -----------------------------------------------------------------------------------------------
Cost of shares reacquired (34,131,285) (11,720,098) (8,050,957) (721,983)
- -----------------------------------------------------------------------------------------------
Increase (decrease) in
net assets derived from
share transactions (9,102,548) (786,561) (1,255,815) 5,435,657
- -----------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets (11,171,809) (889,233) (1,210,687) 5,484,204
- -----------------------------------------------------------------------------------------------
Net Assets
Beginning of period 173,241,529 93,493,924 54,185,855 5,203,465
- -----------------------------------------------------------------------------------------------
End of period+ $ 162,069,720 $ 92,604,691 $ 52,975,168 $ 10,687,669
===============================================================================================
</TABLE>
+ Including undistributed (overdistributed) net investment income of
$(267,715), $(31,512), $19,672 and, $(21,696) at April 30, 1997 and
$(115,684), $(37,133), $(14,256) and $(14,804) at October 31, 1996.
See Notes to Financial Statements.
10
<PAGE>
Financial Highlights
FLORIDA SERIES
<TABLE>
<CAPTION>
Class A Shares Class C Shares
-----------------------------------------------------------------------------------------
Six Months Six Months
Ended Year Ended Ended
April 30, October 31, April 30, 7/15/96(b)
Per Share Operating Performance: 1997 1996 1995 1994 1993 1992 1997 to 10/31/96
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.79 $ 4.85 $ 4.49 $ 5.28 $ 4.75 $ 4.76 $ 4.79 $ 4.70
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .121 .248 .271 .291 .297 .308 .099 .064
Net realized and unrealized gain (loss)
on investments (.075) (.056) .352 (.695) .549 .002 (.071) .093
Total from investment operations .046 .192 .623 (.404) .846 .310 .028 .157
------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.126) (.252) (.263) (.2835) (.301) (.320) (.108) (.067)
Distributions from net realized gain -- -- -- (.1025) (.015) -- -- --
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 4.71 $ 4.79 $ 4.85 $ 4.49 $ 5.28 $ 4.75 $ 4.71 $ 4.79
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 0.95%(c) 4.09% 14.22% (8.03)% 18.24% 6.65% 0.57%(c) 3.35%(c)
====================================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver .43%(c) .80% .74% .32% .38% .29% .80%(c) .44%(c)
Expenses, excluding waiver .43%(c) .82% .88% .82% .88% .78% .80%(c) .44%(c)
Net investment income 2.54%(c) 5.19% 5.81% 5.98% 5.71% 5.84% 2.13%(c) 1.37%(c)
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended
April 30, Year Ended October 31,
Supplemental Data for AllClasses: 1997 1996 1995 1994 1993 1992
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000) $150,841 $162,070 $173,242 $174,844 $191,463 $121,408
Portfolio turnover rate 45.22% 167.95% 142.04% 122.36% 89.32% 94.90%
==============================================================================================================================
</TABLE>
(a)Total return does not consider the effects of sales loads.
(b)Commencement of offering Class shares.
(c)Not annualized. See Notes to Financial Statements.
Financial Highlights
PENNSYLVANIA SERIES
<TABLE>
<CAPTION>
Six Months
Ended
April 30, Year Ended October 31, 2/3/92(b)
Per Share Operating Performance: 1997 1996 1995 1994 1993 to 10/31/92
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.01 $5.01 $4.62 $5.33 $4.75 $4.76
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .1377 .2772 .282 .300 .299 .228
Net realized and unrealized gain
(loss) on investments (.0603) (.0011) .395 (.6975) .582 (.006)
Total from investment operations .0774 .2761 .677 (.3975) .881 .222
------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.1374) (.2761) (.2870) (.2925) (.301) (.232)
Distribution from net realized gain -- -- -- (.02) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.95 $5.01 $5.01 $4.62 $5.33 $4.75
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 1.55%(c) 5.68% 15.02% (7.73%) 18.95% 4.68%(c)
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (000) $91,213 $92,605 $93,494 $81,258 $82,113 $41,207
------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .31%(c) .62% .50% .33% .31% .00%(c)
Expenses, excluding waiver .33%(c) .69% .65% .68% .81% .61%(c)
Net investment income 2.75%(c) 5.55% 5.83% 5.98% 5.70% 4.42%(c)
Portfolio turnover rate 35.90% 78.30% 126.11% 137.22% 7.71% 32.66%
==============================================================================================================================
</TABLE>
(a)Total return does not consider the effects of sales loads.
