1933 Act File No. 2-88912
1940 Act File No. 811-3942
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 33 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
AMENDMENT No. 33 [X]
LORD ABBETT TAX-FREE INCOME FUND, INC.
Exact Name of Registrant as Specified in Charter
90 Hudson Street
Jersey City, New Jersey 07302
Address of Principal Executive Office
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REGISTRANT'S TELEPHONE NUMBER (800) 201-6984
Christina T. Simmons, Vice President & Assistant Secretary
90 Hudson Street
Jersey City, New Jersey 07302
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
---- previously filed post-effective amendment
LORD ABBETT [GRAPHIC]
LORD ABBETT
TAX-FREE INCOME FUND
TAX-FREE INCOME TRUST
FEBRUARY 1, 2002
PROSPECTUS
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National Tax-Free Fund
California Tax-Free Fund
Connecticut Tax-Free Fund
Hawaii Tax-Free Fund
Minnesota Tax-Free Fund
Missouri Tax-Free Fund
New Jersey Tax-Free Fund
New York Tax-Free Fund
Texas Tax-Free Fund
Washington Tax-Free Fund
Florida Tax-Free Trust
Georgia Tax-Free Trust
Michigan Tax-Free Trust
Pennsylvania Tax-Free Trust
As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Class P shares of each Fund are neither offered to the general public nor available in all states. Please call 800-821-5129 for further information.
TABLE OF CONTENTS
THE FUNDS PAGE
Goal 3
Principal Strategy 3
Main Risks 3
Information about National Tax-Free Fund 7
performance, fees California Tax-Free Fund 9
and expenses Connecticut Tax-Free Fund 11
Hawaii Tax-Free Fund 13
Minnesota Tax-Free Fund 15
Missouri Tax-Free Fund 17
New Jersey Tax-Free Fund 19
New York Tax-Free Fund 21
Texas Tax-Free Fund 23
Washington Tax-Free Fund 25
Florida Tax-Free Trust 27
Georgia Tax-Free Trust 29
Michigan Tax-Free Trust 31
Pennsylvania Tax-Free Trust 33
Additional Investment Information 35
Management 37
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YOUR INVESTMENT
Information for managing Purchases 38
your Fund account Sales Compensation 42
Opening Your Account 43
Redemptions 43
Distributions and Taxes 44
Services For Fund Investors 47
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TABLE OF CONTENTS Con't
FINANCIAL INFORMATION PAGE
Financial highlights National Tax-Free Fund 49
California Tax-Free Fund 50
Connecticut Tax-Free Fund 51
Hawaii Tax-Free Fund 52
Minnesota Tax-Free Fund 53
Missouri Tax-Free Fund 54
New Jersey Tax-Free Fund 55
New York Tax-Free Fund 56
Texas Tax-Free Fund 57
Washington Tax-Free Fund 58
Florida Tax-Free Trust 59
Georgia Tax-Free Trust 60
Michigan Tax-Free Trust 61
Pennsylvania Tax-Free Trust 62
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ADDITIONAL INFORMATION
How to learn more about the Funds Back Cover and other Lord Abbett Funds
THE FUNDS
GOAL
The investment objective of each Fund is to seek the maximum amount of interest income exempt from federal income tax as is consistent with reasonable risk. Each Fund (except for the National Fund) also seeks as high a level of interest income exempt from the personal income tax of its state as is consistent with reasonable risk. The New York Fund also seeks as high a level of interest income exempt from New York City personal income tax as is consistent with reasonable risk. At present, Florida, Texas and Washington do not impose a personal income tax.
PRINCIPAL STRATEGY
To pursue its goal, each Fund invests in municipal bonds which, at the time of purchase, are investment grade or determined by Lord Abbett to be of comparable quality. At least 70% of the municipal bonds held by each Fund at the time of purchase must be rated within the three highest grades assigned by a Rating Agency or deemed to be of comparable quality by Lord Abbett. Under normal market conditions, each Fund attempts to be at least 80% invested in municipal bonds, the interest on which is exempt from federal, its corresponding state's and, in the case of the New York Fund, New York City personal income tax (this policy may not be changed without shareholder approval). If the interest on a particular municipal bond is so exempt, the Fund will treat the bond as qualifying for purposes of the 80% requirement even though the issuer of the bond may be located outside of the named state or city. Under normal circumstances, we intend to maintain the average weighted stated maturity of each Fund at between ten and thirty-five years.
In selecting municipal bonds, we focus on:
- CREDIT QUALITY - an issuer's ability to pay principal and interest
- INCOME TAX EXEMPTION - the bond issuer's ability to pay interest free from federal, state and/or local personal income taxes
- TOTAL RETURN POTENTIAL - the return possibilities for an investment over a period of time, including appreciation and interest
- CALL PROTECTION - assurance by an issuer that it will not redeem a bond earlier than anticipated
While typically fully invested, we may take a temporary defensive position in: (i) short-term tax-exempt securities, and (ii) cash, investment grade commercial paper, and short-term U.S. Government Securities. This could reduce tax-exempt income and prevent a Fund from achieving its investment objective. Temporary defensive investments in taxable securities will be limited to 20% of a Fund's assets.
MAIN RISKS
FOR ALL FUNDS - Each Fund's performance and the value of its investments will vary in response to changes in interest rates and other market factors. As interest rates rise, a Fund's investments typically will lose value. This risk is usually greater for long-term bonds than for short-term bonds. As a result, the Funds, which tend to invest in longer term bonds than many other municipal bond funds, normally will have more price volatility than those funds.
[SIDENOTE]
LORD ABBETT TAX-FREE
INCOME FUND, INC.
National Tax-Free Fund
California Tax-Free Fund
Connecticut Tax-Free Fund
Hawaii Tax-Free Fund
Minnesota Tax-Free Fund
Missouri Tax-Free Fund
New Jersey Tax-Free Fund
New York Tax-Free Fund
Texas Tax-Free Fund
Washington Tax-Free Fund
LORD ABBETT TAX-FREE
INCOME TRUST
Florida Tax-Free Trust
Georgia Tax-Free Trust
Michigan Tax-Free Trust
Pennsylvania Tax-Free Trust
WE OR THE FUNDS refers to any one or more of the portfolios of Lord Abbett Tax-Free Income Fund, Inc. or Lord Abbett Tax-Free Income Trust listed above.
LORD ABBETT refers to Lord, Abbett & Co., each Fund's investment adviser.
ABOUT EACH FUND. Each Fund is a professionally managed portfolio primarily holding municipal bonds purchased with the pooled money of investors. Each strives to reach its stated goal; although, as with all mutual funds, it cannot guarantee results.
REASONABLE RISK The Funds assess risk by considering the volatility each Fund has over time. The Funds believe that a volatility that generally approximates the volatility of the Lehman Municipal Long Current Coupon Index represents a reasonable risk.
MUNICIPAL BONDS ("bonds") are debt securities issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies and instrumentalities which provide income free from federal, state and/or local personal income taxes. Municipal bonds generally are divided into two types:
- GENERAL OBLIGATION BONDS are secured by the full faith and credit of the issuer and its taxing power.
- REVENUE BONDS are payable only from revenue derived from a particular facility or source, such as bridges, tolls or sewer services. Industrial development bonds are revenue bonds.
INVESTMENT GRADE DEBT SECURITIES are debt securities that are rated within the four highest grades assigned by Moody's Investor Service, Inc. (Aaa, Aa, A, Baa), Standard & Poor's Ratings Services (AAA, AA, A, BBB) or Fitch Investors Service (AAA, AA, A, BBB), (each a "Rating Agency") or are unrated but determined by Lord Abbett to be of comparable quality.
Additional risks that could reduce each Fund's performance or increase volatility include the following:
- CREDIT RISK - If the market perceives a deterioration in the creditworthiness of an issuer, the value of bonds issued by that issuer tends to decline. Credit risk varies among states based upon the economic and fiscal conditions of each state and the municipalities, agencies, and instrumentalties within the state.
- CALL RISK - As interest rates decline, bond issuers may pay off their loans early by buying back the bonds, thus depriving bondholders of above market interest rates.
- GOVERNMENTAL RISK - Government actions, including actions by local, state and regional governments, could have an adverse effect on municipal bond prices.
- LEGISLATIVE RISK - Legislative changes in the tax-exempt character of particular municipal bonds could have an adverse effect on municipal bond prices.
- MANAGEMENT RISK - If certain sectors or investments do not perform as expected, the Funds could underperform other similar funds or lose money.
Each Fund (except the National Fund) is nondiversified which means that it may invest a greater portion of its assets in a single issuer than a diversified fund. Thus, it may be exposed to greater risk.
An investment in the Funds is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Funds may not be appropriate for all investors and none of the Funds is a complete investment program. You could lose money investing in the Funds.
STATE AND TERRITORY RISKS - Because each Fund other than the National Fund focuses on a particular state or territory, each Fund's performance may be more affected by local, state and regional factors than a fund such as the National Fund that invests in municipal bonds issued in many states. These factors may, for example, include economic or political developments, erosion of the tax base and the possibility of credit problems. In addition, downturns or developments in the U.S. economy or in foreign economies, or significant world events, may harm the performance of any of the Funds (including the National Fund), and may do so disproportionately as a result of the corresponding disproportionate impact of such occurrences on particular state, territory, or local economies. For example, the U.S. economic recession that began in 2001 and the September 11th terrorist attacks will reduce revenues collected by certain state and local governments and other government issuers, and otherwise harm certain state and local economies. The depth and duration of the U.S. economic slowdown and the impact of the events of September 11th could thus have significant consequences for the Funds. A worsening of the economic position of a state or other issuer of bonds in which one of the Funds invests could lower the value of that Fund's investments and could cause you to lose money. The following information is a summary of some special risks that may affect the states and territory indicated, each of which could affect the value of the bonds held by the corresponding Funds.
- PUERTO RICO BONDS - Each Fund may invest in bonds issued by the Commonwealth of Puerto Rico and its instrumentalities. Puerto Rico has relatively high debt levels, and relatively low reserves. A recent debt restructuring extended the amount of time Puerto Rico has to repay much of its debt, which may limit the Commonwealth's future financial flexibility. Growth of Puerto Rico's economy slowed in 2001, and Puerto Rico had budget deficits in fiscal years 2000 and 2001. Tourism is an important sector of the economy, and a sustained decrease in air travel and tourism following the September 11th terrorist attacks could have serious consequences. A long or deep U.S.
economic recession could diminish Puerto Rico's prospects for an economic recovery in 2002. Puerto Rico's unemployment rate continues to substantially exceed the U.S. average and the Commonwealth needs to address its substantial unfunded public employee pension liabilities.
- CALIFORNIA BONDS - The September 11th terrorist attacks have increased pre-existing uncertainty regarding the economic and revenue outlook for California. California faces substantial challenges resulting from a slowing economy, decreasing revenues, potential power shortages, costly State power purchases, and difficulty financing State power purchases. Various constitutional and statutory provisions may cause a decrease in revenues and thus affect the ability of issuing authorities to meet their financial obligations.
- CONNECTICUT BONDS - Despite Connecticut's recent strong economic performance, the State's economy has slowed significantly, and the State is projecting a budget deficit for the first time in many years, absent corrective measures. High levels of tax-supported debt and unfunded pension liabilities are also a concern as they pose a significant burden on the State's revenue base.
- FLORIDA BONDS - Florida's tax base is relatively narrow, with most of its revenues derived from recession sensitive sales and use taxes. In addition, tourism is a big part of the State's economy. As a result, recent declines in consumer confidence and tourism have disproportionately impacted Florida, and contributed to projected decreases in revenue, that will in turn lead to budget deficits, absent corrective measures. In addition, Florida's debt burden has increased recently.
- GEORGIA BONDS - Although Georgia's economy has performed well in recent years, State revenues are projected to decrease and employment began decreasing in fiscal year 2002.
- HAWAII BONDS - Hawaii's economy is highly dependent on tourism and the State is reachable only by air travel. If recovery from the post-September 11th dropoff in tourism and air travel and U.S. economic recession is delayed, the consequences for Hawaii could be severe. In the 1990s, Hawaii's economy performed poorly.
- MICHIGAN BONDS - Michigan's economy weakened considerably in 2001. The State projects that in fiscal years 2001 and 2002, State revenues will fall below actual 2000 revenues, and Michigan wage and salary employment will decrease. The full impact of the national economic recession that began in 2001 and the September 11th attacks is still unclear and the impact on Michigan could be worse than projected.
- MINNESOTA BONDS - Minnesota relies heavily on individual, sales and corporate income taxes for revenues, all of which are sensitive to economic conditions. The national economic recession that began in 2001 and the September 11th terrorist attacks could thus disproportionately impact the financial condition of Minnesota. Employment has already dropped significantly, and Minnesota expects growing budget deficits over the next several years, absent corrective measures.
- MISSOURI BONDS - Although the Missouri economy has performed well in recent years, the State recently lowered revenue forecasts due in large part to the economic slowdown. Certain provisions of the Constitution of Missouri could adversely affect payment on Missouri municipal bonds.
- NEW JERSEY BONDS - New Jersey anticipates that the terrorist attacks will worsen the slowdown that occurred in 2001. New Jersey's economy could slow significantly as a result. State law and the State Constitution restrict appropriations. Statutory or
legislative restrictions of this type may adversely affect an issuing authority's ability to repay its obligations.
- NEW YORK BONDS - New York State, and many of its political subdivisions and authorities, will face extraordinary budget challenges as a result of the September 11th terrorist attacks, in addition to the challenges posed by the recession. It is not yet possible to predict the short-term or long-term economic impact of these events, or the extent of offsetting considerations such as federal aid to the State and the City of New York, or the economic activity generated by rebuilding efforts. If recovery is slower than expected, the value of investments held by the New York Fund could decrease, perhaps substantially. The State, New York City, the State's other political sub-divisions, and the State authorities are perceived in the marketplace to be financially interdependent, and these entities are likely to require financial assistance from the State. The State's overall debt burden is high, future capital needs are significant, and reserve levels are relatively lower than in other states. The State's economy and the financial position of the State and local governments heavily rely on the financial services sector and could be adversely affected by the recent downturn in the financial markets.
- PENNSYLVANIA BONDS - The effects of the national economic recession that began in 2001 and the September 11th terrorist attacks on Pennsylvania's economy and State revenues cannot yet be accurately predicted. These events may cause tax revenues to be lower than projected in the fiscal year 2002 budget. Most of the State's revenues derive from personal and corporate income taxes and sales taxes, all of which can be sensitive to economic conditions.
- TEXAS BONDS - Job growth in Texas has slowed in 2001, and will likely slow further once the effects of the national economic recession that began in 2001 and September 11th terrorist attacks are more fully reflected in Texas labor markets. The State's reserve levels are relatively low, which could present challenges if the national economic recession is long or severe.
- WASHINGTON BONDS - Washington is in the midst of an economic downturn resulting in large part from the national economic recession that began in 2001 and the September 11th terrorist attacks. The Boeing Company is the state's largest employer and is projecting significant job cuts in Washington in light of the steep dropoff in air travel. Unemployment in Washington is above the national average and is projected to increase. In November 2001, Washington voters passed an initiative that limits the State's taxing powers, and may result in significant revenue losses. There is a risk that Washington voters will pass additional initiatives or referenda that may adversely affect the State's financial condition.
PORTFOLIO TURNOVER - Each Fund may engage in active and frequent trading of portfolio securities to achieve its principal investment strategies. Each Fund may have an annual portfolio turnover rate in excess of 100%. High portfolio turnover increases Fund transaction costs.
NATIONAL TAX-FREE FUND Symbols: Class A - LANSX
Class B - LANBX
Class C - LTNSX
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PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
92 8.7% 93 13.0% 94 -8.3% 95 17.7% 96 4.0% 97 10.0% 98 6.4% 99 -5.5% 00 12.7% 01 4.2% |
BEST QUARTER 1st Q '95 7.7% WORST QUARTER 1st Q '94 -6.4%
The table below shows how the average annual total returns of the Fund's Class A, B and C shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS 10 YEARS LIFE OF FUND(1) Class A shares 0.74% 4.64% 5.64% - ------------------------------------------------------------------------------------------ Class B shares -1.43% 4.42% - 4.91% ------------------------------------------------------------------------------------------ Class C shares 2.47% 4.65% - 5.19% ------------------------------------------------------------------------------------------ Lehman Municipal Bond Index((2) 5.13% 5.98% 6.63% 6.27%(3) ------------------------------------------------------------------------------------------ Lehman Municipal Long Current Coupon Index(2) 3.99% 5.29% 5.85% 5.67%(3) ------------------------------------------------------------------------------------------ |
(1) The date of inception for Class B shares and Class C shares is 8/1/96 and 7/15/96, respectively.
(2) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance.
(3) Represents total returns for the period 7/31/96 - 12/31/01, to correspond with Class B and C inception dates.
NATIONAL TAX-FREE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS B(1) CLASS C CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
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Maximum Sales Charge on Purchases
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(as a % of offering price) 3.25% none none none
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Maximum Deferred Sales Charge (See "Purchases")(2) none(3) 5.00% 1.00%(4) none
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ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
---------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50% 0.50% 0.50%
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Distribution and Service (12b-1) Fees(5) 0.37% 1.00% 1.00% 0.45%
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Other Expenses 0.19% 0.19% 0.19% 0.19%
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Total Annual Fund Operating Expenses 1.06% 1.69% 1.69%(6) 1.14%
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(1) Class B shares will convert to Class A shares on the eighth anniversary of your original purchase of Class B shares.
(2) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(3) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(4) A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.
(5) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
(6) The annual operating expenses have been restated from fiscal year amounts to reflect an estimate of current fees.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $430 $651 $ 891 $1,577 -------------------------------------------------------------------------------------- Class B shares $672 $833 $1,118 $1,829 -------------------------------------------------------------------------------------- Class C shares $272 $533 $ 918 $1,998 -------------------------------------------------------------------------------------- Class P shares $116 $362 $ 628 $1,386 -------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $430 $651 $ 891 $1,577 -------------------------------------------------------------------------------------- Class B shares $172 $533 $ 918 $1,998 -------------------------------------------------------------------------------------- Class C shares $172 $533 $ 918 $1,998 -------------------------------------------------------------------------------------- Class P shares $116 $362 $ 628 $1,386 -------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
CALIFORNIA TAX-FREE FUND Symbols: Class A - LCFIX
Class C - CALAX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
92 9.0% 93 13.9% 94 -10.5% 95 17.4% 96 3.4% 97 8.9% 98 6.1% 99 -6.4% 00 14.9% 01 4.4% |
BEST QUARTER 1st Q '95 7.8% WORST QUARTER 1st Q '94 -7.3%
The table below shows how the average annual total returns of the Fund's Class A and C shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS 10 YEARS LIFE OF FUND(1) Class A shares 1.01% 4.65% 5.41% - ----------------------------------------------------------------------------------------- Class C shares 2.91% 4.65% - 5.15% ----------------------------------------------------------------------------------------- Lehman Municipal Bond Index(2) 5.13% 5.98% 6.63% 6.27%(3) ----------------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(2) 3.99% 5.29% 5.85% 5.67%(3) ----------------------------------------------------------------------------------------- |
(1) The date of inception for Class C shares is 7/15/96.
(2) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
(3) Represents total return for the period 7/31/96 - 12/31/01, to correspond with Class C inception date.
CALIFORNIA TAX-FREE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS C CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
-------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
-------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none none
-------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) 1.00%(3) none
-------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
-------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50% 0.50%
-------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(4) 0.38% 1.00% 0.45%
-------------------------------------------------------------------------------------------------
Other Expenses 0.16% 0.16% 0.16%
-------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.04% 1.66%(5) 1.11%
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(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.
(4) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
(5) The annual operating expenses have been restated from fiscal year amounts to reflect an estimate of current fees.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $428 $645 $880 $1,555 -------------------------------------------------------------------------------------- Class C shares $269 $523 $902 $1,965 -------------------------------------------------------------------------------------- Class P shares $113 $353 $612 $1,352 -------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $428 $645 $880 $1,555 -------------------------------------------------------------------------------------- Class C shares $169 $523 $902 $1,965 -------------------------------------------------------------------------------------- Class P shares $113 $353 $612 $1,352 -------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
CONNECTICUT TAX-FREE FUND Symbol: Class A - LACTX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
92 7.9% 93 13.8% 94 -7.7% 95 17.3% 96 4.2% 97 8.8% 98 6.3% 99 -5.6% 00 11.8% 01 5.4% |
BEST QUARTER 1st Q '95 7.9% WORST QUARTER 1st Q '94 -5.7%
The table below shows how the average annual total returns of the Fund's Class A shares compared to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS 10 YEARS Class A shares 2.00% 4.49% 5.59% ---------------------------------------------------------------------------------- Lehman Municipal Bond Index(1) 5.13% 5.98% 6.63% ---------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(1) 3.99% 5.29% 5.85% ---------------------------------------------------------------------------------- |
(1) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
CONNECTICUT TAX-FREE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
--------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
--------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none
--------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) none
--------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
--------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50%
--------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(3) 0.37% 0.45%
--------------------------------------------------------------------------------------------------
Other Expenses 0.16% 0.16%
--------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.03% 1.11%
--------------------------------------------------------------------------------------------------
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(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $427 $642 $875 $1,543 -------------------------------------------------------------------------------------- Class P shares $113 $353 $612 $1,352 -------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $427 $642 $875 $1,543 -------------------------------------------------------------------------------------- Class P shares $113 $353 $612 $1,352 -------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
HAWAII TAX-FREE FUND Symbols: Class A - LAHIX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
92 8.5% 93 14.4% 94 -8.8% 95 18.2% 96 3.8% 97 8.5% 98 6.2% 99 -5.1% 00 11.4% 01 3.7% |
BEST QUARTER 1st Q '95 8.0% WORST QUARTER 1st Q '94 -6.9%
The table below shows how the average annual total returns of the Fund's Class A shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS 10 YEARS Class A shares 0.24% 4.07% 5.44% ------------------------------------------------------------------------------------- Lehman Municipal Bond Index(1) 5.13% 5.98% 6.63% ------------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(1) 3.99% 5.29% 5.85% ------------------------------------------------------------------------------------- |
(1) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
HAWAII TAX-FREE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
--------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
--------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none
--------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) none
--------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
--------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50%
--------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(3) 0.39% 0.45%
--------------------------------------------------------------------------------------------------
Other Expenses 0.18% 0.18%
--------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.07% 1.13%
--------------------------------------------------------------------------------------------------
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $431 $654 $896 $1,588 ------------------------------------------------------------------------------------- Class P shares $115 $359 $622 $1,375 ------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $431 $654 $896 $1,588 ------------------------------------------------------------------------------------- Class P shares $115 $359 $622 $1,375 ------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
MINNESOTA TAX-FREE FUND Symbols: Class A - LAMNX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
95 14.5% 96 3.4% 97 8.6% 98 6.4% 99 -5.3% 00 13.0% 01 4.8% |
BEST QUARTER 4th Q '00 5.4% WORST QUARTER 1st Q '96 -2.7%
The table below shows how the average annual total returns of the Fund's Class A shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS LIFE OF FUND(1) Class A shares 1.35% 4.63% 5.81% ------------------------------------------------------------------------------------------- Lehman Municipal Bond Index(2) 5.13% 5.98% 7.32%(3) ------------------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(2) 3.99% 5.29% 6.73%(3) ------------------------------------------------------------------------------------------- |
(1) The date of inception for Class A shares is 12/27/94.
(2) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
(3) Represents total return for the period 12/31/94 - 12/31/01, to correspond with Class A inception date.
MINNESOTA TAX-FREE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
--------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
--------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none
--------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) none
--------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
--------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50%
--------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(3) 0.00% 0.45%
--------------------------------------------------------------------------------------------------
Other Expenses 0.32% 0.32%
--------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.82% 1.27%
--------------------------------------------------------------------------------------------------
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $406 $578 $765 $1,306 -------------------------------------------------------------------------------------- Class P shares $129 $403 $697 $1,534 -------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $406 $578 $765 $1,306 -------------------------------------------------------------------------------------- Class P shares $129 $403 $697 $1,534 -------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management. Lord Abbett is currently waiving the management fees for the Fund. Lord Abbett may stop waiving the management fees at any time. The total operating expense ratio with the fee waiver and expense reduction is 0.19% for Class A and 0.64% for Class P.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. The 12b-1 Plan for Class A shares of the Fund will not become operative until the net assets of Class A reach $100 million. Once the 12b-1 Plan is effective, the 12b-1 fees may total up to 0.39% of Class A shares.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
MISSOURI TAX-FREE FUND Symbol: Class A - LAMOX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
92 9.0% 93 14.6% 94 -9.1% 95 17.2% 96 3.7% 97 8.5% 98 5.7% 99 -4.4% 00 11.7% 01 5.1% |
BEST QUARTER 1st Q '95 7.7% WORST QUARTER 1st Q '94 -6.8%
The table below shows how the average annual total returns of the Fund's Class A shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS 10 YEARS Class A shares 1.70% 4.50% 5.56% -------------------------------------------------------------------------------------- Lehman Municipal Bond Index(1) 5.13% 5.98% 6.63% -------------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(1) 3.99% 5.29% 5.85% -------------------------------------------------------------------------------------- |
(1) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
MISSOURI TAX-FREE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
--------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
--------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none
--------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) none
--------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
--------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50%
--------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(3) 0.39% 0.45%
--------------------------------------------------------------------------------------------------
Other Expenses 0.19% 0.19%
--------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.08% 1.14%
--------------------------------------------------------------------------------------------------
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $432 $657 $901 $1,599 -------------------------------------------------------------------------------------- Class P shares $116 $362 $628 $1,386 -------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $432 $657 $901 $1,599 -------------------------------------------------------------------------------------- Class P shares $116 $362 $628 $1,386 -------------------------------------------------------------------------------------- |
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management. For the fiscal year ended September 30, 2001, Lord Abbett waived a portion of its management fees. Lord Abbett may stop waiving the management fees at any time. The total operating expense ratio with fee waiver and expense reduction is 0.89% for Class A and 0.95% for Class P.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
NEW JERSEY TAX-FREE FUND Symbol: Class A - LANJX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
92 9.2% 93 14.3% 94 -6.8% 95 17.2% 96 4.1% 97 8.9% 98 6.5% 99 -5.6% 00 12.5% 01 4.7% |
BEST QUARTER 1st Q '95 7.4% WORST QUARTER 1st Q '94 -5.7%
The table below shows how the average annual total returns of the Fund's Class A shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS 10 YEARS Class A shares 1.38% 4.51% 5.88% --------------------------------------------------------------------------------------- Lehman Municipal Bond Index(1) 5.13% 5.98% 6.63% --------------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(1) 3.99% 5.29% 5.85% --------------------------------------------------------------------------------------- |
(1) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
NEW JERSEY TAX-FREE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
--------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
--------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none
--------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) none
--------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
--------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50%
--------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(3) 0.38% 0.45%
--------------------------------------------------------------------------------------------------
Other Expenses 0.18% 0.18%
--------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.06% 1.13%
--------------------------------------------------------------------------------------------------
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $430 $651 $891 $1,577 ---------------------------------------------------------------------------------------- Class P shares $115 $359 $622 $1,375 ---------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $430 $651 $891 $1,577 ---------------------------------------------------------------------------------------- Class P shares $115 $359 $622 $1,375 ---------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management. For the fiscal year ended September 30, 2001, Lord Abbett waived a portion of its management fees. Lord Abbett may stop waiving the management fees at any time. The total operating expense ratio with fee waiver and expense reduction is 0.90% for Class A and 0.97% for Class P.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
NEW YORK TAX-FREE FUND Symbols: Class A - LANYX
Class C - NYLAX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
92 8.9% 93 12.7% 94 -9.3% 95 15.9% 96 3.7% 97 8.5% 98 6.1% 99 -4.6% 00 14.0% 01 4.3% |
BEST QUARTER 1st Q '95 7.1% WORST QUARTER 1st Q '94 -5.9%
The table below shows how the average annual total returns of the Fund's Class A and C shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION(1) Class A shares 0.89% 4.75% 5.38% - -------------------------------------------------------------------------------------------- Class C shares 2.71% 4.77% - 5.23% -------------------------------------------------------------------------------------------- Lehman Municipal Bond Index(2) 5.13% 5.98% 6.63% 6.27%(3) -------------------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(2) 3.99% 5.29% 5.85% 5.67%(3) -------------------------------------------------------------------------------------------- |
(1) The date of inception for Class C shares is 7/15/96.
(2) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
(3) Represents total returns for the period 7/31/96 - 12/31/01, to correspond with Class C inception date.
NEW YORK TAX-FREE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS C CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
-------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
-------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none none
-------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) 1.00%(3) none
-------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
-------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50% 0.50%
-------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(4) 0.37% 1.00% 0.45%
-------------------------------------------------------------------------------------------------
Other Expenses 0.17% 0.17% 0.17%
-------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.04% 1.67%(5) 1.12%
-------------------------------------------------------------------------------------------------
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.
(4) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
(5) The annual operating expenses have been restated from fiscal year amounts to reflect an estimate of current fees.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $428 $645 $880 $1,555 ------------------------------------------------------------------------------------- Class C shares $270 $526 $907 $1,976 ------------------------------------------------------------------------------------- Class P shares $114 $356 $617 $1,363 ------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $428 $645 $880 $1,555 ------------------------------------------------------------------------------------- Class C shares $170 $526 $907 $1,976 ------------------------------------------------------------------------------------- Class P shares $114 $356 $617 $1,363 ------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
TEXAS TAX-FREE FUND Symbol: Class A - LATIX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
92 8.7% 93 13.0% 94 -6.9% 95 18.0% 96 4.0% 97 9.7% 98 5.9% 99 -6.7% 00 12.0% 01 4.6% |
BEST QUARTER 1st Q '95 7.4% WORST QUARTER 1st Q '94 -6.6%
The table below shows how the average annual total returns of the Fund's Class A shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS 10 YEARS Class A shares 1.17% 4.19% 5.58% ------------------------------------------------------------------------------------------- Lehman Municipal Bond Index(1) 5.13% 5.98% 6.63% ------------------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(1) 3.99% 5.29% 5.85% ------------------------------------------------------------------------------------------- |
(1) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
TEXAS TAX-FREE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
--------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
--------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none
--------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) none
--------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
--------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50%
--------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(3) 0.37% 0.45%
--------------------------------------------------------------------------------------------------
Other Expenses 0.22% 0.22%
--------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.09% 1.17%
--------------------------------------------------------------------------------------------------
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $433 $660 $906 $1,611 -------------------------------------------------------------------------------------- Class P shares $119 $372 $644 $1,420 -------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $433 $660 $906 $1,611 -------------------------------------------------------------------------------------- Class P shares $119 $372 $644 $1,420 -------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management. Lord Abbett is currently waiving a portion of its management fees and reimbursing a portion of other expenses. Lord Abbett may stop waiving the management fees and reimbursing other expenses at anytime. The total operating expense ratio with the fee waiver, expense reductions and reimbursement of other expenses is 0.64% for Class A and 0.72% for Class P.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
WASHINGTON TAX-FREE FUND Symbols: Class A - LAWAX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
93 14.2% 94 -8.5% 95 18.1% 96 4.7% 97 10.0% 98 6.5% 99 -5.9% 00 12.4% 01 4.9% |
BEST QUARTER 1st Q '95 7.3% WORST QUARTER 1st Q '94 -7.2%
The table below shows how the average annual total returns of the Fund's Class A shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS SINCE INCEPTION(1) Class A shares 1.47% 4.69% 6.02% -------------------------------------------------------------------------------------------- Lehman Municipal Bond Index(2) 5.13% 5.98% 6.74%(3) -------------------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(2) 3.99% 5.29% 5.90%(3) -------------------------------------------------------------------------------------------- |
(1) The date of inception for Class A shares is 4/15/92.
