<PAGE>
Lord Abbett
Tax-Free Income Trust
Florida Series o Pennsylvania Series
Michigan Series o Georgia Series
1999 ANNUAL REPORT
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A fund to help you keep more
of your investment income
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Visit our Web Site and get:
up to date statistics and other useful information at
www.lordabbett.com
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Report to Shareholders
For the Fiscal Year Ended October 31, 1999
[PHOTO]
Robert S. Dow
Chairman
November 8, 1999
"We believe municipal bonds remain extremely attractive from a relative value
perspective, offering tax-free yields equivalent to nearly 98% of the yield of
Treasuries."
Lord Abbett Tax-Free Income Trust completed its fiscal year on October 31, 1999
with aggregate net assets of $278 million. Please see page 1 of this report for
individual net assets and performance of each Series.
What Happened in the Markets
What started out as a good year for municipal bonds turned sour in the later
part of 1999 as municipal bond yields climbed from the relatively low yields
experienced earlier in the year. The municipal market enjoyed an early rally as
investors took advantage of the cheapness of tax-free bonds in relation to
Treasuries. But as rates on municipals rose over 35 basis points in the span of
six months, prices fell (generally bond prices move in the opposite direction of
yields) in response to a tightening of the Federal Funds Rate and overall
volatility in the Treasury market.
While U.S. Government bonds recovered recently to essentially the same yield
levels where they began the year, the municipal market has been unable to
recover at the same pace. Circumstances specific to municipal bonds have
combined to prevent the market from returning to the lower yield levels that
market fundamentals would suggest. In particular, property and casualty
insurance companies, traditionally large holders of municipal bonds, became net
sellers of municipals in the third quarter. At the same time, less traditional
institutional buyers, such as life insurance companies, were also heavy sellers.
The flood of extra supply, resulting from the high level of selling and the
absence of "crossover" buyers, temporarily overwhelmed demand for municipals and
forced yields to move higher.
Key Fund Investment Strategies
While these periods of market weakness do have an impact on the value of your
portfolio, they also present opportunities for us to purchase high-quality,
long-term bonds at attractive yields. Looking forward, we expect that the
earlier price declines experienced in the bond market will continue to stabilize
on a larger scale. We also anticipate that the temporary factors that converged
to prevent municipal market recovery will dissipate. While difficult to justify,
given the low inflation the economy continues to enjoy, we would consider any
additional increase in the Federal Funds rate by the Federal Reserve as an
"insurance move" given that today's high rates are only beginning to impact the
economy. The Federal Reserve seems resolved to prevent any sustained increase in
inflation, even before it might emerge.
What May Be Ahead for Municipals
We believe municipal bonds remain extremely attractive from a relative value
perspective, offering tax-free yields equivalent to nearly 98% of the yield of
Treasuries.(1) We continue to emphasize highly liquid, high-quality bonds that
consistently offer attractive levels of income.
On a final note, we are proud to announce that on January 17, 2000, we are
relocating our headquarters to the Colgate Center, at 90 Hudson Street, in
Jersey City, New Jersey. Lord Abbett has experienced strong growth during the
90s. We have more than doubled our assets under management in the last five
years to nearly $33 billion. We are very excited about the move and strongly
believe it to be in the best interest of our shareholders.
Thank you for including the Lord Abbett Tax-Free Income Trust as part of your
diversified investment portfolio. We look forward to helping you attain your
financial goals in the years ahead.
(1) Unlike U.S. Treasury securities, an investment in the Fund is neither
insured nor guaranteed by the U.S. Government.
RISK: All or a portion of income derived from this portfolio may be subject to
the Federal Alternative Minimum Tax. The Fund has the ability to invest in
derivatives, including options, financial futures, options on financial futures
and residual interest bonds (also known as "inverse floaters"). These
instruments involve special risks.
<PAGE>
All tax-free portfolios managed by Lord Abbett emphasize:
o High quality
o Total return potential
o Call protection
Fund Facts
On October 31, 1999, the portfolios in Lord Abbett Tax-Free Income Trust were
invested in a wide variety of high-quality issues.
Lord Abbett's Focus on Quality
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Lord Abbett's Tax-Free Record and SEC-Required Information
<TABLE>
<CAPTION>
Florida Pennsylvania Michigan Georgia
Series(2) Series Series Series(3)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Date of Inception 9/25/91 2/3/92 12/1/92 12/27/94
Net Assets (in millions) $107 $94 $49 $27
Distribution Rate at
Net Asset Value (as of 10/31/99)(3) 5.04% 5.24% 5.31% 5.39%
- ----------------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return
at Net Asset Value (as of 10/31/99)(4):
1 Year -4.74% -4.13% -3.55% -4.36%
3 Years 3.07% 3.95% 3.95% 4.43%
5 Years 5.42% 6.43% 6.46% --
Life of Series 5.29% 5.99% 5.74% 6.79%
30-Day SEC Yield (as of 10/31/99) 4.40% 4.37% 4.77% 4.57%
- ----------------------------------------------------------------------------------------------------------
Average Annual Rate of Total Return at the
Maximum Offering Price (as of 9/30/99):
1 Year -6.80% -6.00% -6.10% -6.30%
5 Years 4.61% 5.50% 5.47% --
Life of Series 5.12% 5.82% 5.49% 6.55%
</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 3.25%.
(1) Includes holdings that 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. For Florida Series Class C
share performance, please see the Series' Financial Highlights table on
page 13. For a full discussion of the differences in pricing alternatives,
please refer to the Trust's current prospectus.
(3) Returns and yield for Tax-Free Income Trust - Georgia Series reflect a
voluntary waiver of Lord, Abbett & Co.'s management fee. Absent this
waiver, the fund's returns and yield would have been lower. Lord, Abbett &
Co. may revise or terminate this waiver at any time.
(4) Dividend Distribution Rate at Net Asset Value: The dividend distribution
rate is calculated by dividing the dividends of a class derived from net
investment income during a stated period by the net asset value on the last
day of the period.
(5) 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 Federal
Alternative Minimum Tax liability 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.
1
<PAGE>
A Note About Year 2000 Matters
As you may know, there has been extensive media coverage about possible problems
that may arise as a result of uncertainties about the ability of computers to
"understand" dates using the year 2000. Potentially, these problems could
disrupt the services and systems that the Trust relies on in its daily
operations.
As a general matter, we believe the financial industry has taken a leadership
role addressing year 2000 (Y2K) issues and this should help to inspire
confidence among concerned investors. More specifically, Lord Abbett, Lord
Abbett Distributor LLC and the Trust's transfer agent, custodian and other
providers of services critical to the Trust have been actively working on
reviewing and replacing or updating computer systems and computer-to-computer
interfaces, as needed. Each has completed or is in the process of testing new or
revised systems and interfaces and generally expects that their systems, as well
as those of their key external service providers, will be ready to handle Y2K
without significant problems. Furthermore, the Trust has been routinely taking
companies' Y2K preparations into account when considering or reviewing
investments.
In summary, while the Y2K problem is unprecedented and we cannot eliminate
altogether the possibility that the Trust could be affected in some way, we are
confident that all parties involved are taking appropriate steps to resolve Y2K
concerns.
Important Information
Each portfolio may invest up to 20% of its net assets in residual interest bonds
("RIBs"). 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 make lower interest payments and their values fall faster than
fixed-rate bonds. But when interest rates fall, not only do RIBs make higher
interest payments, their values also rise faster than fixed-rate bonds. If used
as sales material after 12/31/99, this report must be accompanied by Lord
Abbett's Performance Quarterly for the most recently completed calendar quarter.