(b)Commencement of operations.
(c)Not annualized.
See Notes to Financial Statements.
11
<PAGE>
Financial Highlights
MICHIGAN SERIES
<TABLE>
<CAPTION>
Six Months
Ended
April 30, Year Ended October 31, 12/1/92(b)
Per Share Operating Performance: 1997 1996 1995 1994 to 10/31/93
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.93 $4.93 $4.53 $5.23 $4.76
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .135 .274 .284 .286 .266
Net realized and unrealized gain (loss)
on investments (.043) (.010) .395 (.651) .480
Total from investment operations .092 .264 .679 (.365) .746
-------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.132) (.264) (.279) (.293) (.276)
Distribution from net realized gain -- -- -- (.042) --
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.89 $4.93 $4.93 $4.53 $5.23
- -------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 1.86%(c) 5.53% 15.39% (7.29)% 16.01%(c)
===============================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (000) $50,495 $52,975 $54,186 $45,603 $34,957
-------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .29%(c) .44% .25% .34% .00%(c)
Expenses, excluding waiver .36%(c) .73% .75% .84% .75%(c)
Net investment income 2.73%(c) 5.59% 5.95% 5.69% 4.75%(c)
Portfolio turnover rate 33.14% 85.26% 98.89% 137.31% 68.10%
===============================================================================================================================
</TABLE>
(a)Total return does not consider the effects of sales loads.
(b)Commencement of operations.
(c)Not annualized.
See Notes to Financial Statements.
Financial Highlights
GEORGIA SERIES
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, October 31, 12/27/94(b)
Per Share Operating Performance: 1997 1996 to 10/31/95
===============================================================================================================================
<S> <C> <C> <C>
Net asset value, beginning of period $5.14 $5.12 $4.76
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .138 .290 .245
Net realized and unrealized gain (loss) on investments (.048) .0397 .370
Total from investment operations .090 .3297 .615
-------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.140) (.2872) (.255)
Distributions from net realized gain (.01) (.0225) --
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.08 $5.14 $5.12
- -------------------------------------------------------------------------------------------------------------------------------
Total Return(a) 1.76%(c) 6.69% 13.15%(c)
===============================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (000) $11,897 $10,688 $5,203
-------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .15%(c) .03% .00%(c)
Expenses, excluding waiver .40%(c) .83% 1.08%(c)
Net investment income 2.67%(c) 5.55% 5.44%(c)
Portfolio turnover rate 55.85% 72.53% 142.69%
===============================================================================================================================
</TABLE>
(a)Total return does not consider the effects of sales loads.
(b)Commencement of operations.
(c)Not annualized.
See Notes to Financial Statements.
12
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Lord Abbett Tax-Free Income Trust (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on September 11,
1991. The Trust consists of four separate portfolios ("Series"). Each Series is
non-diversified as defined under the Investment Company Act of 1940. The
financial statements have been prepared in conformity with generally accepted
accounting principles which permit management to make certain estimates and
assumptions at the date of the financial statements. The following summarizes
the significant accounting policies of the Trust:
(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 Trust 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 taxes. (c) Security
transactions are accounted for on the date that the securities are purchased or
sold (trade date). Realized gains and losses from investment transactions are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis. Net investment income (other than distribution and service fees)
and realized and unrealized gains or losses are allocated to each class of
shares based upon the relative proportion of net assets at the beginning of the
day. (d) Dividends from net investment income are declared daily and paid
monthly. Taxable net realized gains from investment transactions, if any,
reduced by capital loss carryforwards are distributed annually. (e) The
organization expenses of the Series are amortized evenly over a period of five
years.