(2) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
(3) Represents total return for the period 4/30/92 - 12/31/01, to correspond with Class A inception date.
WASHINGTON TAX-FREE FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
-------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
-------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none
-------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) none
-------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
-------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50%
-------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(3) 0.00% 0.45%
-------------------------------------------------------------------------------------------------
Other Expenses 0.23% 0.23%
-------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.73% 1.18%
-------------------------------------------------------------------------------------------------
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $397 $551 $718 $1,202 -------------------------------------------------------------------------------------- Class P shares $120 $375 $649 $1,432 -------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $397 $551 $718 $1,202 -------------------------------------------------------------------------------------- Class P shares $120 $375 $649 $1,432 -------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. The 12b-1 Plan for Class A shares of the Fund will not become operative until the net assets of Class A reach $100 million. Once the 12b-1 Plan is effective, the 12b-1 fees may total up to 0.39% of Class A shares.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
FLORIDA TAX-FREE TRUST Symbols: Class A - LAFLX
Class C - FLLAX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
92 10.5% 93 13.8% 94 -8.5% 95 16.8% 96 2.6% 97 8.2% 98 6.2% 99 -5.5% 00 11.2% 01 4.4% |
BEST QUARTER 1st Q '95 7.6% WORST QUARTER 1st Q '94 -7.0%
The table below shows how the average annual total returns of the Fund's Class A and C shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION(1) Class A shares 1.03% 4.05% 5.33% - -------------------------------------------------------------------------------------------- Class C shares 2.76% 4.04% - 4.50% -------------------------------------------------------------------------------------------- Lehman Municipal Bond Index(2) 5.13% 5.98% 6.63% 6.27%(3) -------------------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(2) 3.99% 5.29% 5.85% 5.67%(3) -------------------------------------------------------------------------------------------- |
(1) The date of inception for Class C shares is 7/15/96.
(2) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
(3) Represents total returns for the period 7/31/96 - 12/31/01, to correspond with Class C inception date.
FLORIDA TAX-FREE TRUST
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS C CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
-----------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
-----------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none none
-----------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) 1.00%(3) none
-----------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)(3)
-----------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50% 0.50%
-----------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(4) 0.35% 1.00% 0.45%
-----------------------------------------------------------------------------------------------------
Other Expenses 0.20% 0.20% 0.20%
-----------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.05% 1.70% 1.15%
-----------------------------------------------------------------------------------------------------
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.
(4) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $429 $648 $886 $1,566 -------------------------------------------------------------------------------------- Class C shares $273 $536 $923 $2,009 -------------------------------------------------------------------------------------- Class P shares $117 $365 $633 $1,398 -------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $429 $648 $886 $1,566 -------------------------------------------------------------------------------------- Class C shares $173 $536 $923 $2,009 -------------------------------------------------------------------------------------- Class P shares $117 $365 $633 $1,398 -------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
GEORGIA TAX-FREE TRUST Symbols: Class A - LAGAX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
95 17.1% 96 4.6% 97 10.5% 98 7.2% 99 -4.8% 00 14.5% 01 6.0% |
BEST QUARTER 1st Q '95 6.2% WORST QUARTER 2nd Q '99 -2.9%
The table below shows how the average annual total returns of the Fund's Class A shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS SINCE INCEPTION(1) Class A shares 2.51% 5.78% 7.14% Lehman Municipal Bond Index(2) 5.13% 5.98% 7.32%(3) Lehman Municipal Long Current Coupon Index(2) 3.99% 5.29% 6.73%(3) |
(1) The date of inception for Class A is 12/27/94.
(2) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
(3) Represents total returns for the period 12/31/94 - 12/31/01, to correspond with Class A inception date.
GEORGIA TAX-FREE TRUST
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
--------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
--------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none
--------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) none
--------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
--------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50%
--------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(3) 0.00% 0.45%
--------------------------------------------------------------------------------------------------
Other Expenses 0.28% 0.28%
--------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.78% 1.23%
--------------------------------------------------------------------------------------------------
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $402 $566 $744 $1,260 -------------------------------------------------------------------------------------- Class P shares $125 $390 $676 $1,489 -------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $402 $566 $744 $1,260 -------------------------------------------------------------------------------------- Class P shares $125 $390 $676 $1,489 -------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management. For the fiscal year ended September 30, 2001, Lord Abbett waived a portion of its management fees. Lord Abbett may stop waiving the management fees at any time. The total operating expense ratio with fee waiver and expense reduction is 0.31% for Class A and 0.76% for Class P.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. The 12b-1 Plan for Class A shares of the Fund will not become operative until the net assets of Class A reach $100 million. Once the 12b-1 Plan is effective, the 12b-1 fees may total up to 0.39% of Class A shares.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
MICHIGAN TAX-FREE TRUST Symbols: Class A - LAMIX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
BAR CHART (PER CALENDAR YEAR) - CLASS A SHARES
93 15.6% 94 -8.3% 95 18.1% 96 4.3% 97 8.8% 98 6.1% 99 -4.1% 00 13.4% 01 5.2% |
BEST QUARTER 1st Q '95 8.1% WORST QUARTER 1st Q '94 -6.6%
The table below shows how the average annual total returns of the Fund's Class A shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 2001
SHARE CLASS 1 YEAR 5 YEARS SINCE INCEPTION(1) Class A shares 1.80% 5.01% 6.01% ------------------------------------------------------------------------------------------- Lehman Municipal Bond Index(2) 5.13% 5.98% 6.45%(3) ------------------------------------------------------------------------------------------- Lehman Municipal Long Current Coupon Index(2) 3.99% 5.29% 5.48%(3) |
(1) The date of inception for Class A shares is 12/1/92.
(2) Performance for each unmanaged index does not reflect any fees or expenses. The performance of the indices is not necessarily representative of the Fund's performance. Each index is composed of municipal bonds from many states while the Fund is a single-state municipal bond portfolio.
(3) Represents total return for the period 11/30/92 - 12/31/01, to correspond with Class A inception date.
MICHIGAN TAX-FREE TRUST
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
FEE TABLE
CLASS A CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
-------------------------------------------------------------------------------------------------
Maximum Sales Charge on Purchases
-------------------------------------------------------------------------------------------------
(as a % of offering price) 3.25% none
-------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) none
-------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund assets) (as a % of average net assets)
-------------------------------------------------------------------------------------------------
Management Fees (See "Management") 0.50% 0.50%
-------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees(3) 0.00% 0.45%
-------------------------------------------------------------------------------------------------
Other Expenses 0.24% 0.24%
-------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.74% 1.19%
-------------------------------------------------------------------------------------------------
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value at the time of the redemption or the net asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made within 24 months following any purchases made without a sales charge.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $398 $554 $723 $1,214 -------------------------------------------------------------------------------------- Class P shares $121 $378 $654 $1,443 -------------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares: Class A shares $398 $554 $723 $1,214 -------------------------------------------------------------------------------------- Class P shares $121 $378 $654 $1,443 -------------------------------------------------------------------------------------- |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. The 12b-1 Plan for Class A shares of the Fund will not become operative until the net assets of Class A reach $100 million. Once the 12b-1 Plan is effective, the 12b-1 fees may total up to 0.39% of Class A shares.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
PENNSYLVANIA TAX-FREE TRUST Symbols: Class A - LAPAX
PERFORMANCE
The bar chart and table below provide some indication of the risks of investing in the Fund by illustrating the variability of the Fund's returns. Each assumes reinvestment of dividends and distributions. The Fund's past performance is not necessarily an indication of how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class A shares from calendar year to calendar year. This chart does not reflect the sales charges applicable to Class A shares. If the sales charges were reflected, returns would be less.
[CHART]
Bar Chart (per calendar year) - Class A Shares
93 14.8% 94 -8.8% 95 18.0% 96 4.2% 97 9.2% 98 6.4% 99 -4.7% 00 13.2% 01 4.1% |
BEST QUARTER 1st Q '95 8.1%
WORST QUARTER 1st Q '94 -7.2%
The table below shows how the average annual total returns of the Fund's Class A shares compare to those of a broad-based securities market index and a more narrowly based index that more closely reflects the market sectors in which the Fund invests. The Fund's returns reflect payment of the maximum applicable front-end or deferred sales charges.
Average Annual Total Returns Through December 31, 2001
SHARE CLASS 1 YEAR 5 YEARS SINCE INCEPTION(1) Class A shares 0.77% 4.77% 6.03% Lehman Municipal Bond Index(2) 5.13% 5.98% 6.66%(3) Lehman Municipal Long Current Coupon Index(2) 3.99% 5.29% 5.92%(3) |
(1) The date of inception for Class A shares is 2/3/92.
(2) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the
Fund's performance. Each index is composed of municipal bonds from many
states while the Fund is a single-state municipal bond portfolio.
(3) Represents total return for the period 1/31/92 - 12/31/01, to correspond
with Class A inception date.
PENNSYLVANIA TAX-FREE TRUST
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
Fee Table
CLASS A CLASS P
SHAREHOLDER FEES (Fees paid directly from your investment)
Maximum Sales Charge on Purchases
(as a % of offering price) 3.25% none
Maximum Deferred Sales Charge (See "Purchases")(1) none(2) none
ANNUAL FUND OPERATING EXPENSES (Expenses deducted from Fund
assets) (as a % of average net assets)
Management Fees (See "Management") 0.50% 0.50%
Distribution and Service (12b-1) Fees(3) 0.38% 0.45%
Other Expenses 0.18% 0.18%
Total Annual Fund Operating Expenses 1.06% 1.13%
|
(1) The maximum contingent deferred sales charge ("CDSC") is a percentage of
the lesser of the net asset value at the time of the redemption or the net
asset value when the shares were originally purchased.
(2) A CDSC of 1.00% may be assessed on certain redemptions of Class A shares
made within 24 months following any purchases made without a sales charge.
(3) Because 12b-1 fees are paid out on an ongoing basis, over time they will
increase the cost of your investment and may cost you more than paying
other types of sales charges.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at maximum sales charge, if any, for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable contingent deferred sales charges) would be:
SHARE CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A shares $430 $651 $891 $1,577 Class P shares $115 $359 $622 $1,375 YOU WOULD PAY THE FOLLOWING EXPENSES IF YOU DID NOT REDEEM YOUR SHARES: Class A shares $430 $651 $891 $1,577 Class P shares $115 $359 $622 $1,375 |
[SIDENOTE]
MANAGEMENT FEES are payable to Lord Abbett for the Fund's investment management. For the fiscal year ended September 30, 2001, Lord Abbett waived a portion of its management fee. Lord Abbett may stop waiving the management fee at any time. The total operating expense ratio with fee waiver and expense reduction is 0.90% for Class A and 0.97% for Class P.
12b-1 FEES are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance.
OTHER EXPENSES include fees paid for miscellaneous items such as shareholder service fees and professional fees.
ADDITIONAL INVESTMENT INFORMATION
This section describes some of the investment techniques that might be used by the Funds and their associated risks.
ADJUSTING INVESTMENT EXPOSURE. Each Fund will be subject to the risks associated with investments. Each Fund may, but is not required to, use various strategies to change its investment exposure to adjust to changes in economic, social, political, and general market conditions, which affect security prices, interest rates, currency exchange rates, commodity prices and other factors. For example, a Fund may seek to hedge against certain market risks. These strategies may involve, with board approval, effecting transactions in derivative and similar instruments, including but not limited to options, futures, forward contracts, swap agreements, warrants, and rights. If we judge market conditions incorrectly or use a hedging strategy that does not correlate well with a Fund's investments, it could result in a loss, even if we intended to lessen risk or enhance returns. These strategies may involve a small investment of cash compared to the magnitude of the risk assumed, and could produce disproportionate gains or losses.
CONCENTRATION. No Fund generally intends to invest more than 25% of its total assets in any industry, other than tax-exempt securities issued by governments or political subdivisions of governments that are not considered part of any "industry." Where nongovernmental users of facilities financed by tax-exempt revenue bonds are in the same industry (such as frequently occurs in the electric utility and health care industries), there may be additional risk to a Fund in the event of an economic downturn in that industry. This may result generally in a lowered ability of such users to make payments on their obligations. The electric utility industry is subject to rate regulation vagaries. The health care industry suffers from two main problems - affordability and access.
DIVERSIFICATION. The National Fund is a diversified fund. A diversified fund, with respect to 75% of total assets, will normally not purchase a security if, as a result, more than 5% of the fund's total assets would be invested in securities of a single issuer or the fund would hold more than 10% of the outstanding voting securities of the issuer. Each of the other Funds is a nondiversified mutual fund. A nondiversified fund may invest a greater portion of its assets in, and own a greater amount of the voting securities of, a single company than a diversified fund. As a result, the value of such fund's investments may be more affected by a single adverse economic, political or regulatory event than the investments of a diversified fund would be.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Funds may enter into financial futures contracts and options thereon for bona fide hedging purposes or to pursue risk management strategies. These transactions involve the purchase or sale of a contract to buy or sell a specified security or other financial instrument at a specific future date and price on an exchange or in the over the counter market ("OTC"). A Fund may not purchase or sell futures contracts or options on futures contracts on a CFTC regulated exchange for non-bona fide hedging purposes if the aggregated initial margin and premiums required to establish such positions would exceed 5% of the liquidation value of the Fund's portfolio, after taking into account unrealized profits and losses on any such contracts it has entered into.
RISKS OF OPTIONS AND FUTURES. Fund transactions, if any, in futures, options on futures and other options involve additional risk of loss. Loss may result, for example, from adverse market movements, a lack of correlation between changes in the value of these derivative instruments and the Funds' assets being hedged, the potential illiquidity of the markets for derivative instruments, the risk that the counterparty to an OTC contract will fail to perform its obligations, or the risks arising from margin requirements and related leverage factors associated with such transactions.
PRIVATE ACTIVITY OR INDUSTRIAL DEVELOPMENT BONDS. Each Fund may invest up to 20% of its net assets (less any amount invested in the temporary taxable investments described under "Main Risks") in private activity bonds. See "Distributions and Taxes." In addition, the credit quality of such bonds usually is directly related to the credit standing of the private user of the facilities.
RESIDUAL INTEREST BONDS. Each Fund may invest up to 20% of its net assets in residual interest bonds ("RIBs") to enhance income and increase portfolio duration. 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 specific fixed-rate security ("specific fixed-rate security"). Changes in the interest rate on the specific fixed-rate security inversely affect the residual interest rate paid on the RIB, with the result that when interest rates rise, RIBs' interest payments are lowered and their value falls faster than securities similar to the specific fixed-rate security. When interest rates fall, not only do RIBs provide interest payments that are higher than securities similar to the specific fixed-rate security, but their values also rise faster than such similar securities.
MANAGEMENT
The Funds' investment adviser is Lord, Abbett & Co., which is located at 90 Hudson Street, Jersey City, NJ 07302-3973. Founded in 1929, Lord Abbett manages one of the nation's oldest mutual fund complexes, with approximately $40 billion in more than 40 mutual funds and other advisory accounts. For more information about the services Lord Abbett provides to the Funds, see the Statement of Additional Information.
Lord Abbett is entitled to an annual management fee of 0.50% based on each Fund's average daily net assets. Each fee is calculated daily and payable monthly. For the fiscal year ended September 30, 2001 Lord Abbett waived its entire management fee for Minnesota Fund and waived a portion of its management fee for Missouri, New Jersey, Texas, Georgia and Pennsylvania Funds. The net management fee charged for these Funds for the fiscal year was 0.36%, 0.39%, 0.25%, 0.13%, and 0.39%, respectively. Lord Abbett may stop waiving the management fee at any time. In addition, each Fund pays all expenses not expressly assumed by Lord Abbett.
INVESTMENT MANAGERS. Lord Abbett uses a team of investment managers and analysts acting together to manage each Fund's investments.
Timothy Browse, Investment Team Leader, joined Lord Abbett in 2000 from Eaton Vance Management, Inc. where he served as Portfolio Manager and Vice President. Mr. Browse has been in the investment management business since 1985 and is the holder of a Chartered Financial Analyst designation. Philip Fang, Investment Manager, joined Lord Abbett in 1991 and has been in the investment management business since 1988. Scott Smith, Investment Manager, joined Lord Abbett in 1992 and has been in the investment business since 1990.
Robert Dow, Managing Partner and Chief Investment Officer, together with Zane Brown, Partner and Director of Fixed Income Management, oversee and review the team's investment strategies and implementation. Mr. Dow has been with Lord Abbett since 1972. Mr. Brown has been with Lord Abbett since 1992.
YOUR INVESTMENT
PURCHASES
The National Fund offers in this prospectus four classes of shares: Class
A, B, C and P. The California, New York, and Florida Funds offer three
share classes: Class A, C and P. The other Funds offer two share classes:
Class A and P. Each class in a Fund has different expenses and dividends.
You may purchase shares at the net asset value ("NAV") per share determined
after we receive your purchase order submitted in proper form. A front-end
sales charge may be added to the NAV in the case of the Class A shares.
There is no front-end sales charge in the case of Class B, Class C and
Class P shares, although there may be a contingent deferred sales charge
("CDSC") as described below.
You should read this section carefully to determine which class of shares represents the best investment option for your particular situation. It may not be suitable for you to place a purchase order for Class B shares of $500,000 or more or a purchase order for Class C shares of $1,000,000 or more. You should discuss purchase options with your investment professional.
FOR MORE INFORMATION, SEE "CAPITAL STOCK AND OTHER SECURITIES" IN THE
STATEMENT OF ADDITIONAL INFORMATION.
We reserve the right to withdraw all or any part of the offering made by this prospectus or to reject any purchase order. We also reserve the right to waive or change minimum investment requirements. All purchase orders are subject to our acceptance and are not binding until confirmed or accepted in writing.
SHARE CLASSES
CLASS A (ALL FUNDS)
- normally offered with a front-end sales charge
CLASS B (NATIONAL FUND ONLY)
- no front-end sales charge, but a CDSC is applied to shares
redeemed before the sixth anniversary of purchase
- higher annual expenses than Class A shares
- automatically converts to Class A shares after eight years
CLASS C (NATIONAL, CALIFORNIA, NEW YORK AND FLORIDA FUNDS ONLY)
- no front-end sales charge, but a CDSC is applied to shares
redeemed before the first anniversary of purchase
- higher annual expenses than Class A shares
CLASS P - no front-end sales charge and no CDSC
- available only to certain investorsFront-End Sales Charges -
Class A Shares (All Funds)
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[SIDENOTE]
NAV per share for each class of Fund shares is calculated, under normal circumstances, each business day at the close of regular trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern time. Purchases and sales of Fund shares are executed at the NAV next determined after the Fund receives your order in proper form. In calculating NAV, securities for which market quotations are available are valued at those quotations. Securities for which such quotations are not available are valued at fair value under procedures approved by the Fund's Board.
Front-End Sales Charges - Class A Shares (All Funds)
AS A % OF AS A % OF TO COMPUTE MAXIMUM DEALER'S
OFFERING YOUR OFFERING PRICE CONCESSION
YOUR INVESTMENT PRICE INVESTMENT DIVIDE NAV BY (% OF OFFERING PRICE)
----------------------------------------------------------------------------------------------
Less than $50,000 3.25% 3.36% .9675 2.75%
$50,000 to $99,999 2.75% 2.83% .9725 2.25%
$100,000 to $249,999 2.50% 2.56% .9750 2.00%
$250,000 to $499,999 2.00% 2.04% .9800 1.70%
$500,000 to $999,999 1.50% 1.52% .9850 1.25%
$1,000,000 and over No Sales Charge 1.0000
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The following $1 million category applies only to the Georgia, Michigan, Minnesota and Washington Funds until each Fund's Rule 12b-1 Plan becomes effective, at which time the sales charge table above will apply to the Fund.
$1,000,000 and over 1.00% 1.01% .9900 |
An amount of up to 1% of an investment may be paid to a dealer for purchases of $1 million or more and purchases by certain Retirement and Benefit Plans.
REDUCING YOUR CLASS A FRONT-END SALES CHARGES. Class A shares may be purchased at a discount if you qualify under either of the following conditions:
- RIGHTS OF ACCUMULATION - A Purchaser may apply the value at public offering price of the Class A shares already owned to a new purchase of Class A shares of any ELIGIBLE FUND in order to reduce the sales charge.
- LETTER OF INTENTION - A Purchaser of Class A shares may purchase additional Class A shares of any Eligible Fund over a 13-month period and receive the same sales charge as if all shares were purchased at once. Shares purchased through reinvestment of dividends or distributions are not included. A Letter of Intention may be backdated 90 days. Current holdings under Rights of Accumulation may be included in a Letter of Intention.
The term "Purchaser" includes: (1) an individual, (2) an individual and his or her spouse and children under the age of 21 and (3) a trustee or other fiduciary purchasing shares for a single trust, estate or single fiduciary account (including a pension, profit-sharing, or other employee benefit trust qualified under Section 401 of the Internal Revenue Code). Please note that more than one qualified employee benefit trust of a single employer, including its consolidated subsidiaries, may be considered a single trust, as may qualified plans of multiple employers registered in the name of a single bank trustee be considered as one account; although, more than one beneficiary is involved.
FOR MORE INFORMATION ON ELIGIBILITY FOR THESE PRIVILEGES, READ THE
APPLICABLE SECTIONS IN THE ATTACHED APPLICATION.
CLASS A SHARE PURCHASES WITHOUT A FRONT-END SALES CHARGE. Class A shares may be purchased without a front-end sales charge under the following circumstances:
- purchases of $1 million or more, *
- purchases by RETIREMENT AND BENEFIT PLANS with at least 100 eligible employees, *
- purchases for Retirement and Benefit Plans made through FINANCIAL INTERMEDIARIES that perform participant recordkeeping or other administrative services for the Plans and that have entered into special arrangements with the Funds and/or Lord Abbett Distributor specifically for such purchases, *
- purchases made with dividends and distributions on Class A shares of another Eligible Fund,
- purchases representing repayment under the loan feature of the Lord Abbett-sponsored prototype 403(b) Plan for Class A shares,
[SIDENOTE]
ELIGIBLE FUND. An "Eligible Fund" is any Lord Abbett-sponsored fund except for
(1) certain tax-free, single-state funds where the exchanging shareholder is a
resident of a state in which such a fund is not offered for sale; (2) Lord
Abbett Series Fund, Inc.; (3) Lord Abbett U.S. Government Securities Money
Market Fund, Inc. ("GSMMF") and (4) any other fund the shares of which are not
available to the investor at the time of the transaction due to a limitation on
the offering of the fund's shares (except for holdings in GSMMF which are
attributable to any shares exchanged from the Lord Abbett Family of Funds). An
Eligible Fund also is any Authorized Institution's affiliated money market fund
meeting criteria set by Lord Abbett Distributor as to certain omnibus account
and other criteria.
RETIREMENT AND BENEFIT PLANS include qualified and non-qualified retirement plans, deferred compensation plans and certain other retirement, savings or benefit plans, excluding Individual Retirement Accounts.
Lord Abbett offers a variety of retirement plans. Call 800-253-7299 for information about:
- Traditional, Rollover, Roth and Education IRAs
- Simple IRAs, SEP-IRAs, 401(k) and 403(b) accounts
- Defined Contribution Plans
FINANCIAL INTERMEDIARIES include broker-dealers, registered investment advisers, banks, trust companies, certified financial planners, third-party administrators, recordkeepers, trustees, custodians, financial consultants and insurance companies.
- purchases by employees of any consenting securities dealer having a sales agreement with Lord Abbett Distributor,
- purchases made by or on behalf of Financial Intermediaries for clients that pay the Intermediaries fees for services that include investment advisory or management services, provided that the Financial Intermediaries or their trading agents have entered into special arrangements with the Funds and/or Lord Abbett Distributor specifically for such purchases,
- purchases by trustees or custodians of any pension or profit sharing plan, or payroll deduction IRA for employees of any consenting securities dealer having a sales agreement with Lord Abbett Distributor,
- purchases by each Lord Abbett-sponsored fund's Directors or Trustees, officers of each Lord Abbett sponsored fund, employees and partners of Lord Abbett (including retired persons who formerly held such positions and family members of such purchasers), or
- purchases through an omnibus account of a dealer that features ten or fewer preferred mutual fund families, including the Lord Abbett family of funds, within 30 days of, and with the proceeds from, a redemption through the same dealer's omnibus account of shares of a mutual fund that were originally purchased subject to a sales charge.
SEE THE STATEMENT OF ADDITIONAL INFORMATION FOR A LISTING OF OTHER CATEGORIES OF PURCHASES THAT QUALIFY FOR CLASS A SHARE PURCHASES WITHOUT A FRONT-END SALES CHARGE.
* THESE CATEGORIES MAY BE SUBJECT TO A CDSC.
Contingent Deferred Sales Charge (CDSC)
A CDSC, regardless of class, is not charged on shares acquired through reinvestment of dividends or capital gains distributions and is charged on the original purchase cost or the current market value of the shares at the time they are redeemed, whichever is lower. In addition, repayment of loans under Retirement and Benefit Plans will constitute new sales for purposes of assessing the CDSC.
To minimize the amount of any CDSC, the Fund redeems shares in the following order:
1. shares acquired by reinvestment of dividends and capital gains (always free of a CDSC)
2. shares held for six years or more (Class B) or two years or more after the month of purchase (Class A) or one year or more (Class C)
3. shares held the longest before the sixth anniversary of their purchase
(Class B) or before the second anniversary after the month of purchase
(Class A) or before the first anniversary of their purchase (Class C)
CLASS A SHARE CDSC. If you buy Class A shares under one of the starred () categories listed above or if you acquire Class A shares in exchange for Class A shares of another Lord Abbett-sponsored fund subject to a CDSC and you redeem any of the Class A shares within 24 months after the month in which you initially purchased those shares, the Fund will normally collect a CDSC of 1% and remit it to the Fund in which you originally purchased the shares.
The Class A share CDSC generally will not be assessed at the time of the following transactions:
- benefit payments under Retirement and Benefit Plans in connection with loans, hardship withdrawals, death, disability, retirement, separation from service or any excess distribution under Retirement and Benefit Plans (documentation may be required)
- redemptions by Retirement and Benefit Plans made through Financial Intermediaries that have special arrangements with the Fund and/or Lord Abbett Distributor, provided the Plan has not redeemed all, or substantially all, of its assets from the Lord Abbett family of funds
[SIDENOTE]
BENEFIT PAYMENT DOCUMENTATION. (Class A CDSC only) Requests for benefit payments of $50,000 or more must be in writing. Use the address indicated under "Opening your Account."
CLASS B SHARE CDSC. The CDSC for Class B shares normally applies if you redeem your shares before the sixth anniversary of their initial purchase. The CDSC will be remitted to Lord Abbett Distributor. The CDSC declines the longer you own your shares, according to the following schedule:
Contingent Deferred Sales Charges - Class B Shares
ANNIVERSARY(1) OF THE DAY ON CONTINGENT DEFERRED SALES CHARGE
WHICH THE PURCHASE ORDER ON REDEMPTION (AS % OF AMOUNT
WAS ACCEPTED SUBJECT TO CHARGE)
On Before
1st 5.0%
1st 2nd 4.0%
2nd 3rd 3.0%
3rd 4th 3.0%
4th 5th 2.0%
5th 6th 1.0%
on or after the 6th(2) None
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(1) The anniversary is the same calendar day in each respective year after the date of purchase. For example, the anniversary for shares purchased on May 1 will be May 1 of each succeeding year.
(2) Class B shares will automatically convert to Class A shares on the eighth anniversary of the purchase of Class B shares.
The Class B share CDSC generally will not be assessed under the following circumstances:
- benefit payments under Retirement and Benefit Plans in connection with loans, hardship withdrawals, death, disability, retirement, separation from service or any excess contribution or distribution under Retirement and Benefit Plans
- ELIGIBLE MANDATORY DISTRIBUTIONS under 403(b) Plans and individual retirement accounts
- death of the shareholder
- redemptions of shares in connection with Div-Move and Systematic Withdrawal Plans (up to 12% per year)
SEE "SYSTEMATIC WITHDRAWAL PLAN" UNDER "SERVICES FOR FUND INVESTORS" BELOW
FOR MORE INFORMATION ON CDSCS WITH RESPECT TO CLASS B SHARES.
CLASS C SHARE CDSC (NATIONAL, CALIFORNIA, NEW YORK AND FLORIDA FUNDS ONLY). The 1% CDSC for Class C shares normally applies if you redeem your shares before the first anniversary of their purchase.
CLASS P SHARES. Class P shares have lower annual expenses than Class B and Class C shares, no front-end sales charge, and no CDSC. Class P shares are currently sold and redeemed at NAV in connection with (a) orders made by or on behalf of Financial Intermediaries for clients that pay the Intermediaries fees for services that include investment advisory or management services, provided that the Financial Intermediaries or their trading agents have entered into special arrangements with the Fund and/or Lord Abbett Distributor specifically for such orders; and (b) orders for Retirement and Benefit Plans made through Financial Intermediaries that perform participant recordkeeping or other administrative services for the Plans and that have entered into special arrangements with the Fund and/or Lord Abbett Distributor specifically for such orders.
[SIDENOTE]
ELIGIBLE MANDATORY DISTRIBUTIONS. If Class B shares represent a part of an individual's total IRA or 403(b) investment, the CDSC will be waived only for that part of a mandatory distribution which bears the same relation to the entire mandatory distribution as the Class B share investment bears to the total investment.
SALES COMPENSATION
As part of its plan for distributing shares, the Fund and LORD ABBETT DISTRIBUTOR pay sales and service compensation to AUTHORIZED INSTITUTIONS that sell the Fund's shares and service its shareholder accounts.
Sales compensation originates from two sources, as shown in the table "Fees and Expenses" sales charges which are paid directly by shareholders and 12b-1 distribution fees that are paid by the Fund. Service compensation originates from 12b-1 service fees. Because 12b-1 fees are paid on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges. The total 12b-1 fees payable for each share class for the fiscal year ended 9/30/01 are up to .39% of Class A shares (consisting of .10% distribution fee, .25% service fee, one-time distribution fees of up to 1.00% payable at the time of sale to Authorized Institutions, such as your dealer, on certain qualifying purchases, and an incremental marketing expense of approximately .03%), 1.00% of Class B and C shares, (consisting of .75% distribution fee and .25% service fee), and .45% of Class P shares (consisting of .25% distribution fee and .20% service fee). The Rule 12b-1 plans for Class A and Class P shares provide that maximum payments that may be authorized by the Board are .50% and .75%, respectively. Sometimes we do not pay compensation where tracking data is not available for certain accounts or where the Authorized Institution waives part of the compensation. In such cases, we may not require payment of any otherwise applicable CDSC.
ADDITIONAL CONCESSIONS TO AUTHORIZED INSTITUTIONS. Lord Abbett Distributor may, for specified periods, allow dealers to retain the full sales charge for sales of shares or may pay an additional concession to a dealer who sells a minimum dollar amount of Fund shares and/or shares of other Lord Abbett-sponsored funds. In some instances, such additional concessions will be offered only to certain dealers expected to sell significant amounts of shares. Additional payments may be paid from Lord Abbett Distributor's own resources or from distribution fees received from a Fund and will be made in the form of cash or, if permitted, non-cash payments. The non-cash payments may include business seminars at Lord Abbett's headquarters or other locations, including meals and entertainment, or merchandise. The cash payments may include payment of various business expenses of the dealer.
In selecting dealers to execute portfolio transactions for the Fund's portfolio, if two or more dealers are considered capable of obtaining best execution, we may prefer the dealer who has sold our shares or shares of other Lord Abbett-sponsored funds.