2
<PAGE>
Statement of Net Assets
Florida Series October 31, 1999
<TABLE>
<CAPTION>
Rating*: Principal
S&P or Amount
Investments Moody's (000) Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Education 4.76% Escambia Cnty FL Hsg Fin Auth Univ West FL Fndtn Inc Proj
MBIA+ 53/4% 6/1/2024 Aaa $ 1,355 $ 1,319,431
Florida St Bd Regt Univ Sys Impt Rev MBIA+ 55/8% 7/1/2019 Aaa 800 779,000
Hillsborough Cnty FL Sch Brd Ctfs Partn MBIA+ 53/4% 7/1/2025 Aaa 1,500 1,464,375
Hillsborough Cnty FL Sch Brd Ctfs Partn MBIA+ 6.00% 7/1/2025 Aaa 1,500 1,524,375
Total 5,087,181
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Finance 4.85% Puerto Rico Muni Fin Agy Ser A 61/2% 7/1/2019 A- 4,915 5,191,469
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General Obligation 1.68% Florida St Brd Ed Cap Outlay Pub Ed Ser E 43/4% 6/1/2022 Aa2 750 626,250
Puerto Rico Comwlth RIBs MBIA+ 8.08% 7/1/2008++ Aaa 1,100 1,167,375
Total 1,793,625
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Healthcare 18.47% Charlotte Cnty FL Health Care RIBs FSA+ 8.10% 8/26/2027++ Aaa 10,000 10,050,000
Escambia Cnty FL Hlth Facs Rev Ascension Hlth Ser A-1
AMBAC+ 6.00% 11/15/2031 Aaa 2,000 2,002,500
Jacksonville FL Hlth Fac Auth Hosp Rev Charity Oblig Group Ser C
53/8% 8/15/2023 Aa2 500 465,625
Lee Cnty FL Hosp Brd Directors Rev Lee Mem Sys Ser A MBIA+
53/4% 4/1/2022 Aaa 3,300 3,217,500
Orange Cnty FL Hlth Facs Hosp Regl Hlthcare
Sys Ser D MBIA+ 51/4% 10/1/2014 Aaa 2,750 2,609,063
Suwannee Cnty FL Hlth Care Advent Christian Vlg
Inc ACA+ 51/4% 4/1/2019 A 900 806,625
Tampa FL Rev Hlth Sys Catholic Hlth Ser
A-3 MBIA+ 43/4% 11/15/2028 Aaa 750 603,750
Total 19,755,063
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Housing 5.86% Broward Cnty FL Hsg Fin Auth Multi Fam Rev Bridgewtr Ser A
AMT+++ 5.35% 10/1/2023 A 980 888,125
Broward Cnty FL Prof Sports Fac Tax Rev Civic Arena Ser A
MBIA+ 53/4% 9/1/2021 Aaa 1,750 1,717,187
Dade Cnty FL Hsg Fin Auth Sing Fam Mtg Rev
GNMA/FNMA+ AMT+++ 6.70% 4/1/2028 AAA 1,000 1,022,500
Dade Cnty FL Hsg Fin Auth Sing Fam Mtg Rev Ser E
GNMA/FNMA+ 7.00% 3/1/2024 Aaa 40 41,050
Miami Dade Cnty FL Hsg Fin Auth Multi Fam Rev Villa
Esperanza Apts Proj AMT+++ 5.45% 10/1/2038 A 1,250 1,131,250
Orange Cnty FL Hsg Fin Auth Ser A-1 AMT+++ Zero Coupon 3/1/2028 Aaa 1,000 168,750
Orange Cnty FL Hsg Fin Auth Sing Fam Mtg Ser A
GNMA/FNMA+ AMT+++ 5.90% 9/1/2019 AAA 420 416,325
Palm Beach Cnty FL Hsg Fin Auth Sing Fam Mtg Rev Ser A
AMT+++ 6.55% 4/1/2027 Aaa 870 886,312
Total 6,271,499
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Industrial 3.24% Polk Cnty FL Ind Dev Auth Tampa Elec Co Proj
AMBAC+ AMT+++ 5.85% 12/1/2030 Aaa 3,600 3,465,000
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Miscellaneous 7.76% Brevard Cnty FL Sales Tax Rev MBIA+ 7.00% 12/1/2018 Aaa 1,000 1,057,500
Manatee Cnty FL Rev MBIA+ 5.00% 4/1/2017** Aaa 1,000 897,500
Miami Dade Cnty FL Sp Oblig Sub Ser A
MBIA+ Zero Coupon 10/1/2024 Aaa 20,000 4,375,000
Ocoee FL Rev Transn MBIA+ 41/2% 10/1/2023 AAA 1,000 796,250
Orange Cnty FL Tourist Dev Tax Rev AMBAC+ 6.00% 10/1/2016 Aaa 710 711,321
Tampa FL Sports Auth Rev Tampa Bay Arena Proj
MBIA+ 6.00% 10/1/2015 Aaa 450 464,625
Total 8,302,196
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Pollution 9.51% Citrus Cnty FL Poll Ctrl Rev FL Pwr Corp MBIA+ 65/8% 1/1/2027 Aaa 5,740 6,005,475
Hillsborough Cnty FL Ind Dev Auth Poll Ctrl Rev
Tampa Elec 8.00% 5/1/2022 Aa3 2,500 2,740,625
Jacksonville FL Poll Rev Anheuser-Busch
Proj AMT+++ 5.70% 8/1/2031 A1 1,500 1,430,625
Total 10,176,725
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3
<PAGE>
Statement of Net Assets
Florida Series October 31, 1999
Rating*: Principal
S&P or Amount
Investments Moody's (000) Value
- ------------------------------------------------------------------------------------------------------------------------------------
Power 1.33% Puerto Rico Elec Pwr Auth Ser X FSA+ 51/2% 7/1/2025 AAA $ 1,500 $ 1,425,000
- -----------------------------------------------------------------------------------------------------------------------=============
Prerefunded 18.52% Bay Cnty FL Hosp Sys Rev Bay Med Ctr Proj 8.00% 10/1/2019 Aaa 500 580,000
Dunedin FL Hosp Rev Mease Hlth Care MBIA+ 63/4% 11/15/2021 Aaa 1,000 1,068,750
Florida St Jacksonville Transn 6.40% 7/1/2016 Aaa 5,600 5,936,000
Manatee Cnty FL Pub Util Rev Ser 91A MBIA+ 63/4% 10/1/2013 Aaa 1,000 1,066,250
Melbourne FL Wtr & Swr Rev Ser B FGIC+ 6.40% 10/1/2022 Aaa 1,700 1,771,689
Okeechobee FL Util Auth Sys Rev Acquisition
& Impt MBIA+ 5.60% 10/1/2025 Aaa 200 212,250
Orlando & Orange Cnty Expwy Auth FL Expwy
Rev FGIC+ 61/2% 7/1/2020 Aaa 395 407,494
Puerto Rico Tel Auth Rev RIBs MBIA+ 6.82% 1/25/2007++ Aaa 3,000 3,217,500
Tampa FL Rev Allegany Hlth Sys St Joseph
MBIA+ 6.70% 12/1/2018 Aaa 5,000 5,550,000
Total 19,809,933
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Transportation 14.85% Dade Cnty FL Aviation Rev Ser A
MBIA+ AMT+++ 53/4% 10/1/2018 Aaa 1,775 1,739,500
Dallas-Fort Worth TX Intl Arpt American
Airlines Inc AMT+++ 63/8% 5/1/2035 Baa1 2,000 1,917,500
Florida Ports Fin Commn Rev St Transn Tr Fd Intermodal Prog
FGIC+ AMT+++ 51/2% 10/1/2023 Aaa 1,000 927,500
Florida St Dept Transn Right of Way Ser A 43/4% 7/1/2024 Aa2 1,250 1,031,250
Florida St Tpk Auth Tpk Rev Ser A FSA+ 41/2% 7/1/2028 Aaa 1,500 1,164,375
Pensacola FL Arpt Rev Ser A MBIA+ AMT+++ 61/8% 10/1/2018 Aaa 1,250 1,287,500
Santa Rosa Bay FL Brdg Auth Rev Zero Coupon 7/1/2015 BBB- 3,140 1,208,900
Santa Rosa Bay FL Brdg Auth Rev Zero Coupon 7/1/2022 BBB- 3,000 772,500
Santa Rosa Bay FL Brdg Auth Rev ACA+ 61/4% 7/1/2028 A 4,700 4,835,125
Santa Rosa Bay FL Brdg Auth Rev 61/4% 7/1/2028 BBB- 1,000 997,500
Total 15,881,650
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Water/Sewer 7.17% Broward Cnty FL Wtr & Swr Util Rev FGIC+ 6.00% 10/1/2020 Aaa 2,500 2,503,125
Clearwater FL Wtr & Swr Rev FGIC+ Zero Coupon 12/1/2016 Aaa 3,640 1,314,950
Fort Myers FL Util Rev Ser A FGIC+ 51/2% 10/1/2024 Aaa 1,635 1,538,944
Indian River Cnty FL Wtr & Swr Rev FGIC+ 51/2% 9/1/2016 Aaa 475 459,562
Tampa Bay Wtr FL Util Sys Rev FGIC+ 6.00% 10/1/2024 Aaa 1,835 1,857,938
Total 7,674,519
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Total Municipal Bonds 98.00% (Cost $105,315,412) 104,833,860
====================================================================================================================================
Short-term Investments 2.07%
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Texas St Tax & Rev Antic Notes Ser A 4.50% due 8/31/2000
(Cost $2,213,813) SP-1+ 2,200,000 2,212,342
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Total Investments 100.07% (Cost $107,529,225) 107,046,202
====================================================================================================================================
</TABLE>
4
<PAGE>
Statement of Net Assets
Florida Series October 31, 1999
<TABLE>
<CAPTION>
Other Assets, Less Liabilities (.07)%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Cash $ 60,901
====================================================================================================================================
Receivables for: Securities sold 8,525,452
Interest 1,366,568
Capital stock sold 919
Total Other Assets 9,953,840
- -----------------------------------------------------------------------------------------------------------------------=============
Payables for: Securities purchased 9,306,983
Dividends 366,386
Capital stock reacquired 86,441
Other 270,516
Total Liabilities 10,030,326
Total Other Assets, Less Liabilities (76,486)
- -----------------------------------------------------------------------------------------------------------------------=============
Net Assets 100.00% $106,969,716
====================================================================================================================================
Class A Shares-Net asset value ($100,923,994 / 22,340,000 shares outstanding) $4.52
Maximum offering price (net asset value plus sales charge of 3.25% of the offering price) $4.67
Class C Shares-Net asset value ($6,045,722/1,336,898 shares outstanding) $4.52
*Ratings are unaudited.