2. Management Fee and Other Transactions with Affiliates
The Trust has a management agreement with Lord, Abbett & Co. ("Lord Abbett")
pursuant to which Lord Abbett provides the Trust 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
Trust's investment portfolios. The management fee is based on average daily net
assets for each month at the annual rate of 0.50%. Lord Abbett may waive its
management fees and reimburse the Trust for certain of its other expenses. Any
such other expenses reimbursed are subject to repayment by each Series, pursuant
to a formula based on the asset size and expense ratio of each Series. Each
Series shall not be obligated to repay Lord Abbett after five full fiscal years
after the commencement of operations or the termination of the management
agreement, whichever is earlier. As of April 30, 1997, other expenses reimbursed
by Lord Abbett and not repaid by the Georgia Series amounted to $40,765.
Each Series of the Trust has Rule 12b-1 plans and agreements with respect to one
or more classes of shares as described below (the "Class A and Class C Plans")
with Lord Abbett Distributor LLC ("Distributor"), an affiliate of Lord Abbett.
Each Series makes payments to Distributor which uses or passes on such payments
to authorized institutions. Pursuant to the Class A Plan, the Series pay
Distributor (1) an annual service fee of 0.15% of the average daily net asset
value of shares sold prior to October 1, 1992 and 0.25% of the average daily net
asset value of shares sold on or after that date and (2) a one-time distribution
fee of up to 1% on certain qualifying purchases and a supplemental annual
distribution fee of 0.10% of the average daily net assets of Class A shares
serviced by certain qualifying institutions. The Class A Plan of the
Pennsylvania, Michigan and Georgia Series will not become operative until the
first day of the calendar quarter subsequent to the Series' net assets reaching
$100 million. Pursuant to the Class C Plan of the Florida Series, the Series
pays Distributor (1) a service fee and a distribution fee, at the time such
shares are sold, not to exceed 0.25% and 0.75%, respectively, of the net asset
value of such shares sold and (2) at each quarter-end after the first
anniversary of the sale of such shares, a service fee and a distribution fee at
an annual rate not to exceed 0.25% and 0.75%, respectively, of the average
annual net asset value of such shares outstanding.
Lord Abbett received the following commissions on sales of shares of the Trust
after concessions were paid to authorized distributors:
Lord Abbett Distributors'
Series Commissions Concessions
- --------------------------------------------------------------------------------
Florida-Class A $18,768 $125,881
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Pennsylvania 13,133 120,646
- --------------------------------------------------------------------------------
Michigan 8,266 53,420
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Georgia 10,325 63,120
- --------------------------------------------------------------------------------
Certain of the Trust's officers and trustees have an interest in Lord Abbett.
3. Distributions
As of April 30, 1997, accumulated net realized gain (loss) for financial report-
ing purposes, which is substantially the same as for federal income tax
purposes, aggregated $(11,368,947) for the Florida Series, $(1,393,991) for the
Pennsylvania Series, $(1,509,424) for the Michigan Series and $39,318 for the
Georgia Series. The capital loss carryforwards expire in 2003 and 2004. 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.