SALES ACTIVITIES. We may use 12b-1 distribution fees to pay Authorized Institutions to finance any activity that is primarily intended to result in the sale of shares. Lord Abbett Distributor uses its portion of the distribution fees attributable to the Fund's Class A and Class C shares for activities that are primarily intended to result in the sale of such Class A and Class C shares, respectively. These activities include, but are not limited to, printing of prospectuses and statements of additional information and reports for other than existing shareholders, preparation and distribution of advertising and sales
SERVICE ACTIVITIES. We may pay 12b-1 service fees to Authorized Institutions for any activity that is primarily intended to result in personal service and/or the maintenance of shareholder accounts. Any portion of the service fees paid to Lord Abbett Distributor will be used to service and maintain shareholder accounts.
[SIDENOTE]
LORD ABBETT DISTRIBUTOR LLC ("Lord Abbett Distributor") acts as agent for the Funds to work with investment professionals that buy and/or sell shares of the Funds on behalf of their clients. Generally, Lord Abbett Distributor does not sell Fund shares directly to investors.
AUTHORIZED INSTITUTIONS are institutions and persons permitted by law to receive service and/or distribution fees under a Rule 12b-1 Plan. Lord Abbett Distributor is an Authorized Institution.
12b-1 FEES ARE PAYABLE REGARDLESS OF EXPENSES. The amounts payable by a Fund need not be directly related to expenses. If Lord Abbett Distributor's actual expenses exceed the fee payable to it, the Fund will not have to pay more than that fee. If Lord Abbett Distributor's expenses are less than the fee it receives, Lord Abbett Distributor will keep the full amount of the fee.
OPENING YOUR ACCOUNT
MINIMUM INITIAL INVESTMENT
- Regular account $1,000
- Individual Retirement Accounts and
403(b) Plans under the Internal Revenue Code $ 250
- Uniform Gift to Minor Account $ 250
- Invest-A-Matic $ 250
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No minimum is required for certain Retirement and Benefit Plans and for certain purchases through Financial Intermediaries that charge their clients a fee for services that include investment advisory or management services.
You may purchase shares through any independent securities dealer who has a sales agreement with Lord Abbett Distributor, or you can fill out the attached application and send it to the Fund you select at the address stated below. You should carefully read the paragraph below entitled "Proper Form" before placing your order to ensure that your order will be accepted.
NAME OF FUND
P.O. Box 219100
Kansas City, MO 64121
PROPER FORM. An order submitted directly to the Funds must contain: (1) a completed application, and (2) payment by check. When purchases are made by check, redemption proceeds will not be paid until the Fund or transfer agent is advised that the check has cleared, which may take up to 15 calendar days. For more information, please call the Funds at 800-821-5129.
BY EXCHANGE. Please call the Funds at 800-821-5129 to request an exchange from any eligible Lord Abbett-sponsored fund.
REDEMPTIONS
Redemptions of Fund shares are executed at the NAV next determined after the Fund receives your order in proper form. In the case of redemptions involving Retirement and Benefit Plans, you may be required to provide the Funds with one or more completed forms before your order will be executed. For more information, please call 800-821-5129. To determine if a CDSC applies to a redemption, see "Class A share CDSC," "Class B share CDSC" or "Class C share CDSC."
BY BROKER. Call your investment professional for instructions on how to redeem your shares.
BY TELEPHONE. To obtain the proceeds of a redemption of $50,000 or less from your account, you or your representative should call the Funds at 800-821-5129.
BY MAIL. Submit a written redemption request indicating the name(s) in which the account is registered, the Fund's name, the class of shares, your account number, and the dollar value or number of shares you wish to redeem and include all necessary signatures.
Normally a check will be mailed to the name(s) and address in which the account is registered (or otherwise according to your instruction) within three business days after receipt of your redemption request. Your account balance must be sufficient to cover the amount being redeemed or your redemption order will not be processed. Under unusual circumstances, the Funds may suspend redemptions, or postpone payment for more than seven days, as permitted by federal securities laws.
[SIDENOTE]
SMALL ACCOUNTS. The Board may authorize closing any account in which there are fewer than 25 shares if it is in a Fund's best interest to do so.
If the signer has any Legal Capacity, (i.e., the authority of an individual to act on behalf of an entity or other person(s)), the signature and capacity must be guaranteed by an ELIGIBLE GUARANTOR. Certain other legal documentation may be required. For more information regarding proper documentation, please call 800-821-5129.
A GUARANTEED SIGNATURE is designed to protect you from fraud by verifying your signature. We require a Guaranteed Signature by an Eligible Guarantor on requests for:
- a redemption check for which you have the legal capacity to sign on behalf of another person or entity (i.e. on behalf of an estate or on behalf of a corporation),
- a redemption check payable to anyone other than the shareholder(s) of record,
- a redemption check to be mailed to an address other than the address of record,
- a redemption check payable to a bank other than the bank we have on file, or
- a redemption for $50,000 or more.
DISTRIBUTIONS AND TAXES
Each Fund expects to declare "exempt-interest dividends" from its net investment income daily and pay them monthly. Each Fund distributes its net capital gains (if any) annually as "capital gains distributions."
Distributions will be reinvested in Fund shares unless you instruct the Fund to pay them to you in cash. For distributions payable on accounts other than those held in the name of your dealer, if you instruct the Fund to pay your distributions in cash, and the Post Office is unable to deliver one or more of your checks or one or more of your checks remains uncashed for a certain period, the Fund reserves the right to reinvest your checks in your account at the NAV on the day of the reinvestment following such period. No interest will accrue on checks while they remain uncashed before they are reinvested or on amounts represented by uncashed redemption checks. There are no sales charges on such reinvestments.
Each Fund seeks to earn income and pay dividends exempt from federal income tax. It is anticipated that substantially all of each Fund's income will be exempt from federal income tax. However, each Fund may invest a portion of its assets in securities that pay income that is not exempt from federal income tax. In the case of non-exempt securities, distributions of short-term capital gains and gains characterized as market discount are taxable to you as ordinary income for federal income tax purposes, while distributions of net long-term capital gains are taxable to you as long-term capital gains. This tax treatment of distributions applies regardless of how long you have owned shares or whether distributions are reinvested or paid in cash.
A portion of the dividends you receive may be subject to federal individual or corporate alternative minimum tax ("AMT"). Each Fund may invest up to 20% of its net assets in private activity bonds. The income from these bonds is an item of tax preference when determining your federal individual or corporate AMT.
Except in tax-advantaged accounts, any sale, redemption or exchange of Fund shares may be taxable to you.
If you buy shares when the Fund has realized but not yet distributed income or capital gains, you will be "buying a dividend" by paying the full price for shares and then receiving a portion of the price back in the form of a potentially taxable distribution.
Changes in federal or state law or adverse determinations by the Internal Revenue Service, as they relate to certain municipal bonds, may make income from such bonds taxable.
Tax reporting information concerning Fund distributions will be mailed to you each year. Because everyone's tax situation is unique, you should consult your tax adviser regarding the treatment of such distributions under the federal, state and local tax rules that apply
[SIDENOTE]
ELIGIBLE GUARANTOR is any broker or bank that is usually a member of the medallion stamp program. Most major securities firms and banks are members of this program. A NOTARY PUBLIC IS NOT AN ELIGIBLE GUARANTOR.
GUARANTEED SIGNATURE. An acceptable form of guarantee would be as follows:
- In the case of an estate -
ROBERT A. DOE
EXECUTOR OF THE ESTATE OF
JOHN W. DOE
[Date]
[GRAPHIC]
- In the case of a corporation - ABC Corporation
MARY B. DOE
By Mary B. Doe, President
[Date]
[GRAPHIC]
to you, as well as the tax consequences of gains or losses from the sale, redemption, or exchange of your shares.
SINGLE-STATE TAXABILITY OF DISTRIBUTIONS
FOR ALL STATE FUNDS - With respect to each state Fund described below, generally exempt-interest dividends derived from interest income on obligations of that state or its political subdivisions, agencies or instrumentalities and on obligations of the federal government or certain other U.S. instrumentalities paid to shareholders who are residents of that state will be exempt from individual income tax in that state but will not be exempt from state and local taxes in other states. However, special rules, described below, may apply. Even if exempt from individual tax, exempt-interest dividends may be subject to a state's franchise or other corporate or business taxes if received by a corporation subject to taxes in that state.
Generally, distributions other than exempt-interest dividends, whether received in cash or additional shares, that are federally taxable as ordinary income or capital gains will be includible in income for both state individual and corporate tax purposes. Furthermore, a portion of the Fund's distributions, including exempt-interest dividends, may be subject to state individual or corporate AMT. The income from private activity bonds may be an item of tax preference for state individual or corporate AMT purposes.
The following special rules generally apply only to shareholders who are residents of each respective state.
CALIFORNIA FUND - The Fund seeks to earn income and pay dividends that will be exempt from California individual income taxes. All exempt-interest dividends from the Fund are included in the income of corporate shareholders that are subject to the California franchise or corporate income tax.
CONNECTICUT FUND - The Fund generally seeks to earn income and pay dividends that will be exempt from Connecticut individual income taxes. However, dividends on certain U.S. obligations may not be exempt from Connecticut individual income taxes. Distributions that qualify as capital gains distributions for federal income tax purposes are not subject to the Connecticut individual income tax to the extent they are derived from Connecticut obligations. All exempt-interest dividends from the Fund are included in the income of corporate shareholders that are subject to the Connecticut Corporation Business Tax.
FLORIDA FUND - Florida imposes no state individual income tax. Therefore, individuals derive no special Florida state income tax benefits by investing in the Fund. Exempt-interest dividends paid by the Fund to corporate shareholders are generally included in the income of corporate shareholders that are subject to Florida corporate income tax.
Florida also imposes an intangible personal property tax on certain financial assets, including, under certain circumstances, interests in mutual funds. However, the Fund expects that its shares will be exempt from the Florida intangible personal property tax.
GEORGIA FUND - The Fund seeks to earn income and pay dividends that will be exempt from Georgia individual and corporate income taxes.
HAWAII FUND - The Fund seeks to earn income and pay dividends that will be exempt from Hawaii individual and corporate income taxes.
MICHIGAN FUND - The Fund seeks to earn income and pay dividends that will be exempt from Michigan individual and corporate income taxes.
MINNESOTA FUND - The Fund seeks to earn income and pay dividends that will be exempt from Minnesota individual income taxes. All exempt-interest dividends from the Fund are included in the income of corporate shareholders that are subject to the Minnesota franchise tax.
MISSOURI FUND - The Fund seeks to earn income and pay dividends that will be exempt from Missouri individual and corporate income taxes.
NEW JERSEY FUND - The Fund seeks to earn income and pay dividends that will be exempt from New Jersey individual income taxes. All exempt-interest dividends from the Fund are included in income of corporate shareholders that are subject to the New Jersey gross income tax.
NEW YORK FUND - The Fund seeks to earn income and pay dividends that will be exempt from New York State, as well as New York City, individual income taxes. All exempt-interest dividends from the Fund are included in the income of corporate shareholders that are subject to the New York State corporation franchise tax, as well as New York City general corporation tax.
PENNSYLVANIA FUND - The Fund seeks to earn income and pay dividends that will be exempt from Pennsylvania individual and corporate income taxes. Capital gains distributions from the Fund will be considered ordinary income for Pennsylvania individual income tax purposes.
Pennsylvania county personal property tax may be imposed on shares of the Pennsylvania Fund if, on the annual assessment date, the Fund holds certain assets other than exempt securities in which the Fund may engage. In such circumstances, a portion of the value of the Fund's shares would be subject to personal property tax.
TEXAS FUND - Texas imposes no state individual income tax. Therefore, individuals derive no special Texas state income tax benefits by investing in the Fund. To the extent exempt-interest dividends are excludable from taxable income for federal corporate income tax purposes, they will not be subject to the Texas franchise tax.
WASHINGTON FUND - Washington imposes no state individual or corporate income tax. Therefore, individual and corporate shareholders derive no special Washington state income benefits by investing in the Fund.
NATIONAL FUND
Shareholders generally will not be able to exclude exempt-interest dividends paid by the National Fund from their state taxable income. However, shareholders who are residents of a state that does not impose minimum investment requirements in order for exempt dividends from a fund to be excludible from state taxable income may be eligible to exclude the percentage of income derived from obligations of that state when determining their state taxable income. The amount excludible from state taxable income generally will be relatively small, however. Information concerning the percentage of income attributable to each state will be provided to you. You should confirm with your tax adviser that income attributable to a state of residence is properly excludable when determining your taxable income. In addition, the portion of the National Fund's dividends attributable to private activity bonds will be a tax preference item for federal, and possibly state, AMT purposes.
The foregoing is only a summary of important state tax rules. You should consult your tax advisers regarding specific questions as to federal, state or local taxes and how these relate to your own tax situation.
SERVICES FOR FUND INVESTORS
AUTOMATIC SERVICES
Buying or selling shares automatically is easy with the services described below. With each service, you select a schedule and amount, subject to certain restrictions. You may set up most of these services when filling out your application or by calling 800-821-5129.
FOR INVESTING
INVEST-A-MATIC You can make fixed, periodic investments ($50 minimum)
(Dollar-cost into your Fund account by means of automatic money
averaging) transfers from your bank checking account. See the
attached application for instructions.
DIV-MOVE You can automatically reinvest the dividends and
distributions from your account into another account in
any Eligible Fund ($50 minimum).
FOR SELLING SHARES
SYSTEMATIC You can make regular withdrawals from most Lord Abbett
WITHDRAWAL funds. Automatic cash withdrawals will be paid to you
PLAN ("SWP") from your account in fixed or variable amounts. To
establish a plan, the value of yourshares must be at
least $10,000, except for Retirement and Benefit Plans
for which there is no minimum. Your shares must be in
non-certificate form.
CLASS B SHARES The CDSC will be waived on redemptions of up to 12% of
the current net asset value of your account at the time
of your SWP request. For Class B share redemptions over
12% per year, the CDSC will apply to the entire
redemption. Please contact the Funds for assistance in
minimizing the CDSC in this situation.
CLASS B AND Redemption proceeds due to a SWP for Class B and Class C
CLASS C SHARES shares will be redeemed in the order described under
"CDSC" under "Purchases."
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OTHER SERVICES
TELEPHONE INVESTING. After we have received the attached application (selecting "yes" under Section 8C and completing Section 7), you may instruct us by phone to have money transferred from your bank account to purchase shares of the Funds for an existing account. Each Fund will purchase the requested shares when it receives the money from your bank.
EXCHANGES. You or your investment professional may instruct the Funds to exchange shares of any class for shares of the same class of any Eligible Fund. Instruction may be provided in writing or by telephone, with proper identification, by calling 800-821-5129. The Funds must receive instructions for the exchange before the close of the NYSE on the day of your call in which case you will get the NAV per share of the Eligible Fund determined on that day. Exchanges will be treated as a sale for federal tax purposes. Be sure to read the current prospectus for any Fund into which you are exchanging.
REINVESTMENT PRIVILEGE. If you sell shares of a Fund, you have a one-time right to reinvest some or all of the proceeds in the same class of any Eligible Fund within 60 days without a sales charge. If you paid a CDSC when you sold your shares, you will be credited with the amount of the CDSC. All accounts involved must have the same registration.
ACCOUNT STATEMENTS. Every Lord Abbett investor automatically receives quarterly account statements.
[SIDENOTE]
TELEPHONE TRANSACTIONS. You have this privilege unless you refuse it in writing. For your security, telephone transaction requests are recorded. We will take measures to verify the identity of the caller, such as asking for your name, account number, social security or taxpayer identification number and other relevant information. The Funds will not be liable for following instructions communicated by telephone that they reasonably believe to be genuine.
Transactions by telephone may be difficult to implement in times of drastic economic or market change.
EXCHANGE LIMITATIONS. Exchanges should not be used to try to take advantage of short-term swings in the market. Frequent exchanges and similar trading practices can disrupt management of the Funds and raise expenses. Accordingly, the Funds reserve the right to limit or terminate this privilege for any shareholder making frequent exchanges or abusing the privilege. The Fund also may revoke the privilege for all shareholders upon 60 days' written notice. In addition, as stated under "Purchases," the Fund reserves the right to reject any purchase order, including purchase orders from shareholders whose trading has been or may be disruptive to the Fund.
HOUSEHOLDING. Shareholders with the same last name and address will receive a single copy of the prospectus and an annual and semi-annual report, unless additional reports are specifically requested in writing to the Funds.
ACCOUNT CHANGES. For any changes you need to make to your account, consult your investment professional or call the Funds at 800-821-5129.
SYSTEMATIC EXCHANGE. You or your investment professional may establish a schedule of exchanges between the same share classes of any Eligible Fund.
NATIONAL TAX-FREE FUND
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
CLASS A SHARES
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YEAR ENDED 9/30
---------------
2001 2000 1999 1998 1997
Per Share Operating Performance
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Net asset value, beginning of year $10.76 $10.79 $11.98 $11.48 $11.08
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INVESTMENT OPERATIONS
Net investment income .53(a) .51(a) .59 .60 .59
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Net realized and unrealized gain (loss) .59 .01 (1.03) .47 .41
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Total from investment operations 1.12 .52 (.44) 1.07 1.00
---------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.55) (.55) (.56) (.57) (.60)
---------------------------------------------------------------------------
Net realized gain -- -- (.19) -- --
---------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.55) (.55) (.75) (.57) (.60)
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NET ASSET VALUE, END OF YEAR $11.33 $10.76 $10.79 $11.98 $11.48
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TOTAL RETURN(b) 10.64% 5.02% (3.85)% 9.60% 9.30%
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RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions 1.01% .98% .95% .88% .87%
---------------------------------------------------------------------------
Expenses, excluding expense reductions 1.06% .99% .95% .88% .87%
---------------------------------------------------------------------------
Net investment income 4.78% 4.85% 5.10% 5.18% 5.27%
---------------------------------------------------------------------------
YEAR ENDED 9/30
---------------------------------------------------------------------------
SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $512,426 $487,188 $542,601 $606,428 $602,007
---------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 77.46% 185.25% 254.13% 304.15% 232.64%
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|
CLASS B SHARES
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YEAR ENDED 9/30
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $10.79 $10.82 $11.98 $11.50 $11.08
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INVESTMENT OPERATIONS
Net investment income .46(a) .44(a) .51 .52 .56
--------------------------------------------------------
Net realized and unrealized gain (loss) .60 .01 (.99) .46 .41
--------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.06 .45 (.48) .98 .97
--------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.49) (.48) (.49) (.50) (.55)
--------------------------------------------------------
Net realized gain -- -- (.19) -- --
--------------------------------------------------------
TOTAL DISTRIBUTIONS (.49) (.48) (.68) (.50) (.55)
--------------------------------------------------------
NET ASSET VALUE, END OF YEAR $11.36 $10.79 $10.82 $11.98 $11.50
--------------------------------------------------------
TOTAL RETURN(b) 9.96% 4.32% (4.30)% 8.85% 8.95%
--------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions 1.64% 1.63% 1.54% 1.47% 1.37%
--------------------------------------------------------
Expenses, excluding expense reductions 1.69% 1.63% 1.54% 1.47% 1.37%
--------------------------------------------------------
Net investment income 4.15% 4.15% 4.41% 4.49% 4.65%
--------------------------------------------------------
|
CLASS B SHARES
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YEAR ENDED 9/30
--------------------------------------------------------
SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $28,531 $17,594 $16,053 $9,472 $2,935
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PORTFOLIO TURNOVER RATE 77.46% 185.25% 254.13% 304.15% 232.64%
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|
CLASS C SHARES
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YEAR ENDED 9/30
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $10.77 $10.81 $11.99 $11.49 $11.08
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INVESTMENT OPERATIONS
Net investment income .46(a) .45(a) .50 .52 .51
--------------------------------------------------------
Net realized and unrealized gain (loss) .60 (.01) (1.01) .47 .42
--------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.06 .44 (.51) .99 .93
--------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.48) (.48) (.48) (.49) (.52)
--------------------------------------------------------
Net realized gain -- -- (.19) -- --
--------------------------------------------------------
TOTAL DISTRIBUTIONS (.48) (.48) (.67) (.49) (.52)
--------------------------------------------------------
NET ASSET VALUE, END OF YEAR $11.35 $10.77 $10.81 $11.99 $11.49
--------------------------------------------------------
TOTAL RETURN(b) 10.04% 4.23% (4.45)% 8.80% 8.61%
--------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions 1.68% 1.63% 1.63% 1.61% 1.59%
--------------------------------------------------------
Expenses, excluding expense reductions 1.73% 1.64% 1.63% 1.61% 1.59%
--------------------------------------------------------
Net investment income 4.11% 4.19% 4.38% 4.44% 4.54%
--------------------------------------------------------
|
CLASS C SHARES
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YEAR ENDED 9/30
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SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $37,803 $34,999 $38,409 $42,410 $41,794
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PORTFOLIO TURNOVER RATE 77.46% 185.25% 254.13% 304.15% 232.64%
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|
(a) Calculated using average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
CALIFORNIA TAX-FREE FUND
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
CLASS A SHARES
----------------------------------------------------------------------------
YEAR ENDED 9/30
---------------
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $10.29 $10.16 $11.12 $10.72 $10.43
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INVESTMENT OPERATIONS
Net investment income .51(a) .53(a) .54 .54 .56
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Net realized and unrealized gain (loss) .61 .12 (.98) .39 .29
----------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.12 .65 (.44) .93 .85
----------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.52) (.52) (.52) (.53) (.56)
----------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.89 $10.29 $10.16 $11.12 $10.72
----------------------------------------------------------------------------
TOTAL RETURN(b) 11.09% 6.62% (4.09)% 8.86% 8.39%
----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions 1.00% .94% .93% .87% .72%
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Expenses, excluding expense reductions 1.04% .94% .93% .87% .85%
----------------------------------------------------------------------------
Net investment income 4.81% 5.30% 4.96% 4.98% 5.38%
YEAR ENDED 9/30
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SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $192,624 $186,041 $207,113 $250,427 $258,505
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PORTFOLIO TURNOVER RATE 72.84% 100.22% 185.43% 187.26% 121.97%
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|
CLASS C SHARES
------------------------------------------------------------
YEAR ENDED 9/30
---------------
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $10.30 $10.16 $11.12 $10.72 $10.43
------------------------------------------------------------
INVESTMENT OPERATIONS
Net investment income .45(a) .47(a) .46 .47 .48
------------------------------------------------------------
Net realized and unrealized gain (loss) .61 .12 (.98) .38 .29
------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.06 .59 (.52) .85 .77
------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.45) (.45) (.44) (.45) (.48)
------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.91 $10.30 $10.16 $11.12 $10.72
------------------------------------------------------------
TOTAL RETURN(b) 10.53% 6.02% (4.77)% 8.09% 7.59%
------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions 1.55% 1.55% 1.60% 1.59% 1.46%
------------------------------------------------------------
Expenses, excluding expense reductions 1.59% 1.55% 1.60% 1.59% 1.59%
------------------------------------------------------------
Net investment income 4.26% 4.70% 4.28% 4.26% 4.64%
------------------------------------------------------------
YEAR ENDED 9/30
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SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $11,591 $10,646 $12,767 $13,978 $14,504
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PORTFOLIO TURNOVER RATE 72.84% 100.22% 185.43% 187.26% 121.97%
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|
(a) Calculated using average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
CONNECTICUT TAX-FREE FUND
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
YEAR ENDED 9/30
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $9.79 $9.89 $10.73 $10.42 $10.13
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INVESTMENT OPERATIONS
Net investment income .49(a) .49(a) .54 .52 .55
-------------------------------------------------------------------------
Net realized and unrealized gain (loss) .53 (.08) (.86) .32 .29
-------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.02 .41 (.32) .84 .84
-------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.49) (.51) (.52) (.53) (.55)
-------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.32 $9.79 $9.89 $10.73 $10.42
-------------------------------------------------------------------------
TOTAL RETURN(b) 10.65% 4.32% (3.04)% 8.32% 8.56%
-------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions 1.01% 1.02% .95% .81% .59%
-------------------------------------------------------------------------
Expenses, excluding expense reductions 1.03% 1.02% .95% .81% .78%
-------------------------------------------------------------------------
Net investment income 4.85% 5.10% 5.12% 4.95% 5.45%
-------------------------------------------------------------------------
YEAR ENDED 9/30
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SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
------------------ ---- ---- ---- ---- ----
NET ASSETS, END OF YEAR (000) $101,242 $96,901 $111,758 $120,983 $119,909
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PORTFOLIO TURNOVER RATE 21.52% 37.92% 53.76% 61.06% 37.09%
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|
(a) Calculated using average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
HAWAII TAX-FREE FUND
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
YEAR ENDED 9/30
-----------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $4.83 $4.84 $5.25 $5.07 $4.93
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INVESTMENT OPERATIONS
Net investment income .22(a) .24(a) .26 .25 .26
-----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .20 (.01) (.43) .18 .14
-----------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .42 .23 (.17) .43 .40
-----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.24) (.24) (.24) (.25) (.26)
-----------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $5.01 $4.83 $4.84 $5.25 $5.07
-----------------------------------------------------------------------------------
TOTAL RETURN(b) 8.88% 4.94% (3.31)% 8.59% 8.42%
-----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions 1.04% .99% .97% .92% .58%
-----------------------------------------------------------------------------------
Expenses, excluding expense reductions 1.07% .99% .97% .93% .87%
-----------------------------------------------------------------------------------
Net investment income 4.49% 5.03% 5.03% 4.78% 5.39%
-----------------------------------------------------------------------------------
YEAR ENDED 9/30
-----------------------------------------------------------------------------------
SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $71,022 $70,190 $71,619 $80,970 $79,079
-----------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 32.38% 30.06% 27.63% 52.65% 29.09%
-----------------------------------------------------------------------------------
|
(a) Calculated using average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
MINNESOTA TAX-FREE FUND
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
YEAR ENDED 9/30
-----------------------------------------------------
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $4.76 $4.78 $5.18 $5.05 $4.90
-----------------------------------------------------
INVESTMENT OPERATIONS
Net investment income .25(a) .23(a) .27 .27 .27
-----------------------------------------------------
Net realized and unrealized gain (loss) .24 .01 (.41) .13 .16
-----------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .49 .24 (.14) .40 .43
-----------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.25) (.26) (.26) (.27) (.28)
-----------------------------------------------------
NET ASSET VALUE, END OF YEAR $5.00 $4.76 $4.78 $5.18 $5.05
-----------------------------------------------------
TOTAL RETURN(b) 10.57% 5.32% (2.72)% 8.11% 8.97%
-----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions .19% .24% .23% .27% .36%
-----------------------------------------------------
Expenses, excluding waiver and expense reductions .82% .74% .73% .77% .86%
-----------------------------------------------------
Net investment income 5.16% 5.00% 5.43% 5.19% 5.51%
-----------------------------------------------------
YEAR ENDED 9/30
--------------------------------------------------------------------
SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $24,708 $20,864 $19,843 $14,399 $10,510
--------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 24.34% 50.37% 22.87% 40.65% 41.45%
--------------------------------------------------------------------
|
(a) Calculated using average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
MISSOURI TAX-FREE FUND
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
YEAR ENDED 9/30
----------------------------------------------------
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $4.96 $4.99 $5.36 $5.22 $5.08
----------------------------------------------------
INVESTMENT OPERATIONS
Net investment income .25(a) .24(a) .25 .25 .27
----------------------------------------------------
Net realized and unrealized gain (loss) .29 (.02) (.37) .14 .14
----------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .54 .22 (.12) .39 .41
----------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.25) (.25) (.25) (.25) (.27)
----------------------------------------------------
NET ASSET VALUE, END OF YEAR $5.25 $4.96 $4.99 $5.36 $5.22
----------------------------------------------------
TOTAL RETURN(b) 11.11% 4.63% (2.25)% 7.75% 8.22%
----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions .89% 1.02% .99% .92% .70%
----------------------------------------------------
Expenses, excluding waiver and expense reductions 1.08% 1.02% .99% .93% .94%
----------------------------------------------------
Net investment income 4.80% 4.98% 4.84% 4.80% 5.22%
----------------------------------------------------
YEAR ENDED 9/30
------------------------------------------------------------------------
SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $130,122 $120,058 $125,775 $144,155 $140,280
------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 43.75% 43.30% 78.85% 72.89% 27.34%
------------------------------------------------------------------------
|
(a) Calculated using average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
NEW JERSEY TAX-FREE FUND
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
YEAR ENDED 9/30
-----------------------------------------------------
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $4.96 $4.97 $5.54 $5.32 $5.18
-----------------------------------------------------
INVESTMENT OPERATIONS
Net investment income .25(a) .25(a) .27 .26 .27
-----------------------------------------------------
Net realized and unrealized gain (loss) .26 --(b) (.47) .22 .15
-----------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .51 .25 (.20) .48 .42
-----------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.26) (.26) (.26) (.26) (.28)
-----------------------------------------------------
Net realized gain -- -- (.11) -- --
-----------------------------------------------------
TOTAL DISTRIBUTIONS (.26) (.26) (.37) (.26) (.28)
-----------------------------------------------------
NET ASSET VALUE, END OF YEAR $5.21 $4.96 $4.97 $5.54 $5.32
-----------------------------------------------------
TOTAL RETURN(c) 10.41% 5.31% (3.73)% 9.34% 8.25%
-----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions .90% .97% .93% .86% .82%
-----------------------------------------------------
Expenses, excluding waiver and expense reductions 1.06% .98% .93% .86% .86%
-----------------------------------------------------
Net investment income 4.93% 5.03% 5.11% 4.85% 5.21%
-----------------------------------------------------
YEAR ENDED 9/30
-----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $160,171 $151,048 $163,237 $186,127 $184,465
-----------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 101.02% 125.73% 185.16% 118.38% 154.80%
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|
(a) Calculated using average shares outstanding during the year.
(b) Amount is less than $0.01.