**When-issued security.
+Insured or guaranteed by the indicated municipal bond insurance corporation or Federal agency. See
page 11 for Glossary of Terms.
++ 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, 1999.
+++Income from these securities may be subject to the Alternative Minimum Tax (AMT). See Notes to
Financial Statements.
</TABLE>
5
<PAGE>
Statement of Net Assets
Pennsylvania series October 31, 1999
<TABLE>
<CAPTION>
Rating*: Principal
S&P or Amount
Investments Moody's (000) Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Education 11.01% Allegheny Cnty PA Higher Ed Bldg Auth Rev Robert
Morris College ACA+ 6.00% 5/1/2028 A $ 1,000 $ 981,250
Delaware Cnty PA Auth Univ Rev Villanova
Univ AMBAC+ 5.80% 8/1/2025 Aaa 1,600 1,548,000
New Wilmington PA Muni Auth Rev Westminster College
ACA+ 5.35% 3/1/2028 A 1,000 880,000
Pennsylvania St Higher Ed Assistance Agy Student Ln Rev
RIBs AMBAC+ AMT+++ 8.16% 3/1/2022++ Aaa 3,000 3,056,250
Pennsylvania St Higher Ed Fac Auth Bryn Mawr College
AMBAC+ 51/8% 12/1/2029 Aaa 1,400 1,193,500
Pennsylvania St Higher Ed Fac Auth Drexel Univ 6.00% 5/1/2024 A- 500 483,125
Pennsylvania St Higher Ed Fac Auth Drexel Univ 6.00% 5/1/2029 A- 1,000 958,750
Pennsylvania St Higher Ed Fac Auth Ser A MBIA+ 65/8% 8/15/2009 AAA 325 346,938
Puerto Rico Ind Tourist Ed Med & Envirml Ctrl Fac Ana G
Mendez Univ Sys 53/8% 2/1/2029 BBB 1,000 887,500
Total 10,335,313
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Finance 6.83% Delaware VY PA Regl Fin Auth Loc Govt
Rev Ser A AMBAC+ 51/2% 8/1/2028 Aaa 5,500 5,170,000
Delaware VY PA Regl Fin Auth Loc Govt
Rev Ser C AMBAC+ 73/4% 7/1/2027 Aaa 1,000 1,236,250
Total 6,406,250
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General Obligation 9.83% Cambria Cnty PA FGIC+ 51/2% 8/15/2016 Aaa 500 480,625
Council Rock PA Sch Dist FGIC+ 43/4% 11/15/2017 Aaa 1,000 848,750
Lancaster PA Ser A FGIC+ 41/2% 5/1/2028 Aaa 2,000 1,535,000
Philadelphia PA Sch Dist Ser A MBIA+ 43/4% 4/1/2027 Aaa 1,300 1,044,875
Philadelphia PA Sch Dist Ser B AMBAC+ 53/8% 4/1/2027 Aaa 1,000 908,750
Puerto Rico Comwlth 5.00% 7/1/2028 A 1,000 852,500
Puerto Rico Comwlth Ser A 6.00% 7/1/2014 A 1,000 1,037,500
Ridley PA Sch Dist FGIC+ 5.00% 11/15/2029 Aaa 2,000 1,680,000
West Mifflin PA Area Sch Dist FGIC+ 47/8% 2/15/2023 AAA 1,000 835,000
Total 9,223,000
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Healthcare 12.79% Allegheny Cnty PA Hosp Dev Hlth Ctr Univ Pittsburgh Ser A
MBIA+ 55/8% 4/1/2027 Aaa 1,000 936,250
Chester Cnty PA Hlth & Ed Fac Auth Hlth Sys Rev IRS
RIBs AMBAC+ 7.32% 5/15/2020++ Aaa 2,600 2,369,250
Delaware Cnty PA Auth Hosp Rev Crozer Chester Med Ctr
ACA+ 53/8% 12/1/2018 A 1,000 911,250
Delaware Cnty PA Auth Hosp Rev Crozer Chester Med Ctr
ACA+ 5.30% 12/1/2027 A 1,000 867,500
Montgomery Cnty PA Higher Ed & Hlth Auth Hlth Care Holy
Redeemer Hlth Ser A AMBAC+ 51/4% 10/1/2017 Aaa 1,000 913,750
Northeastern PA Hosp & Ed Auth Sch Rev Wyo Seminary Proj
MBIA+ 43/4% 10/1/2028 AAA 1,500 1,190,625
Pottsville PA Hosp Auth Hosp Rev Hosp & Warne Clinic
ACA+ 55/8% 7/1/2024 A 500 458,750
Puerto Rico Ind Tourist Ed Hosp Auxilio Mutuo Oblig Grp Ser A
MBIA+ 61/4% 7/1/2024 Aaa 850 889,313
Sayre PA Hlth Care Fac Auth Rev Tioga Nursing Fac Ser A
AMBAC+ 71/4% 10/1/2018 Aaa 1,500 1,533,750
Scranton-Lackawanna PA Hlth & Welfare Auth Rev Hosp Moses
Taylor Hosp Proj 6.20% 7/1/2017 BBB- 1,055 967,963
West Shore PA Area Hosp Auth Holy Spirit Hosp
Proj MBIA+ 5.70% 1/1/2022 Aaa 1,000 961,250
Total 11,999,651
- -----------------------------------------------------------------------------------------------------------------------=============
Housing 5.21% Pennsylvania Hsg Fin Agy Sing Fam Mtg
Ser 41-B AMT+++ 6.65% 4/1/2025 Aa2 1,000 1,025,000
Pennsylvania Hsg Fin Agy Sing Fam Mtg
Ser 42 AMT+++ 6.85% 4/1/2025 Aa2 2,000 2,065,000
6
<PAGE>
Statement of Net Assets
Pennsylvania series October 31, 1999
Rating*: Principal
S&P or Amount
Investments Moody's (000) Value
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Hsg Fin Agy Sing Fam Mtg
Ser 43 AMT+++ 7.40% 10/1/2014 Aa2 $ 655 $ 687,750
Pennsylvania Hsg Fin Agy Single Fam Mtg Ser 67-A
AMT+++ 5.85% 10/1/2018 Aa2 300 292,125
Puerto Rico Pub Bldg Auth Rev Ser J 61/2% 7/1/2003 A 770 815,238
Total 4,885,113
- -----------------------------------------------------------------------------------------------------------------------=============
Industrial 2.30% Bradford Cnty PA Ind Dev Auth Intl Paper Co Proj Ser A
AMT+++ 6.60% 3/1/2019 A3 1,250 1,289,063
Bucks Cnty PA Ind Dev Auth USX Corp Proj 5.60% 3/1/2033 Baa2 1,000 873,750
Total 2,162,813
- -----------------------------------------------------------------------------------------------------------------------=============
Miscellaneous 2.50% Philadelphia PA Auth Ind Dev Rev Ed Cmnty Foreign Med Grads
MBIA+ 5.00% 6/1/2015 Aaa 500 448,125
Philadelphia PA Auth Ind Dev Rev Natl Board Med Examiners
MBIA+ 4.60% 5/1/2012 AAA 1,000 896,250
Philadelphia PA Pkg Auth Rev Ser A AMBAC+ 51/4% 2/15/2029 Aaa 180 157,950
Pittsburgh & Allegheny Cnty PA Hotel Room AMBAC+ 5.00% 2/1/2024 Aaa 1,000 848,750
Total 2,351,075
- -----------------------------------------------------------------------------------------------------------------------=============
Pollution 6.01% Allegheny Cnty PA Ind Dev Auth Rev Environmental Impt
USX Proj 6.10% 7/15/2020 Baa2 1,000 955,000
Pennsylvania Econ Dev Recov Rev Northhampton Gen Ser A
AMT+++ 6.60% 1/1/2019 BBB- 1,500 1,520,625
Puerto Rico Ind Med & Envirml Poll Ctrl Motorola
Ser A 63/4% 1/1/2014** Aa3 1,500 1,597,500
York Cnty PA Ind Dev Auth Poll Ctrl Rev Pub
Svc Elec & Gas Ser A MBIA+ 6.45% 10/1/2019 Aaa 1,475 1,567,188