Dividends declared by class for the Florida Series were as follows:
Class A $3,910,263
- -----------------------------------------------------------------
Class C $ 192,437
- -----------------------------------------------------------------
4. Capital
Transactions in shares of beneficial interest for the Florida Series (both
shares and dollar amount) were as follows:
Six Months Ended 4/30/97 Year Ended 10/31/96
-------------------------------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 1,017,710 $ 4,866,094 2,490,080 $12,036,691
Shares issued to
shareholders in
reinvestment of net
investment income 334,464 1,599,121 715,706 3,427,406
Total 1,352,174 6,465,215 3,205,786 15,464,097
- --------------------------------------------------------------------------------
Shares reacquired (2,950,406) (14,088,000) (6,969,002) (33,452,324)
Decrease in shares (1,598,232) $(7,622,785) (3,763,216) $(17,988,227)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
7/15/96
(Commencement of
Offering Class C Shares)
Six Months Ended April 30, 1997 to 10/31/96
-------------------------------------------------------------
Class C Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of shares 156,175 $ 745,520 13,038 $ 61,869
Shares issued to shareholders in reinvestment of net investment income 15,448 73,851 4,698 22,585
Shares issued to shareholders in exchange for assets acquired
in tax-free acquisition -- -- 2,016,203 9,480,186
Total 171,623 819,371 2,033,939 9,564,640
- ------------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (402,011) (1,926,952) (142,894) (678,961)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in shares (230,388) $(1,107,581) 1,891,045 $8,885,679
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Transactions in shares of beneficial interest for the single class Series were
as follows:
<TABLE>
<CAPTION>
Six Months Ended April 30, 1997 Year Ended 10/31/96
-----------------------------------------------------------------------------
Pennsylvania Michigan Georgia Pennsylvania Michigan Georgia
Series Series Series Series Series Series
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 996,156 312,623 415,783 1,704,142 1,068,118 1,154,409
Shares issued to shareholders in reinvestment of
net investment income and realized gain from
investment transactions 239,045 148,093 33,633 483,298 312,664 50,038
Total 1,235,201 460,716 449,416 2,187,440 1,380,782 1,204,447
- -----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (1,318,431) (866,254) (185,529) (2,347,568) (1,637,715) (142,263)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in shares (83,230) (405,538) 263,887 (160,128) (256,933) 1,062,184
</TABLE>
As of April 30, 1997, paid in capital for each Series was as follows:
$159,059,809 for the Florida Series, $91,759,762 for the Pennsylvania Series,
$51,949,358 for the Michigan Series and $11,809,933 for the Georgia Series.
5. Purchases and Sales of Securities
Purchases and sales of investment securities (other than short-term investments)
were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
Florida $70,303,203 $80,561,579
- --------------------------------------------------------------------------------
Pennsylvania 35,548,678 36,629,585
- --------------------------------------------------------------------------------
Michigan 17,075,023 19,331,653
- --------------------------------------------------------------------------------
Georgia 7,443,911 5,942,638
- --------------------------------------------------------------------------------
As of April 30,1997, net unrealized appreciation, unrealized appreciation and
unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized Unrealized Unrealized
Series Appreciation Appreciation Depreciation
- --------------------------------------------------------------------------------
Florida $3,417,612 $4,472,497 $1,054,885
- --------------------------------------------------------------------------------
Pennsylvania 878,471 2,067,308 1,188,837
- --------------------------------------------------------------------------------
Michigan 35,335 970,736 935,401
- --------------------------------------------------------------------------------
Georgia 69,667 166,181 96,514
- --------------------------------------------------------------------------------
The cost of investments for federal income tax purposes is the same as that used
for financial reporting purposes.
6. Trustees' Remuneration
The Trustees of the Trust associated withLord Abbett and all officers of the
Trust receive no compensation from the Trust for acting as such. Outside
Trustees' fees and retirement costs are allocated among all funds in the Lord
Abbett group based on the net assets of each fund. Trustee fees payable at April
30, 1997 were $24,427.
7. Acquisition
On July 12, 1996, the Florida Series acquired the net assets of Lord Abbett
Securities Trust-Florida Tax-Free Income Trust ("Florida Trust") pursuant to a
plan of reorganization approved by the Florida Trust's shareholders on June 19,
1996. The acquisition was accomplished by a tax-free exchange of 2,016,203
shares of newly issued Class C shares for 2,136,065 shares of the Florida Trust
valued at $9,480,186 in the aggregate on July 12, 1996. The aggregate net assets
of the Florida Series and the Florida Trust immediately before the acquisition
were $156,381,441 and $9,480,186 (including $54,005 of net unrealized
appreciation and $(1,371,030) of accumulated net realized losses), respectively.
[LOGO](R) Lord, Abbett & Co.
Investment Management
A Tradition og Performance Through Disciplined Investing
Lord Abbett Distributor LLC
- -------------------------------
The GM Building - 767 Fifth Avenur - New York, NY 10153-0203 - 800-426-1130
LATFIT-3-497 (6/97)