(c) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
NEW YORK TAX-FREE FUND
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
CLASS A SHARES
--------------------------------------------------------
YEAR ENDED 9/30
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $10.53 $10.51 $11.43 $11.03 $10.78
--------------------------------------------------------
INVESTMENT OPERATIONS
Net investment income .53(a) .55(a) .58 .56 .58
--------------------------------------------------------
Net realized and unrealized gain (loss) .64 .02 (.94) .41 .26
--------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.17 .57 (.36) .97 .84
--------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.54) (.55) (.56) (.57) (.59)
--------------------------------------------------------
NET ASSET VALUE, END OF YEAR $11.16 $10.53 $10.51 $11.43 $11.03
--------------------------------------------------------
TOTAL RETURN(b) 11.35% 5.65% (3.23)% 9.03% 8.01%
--------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions 1.01% .96% .93% .85% .85%
--------------------------------------------------------
Expenses, excluding expense reductions 1.04% .97% .93% .85% .85%
--------------------------------------------------------
Net investment income 4.80% 5.28% 5.21% 5.06% 5.35%
--------------------------------------------------------
YEAR ENDED 9/30
-----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $242,367 $228,362 $248,456 $283,551 $294,286
-----------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 70.03% 76.33% 52.67% 64.63% 110.28%
-----------------------------------------------------------------------
|
CLASS C SHARES
-----------------------------------------------------------
YEAR ENDED 9/30
2001 2000 1999 1998 1997
Per Share Operating Performance
NET ASSET VALUE, BEGINNING OF YEAR $10.54 $10.51 $11.42 $11.02 $10.78
-----------------------------------------------------------
INVESTMENT OPERATIONS
Net investment income .46(a) .49(a) .50 .49 .48
-----------------------------------------------------------
Net realized and unrealized gain (loss) .65 .02 (.93) .40 .27
-----------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.11 .51 (.43) .89 .75
-----------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.48) (.48) (.48) (.49) (.51)
-----------------------------------------------------------
NET ASSET VALUE, END OF YEAR $11.17 $10.54 $10.51 $11.42 $11.02
-----------------------------------------------------------
TOTAL RETURN(b) 10.74% 5.07% (3.93)% 8.34% 7.13%
-----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions 1.62% 1.55% 1.62% 1.57% 1.57%
-----------------------------------------------------------
Expenses, excluding expense reductions 1.65% 1.56% 1.62% 1.57% 1.57%
-----------------------------------------------------------
Net investment income 4.19% 4.72% 4.49% 4.32% 4.60%
-----------------------------------------------------------
YEAR ENDED 9/30
--------------------------------------------------------------
SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $6,662 $5,278 $6,577 $6,706 $6,204
--------------------------------------------------------------
PORTFOLIO TURNOVER RATE 70.03% 76.33% 52.67% 64.63% 110.28%
--------------------------------------------------------------
|
(a) Calculated using average shares outstanding during the year
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
TEXAS TAX-FREE FUND
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
YEAR ENDED 9/30
--------------------------------------------------------
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $9.43 $9.55 $10.69 $10.40 $10.11
--------------------------------------------------------
INVESTMENT OPERATIONS
Net investment income .46(a) .51(a) .52 .51 .55
--------------------------------------------------------
Net realized and unrealized gain (loss) .57 (.13) (1.03) .40 .37
--------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.03 .38 (.51) .91 .92
--------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.47) (.50) (.52) (.53) (.56)
--------------------------------------------------------
Net realized gain -- -- (.11) (.09) (.07)
--------------------------------------------------------
TOTAL DISTRIBUTIONS (.47) (.50) (.63) (.62) (.63)
--------------------------------------------------------
NET ASSET VALUE, END OF YEAR $9.99 $9.43 $9.55 $10.69 $10.40
--------------------------------------------------------
TOTAL RETURN(b) 11.30% 4.14% (4.96)% 9.24% 9.25%
--------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions .64% .99% .94% .91% .88%
--------------------------------------------------------
Expenses, excluding waiver and expense reductions 1.09% 1.01% .94% .91% .88%
--------------------------------------------------------
Net investment income 4.70% 5.47% 5.12% 4.85% 5.38%
--------------------------------------------------------
YEAR ENDED 9/30
-------------------------------------------------------------------
SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $77,860 $74,405 $84,491 $92,607 $91,301
-------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 108.27% 163.39% 168.04% 143.78% 127.88%
-------------------------------------------------------------------
|
(a) Calculated using average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
WASHINGTON TAX-FREE FUND
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
YEAR ENDED 9/30
PER SHARE OPERATING PERFORMANCE 2001 2000 1999 1998 1997
NET ASSET VALUE, BEGINNING OF YEAR $4.89 $4.91 $5.38 $5.16 $4.96
----------------------------------------------------
INVESTMENT OPERATIONS
Net investment income .26(a) .27(a) .28 .27 .27
----------------------------------------------------
Net realized and unrealized gain (loss) .26 (.04) (.50) .21 .20
----------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .52 .23 (.22) .48 .47
----------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (.26) (.25) (.25) (.26) (.27)
----------------------------------------------------
NET ASSET VALUE, END OF YEAR $5.15 $4.89 $4.91 $5.38 $5.16
----------------------------------------------------
TOTAL RETURN(b) 10.92% 4.90% (4.17)% 9.48% 9.82%
----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense reductions .70% .71% .66% .65% .57%
----------------------------------------------------
Expenses, excluding expense reductions .73% .71% .66% .65% .62%
----------------------------------------------------
Net investment income 5.22% 5.58% 5.42% 5.20% 5.36%
----------------------------------------------------
YEAR ENDED 9/30
------------------------------------------------------------------
SUPPLEMENTAL DATA: 2001 2000 1999 1998 1997
NET ASSETS, END OF YEAR (000) $45,883 $44,512 $51,849 $62,754 $66,215
------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 52.09% 152.63% 180.42% 141.56% 132.37%
------------------------------------------------------------------
|
(a) Calculated using average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
FLORIDA TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
CLASS A SHARES
------------------------------------------------------------------
YEAR ENDED 11/1/1999 TO YEAR ENDED 10/31
PER SHARE OPERATING PERFORMANCE 9/30/2001 9/30/2000* 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 4.57 $ 4.52 $ 4.98 $ 4.87 $ 4.79 $ 4.85
--------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
--------------------------------------------------------------------------------------------------------------
Net investment income .23(a) .23(a) .23 .24 .24 .25
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .25 .03 (.46) .11 .09 (.06)
--------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .48 .26 (.23) .35 .33 .19
--------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
--------------------------------------------------------------------------------------------------------------
Net investment income (.23) (.21) (.23) (.24) (.25) (.25)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 4.82 $4.57 $ 4.52 $ 4.98 $ 4.87 $ 4.79
--------------------------------------------------------------------------------------------------------------
TOTAL RETURN(b) 10.68% 5.86%(c) (4.74)% 7.30% 7.12% 4.09%
--------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
--------------------------------------------------------------------------------------------------------------
Expenses, including expense reductions .99% .89%(c) .97% .89% .86% .80%
--------------------------------------------------------------------------------------------------------------
Expenses, excluding expense reductions 1.05% .89%(c) .97% .89% .86% .82%
--------------------------------------------------------------------------------------------------------------
Net investment income 4.77% 5.00%(c) 4.73% 4.79% 5.03% 5.19%
--------------------------------------------------------------------------------------------------------------
|
YEAR ENDED 11/1/1999 TO YEAR ENDED 10/31
SUPPLEMENTAL DATA: 9/30/2001 9/30/2000* 1999 1998 1997 1996
NET ASSETS, END OF PERIOD (000) $83,798 $94,817 $100,924 $127,292 $137,252 $153,011
--------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 84.37% 169.02% 191.12% 140.61% 106.32% 167.95%
--------------------------------------------------------------------------------------------------------------
|
CLASS C SHARES
----------------------------------------------------------------------
YEAR ENDED 11/1/1999 TO YEAR ENDED 10/31 7/15/1996(d)
PER SHARE OPERATING PERFORMANCE 9/30/2001 9/30/2000* 1999 1998 1997 TO 10/31/1996
NET ASSET VALUE, BEGINNING OF PERIOD $4.58 $4.52 $4.98 $4.87 $4.79 $4.70
-----------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
-----------------------------------------------------------------------------------------------------------------
Net investment income .20(a) .20(a) .20 .20 .20 .07
-----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .25 .04 (.46) .11 .10 .09
-----------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .45 .24 (.26) .31 .30 .16
-----------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
-----------------------------------------------------------------------------------------------------------------
Net investment income (.20) (.18) (.20) (.20) (.22) (.07)
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $4.83 $4.58 $4.52 $4.98 $4.87 $4.79
-----------------------------------------------------------------------------------------------------------------
TOTAL RETURN(b) 9.99% 5.44%(c) (5.43)% 6.52% 6.33% 3.35%(c)
-----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
-----------------------------------------------------------------------------------------------------------------
Expenses, including expense reductions 1.64% 1.42%(c) 1.62% 1.58% 1.57% .44%(c)
-----------------------------------------------------------------------------------------------------------------
Expenses, excluding expense reductions 1.70% 1.43%(c) 1.62% 1.58% 1.57% .44%(c)
-----------------------------------------------------------------------------------------------------------------
Net investment income 4.13% 4.52%(c) 4.07% 4.09% 4.29% 1.37%(c)
-----------------------------------------------------------------------------------------------------------------
|
YEAR ENDED 11/1/1999 TO YEAR ENDED 10/31 7/15/1996(d)
SUPPLEMENTAL DATA: 9/30/2001 9/30/2000* 1999 1998 1997 TO 10/31/1996
NET ASSETS, END OF PERIOD (000) $5,230 $4,706 $6,046 $7,275 $7,496 $9,059
---------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 84.37% 169.02% 191.12% 140.61% 106.32% 167.95%
---------------------------------------------------------------------------------------------------------------
|
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
(d) Commencement of offering of class shares.
* The Trust changed its fiscal year-end.
GEORGIA TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
YEAR 11/1/1999
ENDED TO YEAR ENDED 10/31
PER SHARE OPERATING PERFORMANCE 9/30/2001 9/30/2000* 1999 1998 1997 1996
NET ASSET VALUE, BEGINNING OF PERIOD $5.07 $4.91 $5.43 $5.31 $5.14 $5.12
-------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
-------------------------------------------------------------------------------------------------------------------------------
Net investment income .26(a) .21(a) .28 .27 .27 .29
-------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .37 .19 (.50) .19 .19 .04
-------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .63 .40 (.22) .46 .46 .33
-------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
-------------------------------------------------------------------------------------------------------------------------------
Net investment income (.26) (.24) (.26) (.27) (.28) (.29)
-------------------------------------------------------------------------------------------------------------------------------
Net realized gain -- -- (.04) (.07) (.01) (.02)
-------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.26) (.24) (.30) (.34) (.29) (.31)
-------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $5.44 $5.07 $4.91 $5.43 $5.31 $5.14
-------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(b) 12.69% 8.59%(c) 4.36% 9.00% 9.27% 6.69%
-------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and expense reductions .31% .17%(c) .18% .24% .38% .03%
-------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and expense reductions .78% .63%(c) .68% .74% .88% .83%
-------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.81% 4.30%(c) 5.32% 5.07% 5.23% 5.55%
-------------------------------------------------------------------------------------------------------------------------------
|
YEAR 11/1/1999
ENDED TO YEAR ENDED 10/31
SUPPLEMENTAL DATA: 9/30/2001 9/30/2000* 1999 1998 1997 1996
NET ASSETS, END OF PERIOD (000) $46,235 $29,245 $27,432 $19,764 $13,897 $10,688
--------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 43.50% 122.44% 115.87% 126.52% 90.40% 72.53%
--------------------------------------------------------------------------------------------------------------------------------
|
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
* The Trust changed its fiscal year-end.
MICHIGAN TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
YEAR 11/1/1999
ENDED TO YEAR ENDED 10/31
PER SHARE OPERATING PERFORMANCE 9/30/2001 9/30/2000* 1999 1998 1997 1996
NET ASSET VALUE, BEGINNING OF PERIOD $4.87 $4.75 $5.18 $5.06 $4.93 $4.93
-------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
-------------------------------------------------------------------------------------------------------------------------------
Net investment income .25(a) .21(a) .26 .26 .27 .27
-------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .33 .14 (.44) .12 .13 (.01)
-------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .58 .35 (.18) .38 .40 .26
-------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
-------------------------------------------------------------------------------------------------------------------------------
Net investment income (.25) (.23) (.25) (.26) (.27) (.26)
-------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $5.20 $4.87 $4.75 $5.18 $5.06 $4.93
-------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(b) 12.21% 7.57%(c) (3.55)% 7.59% 8.24% 5.53%
-------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------------------------------------------------------------------------------------------
Expenses, including expense reductions .69% .67%(c) .69% .69% .60% .44%
-------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding expense reductions .74% .67%(c) .69% .69% .68% .73%
-------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.91% 4.37%(c) 5.21% 4.98% 5.37% 5.59%
-------------------------------------------------------------------------------------------------------------------------------
|
YEAR 11/1/1999
ENDED TO YEAR ENDED 10/31
SUPPLEMENTAL DATA: 9/30/2001 9/30/2000* 1999 1998 1997 1996
NET ASSETS, END OF PERIOD (000) $49,330 $45,666 $49,356 $53,139 $52,630 $52,975
-------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 100.27% 111.48% 186.97% 82.33% 68.50% 85.26%
-------------------------------------------------------------------------------------------------------------------------------
|
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
* The Trust changed its fiscal year-end.
PENNSYLVANIA TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the fiscal periods indicated. "Total return" shows how much your investment in the Fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Fund's independent auditors, in conjunction with their annual audit of the Fund's financial statements. Financial statements and the Independent Auditors' Report thereon appear in the 2001 Annual Report to Shareholders and are incorporated by reference into the Statement of Additional Information, which is available upon request. Certain information reflects financial results for a single fund share.
YEAR 11/1/1999
ENDED TO YEAR ENDED 10/31
PER SHARE OPERATING PERFORMANCE 9/30/2001 9/30/2000* 1999 1998 1997 1996
NET ASSET VALUE, BEGINNING OF PERIOD $4.90 $4.81 $5.28 $5.14 $5.01 $5.01
----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
----------------------------------------------------------------------------------------------------------------------------------
Net investment income .25(a) .22(a) .26 .27 .28 .28
----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .28 .10 (.47) .14 .13 --(d)
----------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .53 .32 (.21) .41 .41 .28
----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
----------------------------------------------------------------------------------------------------------------------------------
Net investment income (.25) (.23) (.26) (.27) (.28) (.28)
----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $5.18 $4.90 $4.81 $5.28 $5.14 $5.01
----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(b) 11.06% 6.83%(c) (4.13)% 8.12% 8.37% 5.68%
----------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
----------------------------------------------------------------------------------------------------------------------------------
Expenses, including waiver and expense reductions .90% .88%(c) .96% .72% .61% .62%
----------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding waiver and expense reductions 1.06% .88%(c) .96% .72% .65% .69%
----------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.88% 4.54%(c) 5.02% 5.05% 5.47% 5.55%
----------------------------------------------------------------------------------------------------------------------------------
|
YEAR 11/1/1999
ENDED TO YEAR ENDED 10/31
SUPPLEMENTAL DATA: 9/30/2001 9/30/2000* 1999 1998 1997 1996
NET ASSETS, END OF PERIOD (000) $94,550 $91,750 $93,835 $102,907 $94,237 $92,605
--------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 65.63% 61.00% 40.76% 65.20% 70.99% 78.30%
--------------------------------------------------------------------------------------------------------------------------------
|
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
(d) Amount represents less than $0.01.
* The Trust changed its fiscal year-end.
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
ADDITIONAL INFORMATION
More information on the Funds is available free upon request, including the following:
ANNUAL/SEMI-ANNUAL REPORT
Describes the Funds, lists portfolio holdings, contains a letter from the Funds' manager discussing recent market conditions and each Fund's investment strategies and contains additional performance information.
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
Provides more details about the Funds and their policies. A current SAI is on file with the Securities and Exchange Commission ("SEC") and is incorporated by reference (legally considered part of this prospectus).
Lord Abbett Tax-Free Income Fund, Inc.
Lord Abbett National Tax-Free Income Fund
Lord Abbett California Tax-Free Income Fund
Lord Abbett Connecticut Tax-Free Income Fund
Lord Abbett Hawaii Tax-Free Income Fund
Lord Abbett Minnesota Tax-Free Income Fund
Lord Abbett Missouri Tax-Free Income Fund
Lord Abbett New Jersey Tax-Free Income Fund
Lord Abbett New York Tax-Free Income Fund
Lord Abbett Texas Tax-Free Income Fund
Lord Abbett Washington Tax-Free Income Fund
Lord Abbett Tax-Free Income Trust
Florida Series
Georgia Series
Michigan Series
Pennsylvania Series
SEC FILE NUMBERS: 811-3942, 811-6418 LATFI-1-202
(2/02)
[SIDENOTE]
TO OBTAIN INFORMATION
BY TELEPHONE. Call the Funds at:
888-522-2388
BY MAIL. Write to the Funds at:
The Lord Abbett Family of Funds
90 Hudson Street
Jersey City, NJ 07302-3973
VIA THE INTERNET. LORD, ABBETT & CO.
www.LordAbbett.com
Text only versions of Fund documents can be viewed online or downloaded from the SEC: www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in Washington, DC (phone 202-942-8090) or by sending your request and a duplicating fee to the SEC's Public Reference Section, Washington, DC 20549-6009 or by sending your request electronically to publicinfo@sec.gov.
LORD ABBETT[LOGO]
Lord Abbett Mutual Fund shares are distributed by:
LORD ABBETT DISTRIBUTOR LLC
90 Hudson Street - Jersey City, New Jersey 07302-3973
LORD ABBETT
STATEMENT OF ADDITIONAL INFORMATION FEBRUARY 1, 2002
LORD ABBETT
TAX-FREE INCOME FUND, INC.
TAX-FREE INCOME TRUST
This Statement of Additional Information is not a Prospectus. A Prospectus may be obtained from your securities dealer or from Lord Abbett Distributor LLC ("Lord Abbett Distributor") at 90 Hudson Street, Jersey City, NJ 07302-3973. This Statement of Additional Information relates to, and should be read in conjunction with, the Prospectus dated February 1, 2002.
Shareholder inquiries should be made by directly contacting Lord Abbett Distributor or by calling 800-821-5129. The Annual Report to Shareholders is available without charge, upon request by calling that number. In addition, you can make inquiries through your dealer.
TABLE OF CONTENTS Page
1. Fund History 2
2. Investment Policies 2
3. Management of the Funds 7
4. Control Persons and Principal Holders of Securities 11
5. Investment Advisory and Other Services 11
6. Brokerage Allocations and Other Practices 13
7. Capital Stock and Other Securities 14
8. Purchase, Redemption and Pricing 19
9. Taxation of the Funds 23
10. Underwriter 26
11. Performance 27
12. Financial Statements 29
Appendix A - Bond Ratings 30
Appendix B - State Risk Factors 31
|
1.
FUND HISTORY
Lord Abbett Tax-Free Income Fund, Inc. (the "Income Fund") was organized as a Maryland Corporation on December 27, 1983. The Income Fund consists of the following Series and Classes: National Fund, Class A, B, C and P shares; California Fund and New York Fund, Class A, C and P shares; Connecticut Fund, Hawaii Fund, Minnesota Fund, Missouri Fund, New Jersey Fund, Texas Fund and Washington Fund, Class A and P shares.
Lord Abbett Tax-Free Income Trust (the "Income Trust") was organized as a Massachusetts Business Trust on September 11, 1991 with an unlimited amount of shares of beneficial interest authorized. The Income Trust consists of the following Series and Classes: Florida Series, Class A, C and P shares; Georgia Series, Michigan Series and Pennsylvania Series, Class A and P shares.
Each Series of the Income Fund and Income Trust is referred to as a "Fund" or collectively, the "Funds". Each Fund of the Income Fund and the Income Trust is a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended (the "Act"), except for the National Fund, which is a diversified open-end management investment company. As of the date of this Statement of Additional Information, no P Shares have been issued for any of the classes of shares.
2.
INVESTMENT POLICIES
FUNDAMENTAL INVESTMENT RESTRICTIONS. Each Fund is subject to the following fundamental investment restrictions, which cannot be changed without approval of a majority of the Fund's outstanding shares.
Each Fund may not:
(1) borrow money (except that (i) each Fund may borrow from banks (as defined in the Act) in amounts up to 33 1/3% of its total assets (including the amount borrowed), (ii) each Fund may borrow up to an additional 5% of its total assets for temporary purposes, (iii) each Fund may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities and (iv) each Fund may purchase securities on margin to the extent permitted by applicable law);
(2) pledge its assets (other than to secure such borrowings or to the extent permitted by each Fund's investment policies as permitted by applicable law);
(3) engage in the underwriting of securities except pursuant to a merger or acquisition or to the extent that, in connection with the disposition of its portfolio securities, it may be deemed to be an underwriter under federal securities laws;
(4) make loans to other persons, except that the acquisition of bonds, debentures or other corporate debt securities and investment in government obligations, commercial paper, pass-through instruments, certificates of deposit, bankers acceptances, repurchase agreements or any similar instruments shall not be subject to this limitation, and except further that each Fund may lend its portfolio securities, provided that the lending of portfolio securities may be made only in accordance with applicable law;
(5) buy or sell real estate (except that each Fund may invest in securities directly or indirectly secured by real estate or interests therein or issued by companies which invest in real estate or interests therein), commodities or commodity contracts (except to the extent each Fund may do so in accordance with applicable law and without registering as a commodity pool operator under the Commodity Exchange Act as, for example, with futures contracts);
(6) with respect to 75% of the gross assets of the National Fund, buy securities of one issuer representing more than (i) 5% of the Fund's gross assets, except securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities or (ii) 10% of the voting securities of such issuer;
(7) invest more than 25% of its assets, taken at market value, in the securities of issuers in any particular industry (excluding tax-exempt securities such as tax-exempt securities financing facilities in the same industry or issued by nongovernmental users and securities of the U.S. Government, its agencies and instrumentalities); or
(8) issue senior securities to the extent such issuance would violate applicable law.
Compliance with the investment restrictions above will be determined at the time of the purchase or sale by the Fund.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. In addition to the policies in the Prospectus and the investment restrictions above, which cannot be changed without shareholder approval, each Fund is also subject to the following non-fundamental investment policies, which may be changed by the Board of Directors/Trustees without shareholder approval.
Each Fund may not:
(1) borrow in excess of 33 1/3% of its total assets (including the amount borrowed) and then only as a temporary measure for extraordinary or emergency purposes;
(2) make short sales of securities or maintain a short position except to the extent permitted by applicable law;
(3) invest knowingly more than 15% of its net assets (at the time of investment) in illiquid securities, except for securities qualifying for resale under Rule 144A of the Securities Act of 1933 ("144A Securities") deemed to be liquid by the Board of Directors/Trustees;
(4) invest in securities of other investment companies, except as permitted by applicable law;
(5) invest in securities of issuers which, together with predecessors, have a record of less than three years of continuous operation, if more than 5% of the Fund's total assets would be invested in such securities (this restriction shall not apply to mortgage-backed securities, asset-backed securities or obligations issued or guaranteed by the U. S. government, its agencies or instrumentalities);
(6) hold securities of any issuer if more than 1/2 of 1% of the issuer's securities are owned beneficially by one or more of the Company's officers or directors or by one or more partners or members of each Fund's underwriter or investment adviser if these owners in the aggregate own beneficially more than 5% of the securities of such issuer;
(7) invest in warrants if, at the time of acquisition, its investment in warrants, valued at the lower of cost or market, would exceed 5% of each Fund's total assets (included within such limitation, but not to exceed 2% of the Fund's total assets, are warrants which are not listed on the New York or American Stock Exchange or a major foreign exchange);
(8) invest in real estate limited partnership interests or interests in oil, gas or other mineral leases, or exploration or development programs, except that each Fund may invest in securities issued by companies that engage in oil, gas or other mineral exploration or development activities;
(9) write, purchase or sell puts, calls, straddles, spreads or combinations thereof, except to the extent permitted in the Fund's Prospectus and Statement of Additional Information, as they may be amended from time to time or;
(10) buy from or sell to any of the Income Fund's or Trust's officers, directors, employees, or each Fund's investment adviser or any of the investment adviser's officers, directors, partners or employees, any securities other than shares of the Fund's common stock.
PORTFOLIO TURNOVER RATE. For the year ended September 30, 2001, the portfolio turnover rates were as follows: National Fund, 77.46%; California Fund, 72.84%; Connecticut Fund, 21.52%; Hawaii Fund, 32.38%; Minnesota Fund, 24.34%; Missouri Fund, 43.75%; New Jersey Fund, 101.02%; New York Fund, 70.03%; Texas Fund, 108.27%; Washington Fund, 52.09%; Florida Fund, 84.37%; Georgia Fund, 43.50%; Michigan Fund, 100.27%; and Pennsylvania Fund, 65.63%, respectively.
For the year ended September 30, 2000, the portfolio turnover rates were as follows: National Fund, 185.25%; California Fund, 100.22%; Connecticut Fund, 37.92%; Hawaii Fund, 30.06%; Minnesota Fund, 50.37%; Missouri Fund, 43.30%; New Jersey Fund, 125.73%; New York Fund, 76.33%; Texas Fund, 163.39%; Washington Fund, 152.63% and respectively. For the period November 1, 1999 to September 30, 2000, the portfolio turnover rates were as follows: Florida Fund, 169.02%; Georgia Fund, 122.44%; Michigan Fund, 111.48%; and Pennsylvania Fund, 61.00%, respectively. For the year ended October 31, 1999, the portfolio turnover rates were as follows: Florida Fund, 84.37%; Georgia Fund, 43.50%; Michigan Fund, 100.27%; and Pennsylvania Fund, 65.63%, respectively.
ADDITIONAL INFORMATION ON PORTFOLIO RISKS, INVESTMENTS AND TECHNIQUES. The following sections provide further information on certain types of investments and investment techniques that may be used by each Fund, including their associated risks. In addition, Appendix A hereto contains a description of the four highest municipal bond ratings and Appendix B contains a description of the special risk factors affecting certain state and Puerto Rico bonds. While some of these techniques involve risk when used independently, the Funds intend to use them to reduce risk and volatility in their portfolios.
BORROWING MONEY. Each Fund may borrow money for temporary or emergency purposes from banks and other financial institutions in amounts not exceeding one-third of its total assets. If a Fund borrows money and experiences a decline in its net asset value, the borrowing will increase its losses.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. Futures contracts are standardized contracts that provide for the sale or purchase of a specified financial instrument at a future time at a specified price. An option on a futures contract gives the purchaser the right (and the writer of the option the obligation) to assume a position in a futures contract at a specified exercise price within a specified period of time.
In addition to incurring fees in connection with futures and options, an investor is required to maintain margin deposits. At the time of entering into a futures transaction or writing an option, an investor is required to deposit a specified amount of cash or eligible securities called "initial margin." Subsequent payments, called "variation margin," are made on a daily basis as the market price of the futures contract or option fluctuates.
The Funds may purchase and sell futures contracts, and purchase and write call and put options on futures contracts, for bona fide hedging purposes, including to hedge against changes in interest rates, securities prices, or to the extent a Fund invests in foreign securities, currency exchange rates, or in order to pursue risk management strategies, including gaining efficient exposure to markets and minimizing transaction costs. The Funds may also enter into closing purchase and sale transactions with respect to such contracts and options. A Fund may not purchase or sell futures contracts, options on futures contracts or options on currencies traded on a CFTC-regulated exchange for non-bona fide hedging purposes if the aggregated initial margin and premiums required to establish such positions would exceed 5% of the liquidation value of the Fund's portfolio, after taking into account unrealized profits and losses on any such contracts it has entered into.
Futures contracts and options on futures contracts present substantial risks, including the following:
- While the Funds may benefit from the use of futures and related options, unanticipated market events may result in poorer overall performance than if the Funds had not entered into any futures or related options transactions.
- Because perfect correlation between a futures position and a portfolio position that the Funds intend to hedge is impossible to achieve, a hedge may not work as intended, and the Funds may thus be exposed to additional risk of loss.
- While interest rates on taxable securities generally move in the same direction as the interest rates on
municipal bonds, frequently there are differences in the rate of such movements and temporary dislocations. Accordingly, the use of a financial futures contract on a taxable security or a taxable securities index may involve a greater risk of an imperfect correlation between the price movements of the futures contract and of the municipal bond being hedged than when using a financial futures contract on a municipal bond or a municipal bond index.
- The loss that the Funds may incur in entering into futures contracts and in writing call options on futures is potentially unlimited and may exceed the amount of the premium received.
- Futures markets are highly volatile, and the use of futures may increase the volatility of the Fund's net asset value.
- As a result of the low margin deposits normally required in futures and options on futures trading, a relatively small price movement in a contract may result in substantial losses to the Funds.
- Futures contracts and related options may be illiquid, and exchanges may limit fluctuations in futures contract prices during a single day.
- The counterparty to an OTC contract may fail to perform its obligations under the contract.
ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net assets in illiquid securities that cannot be disposed of in seven days in the ordinary course of business at fair value. Illiquid securities include:
- Domestic and foreign securities that are not readily marketable.
- Repurchase agreements and time deposits with a notice or demand period of more than seven days.
- Certain restricted securities, unless the Board determines, based upon a review of the trading markets for a specific restricted security, that such restricted security is eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("144A Securities") and is liquid.
144A Securities may be resold to a qualified institutional buyer without registration and without regard to whether the seller originally purchased the security for investment. Investing in 144A Securities may decrease the liquidity of the Fund's portfolio to the extent that qualified institutional buyers become for a time uninterested in purchasing these securities. The purchase price and subsequent valuation of restricted and illiquid securities normally reflect a discount, which may be significant, from the market price of comparable securities for which a liquid market exists.
INVESTMENT COMPANIES. The Funds may invest in securities of other investment companies subject to limitations prescribed by the Act. These limitations include a prohibition on the Fund acquiring more than 3% of the voting shares of any other investment company, and a prohibition on investing more than 5% of the Fund's total assets in securities of any one investment company or more than 10% of its total assets in securities of all investment companies. The Funds indirectly will bear their proportionate share of any management fees and other expenses paid by the investment companies in which they invest. Such investment companies will generally be money market funds or have investment objectives, policies and restrictions substantially similar to those of the investing Fund and will be subject to substantially the same risks.
MUNICIPAL BONDS. In general, municipal bonds are debt obligations issued by or on behalf of states, territories and possessions of the United States, the District of Columbia, Puerto Rico, and their political subdivisions, agencies and instrumentalities. Municipal bonds are issued to obtain funds for various public purposes, including the construction of bridges, highways, housing, hospitals, mass transportation, schools, streets and water and sewer works. They may be used to refund outstanding obligations, to obtain funds for general operating expenses, or to obtain funds to lend to other public institutions and facilities and in anticipation of the receipt of revenue or the issuance of other obligations. In addition, the term, "municipal bonds" includes certain types of "private activity" bonds including industrial development bonds issued by public authorities to obtain funds to provide privately-operated housing facilities, sports facilities, convention or trade show facilities, airport, mass transit, port or parking facilities, air or water pollution control facilities and certain facilities for water supply, gas, electricity, or sewerage or solid waste disposal. Under the
Tax Reform Act of 1986, as amended, substantial limitations were imposed on new issues of municipal bonds to finance privately-operated facilities. The interest on municipal bonds generally is excludable from gross income for federal income tax purposes of most investors. The two principal classifications of municipal bonds are "general obligation" and limited obligation or "revenue bonds." General obligation bonds are secured by the pledge of the faith, credit and taxing power of the municipality for the payment of principal and interest. The taxes or special assessments that can be levied for the payment of debt service may be limited or unlimited as to rate or amount. Revenue bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. "Private activity" bonds, including industrial development bonds are, in most cases, revenue bonds and generally do not constitute the pledge of the faith, credit or taxing power of the municipality. The credit quality of such municipal bonds usually is directly related to the credit standing of the user of the facilities. There are variations in the security of municipal bonds, both within a particular classification and between classifications, depending on numerous factors.
The yields on municipal bonds depend on a variety of factors, including general market conditions, supply and demand, general conditions of the municipal bond market, size of a particular offering, the maturity of the obligation and the rating of the issue. The ratings of Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Services ("Standard Poor's") and Fitch Investors Service ("Fitch") represent their opinions as to the quality of the municipal bonds which they undertake to rate. It should be emphasized, however, that such ratings are general and are not absolute standards of quality. Consequently, municipal bonds with the same maturity, coupon and rating may have different yields when purchased in the open market, while municipal bonds of the same maturity and coupon with different ratings may have the same yield.
TEMPORARY DEFENSIVE INVESTMENTS. As described in the Prospectus, each Fund is authorized to invest temporarily a substantial amount, or even all, of its assets in various short-term fixed-income securities to take a defensive position. These securities include:
- Short-Term Tax-Exempt Securities. The tax-exempt securities in which each Fund invests are municipal bonds, the interest on which is exempt from federal income tax and may be exempt from its state's and, in the case of the New York Fund, New York City personal income tax.
- Obligations of the U.S. Government and its agencies and instrumentalities. U.S. Government obligations are debt securities issued or guaranteed as to principal or interest by the U.S. Treasury. These securities include Treasury bills, notes and bonds.
- Commercial paper. Commercial paper consists of unsecured promissory notes issued by corporations to finance short-term credit needs. Commercial paper is issued in bearer form with maturities generally not exceeding nine months. Commercial paper obligations may include variable amount master demand notes.