Total 5,640,313
- -----------------------------------------------------------------------------------------------------------------------=============
Power 2.41% Puerto Rico Elec Pwr Auth Pwr Rev Ser EE 43/4% 7/1/2024 Baa1 1,500 1,237,500
Puerto Rico Elec Pwr Auth Pwr Rev Ser X 6.00% 7/1/2015 Baa1 1,000 1,020,000
Total 2,257,500
- -----------------------------------------------------------------------------------------------------------------------=============
Prerefunded 29.46% Bethlehem PA Area Sch Dist MBIA+ 6.00% 3/1/2016 Aaa 1,000 1,061,250
Burrell PA Sch Dist FGIC+ 5.65% 11/15/2016 Aaa 1,500 1,565,625
Lycoming Cnty PA MBIA+ 5.80% 11/15/2022 Aaa 3,050 3,217,750
North Penn PA Wtr Auth FGIC+ 7.00% 11/1/2024 Aaa 1,150 1,277,937
Northeastern PA Hosp & Ed Auth Luzerne Cnty Cmnty College
AMBAC+ 65/8% 8/15/2015 Aaa 2,000 2,172,500
Pennsylvania Conv Ctr Auth Rev Ser A FGIC+ 6.70% 9/1/2016 Aaa 855 944,775
Pennsylvania Intergovt Coop Auth Spl Tax Rev Funding Prog
FGIC+ 63/4% 6/15/2021 Aaa 2,000 2,192,500
Pennsylvania St Higher Ed Fac Auth Thomas
Jefferson Ser A 65/8% 8/15/2009 Aaa 500 536,875
Philadelphia PA Gas Wks Rev Twelfth Ser B MBIA+ 7.00% 5/15/2020 Aaa 2,220 2,450,325
Puerto Rico Comwlth 6.45% 7/1/2017 Aaa 1,900 2,082,875
Puerto Rico Comwlth MBIA+ 6.45% 7/1/2017 Aaa 700 767,375
Puerto Rico Comwlth 61/2% 7/1/2023 Aaa 1,000 1,098,750
Puerto Rico Comwlth 7.70% 7/1/2020 Aaa 2,025 2,117,481
Puerto Rico Elec Pwr Auth Pwr Rev RIBs FSA+ 8.21% 7/1/2023++ Aaa 3,000 3,315,000
Puerto Rico Elec Pwr Auth Pwr Rev Ser T RIBs
FSA+ 8.87% 7/1/2018++ Aaa 1,500 1,753,125
Puerto Rico Elec Pwr Auth Pwr Rev Ser X 61/8% 7/1/2021 Aaa 500 547,500
Scranton-Lackawanna PA Hlth & Welfare Auth Rev Univ Scranton
AMBAC+ 6.80% 11/1/2014 Aaa 500 540,000
Total 27,641,643
- -----------------------------------------------------------------------------------------------------------------------=============
Transportation 8.15% Pennsylvania St Tpk Comm Oil Franchise Tax Rev Ser A
AMBAC+ 43/4% 12/1/2027 Aaa 2,415 1,935,019
Pennsylvania St Tpk Comm Tpk Rev Ser N MBIA+ 51/2% 12/1/2017 Aaa 1,000 956,250
7
<PAGE>
Statement of Net Assets
Pennsylvania series October 31, 1999
Rating*: Principal
S&P or Amount
Investments Moody's (000) Value
- ------------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Comwlth Hwy & Transn Auth Hwy
Rev Ser V 65/8% 7/1/2012 A $ 2,615 $ 2,768,631
Puerto Rico Comwlth Hwy & Transn Auth Hwy Rev
Ser Y 51/2% 7/1/2026 A 1,000 931,250
Puerto Rico Port Auth Rev Ser D FGIC+ AMT+++ 7.00% 7/1/2014 Aaa 1,000 1,052,500
Total 7,643,650
- -----------------------------------------------------------------------------------------------------------------------=============
Water/Sewer 1.39% Erie PA Wtr Auth Wtr Rev FGIC+ 5.00% 12/1/2015 Aaa 1,000 898,750
Warminster Twp PA Auth Swr & Wtr Rev AMBAC+ 43/4% 3/1/2023 Aaa 500 409,375
Total 1,308,125
- -----------------------------------------------------------------------------------------------------------------------=============
Total Municipal Bonds 97.89% (Cost $94,618,545) 91,854,446
====================================================================================================================================
Cash and Receivables, Net
of Liabilities 2.11% 1,980,220
- -----------------------------------------------------------------------------------------------------------------------=============
Net Assets 100.00% $93,834,666
====================================================================================================================================
Net asset value ($93,834,666 / 19,518,280 shares outstanding) $4.81
Maximum offering price (net asset value plus sales charge of 3.25% of
the offering price) $4.97
*Ratings are unaudited.
**Restricted security under Rule 144A.
+Insured or guaranteed by the indicated municipal bond insurance corporation or Federal agency.
See page 11 for Glossary of Terms.
++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, 1999.
+++ Income from these securities may be subject to the Alternative Minimum Tax (AMT).
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Net Assets
Michigan Series October 31, 1999
Rating*: Principal
S&P or Amount
Investments Moody's (000) Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Education 6.91% Michigan Higher Ed Student Ln Auth Student Ln Ser XII-Q
AMBAC+ AMT+++ 5.20% 9/1/2010 Aaa $ 275 $ 268,125
Saginaw Valley St Univ MI Rev AMBAC+ 51/4% 7/1/2019 Aaa 1,000 920,000
Saginaw Valley St Univ MI Rev AMBAC+ 5.30% 7/1/2028 Aaa 250 226,250
Wayne Cnty MI Cmnty College Cmnty College Impt
AMBAC+ 51/2% 7/1/2019 Aaa 565 534,631
Wayne St Univ MI Univ Rev FGIC+ 53/8% 11/15/2015 Aaa 1,055 1,010,163
Zeeland MI Pub Schs FGIC+ 51/4% 5/1/2022 Aaa 500 451,875
Total 3,411,044
- -----------------------------------------------------------------------------------------------------------------------=============
General Obligation 7.97% Anchor Bay MI Sch Dist Sch Bldg & Site Ser I
FGIC+ 6.00% 5/1/2023 Aaa 600 590,706
Charlotte MI Pub Sch Dst FGIC+ 51/4% 5/1/2025 Aaa 1,000 892,500
Greenville MI Pub Sch FSA+ 6.00% 5/1/2025 Aaa 1,000 982,050
Memphis MI Cmnty Schs FGIC+ 51/4% 5/1/2029 Aaa 300 265,500
Saline MI Area Schs FGIC+ 51/2% 5/1/2015 Aaa 750 732,188
Wayne Cnty MI Bldg Auth Cap Impt Ser A MBIA+ 51/4% 6/1/2016 Aaa 500 472,500
Total 3,935,444
- -----------------------------------------------------------------------------------------------------------------------=============
Healthcare 18.04% Kalamazoo MI Hosp Fin Auth Fac Rev RIBs FGIC+ 6.31% 6/1/2011++ Aaa 4,000 3,825,000
Michigan St Hosp Fin Auth Rev Ascension Hlth Credit Ser A
MBIA+ 53/4% 11/15/2018 Aaa 1,000 977,500
Michigan St Hosp Fin Auth Rev Ascension Hlth Ser A
MBIA+ 61/8% 11/15/2026 Aaa 1,000 1,003,750
Puerto Rico Ind Tourist Ed Ryder Mem Hosp
Proj Ser A 6.70% 5/1/2024 BBB- 1,575 1,610,437
Saginaw MI Hosp Fin Auth Covenant Med Ctr Ser E
MBIA+ 55/8% 7/1/2013 Aaa 1,500 1,485,000
Total 8,901,687
- -----------------------------------------------------------------------------------------------------------------------=============
8
<PAGE>
Statement of Net Assets
Michigan Series October 31, 1999
Rating*: Principal
S&P or Amount
Investments Moody's (000) Value
- ------------------------------------------------------------------------------------------------------------------------------------
Housing 5.89% Michigan St Hsg Dev Auth Ser A AMBAC+ AMT+++ 6.05% 12/1/2027 Aaa $ 1,000 $ 986,250
Michigan St Hsg Dev Auth Ser B 6.95% 12/1/2020 AA+ 515 529,163
Michigan St Hsg Dev Auth Ser D 5.95% 12/1/2016 AA+ 500 501,875
Michigan St Hsg Dev Auth Ser E AMT+++ 6.20% 12/1/2027 AA+ 890 892,225
Total 2,909,513
- -----------------------------------------------------------------------------------------------------------------------=============
Miscellaneous 1.34% Michigan Muni Bd Auth Rev St Revolving Fd 51/8% 10/1/2020 Aa1 750 663,750
- -----------------------------------------------------------------------------------------------------------------------=============
Power 14.06% Michigan St Strategic Fd Disp Rev Genesee Pwr Station
AMT+++ 71/2% 1/1/2021 BB** 500 516,250
Michigan St Strategic Fd Ltd Oblig Rev Detroit Ed Ser BB
MBIA+ 7.00% 7/15/2008 Aaa 500 563,125
Michigan St Strategic Fd Ltd Oblig Rev Detroit Ed Ser BB
AMBAC+ 7.00% 5/1/2021 Aaa 500 566,250
Michigan St Strategic Fund Ltd Oblig Detroit Edison Co Ser A
MBIA+ AMT+++ 5.55% 9/1/2029 Aaa 2,100 1,916,250
Puerto Rico Elec Pwr Auth Pwr Rev Ser Z MBIA+ 51/2% 7/1/2016 Aaa 1,500 1,475,625
Puerto Rico Elec Pwr Auth Ser X FSA+ 51/2% 7/1/2025 AAA 2,000 1,900,000
Total 6,937,500
- -----------------------------------------------------------------------------------------------------------------------=============
Prerefunded 33.22% Alpena MI Pub Schs MBIA+ 55/8% 5/1/2022 Aaa 300 312,000
Alpena MI Pub Schs MBIA+ 55/8% 5/1/2022 Aaa 200 208,000
Clarkston MI Cmnty Schs FGIC+ 53/4% 5/1/2016 Aaa 1,500 1,582,500
Hastings MI Sch Dist FGIC+ 55/8% 5/1/2018 Aaa 490 513,887
Hastings MI Sch Dist FGIC+ 55/8% 5/1/2018 Aaa 510 534,862
Huron Valley MI Sch Dist FGIC+ 53/4% 5/1/2022 Aaa 250 262,188
Kent Hosp MI Fin Auth Hlth Care Rev Butterworth
Hlth Sys Ser A MBIA+ 55/8% 1/15/2026 Aaa 800 844,000
Lake Orion MI Cmnty Sch Dist AMBAC+ 7.00% 5/1/2020 Aaa 1,050 1,170,750
Lakeview MI Cmnty Schs FGIC+ 5.60% 5/1/2022 Aaa 210 218,138
Lakeview MI Cmnty Schs FGIC+ 5.60% 5/1/2022 Aaa 290 301,237
Michigan Muni Bd Auth Rev Loc Govt Ln Prog
AMBAC+ 63/4% 11/1/2014 Aaa 1,500 1,636,875
Michigan St Hosp Fin Auth Rev Hosp Genesys
Hlth Sys Ser A 71/2% 10/1/2027 Aaa 2,500 2,846,875
Michigan St Hosp Fin Auth Rev Sisters of Mercy
Hlth Corp Ser J 71/2% 2/15/2018 Aaa 1,650 1,749,000
Plymouth-Canton MI Cmnty Sch Dist Ser C 61/2% 5/1/2016 Aaa 1,000 1,065,000
Puerto Rico Elec Pwr Auth Pwr Rev Ser T
RIBs FSA+ 8.87% 7/1/2018++ Aaa 500 584,375
Puerto Rico Tel Auth Rev RIBs MBIA+ 7.27% 1/16/2015++ Aaa 900 975,375
Riverview MI Cmnty Sch Dist FGIC+ 6.55% 5/1/2014 Aaa 500 531,875
Romulus MI Cmnty Schs Ser II FGIC+ 6.40% 5/1/2017 Aaa 500 531,875
Tri Cnty MI Area Sch Dist MBIA+ 67/8% 5/1/2016 Aaa 500 526,250
Total 16,395,062
- -----------------------------------------------------------------------------------------------------------------------=============
Transportation 10.08% Kent Cnty MI Arpt Fac Rev Kent Cnty Intl Arpt 5.00% 1/1/2020 AAA 1,100 955,625
Puerto Rico Comwlth Hwy & Transn Auth Hwy
Rev Ser Y 51/2% 7/1/2026 A 500 465,625
Wayne Charter Cnty MI Arpt Rev Detroit Met Wayne Cnty Ser A
MBIA+ AMT+++ 5.00% 12/1/2028 Aaa 3,000 2,508,750
Wayne Charter Cnty MI Arpt Rev Sub Lien Detroit Met Arpt Ser B
MBIA+ AMT+++ 63/4% 12/1/2021 Aaa 1,000 1,046,250
Total 4,976,250
- -----------------------------------------------------------------------------------------------------------------------=============
Water/Sewer 6.86% Charlotte MI Wtr Supply & Sewer Disp Rev FSA+ 53/8% 6/1/2024 Aaa 1,500 1,391,250
Detroit MI Sewer Disp Rev Ser A MBIA+ 51/2% 7/1/2020 Aaa 1,000 935,000
Wayne Cnty MI DownRiver Sys Sewer Disp Ser B
MBIA+ 51/8% 11/1/2018 Aaa 1,175 1,057,500
Total 3,383,750
----------------------------------------------------------------------------------------=============
Total Municipal Bonds 104.37% (Cost $51,971,048) 51,514,000
====================================================================================================================================
9
<PAGE>
Statement of Net Assets
Michigan Series October 31, 1999
Rating*: Principal
S&P or Amount
Investments Moody's (000) Value
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Receivables, Net
of Liabilities (4.37%) $(2,157,935)
- -----------------------------------------------------------------------------------------------------------------------=============
Net Assets 100.00% $ 49,356,065
====================================================================================================================================
Net asset value ($49,356,065 / 10,385,870 shares outstanding) $4.75
Maximum offering price
(net asset value plus sales charge of 3.25% of the offering price) $4.91
* Ratings are unaudited.
** 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.
See page 11for Glossary of Terms.
++ 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, 1999.