WHEN-ISSUED MUNICIPAL BONDS. Each Fund may purchase new issues of municipal bonds, which are generally offered on a when-issued basis, with delivery and payment ("settlement") normally taking place approximately one month after the purchase date. However, the payment obligation and the interest rate to be received by a Fund are each fixed on the purchase date. During the period between purchase and settlement, each Fund's assets consisting of cash and/or high-grade marketable debt securities, marked to market daily, of an amount sufficient to make payment at settlement will be segregated at our custodian. There is a risk that market yields available at settlement may be higher than yields obtained on the purchase date, which could result in depreciation of value. While we may sell when-issued securities prior to settlement, we intend to actually acquire such securities unless a sale appears desirable for investment reasons.
3.
MANAGEMENT OF THE FUNDS
The Fund's Board of Directors/Trustees of the Income Fund and the Income Trust are responsible for the management of the business and affairs of each Fund.
The following Director/Trustee is the managing partner of Lord, Abbett & Co. ("Lord Abbett"), 90 Hudson Street, Jersey City, New Jersey 07302-3973. He has been associated with Lord Abbett for over five years and is also an officer, director, or trustee of the fourteen Lord Abbett-sponsored funds, consisting of 43 portfolios or series.
*ROBERT S. DOW, Chairman and President since 1996
* Mr. Dow is an "interested person" as defined in the Act.
Date of Birth: 3/08/45
The following outside Directors/Trustees are also directors or trustees of the fourteen Lord Abbett-sponsored funds referred to above.
E. THAYER BIGELOW, Director/Trustee since 1994
Bigelow Media, LLC
717 Fifth Avenue, 26th Floor
New York, New York
Date of Birth: 8/22/41
Managing General Partner, Bigelow Media, LLC (since 2000); Senior Adviser, Time Warner Inc. (1998 - 2000); Acting Chief Executive Officer of Courtroom Television Network (1997 - 1998); President and Chief Executive Officer of Time Warner Cable Programming, Inc. (1991 - 1997). Currently serves as a director of Crane Co. and Huttig Building Products Inc.
WILLIAM H.T. BUSH, Director/Trustee since 1998
Bush-O'Donnell & Co., Inc.
101 South Hanley Road, Suite 1025
St. Louis, Missouri
Date of Birth: 7/14/38
Co-founder and Chairman of the Board of the financial advisory firm of Bush-O'Donnell & Company (since 1986). Currently serves as director of Rightchoice Managed Care, Inc., Mississippi Valley Bancorp, DT Industries Inc., and Engineered Support Systems, Inc.
ROBERT B. CALHOUN, JR., Director/Trustee since 1998
Monitor Clipper Partners
Two Canal Park
Cambridge, Massachusetts
Date of Birth: 10/25/42
Managing Director of Monitor Clipper Partners (since 1997) and President of Clipper Asset Management Corp., both private equity investment funds (since 1991). Currently serves as director of Avondale, Inc., Avondale Mills, Inc., IGI/Earth Color, Inc., and Interstate Bakeries Corp.
STEWART S. DIXON, Director/Trustee since 1976
Wildman, Harrold, Allen & Dixon
225 W. Wacker Drive, Suite 2800
Chicago, Illinois
Date of Birth: 11/05/30
Partner in the law firm of Wildman, Harrold, Allen & Dixon (since 1967).
FRANKLIN W. HOBBS, Director/Trustee since 2000
Houlihan Lokey Howard & Zukin
685 Third Ave.
New York, New York
Date of Birth: 7/30/47
Chief Executive Officer of Houlihan Lokey Howard & Zukin (January 2002 to present); Chairman of Warburg Dillon Read (1999 - 2000); Global Head of Corporate Finance of SBC Warburg Dillon Read (1997 - 1999); Chief Executive Officer of Dillon, Read & Co. (1994 - 1997). Currently serves as director of Adolph Coors Company.
C. ALAN MACDONALD, Director/Trustee since 1988
415 Round Hill Road
Greenwich, Connecticut
Date of Birth: 5/19/33
Retired - Special Projects Consulting (since 1992). Formerly officer of Stouffers/Nestle (1955 - 1991); Chief Executive Officer & President of Nestle Foods (1983 - 1991). Currently serves as director of Fountainhead Water Company, Careside, Inc., Lincoln Snacks, J.B. Williams Co., Inc. and Seix Fund, Inc. Seix Fund, Inc. is a registered investment company that is advised by Seix Investment Advisors Inc. Seix Investment Advisors Inc.'s Chairman, CEO, and Chief Investment Officer is married to Robert Dow, the Fund's Chairman and President and Managing General Partner of Lord Abbett.
THOMAS J. NEFF, Director/Trustee since 1982
Spencer Stuart, U.S.
277 Park Avenue
New York, New York
Date of Birth: 10/02/37
Chairman of Spencer Stuart U.S., an executive search consulting firm (since 1976). Currently serves as director of Ace, Ltd. and Exult, Inc.
COMPENSATION DISCLOSURE
The following table summarizes the compensation of each of the Fund's Directors/Trustees from the Funds and all Lord Abbett-sponsored funds.
The second column of the following table sets forth the compensation accrued by the Income Fund for outside Directors/Trustees. The third column of the following table sets forth the compensation accrued by the Income Trust for outside Directors/Trustees. The fourth column sets forth the total compensation paid by all Lord Abbett-sponsored funds to the outside Directors/Trustees, and amounts payable but deferred at the option of the Director/Trustee, but does not include amounts accrued under the second and third columns. No Director/Trustee of the funds associated with Lord Abbett and no officer of the funds received any compensation from the funds for acting as a Director/Trustee or officer.
(1) (2) (3) (4)
FOR THE YEAR ENDED
FOR THE FISCAL FOR THE FISCAL DECEMBER 31, 2001
YEAR ENDED YEAR ENDED TOTAL COMPENSATION
SEPTEMBER 30, SEPTEMBER 30, 2001 PAID BY THE INCOME FUND,
2001 AGGREGATE AGGREGATE INCOME TRUST AND
COMPENSATION COMPENSATION TWELVE OTHER LORD
ACCRUED BY ACCRUED BY ABBETT-SPONSORED
NAME OF DIRECTOR THE INCOME TRUST(1) THE INCOME FUND(1) FUNDS(2)
---------------- ------------------- ------------------ --------
E. Thayer Bigelow $684 $3,999 $86,000
William H. T. Bush $714 $4,176 $87,400
Robert B. Calhoun, Jr. $689 $4,032 $86,000
Stewart S. Dixon $707 $4,135 $86,200
Franklin W. Hobbs $475 $2,776 $85,000
C. Alan MacDonald $689 $4,032 $86,000
Thomas J. Neff $682 $3,990 $85,000
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(1) Outside Directors'/Trustees' fees, including attendance fees for board and committee meetings, are allocated among all Lord Abbett-sponsored funds based on the net assets of each fund. A portion of the fees payable by the Funds to its outside Directors/Trustees may be deferred at the option of a Director/Trustee under an equity-based plan (the "equity-based plan") that deems the deferred amounts to be invested in shares of the Funds for later distribution to the Directors/Trustees. Effective November 1, 2000, each Director/Trustee will receive an additional annual $25,000 retainer, the full amount of which must be deferred under the equity-based plan. The amounts ultimately received by the Directors/Trustees under the equity-based plan will be directly linked to the investment performance of the funds.
The amounts of the aggregate compensation payable by the Income Fund as of September 30, 2001 deemed invested in fund shares, including dividends reinvested and changes in net asset value applicable to such deemed investments were: Mr. Bigelow, $62,230; Mr. Bush, $4,833; Mr. Calhoun, $22,966; Mr. Dixon, $80,571; Mr. Hobbs, $4,177; Mr. MacDonald, $85,752; and Mr. Neff, $172,816.
The amounts of the aggregate compensation payable by the Income Trust as of September 30, 2001 deemed invested in fund shares, including dividends reinvested and changes in net asset value applicable to such deemed investments were: Mr. Bigelow, $9,965; Mr. Bush, $798; Mr. Calhoun, $3,820; Mr. Dixon, $6,941; Mr. Hobbs, $718; Mr. MacDonald, $7,512; and Mr. Neff, $14,362.
2. The fourth column shows aggregate compensation, including Directors'/Trustees' fees and attendance fees for board and committee meetings, of a nature referred to in footnote one, accrued by the Lord Abbett-sponsored funds during the year ended December 31, 2001, including fees Directors/Trustees have chosen to defer.
Except where indicated, the following executive officers of the Income Fund and Trust have been associated with Lord Abbett for over five years. Ms. Binstock, Messrs. Brown, Carper, Hilstad and Kaplan are partners of Lord Abbett; the others are employees. None have received compensation from the Funds.
EXECUTIVE VICE PRESIDENT (DATE OF BIRTH):
Zane E. Brown (12/09/51).
VICE PRESIDENTS:
Paul A. Hilstad (12/13/42) Vice President and Secretary;
Joan A. Binstock (3/04/54) with Lord Abbett since 1999, formerly Chief Operating Officer of Morgan Grenfell from 1996 to 1999, prior thereto Principal of Ernst & Young LLP;
Daniel E. Carper (1/22/52);
Timothy Browse (4/13/59) with Lord Abbett since 2000, formerly Portfolio Manager and Vice President of Eaton Vance Management, Inc.;
Philip Fang (6/19/65);
Lawrence H. Kaplan (1/16/57) with Lord Abbett since 1997 - formerly Vice President and Chief Counsel of Salomon Brothers Asset Management Inc. from 1995 to 1997;
A. Edward Oberhaus, III (12/21/59);
Tracie E. Richter (1/12/68) with Lord Abbett since 1999, formerly Vice President-Head of Fund Administration of Morgan Grenfell from 1998 to 1999, Vice President of Bankers Trust from 1996 to 1998;
Christina T. Simmons (11/12/57) with Lord Abbett since 1999, formerly Assistant General Counsel of Prudential Investments from 1998 to 1999, prior thereto Counsel of Drinker, Biddle & Reath LLP, a law firm from 1985 to 1998;
Scott Smith (9/15/66).
TREASURER:
Francie W. Tai (6/11/65) with Lord Abbett since 2000, formerly Manager of
Goldman Sachs from 1997 to 2000, prior thereto Assistant Vice President of
Bankers Trust from 1994 to 1997.
CODE OF ETHICS
The directors, trustees and officers of Lord Abbett-sponsored mutual funds, together with the partners and employees of Lord Abbett, are permitted to purchase and sell securities for their personal investment accounts. In engaging in personal securities transactions, however, such persons are subject to requirements and restrictions contained in the Income Fund's and Income Trust's Code of Ethics which complies, in substance, with each of the recommendations of the Investment Company Institute's Advisory Group on Personal Investing. Among other things, the Code requires, with limited exceptions, that Lord Abbett partners and employees obtain advance approval before buying or selling securities, submit confirmations and quarterly transaction reports, and obtain approval before becoming a director of any company; and it prohibits such persons from investing in a security 7 days before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account considers a trade or trades in such security, prohibiting profiting on trades of the same security within 60 days and trading on material and non-public information. The Code imposes certain similar requirements and restrictions on the independent directors and trustees of each Lord Abbett-sponsored fund to the extent contemplated by the recommendations of such Advisory Group.
4.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of January 7, 2002, the Income Fund's and Income Trust's officers and Directors/Trustees, as a group, owned less than 1% of the Income Fund's and Trust's outstanding shares. As of January 7, 2002, to the best of our knowledge, other than Lord Abbett Distributor and other institutional broker-dealers for the benefit of their clients the following record holders held 5% or more of each class of a Fund's outstanding shares:
Connecticut Tax-Free Income Fund, Class A Shares: Susan Lynch 7.99%
8 Bayberry Lane
Greenwich, CT 06831-3008
New York Tax-Free Income Fund, Class C Shares: PaineWebber For the Benefit of 8.19%
William Siegel
104 Anchorage Way
Freeport, NY 11520-6280
Florida Tax-Free Income Trust, Class C Shares: PaineWebber For the Benefit of 16.41%
Kyle's Partners L.P.
Attn: Regis E. Kobert
River Park Commons - Suite 200
2403 Sidney Street
Pittsburgh, PA 15203-2167
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5.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT MANAGER
As described under "Management" in the Prospectus, Lord Abbett is the Income
Fund's and Income Trust's investment manager. Of the general partners of Lord
Abbett, the following are officers and/or Directors/Trustees of the Fund: Joan
A. Binstock, Zane E. Brown, Daniel E. Carper, Robert S. Dow, Paul A. Hilstad and
Lawrence H. Kaplan. The other general partners are: John E. Erard, Robert P.
Fetch, Daria L. Foster, Robert I. Gerber, Michael A. Grant, W. Thomas Hudson,
Stephen J. McGruder, Robert Morris, Robert J. Noelke, R. Mark Pennington, Eli M.
Salzmann, Douglas B. Sieg, Christopher J. Towle, Edward von der Linde and Marion
Zapolin. The address of each partner is 90 Hudson Street, Jersey City, New
Jersey 07302-3973.
Under the Management Agreement between Lord Abbett and the Income Fund and Income Trust, each Fund is obligated to pay Lord Abbett a monthly fee, based on average daily net assets for each month, at the annual rate of .50 of 1%. For the National Fund, New York Fund, California Fund and Florida Series this fee is allocated among the separate classes based on such class' proportionate share of the Funds' average daily net assets.
Each Fund pays all expenses not expressly assumed by Lord Abbett, including, without limitation, 12b-1 expenses, outside directors'/trustees' fees and expenses, association membership dues, legal and audit fees, taxes, transfer and dividend disbursing agent fees, shareholder servicing costs, expenses relating to shareholder meetings, expenses of preparing, printing and mailing stock certificates and shareholder reports, expenses of registering its shares under federal and state securities laws, expenses of preparing, printing and mailing prospectuses to existing shareholders,
insurance premiums and brokerage and other expenses connected with executing portfolio transactions.
Although not obligated to do so, Lord Abbett may waive all or a part of its management fees and or may assume other expenses of the Fund.
As of September 30, 2001, other expenses reimbursed by Lord Abbett and not repaid by the Texas Fund amounted to $93,901.
Gross management fees, management fees waived and net management fee for each Fund for the years ended September 30, 2001 and 2000, and the period ended 1999, were as follows:
FUND
2001
----
GROSS MANAGEMENT NET
MANAGEMENT FEES FEES WAIVED MANAGEMENT FEES
--------------- ----------- ---------------
California $1,002,775 - $1,002,775
Connecticut $ 499,326 - $ 499,326
Florida $ 478,907 - $ 478,907
Georgia $ 181,600 ($134,159) $ 47,441
Hawaii $ 367,022 - $ 367,022
Michigan $ 237,375 - $ 237,375
Minnesota $ 113,860 ($113,860) -
Missouri $ 623,104 ($172,898) $ 450,206
National $2,807,052 - $2,807,052
New Jersey $ 791,442 ($178,167) $ 613,275
New York $1,237,397 - $1,237,397
Pennsylvania $ 464,596 ($104,706) $ 359,890
Texas $ 383,232 ($194,171) $ 189,061
Washington $ 227,910 - $ 227,910
FUND
2000
----
GROSS MANAGEMENT NET
MANAGEMENT FEES FEES WAIVED MANAGEMENT FEES
--------------- ----------- ---------------
California $ 997,093 - $ 997,093
Connecticut $ 510,109 - $ 510,109
Florida* $ 464,164 - $ 464,164
Georgia* $ 127,414 ($127,414) -
Hawaii $ 340,900 - $ 340,900
Michigan* $ 210,891 - $ 210,891
Minnesota $ 96,669 ($96,669) -
Missouri $ 598,538 - $ 598,538
National $2,785,204 - $2,785,204
New Jersey $ 767,391 - $ 767,391
New York $1,183,488 - $1,183,488
Pennsylvania* $ 415,631 - $ 415,631
Texas $ 388,928 - $ 388,928
Washington $ 235,023 - $ 235,023
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*Effective November 1, 1999, these Funds changed their fiscal year end from October 31 to September 30.
1999
----
GROSS MANAGEMENT NET
MANAGEMENT FEES FEES WAIVED MANAGEMENT FEES
--------------- ----------- ---------------
Florida $ 641,726 - $ 641,726
Georgia $ 129,345 ($129,345) -
Michigan $ 265,750 - $ 265,750
Pennsylvania $ 504,847 - $ 504,847
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PRINCIPAL UNDERWRITER
Lord Abbett Distributor LLC, a New York limited liability company and subsidiary
of Lord Abbett, 90 Hudson Street, Jersey City, New Jersey 07302-3973, serves as
the principal underwriter for each Fund.
CUSTODIAN
State Street Bank and Trust Company, 801 Pennsylvania Avenue, Kansas City,
Missouri, is the custodian for each Fund.
TRANSFER AGENT
UMB Bank, N.A., 928 Grand Blvd., Kansas City, Missouri 64106, acts as the
transfer agent and dividend disbursing agent for each Fund.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281, are
the independent auditors of each Fund and must be approved at least annually by
Income Fund's and Income Trust's Board of Directors/Trustees to continue in such
capacity. Deloitte & Touche LLP perform audit services for Income Fund and
Income Trust, including the examination of financial statements included in
Annual Report to Shareholders.
6.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Each Fund's policy is to obtain best execution on all our portfolio transactions, which means that it seeks to have purchases and sales of portfolio securities executed at the most favorable prices, considering all costs of the transaction, including brokerage commissions and dealer markups and markdowns and taking into account the full range and quality of the brokers' services. Consistent with obtaining best execution, each Fund generally pays, as described below, a higher commission than some brokers might charge on the same transaction. Our policy with respect to best execution governs the selection of brokers or dealers and the market in which the transaction is executed. To the extent permitted by law, we may, if considered advantageous, make a purchase from or sale to another Lord Abbett-sponsored fund without the intervention of any broker-dealer.
Broker-dealers are selected on the basis of their professional capability and the value and quality of their brokerage and research services. Normally, the selection is made by traders who are employees of Lord Abbett. These traders do the trading as well for other accounts -- investment companies and other investment clients -- managed by Lord Abbett. They are responsible for obtaining best execution.
We pay a commission rate that we believe is appropriate to give maximum assurance that our brokers will provide us, on a continuing basis, the highest level of brokerage services available. While we do not always seek the lowest possible commissions on particular trades, we believe that our commission rates are in line with the rates that many other institutions pay. Our traders are authorized to pay brokerage commissions in excess of those that other brokers might accept on the same transactions in recognition of the value of the services performed by the executing brokers, viewed in terms of either the particular transactions in recognition of the value of the services performed by the executing brokers, viewed in terms of either the particular transaction or the overall responsibilities of Lord Abbett with respect to us and the other accounts they manage. Such services include showing us trading opportunities including blocks, a willingness and ability to take positions in securities, knowledge of a particular security or market proven ability to handle a particular type of trade, confidential treatment, promptness and reliability.
Some of these brokers also provide research services, at least some of which are useful to Lord Abbett in their overall responsibilities with respect to us and the other accounts they manage. Research includes the furnishing of analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts and trading equipment and computer software packages, acquired from third-party suppliers, that enable Lord Abbett to access various information bases. Such services may be used by Lord Abbett in servicing all their accounts, and not all of such services will necessarily be used by Lord Abbett in connection with their management of the Funds. Conversely, such services furnished in connection with brokerage on other accounts managed by Lord Abbett may be used in connection with their management of the Funds, and not all of such services will necessarily be used by Lord Abbett in connection with their advisory services to such other accounts. We have been advised by Lord Abbett that research services received from brokers cannot be allocated to any particular account, are not a substitute for Lord Abbett's services but are supplemental to their own research effort and, when utilized, are subject to internal analysis before being incorporated by Lord Abbett into their investment process. As a practical matter, it would not be possible for Lord Abbett to generate all of the information presently provided by brokers. While receipt of research services from brokerage firms has not reduced Lord Abbett's normal research activities, the expenses of Lord Abbett could be materially increased if it attempted to generate such additional information through its own staff and purchased such equipment and software packages directly from the suppliers.
No commitments are made regarding the allocation of brokerage business to or among brokers, and trades are executed only when they are dictated by investment decisions of the Lord Abbett-sponsored funds to purchase or sell portfolio securities.
When in the opinion of Fund management, two or more broker-dealers (either directly or through their correspondent clearing agents) are in a position to obtain the best price and execution, preference may be given to brokers who have sold shares of each Fund and/or shares of other Lord Abbett-sponsored funds, or who have provided investment research, statistical, or other related services to each Fund.
If other clients of Lord Abbett buy or sell the same security at the same time as a Lord Abbett-sponsored fund does, transactions will, to the extent practicable, be allocated among all participating accounts in proportion to the amount of each order and will be executed daily until filled so that each account shares the average price and commission cost of each day. Other clients who direct that their brokerage business be placed with specific brokers or who invest through wrap accounts introduced to Lord Abbett by certain brokers may not participate with a Lord Abbett-sponsored fund in the buying and selling of the same securities as described above. If these clients wish to buy or sell the same security as a Lord Abbett-sponsored fund does, they may have their transactions executed at times different from our transactions and thus may not receive the same price or incur the same commission cost as a Lord Abbett-sponsored fund does.
During the fiscal years ending September 30, 2001, 2000, and 1999, the Income Fund paid no commissions to independent dealers. During the fiscal year ended September 30, 2001, the Income Trust paid no commissions to independent dealers. For the eleven-month period from October 31, 1999 through September 30, 2000, the Trust paid no commissions to independent dealers. For the fiscal year ended October 31, 1999, the Income Trust paid no commissions to independent dealers.
7.
CAPITAL STOCK AND OTHER SECURITIES
CLASSES OF SHARES. Each Fund offers share classes (Class A, B, C or P) as described in the Prospectus. The different classes of shares represent investments in the same portfolio of securities but are subject to different expenses and likely will have different share prices. Investors should read this section carefully to determine which class represents the best investment option for their particular situation.
All classes of shares have equal noncumulative voting rights and equal rights with respect to dividends, assets and liquidation, except for certain class-specific expenses. They are fully paid and nonassessable when issued and have no preemptive or conversion rights. Additional classes or funds may be added in the future. The Act requires that where more than one class or fund exists, each class or fund must be preferred over all other classes or funds in respect of assets specifically allocated to such class or fund.
Rule 18f-2 under the Act provides that any matter required to be submitted, by the provisions of the Act or applicable
state law, or otherwise, to the holders of the outstanding voting securities of an investment company such as the Fund shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding shares of each class affected by such matter. Rule 18f-2 further provides that a class shall be deemed to be affected by a matter unless the interests of each class or fund in the matter are substantially identical or the matter does not affect any interest of such class or fund. However, the Rule exempts the selection of independent public accountants, the approval of a contract with a principal underwriter and the election of trustees from the separate voting requirements.
Each Fund does not hold annual meetings of shareholders unless one or more matters are required to be acted on by shareholders under the Act. Shareholder meetings may be called at any time by certain officers of the Funds or by a majority of the Directors/Trustees (i) for the purpose of taking action upon any matter requiring the vote or authority of the Fund's shareholders or upon other matters deemed to be necessary or desirable or (ii) upon the written request of the holders of at least one-quarter of the Fund's outstanding shares and entitled to vote at the meeting.
CLASS A SHARES. If you buy Class A shares, you pay an initial sales charge on investments of less than $1 million or on investments for Retirement and Benefit Plans with less than 100 eligible employees or on investments that do not qualify under the other categories listed under "Net Asset Value Purchases of Class A Shares." If you purchase Class A shares as part of an investment of at least $1 million (or for certain Retirement and Benefit Plans) in shares of one or more Lord Abbett-sponsored funds, you will not pay an initial sales charge, but, subject to certain exceptions, if you redeem any of those shares within 24 months after the month in which you buy them, you may pay to the Fund a contingent deferred sales charge ("CDSC") of 1%.
CLASS B SHARES. If you buy Class B shares, you pay no sales charge at the time of purchase, but if you redeem your shares before the sixth anniversary of buying them, you will normally pay a CDSC to Lord Abbett Distributor. That CDSC varies depending on how long you own shares. Class B shares are subject to service and distribution fees at an annual rate of 1% of the average daily net asset value of the Class B shares. The CDSC and the Rule 12b-1 plan applicable to the Class B shares are described in the Fund's prospectus.
CONVERSIONS OF CLASS B SHARES. The conversion of Class B shares on the eighth anniversary of their purchase is subject to the continuing availability of a private letter ruling from the Internal Revenue Service, or an opinion of counsel or tax adviser, to the effect that the conversion of Class B shares does not constitute a taxable event for the holder under Federal income tax law. If such a revenue ruling or opinion is no longer available, the automatic conversion feature may be suspended, in which event no further conversions of Class B shares would occur while such suspension remained in effect. Although Class B shares could then be exchanged for Class A shares on the basis of relative net asset value of the two classes, without the imposition of a sales charge or fee, such exchange could constitute a taxable event for the holder.
CLASS C SHARES. If you buy Class C shares, you pay no sales charge at the time of purchase, but if you redeem your shares before the first anniversary of buying them, you will normally pay the Fund a CDSC of 1%. Class C shares are subject to service and distribution fees at an annual rate of 1% of the average daily net asset value of the Class C shares. The CDSC and the Rule 12b-1 plan applicable to the Class C shares are described in the Fund's prospectus.
CLASS P SHARES. If you buy Class P shares, you pay no sales charge at the time of purchase, and if you redeem your shares you pay no CDSC. Class P shares are subject to service and distribution fees at an annual rate of .45 of 1% of the average daily net asset value of the Class P shares. The Rule 12b-1 plan applicable to the Class P shares is described in the Fund's prospectus. Class P shares are available to a limited number of investors.
RULE 12b-1 PLANS
CLASS A, B, C AND P. The Funds have adopted a Distribution Plan and Agreement
pursuant to Rule 12b-1 of the Act for each Class of shares of each Fund: the "A
Plan" (all Funds), the "B Plan" (National Fund only), the "C Plan" (National,
New York, California and Florida Fund only) and the "P Plan" (all Funds),
respectively. The principal features of each Plan are described in the
Prospectus; however, this SAI contains additional information that may be of
interest to investors. Each Plan is a compensation plan. This allows each class
to pay a fixed fee to Lord Abbett that may be more or less than the expenses
Lord Abbett actually incurs. In adopting each Plan and in approving its
continuance, the Board of Directors/Trustees has concluded that there is a
reasonable likelihood that each Plan will benefit its respective class and such
class's shareholders. The expected benefits include greater sales and lower
redemptions of class shares, which should allow each class to maintain a
consistent cash flow, and a higher quality of
service to shareholders by authorized institutions than would otherwise be the case. Each Plan compensates Lord Abbett for financing activities primarily intended to sell shares of the Fund. These activities include, but are not limited to, the preparation and distribution of advertising material and sales literature and other marketing activities. Lord Abbett also uses amounts received under each Plan as described in the Prospectus and for payments to dealers for (i) providing continuous services to shareholders, such as answering shareholder inquiries, maintaining records, and assisting shareholders in making redemptions, transfers, additional purchases and exchanges and (ii) their assistance in distributing shares of each Fund.
The amounts paid by each Fund pursuant to the A Plan for the fiscal year ended September 30, 2001 in connection with advertising and marketing activities, and payments to dealers were: National Fund -- $111,946 and $1,731,156 totaling $1,843,102; California Fund -- $42,120 and $684,058 totaling $726,178; Connecticut Fund -- $22,215 and $351,735 totaling $373,950; Hawaii Fund -- $10,902 and $279,372 totaling $290,274; Minnesota Fund -- $0 and $0 totaling $0; Missouri Fund -- $27,966 and $456,486 totaling $484,452; New Jersey Fund -- $35,372 and $557,521 totaling $592,893; New York Fund -- $54,124 and $825,593 totaling $879,717; Texas Fund -- $11,870 and $269,243 totaling $281,113; Washington Fund -- $0 and $0 totaling $0; Florida Fund -- $19,936 and $296,775 totaling $316,711; Georgia Fund -- $0 and $0 totaling $0; Michigan Fund -- $0 and $0 totaling $0; and Pennsylvania Fund -- $20,624 and $287,039 totaling $307,663.
The amounts paid to dealers by each Fund pursuant to the B Plan for the fiscal year ended September 30, 2001 were: National Fund -- $232,211.
The amounts paid to dealers by each Fund pursuant to the C Plan for the fiscal year ended September 30, 2001 were: National Fund -- $376,147; New York Fund -- $57,202; California Fund -- $103,129 and Florida $47,977.
Since none of the Funds has issued Class P shares, no payments have been made under the P Plan.
Distribution service fees are accrued daily and paid monthly and are charged as expenses of the Fund as accrued.
The Class A Plans of the Washington, Minnesota, Michigan and Georgia Funds will not go into effect until the quarter subsequent to the net assets of each Fund reaching $100 million. As of September 30, 2001, the net assets of each Fund have not reached $100 million.
Each Plan requires the Board to review, on a quarterly basis, written reports of all amounts expended pursuant to the Plan, the purposes for which such expenditures were made, and any other information the Board reasonably requests to enable it to make an informed determination of whether the plans should be continued. Each Plan shall continue in effect only if its continuance is specifically approved at least annually by vote of the Directors/Trustees, including a majority of the Directors/Trustees who are not interested persons of the Fund and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan ("outside Directors/Trustees"), cast in person at a meeting called for the purpose of voting on the Plan. No Plan may be amended to increase materially above the limits set forth therein the amount spent for distribution expenses thereunder without approval by a majority of the outstanding voting securities of the applicable class and the approval of a majority of the Directors/Trustees, including a majority of the outside Directors/Trustees. As long as the Plans are in effect, the selection or nomination of outside Directors/Trustees is committed to the discretion of the outside Directors/Trustees.
Payments made pursuant to a Plan are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. A Plan terminates automatically if it is assigned. In addition, each Plan may be terminated at any time by vote of a majority of the outside Directors/Trustees or by vote of a majority of its class's outstanding voting securities.
CONTINGENT DEFERRED SALES CHARGES. A CDSC applies upon early redemption of shares, regardless of class, and (i) will be assessed on the lesser of the net asset value of the shares at the time of redemption or the original purchase price and (ii) will not be imposed on the amount of your account value represented by the increase in net asset value over the initial purchase price (including increases due to the reinvestment of dividends and capital gains distributions).
CLASS A SHARES. As stated in the Prospectus, subject to certain exceptions, a CDSC of 1% is imposed with respect to
those Class A shares (or Class A shares of another Lord Abbett-sponsored fund or fund acquired through exchange of such shares) on which a fund has paid the one-time distribution fee of 1% if such shares are redeemed out of the Lord Abbett-sponsored Family of Funds within a period of 24 months from the end of the month in which the original sale occurred.
CLASS B SHARES (NATIONAL FUND ONLY). As stated in the Prospectus, subject to certain exceptions, if Class B shares of the National Fund (or Class B shares of another Lord Abbett-sponsored Fund or fund acquired through exchange of such shares) are redeemed out of the Lord Abbett-sponsored Funds for cash before the sixth anniversary of their purchase, a CDSC will be deducted from the redemption proceeds. The Class B CDSC is paid to Lord Abbett Distributor to reimburse its expenses, in whole or in part, of providing distribution-related service to the Fund in connection with the sale of Class B shares.
To minimize the effects of the CDSC or to determine whether the CDSC applies to a redemption, the Funds redeem shares in the following order: (1) shares acquired by reinvestment of dividends and capital gains distributions, (2) shares held on or after the sixth anniversary of their purchase, and (3) shares held the longest before such sixth anniversary.
The amount of the CDSC will depend on the number of years since you invested and the dollar amount being redeemed, according to the following schedule:
Anniversary of the day on Contingent Deferred Sales Charge
which the Purchase order was accepted on Redemptions (As % of Amount
Subject to Charge)
Before the 1st 5.0%
On the 1st, before the 2nd 4.0%
On the 2nd, before the 3rd 3.0%
On the 3rd, before the 4th 3.0%
On the 4th, before the 5th 2.0%
On the 5th, before the 6th 1.0%
On or after the 6th anniversary None
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In the table, an "anniversary" is the same calendar day in each respective year after the date of purchase. All purchases are considered to have been made on the business day on which the purchase order was accepted.