+++ Income from these securities may be subject to the Alternative Minimum Tax (AMT). See Notes to Financial
Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Net Assets
Georgia Series October 31, 1999
Rating*: Principal
S&P or Amount
Investments Moody's (000) Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Education 10.66% Private Colleges & Univ Auth GA Emory Univ
Proj Ser A 51/2% 11/1/2025 Aa1 $ 950 $ 891,813
Private Colleges & Univ Auth GA Mercer Hsg Corp
Proj Ser A ACA+ 53/8% 6/1/2031 A 1,000 885,000
Private Colleges & Univ Auth GA Mercer Univ
Proj Ser A 51/4% 10/1/2025 A3 1,300 1,147,250
Total 2,924,063
- -----------------------------------------------------------------------------------------------------------------------=============
General Obligation 9.69% Atlanta GA 5.60% 12/1/2015 Aa3 1,255 1,242,450
De Kalb Cnty GA 6.00% 1/1/2020 Aa1 250 251,875
Fulton Cnty GA Sch Dist 51/2% 1/1/2021 Aa2 960 918,000
Puerto Rico Comwlth RIBs FSA+ 8.28% 7/1/2020++ Aaa 250 247,188
Total 2,659,513
- -----------------------------------------------------------------------------------------------------------------------=============
Healthcare 10.72% Cobb Cnty GA Hosp Auth Rev Antic Ctfs Ser A
AMBAC+ 43/4% 4/1/2026 Aaa 1,400 1,134,000
Fulton Cnty GA Residentl Care Canterbury Court
Proj 6.30% 10/1/2024 BBB+ 125 119,063
Gainesville & Hall Cnty GA Hosp Northeast GA Hlth Sys Inc Proj
MBIA+ 51/2% 5/15/2024 Aaa 655 611,606
Glynn-Brunswick GA Mem Hosp Auth Rev Southeast GA Hlth
MBIA+ 6.00% 8/1/2016 Aaa 400 408,500
Royston GA Hosp Auth Hosp Rev Ty Cobb Healthcare
Sys Inc 61/2% 7/1/2027 BBB** 700 667,625
Total 2,940,794
- -----------------------------------------------------------------------------------------------------------------------=============
Housing 3.50% De Kalb Cnty GA Hsg Auth Multi Fam Rev Lakes At Indian Creek
FSA+ AMT+++ 7.15% 1/1/2025 Aaa 500 540,000
Georgia St Hsg & Fin Auth Rev Sing Fam Mtg Ser A Sub A-2
FHA+ AMT+++ 6.45% 12/1/2027 AAA 210 213,675
Georgia St Hsg & Fin Auth Rev Sing Fam Mtg Sub Ser A-2
FHA+ AMT+++ 6.40% 12/1/2015 AAA 200 205,250
Total 958,925
- -----------------------------------------------------------------------------------------------------------------------=============
Industrial 8.07% Albany Dougherty GA Payroll Dev Auth Procter & Gamble
AMT+++ 5.20% 5/15/2028 Aa2 1,500 1,333,125
Effingham Cnty GA Dev Auth Fort James Proj
AMT+++ 55/8% 7/1/2018 Baa2 1,000 880,000
Total 2,213,125
- -----------------------------------------------------------------------------------------------------------------------=============
Miscellaneous 3.53% Cobb Marietta GA Coliseum & Exhibit Hall Auth Rev
MBIA+ 55/8% 10/1/2026 Aaa 1,000 968,750
10
<PAGE>
Statement of Net Assets
Georgia Series October 31, 1999
Rating*: Principal
S&P or Amount
Investments Moody's (000) Value
- ------------------------------------------------------------------------------------------------------------------------------------
Prerefunded 29.67% Albany GA Swr Sys Rev MBIA+ 65/8% 7/1/2017 Aaa $ 100 $ 107,250
Atlanta GA Ser A 61/8% 12/1/2023 Aaa 2,000 2,152,500
Chatham Cnty GA Sch Dist MBIA+ 63/4% 8/1/2020 Aaa 1,035 1,130,737
Cobb Cnty GA Kennestone Hosp Auth Rev Ctfs Ser 86-A
MBIA+ Zero Coupon 8/1/2015 Aaa 395 146,644
Fayette Cnty GA Sch Dist 61/8% 3/1/2015 Aaa 1,000 1,072,500
Fulton Cnty GA Hosp Auth Rev Ctfs Northside Hosp Ser B
MBIA+ 6.60% 10/1/2011 Aaa 1,000 1,076,250
Metropolitan Atlanta GA Rapid Transn Auth Sales T
ax Rev Ser O 6.55% 7/1/2020 Aaa 1,000 1,055,000
Puerto Rico Elec Pwr Auth Pwr Rev Ser T RIBs
FSA+ 8.87% 7/1/2018++ Aaa 1,000 1,168,750
Savannah GA Economic Dev Auth Rev Sub Ser C Zero
Coupon 12/1/2021 Aaa 1,000 230,000
Total 8,139,631
- -----------------------------------------------------------------------------------------------------------------------=============
Solid Waste .39% Cobb Cnty GA Solid Waste Mgmt Auth Rev AMT+++ 6.40% 1/1/2015 Aaa 100 106,000
- -----------------------------------------------------------------------------------------------------------------------=============
Transportation 7.42% Atlanta GA Arpt Facs Rev MBIA+ AMT+++ Zero Coupon 1/1/2010 Aaa 1,500 828,750
Puerto Rico Comwlth Hwy & Transn Auth Transn Rev Ser A
MBIA+ 43/4% 7/1/2038 Aaa 1,000 812,500
Puerto Rico Comwlth Hwy & Transn Auth Transn Rev
Ser A 43/4% 7/1/2038 A 500 393,125
Total 2,034,375
- -----------------------------------------------------------------------------------------------------------------------=============
Water/Sewer 9.98% Carroll Cnty GA Wtr Auth Wtr & Swr Rev AMBAC+ 43/4% 7/1/2022 Aaa 300 249,000
Cartersville GA Dev Auth Rev Swr Fac Anheuser-Busch
AMT+++ 61/8% 5/1/2027 A1 1,000 1,001,250
De Kalb Cnty GA Wtr & Swr 5.00% 10/1/2028 Aa2 1,500 1,290,000
Douglasville Douglas Cnty GA Wtr & Swr Auth Rev
FGIC+ 41/2% 6/1/2023 Aaa 250 197,812
Total 2,738,062
- -----------------------------------------------------------------------------------------------------------------------=============
Total Municipal Bonds 93.63% (Cost $27,049,274) 25,683,238
====================================================================================================================================
Other Assets, Less Liabilities 6.37%
====================================================================================================================================
Cash 881,595
====================================================================================================================================
Receivable for: Capital stock sold 564,241
Interest 441,767
Total Other Assets 1,887,603
- -----------------------------------------------------------------------------------------------------------------------=============
Payable for: Dividends 103,338
Capital stock reacquired 22,280
Other 13,393
Total Liabilities 139,011
Total Other Assets, Less Liabilities 1,748,592
====================================================================================================================================
Net Assets 100.00% $ 27,431,830
====================================================================================================================================
Net asset value ($27,431,830/5,589,730 shares outstanding) $4.91
Maximum offering price (net asset value plus sales charge of 3.25% of the offering price) $5.07
* Ratings are unaudited.
** 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. See Glossary
of Terms.
++ 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, 1999.
+++ Income from these securities may be subject to the Alternative Minimum Tax (AMT). See Notes to Financial
Statements.
</TABLE>
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS:
AMBAC American Municipal Bond Assurance Corporation
ACA American Capital Assets
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Administration
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
MBIA Municipal Bond Investors Assurance
11
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Year Ended October 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
Florida Pennsylvania Michigan Georgia
Investment Income Series Series Series Series
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income Interest $ 7,352,487 $ 6,032,242 $ 3,134,160 $1,424,016
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses Management fee 641,726 504,847 265,750 129,345
Management fee waived - - - (129,345)
12b-1 distribution plan-Class A 395,900 308,528 - -
12b-1 distribution plan-Class C 65,588 - - -
Shareholder servicing 88,106 70,899 48,380 17,852
Professional 52,142 36,794 24,553 13,341
Reports to shareholders 21,796 16,143 8,705 2,969
Trustees' fees 4,488 3,003 1,679 470
Registration 2,994 6,303 1,497 744
Organization - - - 592
Other 24,624 21,027 14,305 11,128
Net expenses 1,297,364 967,544 364,869 47,096
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 6,055,123 5,064,698 2,769,291 1,376,920
- -----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Loss on Investments
===================================================================================================================================
Net realized loss from investment transactions (3,917,644) (383,441) (1,385,665) (363,336)
- -----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation of investments (8,183,315) (8,873,598) (3,271,625) (2,283,607)
Net realized and unrealized loss on investments (12,100,959) (9,257,039) (4,657,290) (2,646,943)
Net Decrease in Net Assets Resulting From Operations $ (6,045,836) $(4,192,341) $(1,887,999) $(1,270,023)
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31, 1999 Year Ended October 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) Florida Pennsylvania Michigan Georgia Florida Pennsylvania Michigan Georgia
in Net Assets Series Series Series Series Series Series Series Series
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 6,055,123 $ 5,064,698 $ 2,769,291 $ 1,376,920 $ 6,590,565 $ 5,009,861 $ 2,657,45 $ 854,695
Net realized
gain (loss) from
investment
transactions (3,917,644) (383,441) (1,385,665) (363,336) 2,832,040 376,860 47,231 169,461
Net change in
unrealized
appreciation
(depreciation)
of investments (8,183,315) (8,873,598) (3,271,625) (2,283,607) 342,625 2,421,388 1,185,432 401,895
Net increase
(decrease) in net
assets resulting
from operations (6,045,836) (4,192,341) (1,887,999) (1,270,023) 9,765,230 7,808,109 3,890,116 1,426,051
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income (6,143,545) (5,110,986) (2,666,930) (1,303,721) (6,640,787) (5,096,457) (2,665,343) (838,393)
Net realized gain from
investment transactions - - - (156,238) - - - (204,622)
Total distributions (6,143,545) (5,110,986) (2,666,930) (1,459,959) (6,640,787) (5,096,457) (2,665,343) (1,043,015)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS
Net proceeds from
sales of shares 11,496,856 9,216,617 6,967,293 14,058,781 8,004,729 18,457,191 5,381,047 6,912,841
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions 2,648,817 2,334,947 1,584,103 1,157,234 2,709,366 2,310,650 1,455,413 666,699
Total 14,145,673 11,551,564 8,551,396 15,216,015 10,714,095 20,767,841 6,836,460 7,579,540
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares
reacquired (29,553,307) (11,320,135) (7,778,927) (4,818,661) (24,019,865) (14,810,076) (7,552,518) (2,095,385)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease)
in net assets
derived from
capital share
transactions (15,407,634) 231,429 772,469 10,397,354 (13,305,770) 5,957,765 (716,058) 5,484,155
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE)
IN NET ASSETS (27,597,015) (9,071,898) (3,782,460) 7,667,372 (10,181,327) 8,669,417 508,715 5,867,191
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 134,566,731 102,906,564 53,138,525 19,764,458 144,748,058 94,237,147 52,629,810 13,897,267
- ------------------------------------------------------------------------------------------------------------------------------------
End of year+ $106,969,716 $ 93,834,666 $49,356,065 $27,431,830 $134,566,731 $102,906,564 $53,138,525 $19,764,458
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Includes undistributed (overdistributed) net investment income of
$(529,045), $(175,891), $97,911 and $52,509, respectively, as of October
31, 1999 and (overdistributed) net investment income of $(454,247),
$(129,603), $(4,450) and $(20,690), respectively, as of October 31, 1998.
See Notes to Financial Statements.
12
<PAGE>
Financial Highlights
Florida Series
<TABLE>
<CAPTION>
Class A Shares Class C Shares
----------------------------------------------------------------------------------
Year Ended
Year Ended October 31, October 31, 7/15/96(b)
Per Share Operating Performance: 1999 1998 1997 1996 1995 1999 1998 1997to 10/31/96
- ---------------------------------------------------------------------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $4.98 $4.87 $4.79 $4.85 $4.49 $4.98 $4.87 $4.79 $4.70
- ---------------------------------------------------------------------------------------------- -----------------------------------
Income (loss) from investment operations
Net investment income .23(d) .235 .240 .248 .271 .20(d) .200 .202 .064
Net realized and unrealized gain (loss)
on investments (.46) .113 .092 (.056) .352 (.46) .112 .093 .093
Total from investment operations (.23) .348 .332 .192 .623 (.26) .312 .295 .157
- ----------------------------------------------------------------------------------------------- ----------------------------------
Distributions
Dividends from net investment income (.23) (.238) (.252) (.252) (.263) (.20) (.202) (.215)
(.067)
- ----------------------------------------------------------------------------------------------- ----------------------------------
Net asset value, end of year $4.52 $4.98 $4.87 $4.79 $4.85 $4.52 $4.98 $4.87 $4.79
- ----------------------------------------------------------------------------------------------- ----------------------------------
Total Return(a) (4.74)% 7.30% 7.12% 4.09% 14.22% (5.43)% 6.52% 6.33% 3.35%(c)
==================================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver .97% .89% .86% .80% .74% 1.62% 1.58% 1.57% .44%(c)
Expenses, excluding waiver .97% .89% .86% .82% .88% 1.62% 1.58% 1.57% .44%(c)
Net investment income 4.73% 4.79% 5.03% 5.19% 5.81% 4.07% 4.09% 4.29% 1.37%(c)
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
Supplemental Data for All Classes: 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets, end of year (000) $106,970 $134,567 $144,748 $162,070 $173,242
Portfolio turnover rate 191.12% 140.61% 106.32% 167.95% 142.04%
=============================================================================================================================
</TABLE>
(a)Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions. (b)Commencement of offering class shares.
(c)Not annualized. (d)Calculated using average shares outstanding during the
year. See Notes to Financial Statements.
Financial Highlights
Pennsylvania Series
<TABLE>
<CAPTION>
Year Ended October 31,
Per Share Operating Performance: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 5.28 $ 5.14 $ 5.01 $ 5.01 $ 4.62
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .26(b) .264 .276 .2772 .282
Net realized and unrealized gain (loss) on investments (.47) .144 .131 (.0011) .395
Total from investment operations (.21) .408 .407 .2761 .677
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.26) (.268) (.277) (.2761) (.287)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 4.81 $ 5.28 $ 5.14 $ 5.01 $ 5.01
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) (4.13)% 8.12% 8.37% 5.68% 15.02%
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of year (000) $93,835 $102,907 $94,237 $92,605 $93,494
==============================================================================================================================
Ratios to Average Net Assets:
Expenses, including waiver .96% .72% .61% .62% .50%
Expenses, excluding waiver .96% .72% .65% .69% .65%
Net investment income 5.02% 5.05% 5.47% 5.55% 5.83%
Portfolio turnover rate 40.76% 65.20% 70.99% 78.30% 126.11%
====================================================================================================================================
</TABLE>
(a)Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions. (b)Calculated using average shares
outstanding during the year. See Notes to Financial Statements.
13
<PAGE>
Financial Highlights
Michigan Series
<TABLE>
<CAPTION>
Year Ended October 31,
Per Share Operating Performance: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 5.18 $ 5.06 $ 4.93 $ 4.93 $ 4.53
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
Net investment income .26(b) .255 .267 .274 .284
Net realized and unrealized gain (loss) on investments (.44) .121 .128 (.010) .395
Total from investment operations (.18) .376 .395 .264 .679
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.25) (.256) (.265) (.264) (.279)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 4.75 $ 5.18 $ 5.06 $ 4.93 $ 4.93
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) (3.55)% 7.59% 8.24% 5.53% 15.39%
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of year (000) $49,356 $53,139 $52,630 $52,975 $54,186
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .69% .69% .60% .44% .25%
Expenses, excluding waiver .69% .69% .68% .73% .75%
Net investment income 5.21% 4.98% 5.37% 5.59% 5.95%
Portfolio turnover rate 186.97% 82.33% 68.50% 85.26% 98.89%
==============================================================================================================================
</TABLE>
(a)Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions. (b)Calculated using average shares
outstanding during the year. See Notes to Financial Statements.
Financial Highlights
Georgia Series
<TABLE>
<CAPTION>
Year Ended October 31, 12/27/94(b)
Per Share Operating Performance: 1999 1998 1997 1996 to 10/31/95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 5.43 $ 5.31 $ 5.14 $ 5.12 $ 4.76
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .28(d) .276 .275 .290 .245
Net realized and unrealized gain (loss) on investments (.50) .187 .187 .0397 .370
Total from investment operations (.22) .463 .462 .3297 .615
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions
Dividends from net investment income (.26) (.268) (.282) (.2872) (.255)
Distributions from net realized gain (.04) (.075) (.01) (.0225) -
Total distributions (.30) (.343) (.292) (.3097) (.255)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 4.91 $ 5.43 $ 5.31 $ 5.14 $ 5.12
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(a) (4.36)% 9.00% 9.27% 6.69% 13.15%(c)
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of year (000) $27,432 $19,764 $13,897 $10,688 $5,203
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses, including waiver .18% .24% .38% .03% .00%(c)
Expenses, excluding waiver .68% .74% .88% .83% 1.08%(c)
Net investment income 5.32% 5.07% 5.23% 5.55% 5.44%(c)
Portfolio turnover rate 115.87% 126.52% 90.40% 72.53% 142.69%
====================================================================================================================================
</TABLE>
(a)Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions. (b)Commencement of operations. (c)Not
annualized. (d)Calculated using average shares outstanding during the year. See
Notes to Financial Statements.
14
<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 require 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) Security valuation is determined as follows: Portfolio securities are valued
at latest prices on the basis of valuations furnished by an independent pricing
service or, in their absence, at 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. Discounts and premiums on securities purchased are
amortized. Taxable net realized gains from investment transactions, if any,
reduced by capital loss carryforwards are distributed annually. (e) Organization
expenses 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 October 31, 1999, other expenses
reimbursed by Lord Abbett and not repaid by the Georgia Series amounted to
$40,765. At October 31, 1999, the management fee payables were $53,595 for the
Florida Series, $41,306, for the Pennsylvania Series and $21,959 for the
Michigan Series.
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 pays
Distributor (1) an annual service fee of 0.15% of the average daily net asset
value of shares sold prior to June 1, 1990 and 0.25% of the average daily net
asset value of shares sold on or after that date, (2) a one-time distribution
fee of up to 1% on certain qualifying purchases and (3) an annual distribution
fee of 0.10% of the average daily net asset value of the Class A shares. The
Class A Plan of the 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. At October 31, 1999, the
12b-1 fees payable were $79,305 for the Florida Series and $52,341 for the
Pennsylvania Series.