CLASS C SHARES (NATIONAL FUND, NEW YORK FUND, CALIFORNIA FUND AND FLORIDA FUND ONLY). As stated in the Prospectus, subject to certain exceptions, if Class C shares are redeemed for cash before the first anniversary of their purchase, the redeeming shareholder will be required to pay to the Fund on behalf of Class C shares a CDSC of 1% of the lower of cost or the then net asset value of Class C shares redeemed. If such shares are exchanged into the same class of another Lord Abbett-sponsored fund and subsequently redeemed before the first anniversary of their original purchase, the charge will be collected by the other fund on behalf of the Fund's Class C shares.
GENERAL. Each percentage (1% in the case of Class A and C shares and 5% through 1% in the case of Class B shares) used to calculate CDSCs described above for the Class A, Class B and Class C shares is sometimes hereinafter referred to as the "Applicable Percentage".
With respect to Class A shares, a CDSC will not be assessed at the time of certain transactions, including redemptions by participants or beneficiaries from certain Retirement and Benefit Plans and benefit payments under Retirement and Benefit Plans in connection with plan loans, hardship withdrawals, death, retirement or separation from service and for returns of excess contributions to retirement plan sponsors. With respect to Class A share purchases by Retirement and Benefit Plans made through Financial Intermediaries that have special arrangements with the Fund and/or Lord Abbett Distributor, no CDSC will be assessed at the time of redemptions which continue as investments in another fund participating in the program provided the Plan has not redeemed all, or substantially all, of its assets from the Lord Abbett family of funds. With respect to Class B shares, no CDSC is payable for redemptions (i) in connection with Systematic Withdrawal Plan and Div-Move services as described below under those headings, (ii) in connection with a mandatory distribution under 403(b) plans and IRAs and (iii) in connection with the death of the shareholder. In the case of Class A and Class C shares, the CDSC is received by the Fund and is intended to reimburse all or a portion of
the amount paid by the Fund if the shares are redeemed before the Fund has had an opportunity to realize the anticipated benefits of having a long-term shareholder account in the Fund. In the case of Class B shares, the CDSC is received by Lord Abbett Distributor and is intended to reimburse its expenses of providing distribution-related service to the National Fund (including recoupment of the commission payments made) in connection with the sale of Class B shares before Lord Abbett Distributor has had an opportunity to realize its anticipated reimbursement by having such a long-term shareholder account subject to the B Plan distribution fee.
In no event will the amount of the CDSC exceed the Applicable Percentage of the lesser of (i) the net asset value of the shares redeemed or (ii) the original cost of such shares (or of the Exchanged Shares for which such shares were acquired). No CDSC will be imposed when the investor redeems (i) shares representing an aggregate dollar amount of your account, in the case of Class A shares, (ii) that percentage of each share redeemed, in the case of Class B and C shares, derived from increases in the value of the shares above the total cost of shares being redeemed due to increases in net asset value, (iii) shares with respect to which no Lord Abbett fund paid a 12b-1 fee and, in the case of Class B shares, Lord Abbett Distributor paid no sales charge or service fee (including shares acquired through reinvestment of dividend income and capital gains distributions) or (iv) shares which, together with Exchanged Shares, have been held continuously for 24 months from the end of the month in which the original sale occurred (in the case of Class A shares); for six years or more (in the case of Class B shares) and for one year or more (in the case of Class C shares). In determining whether a CDSC is payable, (a) shares not subject to the CDSC will be redeemed before shares subject to the CDSC and (b) of the shares subject to a CDSC, those held the longest will be the first to be redeemed.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an appropriate investment for you, the decision as to which class of shares is better suited to your needs depends on a number of factors that you should discuss with your financial adviser. The Fund's class-specific expenses and the effect of the different types of sales charges on your investment will affect your investment results over time. The most important factors are how much you plan to invest and how long you plan to hold your investment. If your goals and objectives change over time and you plan to purchase additional shares, you should re-evaluate those factors to see if you should consider another class of shares.
In the following discussion, to help provide you and your financial adviser with a framework in which to choose a class, we have made some assumptions using a hypothetical investment in a Fund. We used the sales charge rates that apply to Class A, Class B and Class C, and considered the effect of the higher distribution fees on Class B and Class C expenses (which will affect your investment return). Of course, the actual performance of your investment cannot be predicted and will vary, based on the Fund's actual investment returns, the operating expenses borne by each class of shares, and the class of shares you purchase. The factors briefly discussed below are not intended to be investment advice, guidelines or recommendations, because each investor's financial considerations are different. The discussion below of the factors to consider in purchasing a particular class of shares assumes that you will purchase only one class of shares and not a combination of shares of different classes.
HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future financial needs cannot be predicted with certainty, knowing how long you expect to hold your investment will assist you in selecting the appropriate class of shares. For example, over time, the reduced sales charges available for larger purchases of Class A shares may offset the effect of paying an initial sales charge on your investment, compared to the effect over time of higher class-specific expenses on Class B or Class C shares for which no initial sales charge is paid. Because of the effect of class-based expenses, your choice should also depend on how much you plan to invest.
INVESTING FOR THE SHORT TERM. If you have a short-term investment horizon (that is, you plan to hold your shares for not more than six years), you should probably consider purchasing Class A or Class C shares rather than Class B shares. This is because of the effect of the Class B CDSC if you redeem before the sixth anniversary of your purchase, as well as the effect of the Class B distribution fee on the investment return for that class in the short term. Class C shares might be the appropriate choice (especially for investments of less than $100,000), because there is no initial sales charge on Class C shares, and the CDSC does not apply to amounts you redeem after holding them one year.
However, if you plan to invest more than $100,000 for the short term, then the more you invest and the more your investment horizon increases toward six years, the more attractive the Class A share option may become. This is because the annual distribution fee on Class C shares will have a greater impact on your account over the longer term than the reduced front-end sales charge available for larger purchases of Class A shares. For example, Class A might
be more appropriate than Class C for investments of more than $100,000 expected to be held for 5 or 6 years (or more). For investments over $250,000, expected to be held 4 to 6 years (or more), Class A shares may become more appropriate than Class C. If you are investing $500,000 or more, Class A may become more desirable as your investment horizon approaches 3 years or more.
For most investors who invest $1 million or more, Class A shares will generally be the most advantageous choice, no matter how long you intend to hold your shares. For that reason, it may not be suitable for you to place a purchase order for Class B shares of $500,000 or more or a purchase order for Class C shares of $1,000,000 or more. In addition, it may not be suitable for you to place an order for Class B or Class C shares for Retirement and Benefit Plans with at least 100 eligible employees or for purchases for Retirement and Benefit Plans made through Financial Intermediaries that perform participant recordkeeping or other administrative services for the Plans and that have entered into special arrangements with the Fund and/or Lord Abbett Distributor specifically for such purchases. You should discuss this with your financial advisor.
INVESTING FOR THE LONGER TERM. If you are investing for the longer term (for example, to provide for future college expenses for your child) and do not expect to need access to your money for seven years or more, Class B shares may be an appropriate investment option, if you plan to invest less than $100,000. If you plan to invest more than $100,000 over the long term, Class A shares will likely be more advantageous than Class B shares or Class C shares, as discussed above, because of the effect of the expected lower expenses for Class A shares and the reduced initial sales charges available for larger investments in Class A shares under the Fund's Rights of Accumulation.
Of course, these examples are based on approximations of the effect of current sales charges and expenses on a hypothetical investment over time, and should not be relied on as rigid guidelines.
ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Some account features are available in whole or in part to Class A, Class B and Class C shareholders. Other features (such as Systematic Withdrawal Plans) might not be advisable in non-Retirement Plan and Benefit accounts for Class B shareholders (because of the effect of the CDSC on the entire amount of a withdrawal if it exceeds 12% annually) and in any account for Class C shareholders during the first year of share ownership (due to the CDSC on withdrawals during that year). See "Systematic Withdrawal Plan" under "Shareholder Services" in the Prospectus for more information about the 12% annual waiver of the CDSC. You should carefully review how you plan to use your investment account before deciding which class of shares you buy. For example, the dividends payable to Class B and Class C shareholders will be reduced by the expenses borne solely by each of these classes, such as the higher distribution fee to which Class B and Class C shares are subject.
HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a broker, or any other person who is entitled to receive compensation for selling Fund shares may receive different compensation for selling one class than for selling another class. As discussed in more detail below, such compensation is primarily paid at the time of sale in the case of Class A and B shares and is paid over time, so long as shares remain outstanding, in the case of Class C shares. It is important that investors understand that the primary purpose of the CDSC for the Class B shares and the distribution fee for Class B and Class C shares is the same as the purpose of the front-end sales charge on sales of Class A shares: to compensate brokers and other persons selling such shares. The CDSC, if payable, supplements the Class B distribution fee and reduces the Class C distribution fee expenses for the Fund and Class C shareholders.
8.
PURCHASES, REDEMPTIONS
AND PRICING
Information concerning how we value our shares for the purchase and redemption of our shares is contained in the Prospectus under "Purchases" and "Redemptions", respectively.
Under normal circumstances, we calculate the Funds' net asset values as of the close of the New York Stock Exchange ("NYSE") on each day that the NYSE is open for trading by dividing our total net assets by the number of shares outstanding at the time of calculation. The NYSE is closed on Saturdays and Sundays and the following holidays -- New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
Each Fund values its portfolio securities at market value as of the close of the NYSE. Market value will be determined as follows: securities listed or admitted to trading privileges on any national securities exchange are valued at the last sales price, or, if there is no sale on that day, at the mean between the last bid and asked price, or, in the case of bonds, in the over-the-counter market if, in the judgment of the Fund's officers, that market more accurately reflects the market value of the bonds. Over-the-counter securities not traded on the NASDAQ National Market System are valued at the mean between the last bid and asked prices. Securities for which market quotations are not available are valued at fair market value under procedures approved by the Board of Directors/Trustees.
NET ASSET VALUE PURCHASES OF CLASS A SHARES. As stated in the Prospectus, our Class A shares may be purchased at net asset value under the following circumstances: a) purchases of $1 million or more, b) purchases by Retirement and Benefit Plans with at least 100 eligible employees, c) purchases for Retirement and Benefit Plans made though Financial Intermediaries that perform participant recordkeeping or other administrative services for the Plans and that have entered into special arrangements with the Fund and/or Lord Abbett Distributor specifically for such purchases, d) purchases made with dividends and distributions on Class A shares of another Eligible Fund, e) purchases representing repayment under the loan feature of the Lord Abbett-sponsored prototype 403(b) Plan for Class A shares f) purchases by employees of any consenting securities dealer having a sales agreement with Lord Abbett Distributor, g) purchases made by or on behalf of Financial Intermediaries for clients that pay the Intermediaries fees for services that include investment advisory or management services, provided that the Financial Intermediaries or their trading agents have entered into special arrangements with the Fund and/or Lord Abbett Distributor specifically for such purchases, g) purchases by trustees or custodians of any pension or profit sharing plan, or payroll deduction IRA for the employees of any consenting securities dealer having a sales agreement with Lord Abbett Distributor, h) purchases by each Lord Abbett-sponsored fund's Directors or Trustees, officers of each Lord Abbett-sponsored fund, employees and partners of Lord Abbett (including retired persons who formerly held such positions and family members of such purchasers), or i) purchases through an omnibus account of a dealer that features ten or fewer preferred mutual fund families, including the Lord Abbett family of funds, within 30 days of, and with the proceeds from, a redemption through the same dealer's omnibus account of shares of a mutual fund that were originally purchased subject to a sales charge.
Our Class A shares also may be purchased at net asset value i) by employees, partners and owners of unaffiliated consultants and advisors to Lord Abbett, Lord Abbett Distributor or Lord Abbett-sponsored funds who consent to such purchase if such persons provide service to Lord Abbett, Lord Abbett Distributor or such funds on a continuing basis and are familiar with such funds, ii) in connection with a merger, acquisition or other reorganization, iii) employees of our shareholder servicing agent, or iv) by the trustee or custodian under any pension or profit-sharing plan or Payroll Deduction IRA established for the benefit of our directors, trustees, employees of Lord Abbett, or employees of our shareholder service agents. Shares are offered at net asset value to these investors for the purpose of promoting goodwill with employees and others with whom Lord Abbett Distributor and/or the Fund has business relationship.
Our shares may be issued at net asset value in exchange for the assets, subject to possible tax adjustment, of a personal holding company or an investment company. There are economies of selling efforts and sales-related expenses with respect to offers to these investors and those referred to above.
For each class of share, the net asset value will be determined by taking the net assets and dividing by the number of shares outstanding.
NET ASSET VALUE PURCHASES OF CLASS A SHARES. The net asset values and maximum offering prices of our Class A shares on September 30, 2001 were computed as follows:
NATIONAL CALIFORNIA CONNECTICUT HAWAII MINNESOTA
FUND FUND FUND FUND FUND
------ -------- ---- ---- ----
Net asset value per share
(net assets divided by shares
outstanding) $11.33 $10.89 $10.32 $5.01 $5.00
Maximum offering price
per share (net asset value
divided by .9675) $11.71 $11.26 $10.67 $5.18 $5.17
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MISSOURI NEW JERSEY NEW YORK TEXAS WASHINGTON
FUND FUND FUND FUND FUND
----- ------ ------- ---- ----
Net asset value per shares
(net assets divided by shares
outstanding) $5.25 $5.21 $11.16 $ 9.99 $5.15
Maximum offering price
per share (net asset value
divided by .9675) $5.43 $5.39 $11.53 $10.33 $5.32
FLORIDA GEORGIA MICHIGAN PENNSYLVANIA
SERIES SERIES SERIES SERIES
------- ------ -------- -------
Net asset value per share
(net assets divided by shares
outstanding) $4.82 $5.44 $5.20 $5.18
Maximum offering price
per share (net asset value
divided by .9675) $4.98 $5.62 $5.37 $5.35
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The net asset value of our Class B shares on September 30, 2001 were computed as follows:
NATIONAL
FUND
--------
Net asset value per share
(net assets divided by shares
outstanding $11.36
|
The net asset value of our Class C shares on September 30, 2001 were computed as follows:
NATIONAL NEW YORK CALIFORNIA FLORIDA
FUND FUND FUND SERIES
------ -------- ---------- -------
Net asset value per shares
(net assets divided by shares
outstanding $11.35 $11.17 $10.91 $4.83
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EXCHANGES. The Prospectus briefly describes the Telephone Exchange Privilege. You may exchange some or all of your shares of any class for those in the same class of: (i) Lord Abbett-sponsored funds currently offered to the public with a sales charge (front-end, back-end or level), (ii) Lord Abbett U.S. Government Securities Money Market Fund, Inc. ("GSMMF"), or (iii) any authorized institution's affiliated money market fund satisfying Lord Abbett Distributor as to certain omnibus account and other criteria, hereinafter referred to as an "authorized money market fund" or "AMMF", to the extent offers and sales may be made in your state. You should read the prospectus of the other fund before exchanging. In establishing a new account by exchange, shares of the Fund being exchanged must have a value equal to at least the minimum initial investment required for the other fund into which the exchange is made.
Shareholders in other Lord Abbett-sponsored funds and AMMF have the same right to exchange their shares for the Fund's shares. Exchanges are based on relative net asset values on the day instructions are received by the Fund's transfer agent in Kansas City if the instructions are received prior to the close of the NYSE in proper form. No sales charges are imposed except in the case of exchanges out of GSMMF or AMMF (unless a sales charge (front-end, back-end or level) was paid on the initial investment). Exercise of the exchange privilege will be treated as a sale for federal income tax purposes, and, depending on the circumstances, a gain or loss may be recognized. In the case of an exchange of shares that have been held for 90 days or less where no sales charge is payable on the exchange, the original sales charge incurred with respect to the exchanged shares will be taken into account in determining gain or loss on the exchange only to the extent such charge exceeds the sales charge that would have been payable on the
acquired shares had they been acquired for cash rather than by exchange. The portion of the original sales charge not so taken into account will increase the basis of the acquired shares.
Shareholders have the exchange privilege unless they refuse it in writing. You should not view the exchange privilege as a means for taking advantage of short-term swings in the market, and we reserve the right to terminate or limit the privilege of any shareholder who makes frequent exchanges. We can revoke or modify the privilege for all shareholders upon 60 days' prior notice.
"Eligible Funds" are AMMF and other Lord Abbett-sponsored funds that are eligible for the exchange privilege, except that LASF offers its shares only in connection with certain variable annuity contracts. The exchange privilege will not be available with respect to any otherwise "Eligible Funds" the shares of which at the time are not available to new investors of the type requesting the exchange.
The other funds and series which participate in the Telephone Exchange Privilege
[except (a) GSMMF, (b) certain series of Lord Abbett Tax-Free Income Fund and
Lord Abbett Tax-Free Income Trust for which a Rule 12b-1 Plan is not yet in
effect, and (c) AMMF (collectively, the "Non-12b-1 Funds")] have instituted a
CDSC for each class on the same terms and conditions. No CDSC will be charged on
an exchange of shares of the same class between Lord Abbett funds or between
such funds and AMMF. Upon redemption of shares out of the Lord Abbett family of
funds or out of AMMF, the CDSC will be charged on behalf of and paid: (i) to the
fund in which the original purchase (subject to a CDSC) occurred, in the case of
the Class A and Class C shares and (ii) to Lord Abbett Distributor if the
original purchase was subject to a CDSC, in the case of the Class B shares.
Thus, if shares of a Lord Abbett fund are exchanged for shares of the same class
of another such fund and the shares of the same class tendered ("Exchanged
Shares") are subject to a CDSC, the CDSC will carry over to the shares of the
same class being acquired, including GSMMF and AMMF ("Acquired Shares"). Any
CDSC that is carried over to Acquired Shares is calculated as if the holder of
the Acquired Shares had held those shares from the date on which he or she
became the holder of the Exchanged Shares. Although the Non-12b-1 Funds will not
pay a distribution fee on their own shares, and will, therefore, not impose
their own CDSC, the Non-12b-1 Funds will collect the CDSC (a) on behalf of other
Lord Abbett funds, in the case of the Class A and Class C shares and (b) on
behalf of Lord Abbett Distributor, in the case of the Class B shares. Acquired
Shares held in GSMMF and AMMF which are subject to a CDSC will be credited with
the time such shares are held in GSMMF but will not be credited with the time
such shares are held in AMMF. Therefore, if your Acquired Shares held in AMMF
qualified for no CDSC or a lower Applicable Percentage at the time of exchange
into AMMF, that Applicable Percentage will apply to redemptions for cash from
AMMF, regardless of the time you have held Acquired Shares in AMMF.
LETTER OF INTENTION. Under the terms of the Letter of Intention as described in the Prospectus you may invest $100,000 or more over a 13-month period in Class A shares of a Lord Abbett-sponsored fund (other than shares of LASF, GSMMF and AMMF, unless holdings in GSMMF and AMMF are attributable to Class A shares exchanged from a Lord Abbett-sponsored fund offered with a front-end sales charge). Class A shares currently owned by you are credited as purchases (at their current offering prices on the date the Letter is signed) toward achieving the stated investment and reduced initial sales charge for Class A shares. Class A shares valued at 5% of the amount of intended purchases are escrowed and may be redeemed to cover the additional sales charge payable if the Letter of Intention is not completed. The Letter of Intention is neither a binding obligation on you to buy, nor on the Fund to sell, the full amount indicated.
RIGHTS OF ACCUMULATION. As stated in the Prospectus, purchasers (as defined in the Prospectus) may accumulate their investment in Class A shares of Lord Abbett-sponsored funds (other than LASF, GSMMF, and AMMF unless holdings in GSMMF or AMMF are attributable to Class A shares exchanged from a Lord Abbett-sponsored fund offered with a front-end sales charge) so that a current investment, plus the purchaser's holdings valued at the current maximum offering price, reach a level eligible for a discounted sales charge for Class A shares.
REDEMPTIONS. A redemption order is in proper form when it contains all of the information and documentation required by the order form or supplementally by Lord Abbett Distributor or the Fund to carry out the order. The signature(s) and any legal capacity of the signer(s) must be guaranteed by an eligible guarantor. See the Prospectus for expedited redemption procedures.
The right to redeem and receive payment, as described in the Prospectus, may be suspended if the NYSE is closed
(except for weekends or customary holidays), trading on the NYSE is restricted or the Securities and Exchange Commission deems an emergency to exist.
Our Board of Directors/Trustees may authorize redemption of all of the shares in any account in which there are fewer than 25 shares. Before authorizing such redemption, the Board must determine that it is in our economic best interest or necessary to reduce disproportionately burdensome expenses in servicing shareholder accounts. At least 30 days' prior written notice will be given before any such redemption, during which time shareholders may avoid redemption by bringing their accounts up to the minimum set by the Board.
DIV-MOVE. Under the Div-Move service described in the Prospectus, you can invest the dividends paid on your account of any class into an existing account of the same class in any other Eligible Fund. The account must be your account, a joint account for you and your spouse, a single account for your spouse, or a custodial account for your minor child under the age of 21. You should read the prospectus of the other fund before investing.
INVEST-A-MATIC. The Invest-A-Matic method of investing in the Funds and/or any other Eligible Fund is described in the Prospectus. To avail yourself of this method you must complete the application form, selecting the time and amount of your bank checking account withdrawals and the funds for investment, include a voided, unsigned check and complete the bank authorization.
SYSTEMATIC WITHDRAWAL PLANS. The Systematic Withdrawal Plan (the "SWP") also is described in the Prospectus. You may establish a SWP if you own or purchase uncertificated shares having a current offering price value of at least $10,000. Lord Abbett prototype retirement plans have no such minimum. With respect to Class B shares the CDSC will be waived on redemptions of up to 12% per year of the current net asset value of your account at the time the SWP is established. For Class B share redemptions over 12% per year, the CDSC will apply to the entire redemption. Therefore, please contact the Fund for assistance in minimizing the CDSC in this situation. With respect to Class C shares, the CDSC will be waived on and after the first anniversary of their purchase. The SWP involves the planned redemption of shares on a periodic basis by receiving either fixed or variable amounts at periodic intervals. Since the value of shares redeemed may be more or less than their cost, gain or loss may be recognized for income tax purposes on each periodic payment. Normally, you may not make regular investments at the same time you are receiving systematic withdrawal payments because it is not in your interest to pay a sales charge on new investments when in effect a portion of that new investment is soon withdrawn. The minimum investment accepted while a withdrawal plan is in effect is $1,000. The SWP may be terminated by you or by us at any time by written notice.
RETIREMENT PLANS. The Prospectus indicates the types of retirement plans for which Lord Abbett provides forms and explanations. Lord Abbett makes available the retirement plan forms and custodial agreements for IRAs (Individual Retirement Accounts including Simplified Employee Pensions), 403(b) plans and qualified pension and profit-sharing plans, including 401(k) plans. The forms name Investors Fiduciary Trust Company as custodian and contain specific information about the plans. Explanations of the eligibility requirements, annual custodial fees and allowable tax advantages and penalties are set forth in the relevant plan documents. Adoption of any of these plans should be on the advice of your legal counsel or qualified tax adviser.
9.
TAXATION OF THE FUNDS
Each Fund intends to elect and to qualify for the special tax treatment afforded regulated investment companies under the Internal Revenue Code of 1986 (the "Code"). Because each Fund is treated as a separate entity for federal income tax purposes, the status of each Fund as a regulated investment company is determined separately by the Internal Revenue Service. If a Fund so qualifies, the Fund will not be liable for U.S. federal income taxes on income and capital gains that the Fund timely distributes to its shareholders. If in any taxable year a Fund does not qualify as a regulated investment company, all of its taxable income will be taxed to the Fund at regular corporate rates. Assuming a Fund does qualify as a regulated investment company, it will be subject to a 4% non-deductible excise tax on certain amounts that are not distributed or treated as having been distributed on a timely basis each calendar year. Each Fund intends to distribute to its shareholders each year an amount adequate to avoid the imposition of this excise tax.
Income from tax-exempt obligations is not included in investment company taxable income. If at the close of each
quarter of a taxable year of the Fund, at least 50% of the value of the Fund's total assets consists of certain obligations the interest on which is excludable from gross income under Section 103(a) of the Internal Revenue Code, the Fund qualifies to pay "exempt-interest" dividends to its shareholders. Those dividends constitute the portion of aggregate dividends (excluding capital gains) as designated by the Fund, equal to the excess of the Fund's excludable interest over certain amounts disallowed as deductions. Exempt-interest dividends paid by the Fund are generally exempt from federal income tax; however, the amount of such dividends must be reported on the recipient's federal income tax return.
Each Fund seeks to earn income and pay dividends exempt from federal income tax. It is anticipated that substantially all of each Fund's income will be exempt from federal income tax. However, each Fund may invest a portion of its assets in securities that pay income that is not exempt from federal income tax. In the case of non-exempt securities, distributions of short-term capital gains and gains on the sale of bonds characterized as market discount are taxable to you as ordinary income for federal tax purposes, while distributions of net long-term capital gains are taxable to you as long-term capital gains. This treatment of taxable distributions applies regardless of how long you have owned shares or whether distributions are reinvested or paid in cash.
If you buy shares when the Fund has realized but not yet distributed income or capital gains, you will be "buying a dividend" by paying the full price for shares and then receiving a portion of the price back in the form of a potentially taxable distribution.
Ordinarily, you are required to take distributions by the Fund into account in the year in which they are made. A distribution declared in October, November, or December of any year and payable to shareholders of record on a specified date in those months, however, is deemed paid by the Fund and received by you on December 31 of that calendar year if the distribution is paid by the Fund in January of the following year. The Fund will send you annual tax reporting information concerning dividends and other distributions paid to you by the Fund.
Upon your sale, exchange, or redemption of Fund shares, you will recognize short- or long-term capital gain or loss, depending upon whether your holding period of the Fund shares exceeds one year. However, if your holding period in your Fund shares is six months or less, any capital loss realized from a sale, exchange, or redemption of such shares will be disallowed to the extent of the amount of any exempt-interest dividends received. Additionally, if your holding period is six months or less, any capital loss realized from the sale, exchange, or redemption of such shares, must be treated as a long-term capital loss to the extent of any dividends classified as "capital gain dividends" received with respect to such shares. Losses on the sale of Fund shares are not deductible if, within a period beginning 30 days before the date of the sale and ending 30 days after the date of the sale, you acquire shares that are substantially identical.
The maximum tax rates applicable to net capital gains recognized by individuals and other non-corporate taxpayers are currently (i) the same as ordinary income tax rates for capital assets held for one year or less and (ii) 20% for capital assets held for more than one year. Capital gains or losses recognized by corporate shareholders are subject to tax at the ordinary income tax rates applicable to corporations.
Interest on indebtedness incurred by a shareholder to purchase or carry shares of the Fund may not be deductible, in whole or in part, for federal purposes. Pursuant to published guidelines, the Internal Revenue Service may deem indebtedness to have been incurred for the purpose of acquiring or carrying shares of the Fund even though the borrowed funds may not be directly traceable to the purchase of shares.
Fund shares may not be an appropriate investment for "substantial users" of facilities financed by industrial development bonds, or persons related to such "substantial users." Such persons should consult their tax advisers before investing in Fund shares.
Exempt interest dividends are taken into account when determining the taxable portion of your social security or railroad retirement benefits.
Certain investment practices that the Fund may use, such as investing in futures may affect the character and timing of the recognition of gains and losses by the Fund. Such transactions may in turn affect the amount and character of Fund distributions to you.
You may be subject to a 30.5% withholding tax on reportable dividends, capital gain distributions, and redemption
payments ("backup withholding"). The backup withholding tax is reduced to 30% for dividends, distributions, and payments that are received for tax purposes after December 31, 2001. Generally, you will be subject to backup withholding if the Fund does not have your certified taxpayer identification number on file, or, to the Fund's knowledge, you have furnished an incorrect number. When establishing an account, you must certify under penalties of perjury that your taxpayer identification number is correct and that you are not otherwise subject to backup withholding.
The foregoing discussion addresses only the U.S. federal income tax consequences applicable to U.S. persons (generally, U.S. citizens or residents (including certain former citizens and former long-term residents), domestic corporations or domestic entities taxed as corporations for U.S. federal tax purposes, estates the income of which is subject to U.S. federal income tax regardless of its source, and trusts if a court within the United States is able to exercise primary supervision over their administration and at least one U.S. person has the authority to control all substantial decisions of the trusts). The treatment of the owner of an interest in an entity that is a pass-through entity for U.S. federal tax purposes (e.g., partnerships and disregarded entities) and that owns Fund shares will generally depend upon the status of the owner and the activities of the pass-through entity. If you are not a U.S. person or are the owner of an interest in a pass-through entity that owns Fund shares, you should consult your tax adviser regarding the U.S. and foreign tax consequences of the ownership of Fund shares, including the applicable rate of U.S. withholding tax on dividends representing ordinary income and net short-term capital gains, and the applicability of U.S. gift and estate taxes.
The tax rules of the various states of the United States and their local jurisdictions with respect to distributions from the Funds may differ from the U.S. federal income tax rules described above. Although interest from tax-exempt bonds is generally not excludible from income for state and local income tax purposes, many states allow you to exclude the percentage of dividends derived from interest income on obligations of the state or its political subdivisions and instrumentalities if you are a resident of that state. Many states also allow you to exclude from income interest on obligations of the federal government and certain other governmental authorities, including U.S. territories and possessions. As noted below, however, certain states, may require that a specific percentage of a Fund's income be derived from state and/ or federal obligations before such dividends may be excluded from state taxable income. Interest on indebtedness incurred by a shareholder to purchase or carry shares of the Fund may not be deductible, in whole or in part, for state or local purposes. Because everyone's tax situation is unique, you should consult your tax adviser regarding the treatment of distributions under the federal, state, and local tax rules that apply to you, as well as the tax consequences of gains or losses from the sale, exchange, or redemption of your Fund shares.
CALIFORNIA TAX-FREE FUND - For the Fund to qualify to pay exempt-interest dividends under California law, at the close of each fiscal-year quarter, at least 50% of the value of the Fund's total assets must consist of obligations from which interest is exempt from California individual income taxation (the "50% Test"). Thus, state and federal obligations may be combined for purposes of meeting the 50% Test. For purposes of California personal income taxation, distributions to shareholders derived from interest on non-exempt obligations and short-term capital gains will be taxed as ordinary income and long-term capital gains distributions will be taxed as long-term capital gains.
CONNECTICUT TAX-FREE FUND - Dividends derived from interest income on federal obligations are subject to Connecticut personal income tax unless at least 50% of the value of the Fund's total assets consist of federal obligations or other obligations with respect to which taxation by Connecticut is prohibited by federal law at the close of each quarter of the Fund's taxable year.
FLORIDA TAX-FREE TRUST - Florida imposes an intangible personal property tax on certain financial assets, including, under certain circumstances, mutual fund shares. Unlike most state and local taxes which are assessed on distributions with respect to mutual fund shares, the Florida intangible personal property tax is based on the net asset value of these shares. For the NAV of Fund shares to be excluded from the calculation of the Florida intangible personal property tax, the Fund must be organized as a business trust and at least 90% of the net asset value of the Fund's portfolio of assets must consist of assets that are exempt from the Florida intangible personal property tax. Exempt assets include notes, bonds, and obligations issued by the State of Florida, its municipalities, counties and other taxing districts, or by the United States Government and certain of its agencies.
MINNESOTA TAX-FREE FUND - For the Fund to qualify to pay exempt-interest dividends, at least 95% of exempt-interest dividends paid by the Fund must be derived from interest on obligations of the State of Minnesota or its political or
governmental subdivisions, municipalities, governmental agencies, or instrumentalities, or on obligations of Indian tribes located in Minnesota. In the event that less than 95% of the exempt-interest dividends paid by the Fund are derived from interest on the above obligations, the dividends derived from such interest will not be exempt from the Minnesota personal income tax.