Distributor received the following commissions on sales of shares of the Trust
after concessions were paid to authorized distributors:
Distributor Dealers'
Series Commissions Concessions
- --------------------------------------------------------------------------------
Florida-Class A $19,203 $123,182
- --------------------------------------------------------------------------------
Pennsylvania 34,170 213,869
Michigan 20,680 142,339
Georgia 40,828 269,680
- --------------------------------------------------------------------------------
Certain of the Trust's officers and trustees have an interest in Lord Abbett.
3. Distributions
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 gain amounts in accordance with generally
accepted accounting principles.
At October 31, 1999, accumulated net realized loss for financial reporting
purposes was as follows:
Florida $11,249,391 Pennsylvania $839,039
- --------------------------------------------------------------------------------
Michigan 2,575,354 Georgia 363,336
- --------------------------------------------------------------------------------
At October 31, 1999, the capital loss carryforwards were as follows:
Expiration Date
- --------------------------------------------------------------------------------
2002 2003 2004 2007 Total
- --------------------------------------------------------------------------------
Florida $3,194,374 $2,973,819 $1,163,554 $3,917,644 $11,249,391
- --------------------------------------------------------------------------------
Pennsylvania - 455,598 - 383,441 839,039
Michigan 818,540 371,149 - 1,385,665 2,575,354
Georgia - - - 363,336 363,336
- --------------------------------------------------------------------------------
Dividends declared by class for the Florida Series were as follows:
Year Ended 10/31/99 Year Ended 10/31/98
- --------------------------------------------------------------------------------
Class A $5,861,053 $6,344,675
- --------------------------------------------------------------------------------
Class C $ 282,492 $ 296,112
15
<PAGE>
4. Capital
- --------------------------------------------------------------------------------
Transactions in shares of beneficial interest for the Florida Series (both
shares and dollar amount) were as follows:
Year Ended 10/31/99 Year Ended 10/31/98
- --------------------------------------------------------------------------------
Class A Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 2,140,580 $ 10,489,982 1,389,830 $ 6,880,942
Shares issued to
shareholders in
reinvestment of
dividends 521,529 2,536,233 526,740 2,597,397
Total 2,662,109 13,026,215 1,916,570 9,478,339
- --------------------------------------------------------------------------------
Shares reacquired (5,872,974) (27,847,385) ( 4,542,387) (22,396,582)
Decrease (3,210,865)$(14,821,170) (2,625,817) $(12,918,243)
- --------------------------------------------------------------------------------
Year Ended 10/31/99 Year Ended 10/31/98
- --------------------------------------------------------------------------------
Class C Shares Amount Shares Amount
- --------------------------------------------------------------------------------
Sales of shares 206,290 $1,006,874 227,206 $ 1,123,787
Shares issued to
shareholders in
reinvestment of
dividends 23,004 112,584 23,490 111,969
Total 229,294 1,119,458 250,696 1,235,756
- --------------------------------------------------------------------------------
Shares reacquired (351,921) (1,705,922) (329,582) (1,623,283)
Decrease (122,627) $ (586,464) (78,886) $ (387,527)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial interest for the single class Series were
as follows:
<TABLE>
<CAPTION>
Year Ended 10/31/99 Year Ended 10/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Michigan Georgia Pennsylvania Michigan Georgia
Series Series Series Series Series Series
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales of shares 1,782,011 1,369,248 2,650,359 3,532,337 1,049,221 1,288,523
Shares issued to shareholders
in reinvestment of dividends
and distributions 453,990 313,540 219,532 443,670 283,947 124,402
Total 2,236,001 1,682,788 2,869,891 3,976,007 1,333,168 1,412,925
- ----------------------------------------------------------------------------------------------------------------------------------
Shares reacquired (2,210,655) (1,554,501) (918,111) (2,833,326) (1,470,712) (390,439)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in shares 25,346 128,287 1,951,780 1,142,681 (137,544) 1,022,486
</TABLE>
As of October 31, 1999, paid in capital for each Series was as follows:
$119,231,175 for the Florida Series, $97,613,695 for the Pennsylvania Series,
$52,290,556 for the Michigan Series and $29,108,693 for the Georgia Series.
5. Fund Sales of Securities
Purchases and sales of investment securities (other than short-term investments)
were as follows:
Series Purchases Sales
- --------------------------------------------------------------------------------
Florida $244,258,532 $254,930,480
- --------------------------------------------------------------------------------
Pennsylvania 40,580,318 41,245,867
- --------------------------------------------------------------------------------
Michigan 102,712,634 100,482,219
- --------------------------------------------------------------------------------
Georgia 37,943,069 28,791,044
- --------------------------------------------------------------------------------
As of October 31, 1999, net unrealized depreciation, unrealized appreciation and
unrealized depreciation of investments based on cost for federal income tax
purposes were as follows:
Net Unrealized Unrealized Unrealized
Series Depreciation Appreciation Depreciation
- --------------------------------------------------------------------------------
Florida $ (483,023) $1,709,415 $(2,192,438)
- --------------------------------------------------------------------------------
Pennsylvania (2,764,099) 2,173,625 (4,937,724)
- --------------------------------------------------------------------------------
Michigan (457,048) 816,157 (1,273,205)
- --------------------------------------------------------------------------------
Georgia (1,366,036) 66,928 (1,432,964)
- --------------------------------------------------------------------------------
The cost of investments for federal income tax purposes is substantially 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
October 31, 1999 were $36,524.
Copyright(C)1999 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.
Please read the prospectus carefully before you invest. There is no guarantee
that the forecasts contained within this publication will come to pass.
All rights reserved. Printed in the U.S.A.
<PAGE>
Lord, Abbett & Co.
A Tradition of Performance Through
Disciplined Investing
[PHOTO]
(standing, left to right)
Lisa D'Emic, Municipal Portfolio Manager
Richard Smola, Municipal Portfolio Manager
Philip Fang, Fund Portfolio Manager
(seated, left to right)
Zane E. Brown, Partner in Charge of
Fixed Income and Fund Portfolio Manager
John R. Mousseau, Director of Municipal
Bond Management and Fund Portfolio Manager
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 68 investment professionals have helped us earn the trust of financial
professionals and investors for the past 70 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. Trustees review and approve every contract between
your Trust and Lord, Abbett & Co. (the Trust's investment manager) and Lord
Abbett Distributor LLC (the Trust's underwriter). They meet regularly to review
a wide variety of information and issues regarding your Trust. Every Trustee
possesses extensive business experience. Lord Abbett Tax-Free Income Trust
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. Below, we feature one of our Trustees, William Bush.
William Bush
Trustee-Lord Abbett
Tax-Free Income Trust
[PHOTO]
Mr. Bush received his BA degree from Yale University in 1960. Mr. Bush
co-founded the financial advisory firm of Bush-O'Donnell & Company which
provides investment management and financial advisory services to corporations
and individuals throughout the United States and abroad.
Mr. Bush serves as a member of the Board of Directors of Right Choice Managed
Care Inc., Maritz Inc., Mississippi Valley Bancshares, Inc., and INTRAV, Inc.,
all of St. Louis, and DT Industries Inc. of Springfield, Missouri. He was named
an independent director for all of Lord Abbett's funds in 1998.
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders,Lord Abbett Tax-Free Income Trust, Inc.:
We have audited the accompanying statements of net assets of the Florida Series,
Pennsylvania Series, Michigan Series, and Georgia Series of Lord Abbett Tax-Free
Income Trust, Inc. as of October 31, 1999, the related statements of operations
for the year ended, and of changes in net assets for each of the years in the
two-year period then ended, 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 audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1999 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 the Florida Series,
Pennsylvania Series, Michigan Series, and Georgia Series of Lord Abbett Tax-Free
Income Trust, Inc. at October 31, 1999, the results of their operations, the
changes in their net assets and their financial highlights for the respective
periods presented, in conformity with generally accepted accounting principles.
[GRAPHIC OMITTED]
Deloitte & Touche LLP
New York, New York
December 17,1999
Copyright(C)1999 by Lord Abbett Tax-Free Income Trust, Inc., 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, Inc., 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.
Please read the prospectus carefully before you invest. There is no guarantee
that the forecasts contained within this publication will come to pass.
All rights reserved. Printed in the U.S.A.
Numbers to Keep Handy
For Shareholder Account or Statement
Inquiries: 800-821-5129
For Literature Only: 800-874-3733
24-Hour Automated Shareholder
Service Line: 800-865-7582
Visit OurWeb Site:
www.lordabbett.com
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(12/99)