FUTURE JUDICIAL DECISIONS: The Minnesota legislature enacted a provision expressing its intent that if a court holds that Minnesota's tax treatment of obligations of other states and their governmental units is unlawful in that it discriminates against interstate commerce, the remedy should be to include interest on obligations of Minnesota governmental units as Minnesota taxable income. This provision applies to taxable years that begin during or after the calendar year in which any such court decision becomes final, no matter when the obligations were issued. Should a court so rule, the value of securities held by the Fund, and thus the value of the Fund's shares, would likely decrease, perhaps significantly.
NEW JERSEY TAX-FREE FUND - For the Fund to qualify to pay exempt-interest dividends, at least 80% of the aggregate principal amount of all its investments must be in obligations issued by or on behalf of the State of New Jersey or any county, municipality, school or other district, agency, authority, commission, instrumentality, public corporation, body corporate and politic or political subdivision of the state of New Jersey (the "80% Test"). For purposes of calculating whether the 80% Test is satisfied, financial options, futures, forward contracts or other similar financial instruments related to interest-bearing obligations, obligations issued at a discount or bond indexes related thereto, and cash and cash items (including receivables) are excluded from the principal amount of the Fund's investments. If the Fund qualifies to pay exempt-interest dividends, all distributions attributable to interest earned on the above obligations will be exempt from New Jersey personal income tax. All distributions attributable to interest earned on federal obligations will be exempt from New Jersey personal income tax, regardless of whether the Fund meets the 80% Test.
NEW YORK TAX-FREE FUND - Shareholders of the Fund will not be required to include in their gross income for New York State and New York City personal income tax purposes, any portion of distributions received by the Fund that are attributable to interest earned on (1) tax-exempt obligations issued by New York State or any political subdivision thereof (including New York City); (2) obligations of the United States and its possessions, but only if 50% of the Fund's assets consists of obligations of the United States and its possessions; or (3) obligations of any authority, commission, or instrumentality of the United States to the extent federal law exempts such interest from state income taxation.
10.
UNDERWRITER
Lord Abbett Distributor LLC, a New York limited liability company and subsidiary of Lord Abbett, 90 Hudson Street, Jersey City, New Jersey 07302-3973, serves as the principal underwriter for the Funds. The Fund has entered into a distribution agreement with Lord Abbett Distributor, under which Lord Abbett Distributor is obligated to use its best efforts to find purchasers for the shares of the Fund, and to make reasonable efforts to sell Fund shares so long as, in Lord Abbett Distributor's judgment, a substantial distribution can be obtained by reasonable efforts.
Lord Abbett Distributor as our principal underwriter received net commissions after allowance of a portion of the sales charge to independent dealers with respect to the Class A shares as follows:
INCOME FUND
YEAR ENDED YEAR ENDED YEAR ENDED
SEPT. 30, 2001 SEPT. 30, 2000 SEPT. 30, 1999
-------------- -------------- --------------
Gross sales charge $1,741,142 $ 910,953 $2,720,640
Amount allowed
to dealers $1,469,462 $ 752,528 $2,338,464
---------- ----------
Net commissions received
by Lord Abbett $ 271,680 $ 158,425 $ 382,176
=========== ========== ===========
INCOME TRUST*
YEAR ENDED 11 MONTHS ENDED YEAR ENDED
SEPT. 30, 2001 SEPT. 30, 2000 OCT. 31, 1999
-------------- -------------- -------------
Gross sales charge $ 658,237 $ 234,217 $ 863,951
Amount allowed
to dealers $ 547,027 $ 192,948 $ 749,070
----------- ----------- -----------
Net commissions received
by Lord Abbett Distributor $ 111,210 $ 41,269 $ 114,881
=========== -=========== ============
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*Effective November 1, 1999, the Income Trust changed its fiscal year end from October 31 to September 30.
11.
PERFORMANCE
Each Fund computes the average annual rate of total return for each class during specified periods that would equate the initial amount invested to the ending redeemable value of such investment by adding one to the computed average annual total return, raising the sum to a power equal to the number of years covered by the computation and multiplying the result by $1,000 which represents a hypothetical initial investment. The calculation assumes deduction of the maximum sales charge from the initial amount invested and reinvestment of all income dividends and capital gains distributions on the reinvestment dates at prices calculated as stated in the Prospectus. The ending redeemable value is determined by assuming a complete redemption at the end of the period(s) covered by the average annual total return computation.
In calculating total returns for Class A shares, the current maximum sales charge of 3.25% (as a percentage of the offering price) is deducted from the initial investment (unless the return is shown at net asset value). For Class B shares (National Fund only), the payment of the applicable CDSC (5.0% prior to the first anniversary of purchase, 4.0% prior to the second anniversary of purchase, 3.0% prior to the third and fourth anniversaries of purchase, 2.0% prior to the fifth anniversary of purchase, 1.0% prior to the sixth anniversary of purchase and no CDSC on and after the sixth anniversary of purchase) is applied to the National Fund's investment result for that class for the time period shown (unless the total return is shown at net asset value). For Class C shares, the 1.0% CDSC is applied to the applicable Fund's investment result for that class for the time period shown prior to the first anniversary of purchase (unless the total return is shown at net asset value). Total returns also assume that all dividends and capital gains distributions during the period are reinvested at net asset value per share, and that the investment is redeemed at the end of the period.
The total returns for the following Funds for the one-year, five-year, and the ten-year periods or life of the Fund ending September 30, 2001 are as follows:
FUND 1 YEAR 5 YEARS 10 YEARS LIFE OF FUND (DATE)
---- ------ ------- -------- -------------------
CLASS A
National Tax-Free Fund 7.06% 5.31% 6.12% -
California Tax-Free Fund 7.44% 5.34% 5.91% -
Connecticut Tax-Free Fund 7.04% 4.96% 5.98% -
Hawaii Tax-Free Fund 5.39% 4.69% - 5.83% (10/28/91)
Minnesota Tax-Free Fund 6.97% 5.26% - 6.04% (12/27/94)
Missouri Tax-Free Fund 7.43% 5.10% 6.02% -
New Jersey Tax-Free Fund 6.75% 5.11% 6.25% -
New York Tax-Free Fund 7.76% 5.34% 5.79% -
Texas Tax-Free Fund 7.65% 4.93% 6.06% -
Washington Tax-Free Fund 7.40% 5.33% - 6.24% (4/15/92)
Florida Tax-Free Trust 7.16% 4.60% 5.58% -
Georgia Tax-Free Trust 9.03% 6.40% - 7.48% (12/24/94)
Michigan Tax-Free Trust 8.64% 5.82% - 6.32% (12/1/92)
Pennsylvania Tax-Free Trust 7.54% 5.44% - 6.28% (2/3/92)
FUND 1 YEAR 5 YEARS LIFE OF FUND (DATE)
---- ------ ------- -------------------
CLASS B
National Tax-Free Fund 4.96% 5.10% 5.32% (8/1/96)
FUND 1 YEAR 5 YEARS LIFE OF FUND (DATE)
---- ------ ------- -------------------
CLASS C
National Tax-Free Fund 9.04% 5.31% 5.62% (7/15/96)
New York Tax-Free Fund 9.74% 5.34% 5.61% (7/15/96)
California Tax-Free Fund 9.53% 5.35% 5.65% (7/15/96)
Florida Tax-Free Trust 8.99% 4.60% 4.91% (7/15/96)
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Each Fund's yield quotation for each class is based on a 30-day period ended on a specified date, computed by dividing the Fund's net investment income per share earned during the period by the Fund's maximum offering price per share on the last day of the period. This is determined by finding the following quotient: Take the Fund's dividends and interest earned during the period minus its expenses accrued for the period (net of reimbursements) and divide by the product of (i) the average daily number of Fund shares outstanding during the period that were entitled to receive dividends and (ii) the Fund's maximum offering price per share on the last day of the period. To this quotient add one. This sum is multiplied by itself five times. Then, one is subtracted from the product of this multiplication and the remainder is multiplied by two. Yield for the Class A shares reflects the deduction of the maximum initial sales charge, but may also be shown based on the Fund's net asset value per share. Yields for Class B and C shares do not reflect the deduction of the CDSC.
Each Fund's tax-equivalent yield is computed by dividing that portion of the Fund's yield (as determined above) which is tax exempt by one minus a stated income tax rate (National 39.60%; California 45.22%; Connecticut 42.32%; Florida 39.60%; Georgia 43.22%; Michigan 42.20%; Missouri 41.82%; New Jersey 43.45%; New York 43.74%; Pennsylvania 41.29%; Texas 39.60%; Hawaii 44.58%; Washington 39.60% and Minnesota 44.43%) and adding the product to that portion, if any, of the Fund's yield that is not tax exempt.
For the 30-day period ended September 30, 2001, the 30-day yield and the tax equivalent yield for Class A shares of the Funds were:
FUND 30-DAY YIELD TAX-EQUIVALENT YIELD
---- ------------ --------------------
National Tax-Free Fund 3.95% 6.54%
California Tax-Free Fund 3.43% 6.26%
Connecticut Tax-Free Fund 3.68% 6.38%
Hawaii Tax-Free Fund 3.52% 6.35%
Minnesota Tax-Free Fund 4.67% 8.40%
Missouri Tax-Free Fund 3.21% 5.52%
New Jersey Tax-Free Fund 3.73% 6.60%
New York Tax-Free Fund 3.59% 6.38%
Texas Tax-Free Fund 4.61% 7.63%
Washington Tax-Free Fund 3.74% 6.19%
Florida Tax-Free Trust 3.31% 5.48%
Georgia Tax-Free Trust 3.56% 6.27%
Michigan Tax-Free Trust 3.83% 6.63%
Pennsylvania Tax-Free Trust 3.94% 6.71%
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It is important to remember that these figures represent past performance and an investor should be aware that the investment return and principal value of a fund investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Therefore, there is no assurance that this performance will be repeated in the future.
Each Fund may from time to time quote or otherwise use yield and total return information in advertisements, shareholder reports or sales literature. Thirty-day yield and average annual total return values are computed pursuant to formulas specified by the SEC. Each Fund may also from time to time quote distribution rates in reports to shareholders and in sales literature. In addition, each Fund may from time to time advertise or describe in sales literature its performance relative to certain averages, performance rankings, indices, or other information prepared by recognized mutual fund statistical services and investments for which reliable performance information is available.
12.
FINANCIAL STATEMENTS
The financial statements and reports of Deloitte & Touche LLP, independent auditors, included in the 2001 Annual Report to Shareholders of Lord Abbett Tax-Free Income Fund, Inc. and Lord Abbett Tax-Free Income Trust, respectively, are incorporated herein by reference in reliance upon the authority of Deloitte & Touche LLP as experts in auditing and accounting.
APPENDIX A
DESCRIPTION OF FOUR HIGHEST MUNICIPAL BOND RATINGS
Moody's describes its four highest ratings for municipal bonds as
follows:
Aaa Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Aa Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present that make the long-term risks appear
somewhat larger than in Aaa securities.
A Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the
future.
Baa Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Standard & Poor's describes its four highest ratings for municipal bonds
as follows:
AAA An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA An obligation rated AA differs from the highest rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions and changing circumstances are more likely to
lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.
Fitch describes its four highest ratings for municipal bonds as follows:
AAA HIGHEST CREDIT QUALITY. `AAA' ratings denote the lowest expectation of
credit risk. They are assigned only in case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is
highly unlikely to be adversely affected by foreseeable events.
AA VERY HIGH CREDIT QUALITY. `AA' ratings denote a very low expectation of
credit risk. They indicate very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.
A HIGH CREDIT QUALITY. `A' ratings denote a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered
strong. This capacity may, nevertheless, be more vulnerable to changes in
circumstances or in economic conditions than is the case for higher
ratings.
BBB GOOD CREDIT QUALITY. `BBB' ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances
and in economic conditions and more likely to impair this capacity. This
is the lowest investment-grade category.
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APPENDIX B
RISK FACTORS REGARDING INVESTMENTS
IN PUERTO RICO, CALIFORNIA, CONNECTICUT, HAWAII, MINNESOTA, MISSOURI,
NEW JERSEY, NEW YORK, TEXAS, WASHINGTON, FLORIDA, GEORGIA, MICHIGAN
AND PENNSYLVANIA MUNICIPAL BONDS
The following information is a summary of certain special risks that may affect the states and territory indicated, which could affect the value of the bonds held by the corresponding Fund. This information may not be complete or current and is compiled based upon information and judgments in publicly available documents. The Funds have not verified any of this information.
PUERTO RICO BONDS
Each Fund may invest in bonds issued by the Commonwealth of Puerto Rico, its agencies, and instrumentalities.
Puerto Rico faces significant fiscal challenges. Puerto Rico has relatively high debt levels, and relatively low reserves. In 2001, Puerto Rico restructured its debt to fund deficits and back-load debt maturities. This restructuring may limit the Commonwealth's future financial flexibility.
Growth of the Puerto Rico economy slowed in 2001, and Puerto Rico had budget deficits in fiscal years 2000 and 2001. The September 11th terrorist attacks may increase the vulnerability of the Commonwealth's financial condition. Tourism is an important sector of the economy, and a sustained decrease in air travel could have serious consequences. Continued growth of the Puerto Rico economy depends on factors such as the state of the U.S. economy, stability of the price of oil and borrowing costs. A long or deep U.S. economic recession could diminish Puerto Rico's prospects for an economic recovery in 2002.
The manufacturing and service sectors are also important to Puerto Rico's economy. Although its unemployment rate has generally declined in recent years, Puerto Rico's unemployment rate continues to substantially exceed the U.S. average.
Much of the development of the manufacturing sector in Puerto Rico to date can
be attributed to various federal and Commonwealth tax incentives, most notably
Section 936 of the Internal Revenue Code (the "Code"), which allows companies
with operations in Puerto Rico and other U.S. territories to receive a credit to
be used against U.S. taxes on certain income from operations and the
Commonwealth's Industrial Incentives Program. However, in 1996 amendments were
passed that phase out Section 936 tax credits over ten years for existing
claimants and eliminate it for corporations without established operations after
October 1995. The long-term effects on the Puerto Rico economy of the repeal of
Section 936 cannot yet be determined, although the Puerto Rico does not expect
the repeal to have material adverse effects on the Commonwealth's economy in the
short- or medium-term. The Commonwealth also needs to address its substantial
unfunded pension liabilities to its two main public pension systems.
The Constitution of Puerto Rico limits the direct obligations of the Commonwealth evidenced by full faith and credit bonds or notes.
In recent years the Commonwealth has had higher levels of public sector debt compared to the growth in gross product. This trend is expected to continue during the next few fiscal years as the level of public sector capital investment remains high.
CALIFORNIA BONDS
The September 11th terrorist attacks have increased pre-existing uncertainty regarding the economic and revenue outlook for California. In 2001, the State projects lower revenues than were collected in 2000--the first time the State has projected such a drop since 1994--and 2001 revenue collections are running below even these estimates. This decrease in revenues is due largely to a significant slowdown in the State's economy and the poor recent performance of U.S. financial markets, combined with overall revenues that are highly sensitive to such changes. In addition, the
State has a significant high technology sector that is expected to recover more slowly than other sectors of the economy. A budget deficit is projected for fiscal 2002, and projected to widen in 2003, absent corrective measures.
Power shortages in California pose significant near- and long-term challenges for the State's economy and government budgets. Since January 2001, the State has implemented a number of steps to address the State's energy problems including buying power directly under long-term contracts. Because the State entered these long-term contracts at the peak of the energy crisis, the rates on these long-term contracts are much higher than current market rates. The situation continues to be fluid and subject to many uncertainties. The State government may face liquidity problems in the coming years if the State is unable to sell bonds to finance its power purchases, and the State's power purchase program creates potentially significant financial exposure for the State's general fund. There can be no assurance that there will not be future disruptions in power supplies or related developments which could adversely affect the State's economy or government revenues and expenses.
Various constitutional and statutory provisions, may result in decreases in State and local revenues and thus affect the ability of issuers of California municipal bonds to meet their financial obligations.
The taxing and spending authority of California's governmental entities has been limited by the adoption of constitutional amendments. Proposition 13, enacted in 1978, constrains the fiscal condition of local governments by limiting ad valorem taxes on real property and restricting the ability of taxing entities to increase real property and other taxes. In 1996, voters approved Proposition 218, which limits the ability of local government agencies to impose or raise various taxes, fees, charges and assessments without voter approval, and clarifies the right of local voters to reduce taxes, fees, assessments or charges through local initiatives. Proposition 218 is generally viewed as restricting the flexibility of local governments, and consequently has and may further cause reductions in ratings of some cities and counties. The State is also subject to an annual appropriations limit imposed by Article XIII B of the State Constitution, which prohibits the state from spending the proceeds of tax revenues, regulatory licenses, user charges or other fees beyond imposed appropriations limits that are adjusted annually based on per capita personal income and changes in population. Revenues that exceed the limitation are measured over consecutive two-year periods, and any excess revenues are divided equally between transfers to schools and community colleges and refunds to taxpayers. Certain appropriations, including appropriations for the debt service costs of bonds existing or authorized by January 1, 1979, or subsequently authorized by voters, are not subject to this limitation.
The effect of these various provisions on the ability of California issuers to pay interest and principal on their obligations remains unclear in many cases. In any event, the effect may depend on whether a particular California municipal bond is a general or limited obligation bond (limited obligation bonds generally being less affected by such changes) and on the type of security, if any, provided for the bond. Future amendments to the California Constitution or statutory changes also may harm the ability of the State or local issuers to repay their obligations.
CONNECTICUT BONDS
Although Connecticut's economy has performed well in recent years, its growth slowed sharply this year. After many years of budget surpluses, the State is projecting a significant budget deficit in 2002, absent corrective measures, and estimates that the State has lost as many as 10,000 jobs since the September 11th terrorist attacks. The State's high level of tax-supported debt remains a concern because it poses a relatively significant burden on the State's revenue base. In addition, the State has significant unfunded pension liabilities. One mitigating factor is the State's rainy day fund, which is fully funded at five percent.
Connecticut law limits the indebtedness payable from the General Fund tax receipts. In 1992, Connecticut voters approved a constitutional amendment, which requires a balanced budget for each year and imposes a cap on the growth of expenditures. The General Assembly cannot authorize an increase in general budget expenditures for any fiscal year above the amount of general budget expenditures for the previous fiscal year by a percentage, which exceeds the greater of the percentage increase in personal income or the percentage increase in inflation. There is an exception provided if the governor declares an emergency or the existence of extraordinary circumstances and at least three-fifths of the members of each house of the General Assembly vote to exceed the limit for purposes of such emergency or extraordinary circumstances. Expenditures for the payment of bonds, notes and other evidences of indebtedness are excluded from the constitutional and statutory definitions of general budget expenditures.
FLORIDA BONDS
Recent declines in tourism have disproportionately affected Florida. Tourism continues to be one of Florida's most important industries, and there will likely be short-term dislocations in this industry resulting from the September 11th terrorist attacks. An extended national economic slump could have longer term effects on tourism and Florida's economy.
Recent declines in consumer confidence along with recent tourism declines have contributed to significant anticipated decreases in State revenues, that will in turn lead to budget deficits, absent corrective measures. Florida's tax base is relatively narrow, with most of its revenues derived from the state's sales and use tax. This reliance on a cyclical revenue source creates some vulnerability to economic downturns. Florida's economy is also still somewhat dependent on employment related to construction and agriculture. A significant downturn in any either of these sectors could adversely affect the Florida economy.
Florida's constitutional budget stabilization reserve is fully funded at five percent, but the State's working capital reserve is projected to decrease and the State's debt burden has increased recently. In 1994, Florida passed a constitutional amendment that limits the rate of growth in state revenues. This limitation, however, exempts revenues pledged to bonds.
GEORGIA BONDS
Although Georgia's economy has performed well in recent years, and the State's general reserve is fully funded at five percent, State revenues are projected to decrease and employment began decreasing in fiscal year 2002.
Georgia's rapid economic growth and expansion have stressed the State's infrastructure, particularly in the Atlanta area.
The Georgia Constitution provides that the State cannot incur general obligation debt if debt service on all existing general obligation debt exceeds ten percent of total revenue receipts less refunds of the State treasury in the year following the proposed issuance.
HAWAII BONDS
It is not yet possible to predict the short- or long-term adverse impacts of the September 11th terrorist attacks on Hawaii. Hawaii's economy is highly dependent on tourism and the State is reachable only by air travel. If recovery from the dropoff in air travel and tourism and U.S. economic recession is delayed, the consequences for Hawaii could be severe.
Hawaii's economy performed poorly in the 1990s, but has shown signs of recovery in recent years. In the 1990s, Hawaii's economy was harmed by financial and economic downturns in Southeast Asia. Construction activity also declined during this period. Agriculture, dominated by pineapple and sugar production, experienced increased foreign competition.
Economic diversification projects are under way, including expansion of containerized port facilities, aquaculture and other agricultural products. These projects have not yet had any significant positive effects on the State's overall economy, and remains concentrated in tourism, retail trade, construction, agriculture and military operations.
Hawaii's debt burden remains among the highest of all the U.S. states, although the State government funds many activities typically funded by local governments.
The Hawaii Constitution provides that general obligation bonds may only be issued by the State if such bonds at the time of issuance will not cause the total amount of principal and interest payable in the current or any future fiscal year, whichever is higher, on such bonds and on all outstanding general obligation bonds, to exceed 20% of the average general fund revenues of Hawaii in the three fiscal years immediately before the issuance.
MICHIGAN BONDS
Michigan's economy weakened considerably in 2001. On October 23, 2001, the State Treasurer convened a special revenue estimating conference to update revenue projections after the September 11th terrorist attacks. At the conference, a consensus was reached that in fiscal years 2001 and 2002, revenues would be substantially below previous forecasts and below actual 2000 revenues, and Michigan wage and salary employment would decrease. The full impact of the national economic recession that began in 2001 and the September 11th attacks, however, is still unclear and the impact on Michigan could be worse than projected.
Michigan's economy remains heavily concentrated in the manufacturing sector. The State's automobile industry remains an important component of this sector. Accordingly, the State's economy is potentially more volatile than those of other states with more diverse economies and may be more likely to be adversely affected by the recent national economic slowdown.
Michigan has several legislative and constitutional provisions that could affect the State's financial condition. As a result of legislative action in 1993, and a statewide referendum in 1994, the State has made major changes in the financing of local public schools. Most local property taxes, which had been the primary source of school financing, have been repealed. They have been replaced by other revenues, with the principal replacement revenue being an increased sales tax. These additional revenues will be included within the State's constitutional revenue limitations and may have an impact on the State's ability to raise additional revenues in the future.
The State Constitution provides that the total amount of general ad valorem taxes imposed on taxable property in any year cannot exceed certain millage limitations set by the Constitution, statute or charter. The Constitution prohibits local units of government from levying any tax not authorized by law or charter, or from increasing the rate of an existing tax above the rate authorized by law or charter, without the approval of the electors of the local unit voting on the question. Local units of government and local authorities are authorized to issue bonds and other evidences of indebtedness in a variety of situations without the approval of electors, but the ability of the obligor to levy taxes for the payment of such obligations is subject to the foregoing limitations unless the obligations were authorized before December 23, 1978 or approved by the electors. The Constitution also contains millage reduction provisions.
In 1978, the Michigan Constitution was amended to limit the amount of total state revenues raised from taxes and other sources. The State may, however, raise taxes in excess of the limit for emergencies, when deemed necessary by the Governor and two-thirds of the members of each house of the Legislature. The revenue limit does not apply to taxes imposed for the payment of principal of and interest on bonds of the State, if the bonds are approved by voters and authorized by a vote of two-thirds of the members of each House of the Legislature. The Constitution also provides that the proportion of State spending paid to all local units of government to total State spending may not be reduced below the proportion in effect in the 1978-79 fiscal year.
MINNESOTA BONDS
Minnesota relies heavily on individual, sales, and corporate income taxes for revenues, all of which are sensitive to economic conditions. The national economic recession that began in 2001 and the September 11th terrorist attacks could thus disproportionately impact the financial condition of Minnesota. Although Minnesota has significant reserves and a relatively low debt burden to help it weather the economic downturn, payrolls have already dropped significantly, and the State expects growing budget deficits over the next several years, absent corrective measures.
MISSOURI BONDS
Although the Missouri economy has performed well in recent years, the State recently lowered revenue forecasts due in large part, to the economic slowdown. After effecting recent budget cuts and including tobacco settlement proceeds, Missouri expects balanced budgets in 2001 and 2002. The State's relatively low debt burden and substantial reserves may help the State weather the economic downturn.
Economic reversals in either Kansas City or St. Louis metropolitan areas, whose Missouri portions together contain a significant portion of the State's population, would have a major impact on the State's overall economic condition. Changes in military appropriations, which play an important role in the State's economy, could adversely affect unemployment rates. The State also has a significant agricultural sector that is important to the State's economy.
Certain provisions of the Constitution of Missouri could adversely affect payment on Missouri municipal bonds. The State Constitution provides that the General Assembly may issue general obligation bonds without voter approval solely for the purpose of (1) refunding outstanding bonds or (2) upon the recommendation of the Governor, for a temporary liability by reason of unforeseen emergency or of deficiency in revenue in an amount not to exceed $1,000,000 for any one year and to be paid in not more than five years or as otherwise specifically provided.
The Constitution imposes in the Tax Limitation Amendment limits on the amount of State taxes that may be collected by the State of Missouri in any fiscal year. The details of the Amendment are complex and clarification from subsequent legislation and further judicial decisions may be necessary. If total State revenues exceed the State revenue limit by more than one percent, the State is required to refund the excess. The revenue limit can only be exceeded if the General Assembly approves by a two-thirds vote of each House an emergency declaration by the Governor. Revenues have exceeded the limit in the past triggering an income tax refund liability under the Constitution.
To the extent that the payment of general obligation bonds issued by the State of Missouri or a unit of local government in the Fund' portfolio is dependent on revenues from the levy of taxes and such obligations have been issued subsequent to the date of the Tax Limitation Amendment's adoption, November 4, 1980, the ability of the State of Missouri or the appropriate local unit to levy sufficient taxes to pay the debt service on such bonds may be affected.
NEW JERSEY BONDS
The State's economy has been steadily growing since the recession in the early 1990s. Before September 11th, the State anticipated lower, but positive, growth for the next several years. New Jersey now anticipates that the terrorist attacks will accelerate the slowdown that occurred in 2001.
In recent years, State debt levels have increased, and are above historical levels. In addition, State law and the State Constitution restrict appropriations. Statutory or legislative restrictions of such character may adversely affect a municipality's or any other bond-issuing authority's ability to repay its obligations.
The New Jersey Constitution provides, in part, that no money shall be drawn from the State treasury except for appropriations made by law and that no law appropriating money for any State purpose shall be enacted if the appropriations contained therein, together with all prior appropriations made for the same fiscal period, shall exceed the total amount of the revenue on hand and anticipated to be available to meet such appropriations during such fiscal period, as certified by the Governor.
New Jersey's Local Budget Law imposes specific budgetary procedures upon counties and municipalities ("local units"). Every local unit must adopt an operating budget that is balanced on a cash basis, and the Director of the Division of Local Government Services must examine items of revenue and appropriation. State law also regulates the issuance of debt by local units, by limiting the amount of tax anticipation notes that may be issued by local units and requiring their repayment within 120 days of the end of the fiscal year (six months in the case of the counties) in which issued. With certain exceptions, no local unit is permitted to issue bonds for the payment of current expenses or to pay outstanding bonds, except with the approval of the Local Finance Board. Local units may issue bond anticipation notes for temporary periods not exceeding in the aggregate approximately ten years from the date of first issue. The debt that any local unit may authorize is limited by statute. State law restricts total appropriations increases to five percent
annually for such entities, with certain exceptions.
NEW YORK BONDS
New York State, and many of its political subdivisions and authorities, will face extraordinary budget challenges as a result of the September 11th terrorist attacks, in addition to challenges posed by the national economic recession that began in 2001. It is not yet possible to predict the short-term or long-term economic impact of these events, or the extent of offsetting considerations such as federal aid to the State and the City of New York, or the economic activity generated by rebuilding efforts. The immediate economic consequences to date have been severe, including the loss of approximately 77,000 jobs in New York City, with total job losses of 130,000 expected by June 2002. If recovery is slower than expected, or the national economic recession that began in 2001 is deep or extended, the value of investments held by the New York Fund could decrease, perhaps substantially.
The State's Authorities generally are responsible for financing, constructing and operating revenue-producing public facilities. While payments on Authority obligations normally are paid from revenues generated by projects of the Authorities, in the past the State has had to appropriate large amounts to enable certain Authorities to meet their financial obligations. Further assistance to Authorities may be required in the future. The amount of debt issued by the Authorities is substantial.
The fiscal health of the State is closely related to the fiscal health of its localities, particularly the City of New York. Certain localities have experienced financial problems and have received State assistance during the last several years. State localities may required additional State assistance.
The market perceives the State, its political subdivisions, and Authorities to be interdependent. Circumstances affecting the financial condition of one such entity may thus affect the value of securities issued by the others.
The State's overall debt burden is high, future capital needs are significant, and reserve levels are relatively lower than in other states. Moreover, municipalities and school districts have engaged in substantial short-term and long-term borrowing.
The State's economy and the government's financial position significantly rely on the financial services sector. The financial services sector is the second largest source of revenue for the State. Accordingly, the depth and duration of the recent downturn in the financial services sector is an important consideration regarding the State's financial condition.
PENNSYLVANIA BONDS
Despite low debt levels, and recently increased reserves, the effects of the national economic recession that began in 2001 and the September 11th terrorist attacks on Pennsylvania's economy and State revenues cannot yet be accurately predicted. These events may cause tax revenues to be lower than projected in the fiscal year 2002 budget. Most of the State's revenues derive from personal and corporate income taxes and sales taxes, all of which can be sensitive to economic conditions.
The Pennsylvania Constitution limits the total operating budget appropriations made by the Commonwealth's General Assembly. Pennsylvania engages in short-term borrowing to fund expenses within a fiscal year through the sale of tax anticipation notes, for the account of the General Fund or the Motor License Fund or both such funds. Tax anticipation notes must mature within the fiscal year of issuance. The principal amount issued, when added to that outstanding, may not exceed, in the aggregate, 20% of the revenues estimated to accrue to the appropriate fund or both funds in the fiscal year. The Commonwealth is not permitted to fund deficits between fiscal years with any form of debt. All year-end deficit balances must be funded within the succeeding fiscal year's budget.
TEXAS BONDS
Job growth in Texas has slowed in 2001, and will likely slow further once the effects of the national economic recession that began in 2001 and the September 11th terrorist attacks are more fully reflected in Texas labor markets. State revenues, however, have so far remained close to budgeted projections after September 11th. The State's reserve levels
are relatively low, which could present challenges if the national economic recession that began in 2001 is long or severe.
Due to the State's expansion in Medicaid spending and other Health and Human Services programs requiring federal matching revenues, federal receipts have recently been the State's main revenue source. Any change in federal law that decreases these receipts could have a significant impact on the State's operating budget.
The State Constitution prohibits the State from levying ad valorem taxes on property for general revenue purposes. The State Constitution also limits the rate of growth of appropriations from tax revenues not dedicated by the Constitution during any biennium to the estimated rate of growth for the State's economy. The Legislature may avoid this constitutional limitation if it finds, by a majority vote of both Houses, that an emergency exists. The State Constitution authorizes the Legislature to provide by law for the implementation of this restriction, and the Legislature, pursuant to such authorization, has defined the estimated rate of growth in the State's economy to mean the estimated increase in State personal income.
In 1997, voters approved a constitutional amendment that prohibits the legislature from authorizing additional state debt payable from general revenues if the resulting annual debt service exceeds five percent of an amount equal to the average amount of general revenue for the three immediately preceding years, excluding revenues constitutionally dedicated for purposes other than payment of debt service.
WASHINGTON BONDS
Washington is in the midst of an economic downturn resulting largely from the national economic recession that began in 2001 and the September 11th terrorist attacks. The Boeing Company is the state's largest employer and exerts a significant impact on overall state production, employment and labor earnings. In light of the decrease in air travel after September 11th, Boeing is projecting significant job cuts in Washington. Unemployment in Washington is above the national average and is projected to increase.
The economic base of the State includes also manufacturing and service industries as well as agricultural and timber production. Forest products rank second behind aerospace in value of total production. A downturn in these sectors could adversely impact the State's economy.
International trade plays an important role in the State's employment base, with approximately one in six jobs in the State related to international trade. The State's trade levels depend largely on national and world (rather than local) economic conditions, including consumer demand.
The Washington Constitution gives voters the power to initiate and modify legislation through voter initiatives and referenda. Initiatives and referenda will be put on the ballot upon submission of a petition with specified numbers of signatures, and become law if approved by a majority of voters. Such laws may not be amended for two years except by a two thirds vote of each house of the State legislature.
In November 2001, voters passed Initiative 747. This initiative limits growth in regular property taxes the lower of 1 percent or the rate of inflation. Taxes may exceed this threshold if approved by a simple majority of voters in an election. Initiative 747 may result in significant revenue losses for the State. There is a risk that Washington voters will pass additional referenda that may adversely affect the State's financial condition.
Washington's Constitution, as interpreted by the State Supreme Court, prohibits the imposition of net income taxes. Most of the State's tax revenues derive from general and selective sales and gross receipts taxes.
With certain exceptions, the amount of State general obligation debt and other expenditures that may be incurred is limited by constitutional and statutory restrictions.
LORD ABBETT TAX-FREE INCOME FUND, INC.
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) (i) ARTICLES OF RESTATEMENT incorporated by reference to Post
Effective Amendment No. 29 to the Registration Statement
on Form N-1A filed on December 2, 1998.
(ii) ARTICLES OF AMENDMENT DATED FEBRUARY 2, 1999. Filed
herein.
(iii) ARTICLES SUPPLEMENTARY DATED FEBRUARY 2, 1999. Filed
herein.
(b) BY-LAWS, AS AMENDED MARCH 9, 2000. Incorporated by reference to
Post Effective Amendment No. 32 to the Registration Statement on
Form N-1A filed on January 31, 2001.
(c) INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS. Not applicable.
(d) INVESTMENT ADVISORY CONTACTS, MANAGEMENT AGREEMENT. FILED HEREIN.
(e) UNDERWRITING CONTRACTS. DISTRIBUTION AGREEMENT. FILED HEREIN.
(f) BONUS OR PROFIT SHARING CONTRACTS. Incorporated by reference to
Post Effective Amendment No. 32 to the Registration Statement on
Form N-1A filed on January 31, 2001.
(g) CUSTODIAN AGREEMENT. FILED HEREIN.
(h) TRANSFER AGENCY AGREEMENT. Incorporated by reference.
(i) LEGAL OPINION. FILED HEREIN.
(j) OTHER OPINION. CONSENT OF DELOITTE & TOUCHE, LLP FILED HEREIN.
(k) OMITTED FINANCIAL STATEMENTS incorporated by reference.
(l) INITIAL CAPITAL AGREEMENTS incorporated by reference.
(m) RULE 12b-1 PLANS. FILED HEREIN.
RULE 12b-1 CLASS A PLANS FOR ALL FUNDS
RULE 12b-1 CLASS B PLAN FOR THE NATIONAL FUND ONLY
RULE 12b-1 CLASS C TYPE I PLANS FOR CALIFORNIA,
NATIONAL, AND NEW YORK FUNDS
(n) RULE 18f-3 PLAN. Incorporated by reference to Post Effective
Amendment No. 32 to the Registration Statement on Form N-1A filed
on January 31, 2001.
(o) Not applicable.
(p) CODE OF ETHICS. Incorporated by reference to Post Effective
Amendment No. 32 to the Registration Statement on Form N-1A filed
on January 31, 2001.
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Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None.
Item 25. INDEMNIFICATION
Registrant is incorporated under the laws of the State of Maryland and is subject to Section 2-418 of the Corporations and Associations Article of the Annotated Code of the State of Maryland controlling the indemnification of directors and officers. Since Registrant has its executive offices in the State of New York, and is qualified as a foreign corporation doing business in such State, the persons covered by the foregoing statute may also be entitled to and subject to the limitations of the indemnification provisions of Section 721-726 of the New York Business Corporation Law.
The general effect of these statutes is to protect officers, directors and employees of Registrant against legal liability and expenses incurred by reason of their positions with the Registrant. The statutes provide for indemnification for liability for proceedings not brought on behalf of the corporation and for those brought on behalf of the corporation, and in each case place conditions under which indemnification will be permitted, including requirements that the officer, director or employee acted in good faith. Under certain conditions, payment of expenses in advance of final disposition may be permitted. The By-laws of Registrant, without limiting the authority of Registrant to indemnify any of its officers, employees or agents to the extent consistent with applicable law, make the indemnification of its directors mandatory subject only to the conditions and limitations imposed by the above-mentioned Section 2-418 of Maryland law and by the provisions of Section 17(h) of the Investment Company Act of 1940 as interpreted and required to be implemented by SEC Release No. IC-11330 of September 4, 1980.
In referring in its By-laws to, and making indemnification of
directors subject to the conditions and limitations of, both
Section 2-418 of the Maryland law and Section 17(h) of the
Investment Company Act of 1940, Registrant intends that
conditions and limitations on the extent of the
indemnification of directors imposed by the provisions of
either Section 2-418 or Section 17(h) shall apply and that any
inconsistency between the two will be resolved by applying the
provisions of said Section 17(h) if the condition or
limitation imposed by Section 17(h) is the more stringent. In
referring in its By-laws to SEC Release No. IC-11330 as the
source for interpretation and implementation of said Section
17(h), Registrant understands that it would be required under
its By-laws to use reasonable and fair means in determining
whether indemnification of a director should be made and
undertakes to use either (1) a final decision on the merits by
a court or other body before whom the proceeding was brought
that the person to be indemnified ("indemnitee") was not
liable to Registrant or to its security holders by reason of
willful malfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office
("disabling conduct") or (2) in the absence of such a
decision, a reasonable determination, based upon a review of
the facts, that the indemnitee was not liable by reason of
such disabling conduct, by (a) the vote of a majority of a
quorum of directors who are neither "interested persons" (as
defined in the 1940 Act) of Registrant nor parties to the
proceeding, or (b) an independent legal counsel in a written
opinion. Also, Registrant will make advances of attorneys'
fees or other expenses incurred by a director in his defense
only if (in addition to his undertaking to repay the advance
if he is not ultimately entitled to indemnification) (1) the
indemnitee provides a security for his undertaking, (2)
Registrant shall be insured against losses arising by reason
of any lawful advances, or (3) a majority of a quorum of the
non-interested, non-party directors of Registrant, or an
independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts, that
there is reason to believe that the indemnitee ultimately will
be found entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expense incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
In addition, Registrant maintains a directors' and officers' errors and omissions liability insurance policy protecting directors and officers against liability for breach of duty, negligent act, error or omission committed in their capacity as directors or officers. The policy contains certain exclusions, among which is exclusion from coverage for active or deliberate dishonest or fraudulent acts and exclusion for fines or penalties imposed by law or other matters deemed uninsurable.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Lord, Abbett & Co. acts as investment adviser for the Lord Abbett registered investment companies and provides investment management services to various pension plans, institutions and individuals. Lord Abbett Distributor, a limited liability corporation, serves as their distributor and principal underwriter. Other than acting as trustees, directors and/or officers of open-end investment companies managed by Lord, Abbett & Co., none of Lord, Abbett & Co.'s partners has, in the past two fiscal years, engaged in any other business, profession, vocation or employment of a substantial nature for his or her own account or in the capacity of director, officer, employee, or partner of any entity.
Item 27. PRINCIPAL UNDERWRITER
(a) Lord Abbett Affiliated Fund, Inc. Lord Abbett Blend Trust Lord Abbett Bond-Debenture Fund, Inc. Lord Abbett Developing Growth Fund, Inc. Lord Abbett Global Fund, Inc. Lord Abbett Investment Trust Lord Abbett Large-Cap Growth Fund Lord Abbett Mid-Cap Value Fund, Inc. Lord Abbett Research Fund, Inc. Lord Abbett Series Fund, Inc. Lord Abbett Securities Trust Lord Abbett Tax-Free Income Fund, Inc. Lord Abbett Tax-Free Income Trust Lord Abbett U.S. Government Money Market Fund, Inc
(b) The partners of Lord, Abbett & Co. are:
Name and Principal Positions and Offices Business Address* With Registrant ----------------- --------------- Robert S. Dow Chairman and President Paul A. Hilstad Vice President & Secretary Lawrence H. Kaplan Vice President & Assistant Secretary Joan A. Binstock Vice President |
Zane E. Brown Vice President Daniel E. Carper Vice President |
The other partners who are neither officers nor directors of the Fund are: John E. Erard, Robert P. Fetch, Daria L. Foster, Robert I. Gerber, Michael A. Grant, W. Thomas Hudson, Jr., Stephen J. McGruder, Robert G. Morris, Robert J. Noelke, R. Mark Pennington, Eli M. Salzmann, Douglas B. Seig, Christopher J. Towle, Edward von der Linde and Marion Zapolin.
*Each of the above has a principal business address:
90 Hudson Street, Jersey City, New Jersey 07302-3973
(c) Not applicable
Item 28. LOCATION OF ACCOUNTS AND RECORDS
The Registrant maintains the records, required by Rules 31a - 1(a) and (b), and 31a - 2(a) at its main office.
Lord, Abbett & Co. maintains the records required by Rules 31a
- 1(f) and 31a - 2(e) at its main office.
Certain records such as cancelled stock certificates and correspondence may be physically maintained at the main office of the Registrant's Transfer Agent, Custodian, or Shareholder Servicing Agent within the requirements of Rule 31a-3.
Item 29. MANAGEMENT SERVICES
None.
Item 30. UNDERTAKINGS
The Registrant undertakes to furnish each person to whom a prospectus is delivered with a copy of the Registrant's latest annual report to shareholders, upon request and without charge.
The Registrant undertakes, if requested to do so by the holders of at least 10% of the Registrant's outstanding shares, to call a meeting of shareholders for the purpose of voting upon the question of removal of a director or directors and to assist in communications with other shareholders as required by Section 16(c) of the Investment Company Act of 1940, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement under Rule 485(b) under the Securities Act and has duly caused this Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Jersey City, and the State of New Jersey, on the 28th day of January, 2002.
LORD ABBETT TAX-FREE INCOME FUND, INC.
/s/ Christina T. Simmons
------------------------
By: Christina T. Simmons
Vice President and Assistant Secretary
/s/ Francie W. Tai
------------------
By: Francie W. Tai
Treasurer
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LORD ABBETT TAX-FREE INCOME FUND, INC.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
---------- ----- ----
Chairman, President
/s/Robert S. Dow* and Director/Trustee January 28, 2002
---------------------------- -------------------------- -------------------
Robert S. Dow
/s/ E. Thayer Bigelow* Director/Trustee January 28, 2002
---------------------------- ---------------------- -------------------
E. Thayer Bigelow
/s/William H. T. Bush* Director/Trustee January 28, 2002
---------------------------- ------------------------ -------------------
William H. T. Bush
/s/Robert B. Calhoun, Jr.* Director/Trustee January 28, 2002
---------------------------- ------------------------ -------------------
Robert B. Calhoun, Jr.
/s/Stewart S. Dixon* Director/Trustee January 28, 2002
---------------------------- ------------------------ -------------------
Stewart S. Dixon
/s/Franklin W. Hobbs* Director/Trustee January 28, 2002
---------------------------- ------------------------ -------------------
Franklin W. Hobbs
/s/C. Alan MacDonald* Director/Trustee January 28, 2002
---------------------------- ------------------------ -------------------
C. Alan MacDonald
/s/Thomas J. Neff* Director/Trustee January 28, 2002
---------------------------- ------------------------ -------------------
Thomas J. Neff
*/s/ Christina T. Simmons
----------------------------
Attorney-in-Fact
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LORD ABBETT TAX-FREE INCOME FUND, INC.
ARTICLES OF AMENDMENT
LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Articles of Incorporation of the Corporation (hereinafter
called the "Articles"), as heretofore amended, are hereby further amended by:
(i) changing the legal name for the existing California Series of the
Corporation to the "Lord Abbett California Tax-Free Income Fund," its Class A
and C shares now being Class A and C shares of the Lord Abbett California
Tax-Free Income Fund; (ii) changing the legal name for the existing National
Series of the Corporation to the "Lord Abbett National Tax-Free Income Fund,"
it's Class A, B and C shares now being Class A, B and C shares of the Lord
Abbett National Tax-Free Income Fund; (iii) changing the legal name for the
existing New York Series of the Corporation to the "Lord Abbett New York
Tax-Free Income Fund," its Class A and C shares now being Class A and C shares
of the Lord Abbett New York Tax-Free Income Fund; (iv) changing the legal name
for the existing Texas Series of the Corporation to the "Lord Abbett Texas
Tax-Free Income Fund," its Class A and C shares now being class A and C shares
of the Lord Abbett Texas Tax-Free Income Fund; (v) changing the legal name for
the existing New Jersey Series of the Corporation to the "Lord Abbett New Jersey
Tax-Free Income Fund," its Class A shares now being Class A shares of the Lord
Abbett New Jersey Tax-Free Income Fund; (vi) changing the legal name for the
existing Connecticut Series of the Corporation to the "Lord Abbett Connecticut
Tax-Free Income Fund," its Class A shares now being Class A shares of the Lord
Abbett Connecticut Tax-Free Income Fund; (vii) changing the legal name for the
existing Missouri Series of the Corporation to the "Lord Abbett Missouri
Tax-Free Income Fund," its Class A shares now being Class A shares of the Lord
Abbett Missouri Tax-Free Income Fund; (viii) changing the legal name for the
existing Hawaii Series of the Corporation to the "Lord Abbett Hawaii Tax-Free
Income Fund," its Class A shares now being Class A shares of the Lord Abbett
Hawaii Tax-Free Income Fund; (ix) changing the legal name for the existing
Washington Series of the Corporation to the "Lord Abbett Washington Tax-Free
Income Fund," its Class A shares now being Class A shares of the Lord Abbett
Washington Tax-Free Income Fund; and (x) changing the legal name for the
existing Minnesota Series of the Corporation to the "Lord Abbett Minnesota
Tax-Free Income Fund," its Class A shares now being Class A shares of the Lord
Abbett Minnesota Tax-Free Income Fund.
SECOND. A majority of the entire Board of Directors of the Corporation on January 19, 1999, duly adopted resolutions approving the foregoing amendment to the Articles.
THIRD. The amendment of the Articles set forth herein has been duly approved by the Board of Directors of the Corporation and is limited to a change expressly permitted by Section 2-605 of the General Corporation Law of the State of Maryland to be made without action of the stockholders.
FOURTH. The Corporation is registered as an open-end company under the Investment Company Act of 1940, as amended from time to time.
IN WITNESS WHEREOF, Lord Abbett Tax-Free Income Fund, Inc. has caused these presents to be signed in its name and on its behalf by its Vice President and witnessed by its Assistant Secretary on February 2, 1999.
LORD ABBETT TAX-FREE
INCOME FUND, INC.
/s/ Thomas F. Konop ------------------- Thomas F. Konop Vice President |
WITNESS:
/s/ Lawrence H. Kaplan ---------------------- Lawrence H. Kaplan Assistant Secretary |
THE UNDERSIGNED, Vice President of Lord Abbett Tax-Free Income Fund, Inc., who executed on behalf of the Corporation the foregoing Articles of Amendment, of which this Certificate is made a part, hereby acknowledges, in the name and on behalf of said Corporation, the foregoing Articles of Amendment to be the corporate act of said Corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the authorization and approval thereof are true in al material respects under the penalties of perjury.
/s/ Thomas F. Konop ------------------- Thomas F. Konop Vice President |
LORD ABBETT TAX-FREE INCOME FUND, INC.
ARTICLES SUPPLEMENTARY
LORD ABBETT TAX-FREE INCOME FUND, INC. A Maryland corporation (herein after called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Corporation presently has authority to issue 1,000,000,000
shares of capital stock, of the par value $.001 each, previously classified and
designated by the Board of Directors as: (i) Class A shares (60,000,000) and
Class C shares (20,000,000) of the Lord Abbett California Tax-Free Income Fund;
(ii) Class A shares (80,000,000), Class B shares (20,000,000) and Class C shares
(20,000,000) of the Lord Abbett National Tax-Free Income Fund; (iii) Class A
shares (60,000,000) and Class C shares (20,000,000) of the Lord Abbett New York
Tax-Free Income Fund; (iv) Class A shares (40,000,000) of the Lord Abbett Texas
Tax-Free Income Fund; (v) Class A shares (80,000,000) of the Lord Abbett New
Jersey Tax-Free Income Fund; (vi) Class A shares (40,000,000) of the Lord Abbett
Connecticut Tax-Free Income Fund; (vii) Class A shares (40,000,000) of the Lord
Abbett Missouri Tax-Free Income Fund; (viii) Class A shares (40,000,000) of the
Lord Abbett Hawaii Tax-Free Income Fund; (ix) Class A shares (40,000,000) of the
Lord Abbett Washington Tax-Free Income Fund and (x) Class A shares (40,000,000)
of the Lord Abbett Minnesota Tax-Free Income Fund.
SECOND: Pursuant to the authority of the Board of Directors to classify
and reclassify unissued shares of stock of the Corporation and to classify a
series into one or more classes of such series, the Board of Directors hereby:
(I) classifies and reclassifies 30,00,000 authorized but unissued and
unclassified shares of the Corporation of Class P shares of the Lord Abbett
California Tax-Free Income Fund; (ii) classifies and reclassifies 30,000,000
authorized but unissued and unclassified shares of the Corporation as Class P
shares of the Lord Abbett National Tax-Free Income Fund; (iii) classifies and
reclassifies 30,000,000 authorized but unissued and unclassified shares of the
Corporation as Class P shares of the Lord Abbett New York Tax-Free IncomeFund;
(iv) classifies and reclassifies 30,000,000 authorized but unissued and
unclassified shares of the Corporation as Class P shares of the Lord Abbett
Texas Tax-Free Income Fund; (v) classifies and reclassifies 30,000,000
authorized ut unissued and unclassified shares of the Corporation as Class P
shares of the Lord Abbett New Jersey Tax-Free Income Fund; (vi) classifies and
reclassifies 30,000,000 authorized but unissued and unclassifed shares of the
Corporation as Class P shares of the Lord Abbett Connecticut Tax-Free Income
Fund (vii) classifies and reclassifes 30,000,000 authorized but unissued and
unclassifed shares of the Corporation as Class P shares of the Lord Abbett
Missouri Tax-Free Income Fund; (viii) classifies and reclassifies 30,000,000
authorized but unissued and unclassified shares of the Corporation as Class P
shares of the Lord Abbett Hawaii Tax-Free Income Fund; (ix) classifies and
reclassifies 30,000,000 authorized but unissued and unclassified shares of the
Corporation as Class P shares of the Lord Abbett Washington Tax-Free Income Fund
and (x) classifies and reclassifies 30,000,000 authorized but unissued and
unclassified shares of the Corporation as Class P shares of the Lord Abbett
Minnesota Tax-Free Income Fund.
FOURTH: Subject to the power of the Board of Directors to classify and reclassify unissued shares, all Class P shares of the Lord Abbett California Tax-Free Income Fund, the Lord Abbett National Tax-Free Income Fund, the Lord Abbett New York Tax-Free Income Fund, the Lord Abbett Texas Tax-Free Income Fund, the Lord Abbett New Jersey Tax-Free Income Fund, the Lord Abbett Connecticut Tax-Free Income Fund, the Lord Abbett Missouri Tax-Free Income Fund, the Lord Abbett Hawaii Tax-Free Income Fund, the Lord Abbett Washington Tax-Free Income Fund, and the Lord Abbett Minnesota Tax-Free Income Fund shall be invested in the same investment portfolios of the Corporation as the other classes of their respective series and shall have the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption set forth in Article V of the
Articles of Incorporation of the Corporation (hereafter called the "Articles") and shall be subject to all other provisions of the Articles relating to stock of the Corporation generally.
FIFTH: The Class P shares of the Lord Abbett California Tax-Free Income Fund, the Lord Abbett National Tax-Free Income Fund, the Lord Abbett New York Tax-Free Income fund, the Lord Abbett Texas Tax-Free Income Fund, the Lord Abbett New Jersey Tax-Free Income Fund, the Lord Abbett Connecticut Tax-Free Income Fund, the Lord Abbett Missouri Tax-Free Income Fund, the Lord Abbett Hawaii Tax-Free Income Fund, the Lord Abbett Washington Tax-Free Income Fund and the Lord Abbett Minnesota Tax-Free Income Fund aforesaid have been duly classified by the Board of Directors under the authority contained in the Articles.
IN WITNESS WHEREOF, Lord Abbett Tax-Free Income Fund, Inc. has caused these presents to be signed in its name and on its behalf by its Vice President and witnessed by its Assistant Secretary on February 2, 1999.
LORD ABBETT TAX-FREE
INCOME FUND, INC.
By: /s/ Thomas F. Konop
------------------------
Thomas F. Konop
Vice President
|
WITNESS:
/s/ Lawrence H. Kaplan ---------------------- Lawrence H. Kaplan Assistant Secretary |
THE UNDERSIGNED, Vice President of Lord Abbett Tax-Free Income Fund, Inc., who executed on behalf of the Corporation the foregoing Articles Supplementary, of which this Certificate is made a part, hereby acknowledges, in the name and on behalf of said Corporation, the foregoing Articles Supplementary to be the corporate act of said Corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury.
/s/ Thomas Konop ---------------- Thomas F. Konop Vice President |
MANAGEMENT AGREEMENT
AGREEMENT made as of this 15th day of December, 1994 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland Corporation (hereinafter called the "Corporation"), and LORD, ABBETT & CO., a New York partnership (hereinafter called the "Investment Manager").
WHEREAS, the Corporation desires to obtain the investment management services of the Investment Manager and the Investment Manager is willing to provide services of the nature desired upon the terms and conditions hereinafter provided.
WHEREAS, the parties intend this new form of agreement to apply to series of the Corporation which are initially offered to the public subsequent to November 16, 1994 (the "Series").
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. Each Series of the Corporation hereby employs the Investment Manager under the terms and conditions of this Agreement, and the Investment Manager hereby accepts such employment and agrees to perform supervisory functions of the Corporation with respect to the investment and reinvestment of its property and assets (whether or not held in trust or in the custody of a bank or trust company subject to the Corporation's direction or control) including, without limitation, the supervision of its investment portfolio and the recommendation of investment policies and procedures within the limitations set forth in the Corporation's Registration Statement on file with the Securities and Exchange Commission under the Securities Act of 1933 and the Investment Company Act of 1940.
The Investment Manager agrees to maintain an adequate organization of competent persons to perform the supervisory functions mentioned herein.
All recommendations with respect to the investment portfolios will be made to the Corporation's trading department which, with the approval of authorized officers of the Corporation, will execute all trades in accordance with the Corporation's investment procedures.
The Investment Manager reserves the right, in its discretion, to purchase or otherwise obtain statistical information and services from other sources, including affiliated persons of the Investment Manager.
Notwithstanding the provisions of this paragraph 1, the investment policies and procedures and all other actions of the Corporation are, and shall at all times be, subject to the control and direction of its Board of Directors.
2. Each Series of the Corporation agrees to pay the Investment Manager for its services under this Agreement and for the expenses assumed, a management fee computed and payable monthly at the annual rate of one half (1/2) of one percent (1%) of the value of the Series' average daily net assets. The value of the net assets of the Corporation shall include all assets held in trust or in custody of any bank, savings bank or trust company for the Series, subject to its control or direction, and shall be determined as provided in the Articles of Incorporation of the Corporation. The fee shall be paid on the first day of each month for the preceding month.
The Investment Manager may receive research and other statistical information from broker-dealers and from other sources and, in accordance with section 28(e) of the Securities Exchange Act of 1934, a broker-dealer may be paid a commission for a transaction involving portfolio securities of the Corporation exceeding the amount another broker-dealer
would have charged for the same transaction if it is determined by the Investment Manager that such amount of commission is reasonable in relation to the value of the research services provided by the executing broker-dealer, viewed in terms of either the particular transaction or the overall responsibilities of the Investment Manager with respect to the Corporation and other accounts (investment companies and other investment clients) with respect to which it exercises investment discretion. Such research services may be used by the Investment Manager in serving all its accounts, and not all of such research services need necessarily be used by the Investment Manager in connection with its services to the Corporation.
It is understood that any supplemental advisory or statistical services which may be provided to the Corporation or to the Investment Manager from time to time by independent broker-dealers or persons other than the Investment Manager, for whatever reason, shall not reduce the amount of the fees payable to the Investment Manager hereunder. It is recognized that such supplementary advisory or statistical services may be useful to the Investment Manager and the Corporation, but their value is indeterminable and is not to be considered a substitute for the services provided by the Investment Manager hereunder.
3. It is understood that the services of the Investment Manager are not deemed to be exclusive, and nothing in this Agreement shall prevent the Investment Manager, or any officer, director, partner or employee thereof, from providing similar services to other investment companies and other clients (whether or not their investment objectives and policies are similar to those of the Corporation) or to engage in other activities. When other clients of the Investment Manager desire to purchase or sell the same portfolio security at the same time as the Corporation, it is understood that such purchases and sales will be made as
nearly as practicable on a pro rata basis in proportion to the amounts desired to be purchased or sold by each client.
4. Each Series of the Corporation will, at its own expense, furnish to the Investment Manager periodic (but not less than semi-annually) statements of its books of account, including balance sheets and earnings statements, and all other information which may reasonably be required, from time to time, by the Investment Manager, and will, at its own expense, at all times keep the Investment Manager fully advised as to the cash, securities and other property then comprising its assets, and furnish daily detailed price makeup sheets with respect to its investment portfolio and its shares of its capital stock outstanding.
5. The Investment Manager shall be under no obligation to pay any fees, costs, expenses or other charges of the Corporation, except for the compensation of its officers, the compensation, if any, of its directors who are affiliated with the Investment Manager, the rental for its office space, and the ordinary and necessary office and clerical expenses relating to research, statistical work and supervision of each Series' investment portfolio, to be performed by the Investment Manager under paragraph 1 of this Agreement. Each Series will pay all other fees, costs, expenses or charges relating to its assets and operations, including without limitation: office and clerical expenses not relating to research, statistical work and supervision of its investment portfolio; fees and expenses of directors not affiliated with the Investment Manager; governmental fees; interest charges; taxes and association membership dues; fees and charges for legal and auditing services; fees and expenses of any custodians or trustees with respect to custody of its assets; fees, charges and expenses of dividend disbursing agents, registrars and transfer agents (including the cost of keeping all necessary
shareholder records and accounts, and of handling any problems relating thereto and the expense of furnishing to all shareholders statements of their accounts after every transaction including the expense of mailing); costs and expenses of repurchase and redemption of its shares; costs and expenses of preparing, printing and mailing to shareholders stock certificates, proxy statements and materials, prospectuses, reports and notices; costs of preparing reports to governmental agencies; brokerage fees and commissions of every kind and expenses in connection with the execution of portfolio security transactions (including the cost of any service or agency designed to facilitate the purchase and sale of portfolio securities); and all postage, insurance premiums, and any other fee, cost, expense or charge of any kind incurred by and on behalf of the Corporation and not expressly assumed by the Investment Manager under this Agreement.
Notwithstanding the above, to encourage sales of capital stock of a Series, the Investment Manager may, but is not required to, waive its fee hereunder attributable to such Series and directly pay or reimburse the Corporation for any portion of operating expenses of such Series not expressly assumed by the Investment Manager under this Agreement. The amount of any such expenses so voluntarily paid or reimbursed by the Investment Manager shall be paid back to the Investment Manager by the applicable Series without interest to the extent provided as follows. No such pay-back will be made prior to the first day of the calendar quarter after the net assets of such Series first reach $50 million (the "commencement date"). Thereafter, until the first day of the calendar quarter the net assets for such Series first reach $100 million (the "recalculation date"), if the ratio of operating expenses of such Series (determined before taking into account any fee waiver or payment or reimbursement of expenses by the Investment Manager) to average net assets ("expense
ratio") is less than .85%, such Series shall repay the Investment Manager an amount equal in dollars to the difference between the expenses included in the determination of such expense ratio and those at an expense ratio of .85%. The expense ratios will be determined on a full fiscal year basis and, if the commencement date does not begin at the start of a fiscal year, the determination will be based on the remaining portion of the fiscal year annualized. Beginning with the recalculation date, the reimbursement of expenses shall be measured by the difference between the expenses included in the determination of such expense ratio and those at an expense ratio of 1.05%. Any such repayments shall be made promptly (but in any event within 60 days) after the end of the fiscal years of the Series with respect to which they are payable, and no such repayment shall exceed the amount of the expenses of the applicable Series paid or reimbursed by the Investment Manager and not previously paid back. The amount of any expenses of a Series paid or reimbursed that is subject to the repayment provisions of this paragraph and not repaid as provided above prior to termination of this Agreement or within five full fiscal years after the commencement date of such Series, whichever first occurs, shall not be repaid to the Investment Manager.
Notwithstanding any other provision of this Agreement, if expenses (including the management fee hereunder but excluding interest, taxes, brokerage fees, and where permitted, extraordinary expenses) borne by the Corporation in any fiscal year exceed expense limitations applicable to the Corporation imposed by state securities administrators, as such limitations may be lowered or raised from time to time, the Investment Manager will reimburse the Corporation for any such excess.
If the Investment Manager pays for other expenses of the Corporation or furnishes without charge to the Corporation services the cost of which is to be borne by the
Corporation under this Agreement, the Investment Manager shall not be deemed to have waived its rights under this Agreement to have the Corporation pay for such expenses or provide or pay for such services in the future. The Investment Manager may also advance the payment of expenses, subject to reimbursement by the Corporation in the ordinary course of business.
6. The Investment Manager agrees that it shall observe and be bound by all of the provisions of the Articles of Incorporation (including any amendments thereto) of the Corporation which shall in any way limit or restrict or prohibit or otherwise regulate any action by the Investment Manager.
7. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Investment Manager assumes no responsibility under this Agreement and, having so acted, the Investment Manager shall not be held liable or accountable for any mistakes of law or fact, or for any error or omission of its officers, directors, partners or employees, or for any loss or damage arising or resulting therefrom suffered by the Corporation or any of its stockholders, creditors, directors or officers; provided however, that nothing herein shall be deemed to protect the Investment Manager against any liability to the Corporation or to its stockholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder. The Investment Manager shall not be responsible for any action of the Board of Directors of the Corporation in following or declining to follow any advice or recommendation of the Investment Manager.
8. Neither this Agreement nor any other transaction between the parties hereto pursuant to this Agreement shall be invalidated or in any way affected by the fact that any or
all of the directors, officers, stockholders, or other representatives of the Corporation are or may be interested in the Investment Manager, or any successor or assignee thereof, or that any or all of the directors, officers, partners, or other representatives of the Investment Manager are or may be interested in the Corporation, except as otherwise may be provided in the Investment Company Act of 1940. The Investment Manager in acting hereunder shall be an independent contractor and not any agent of the Corporation.
9. This Agreement shall become effective upon the date hereof, and shall continue in force until January 30, 1996, and is renewable annually thereafter by specific approval of the Board of Directors of the Corporation or by vote of a majority of the outstanding voting securities of the Corporation; any such renewal shall be approved by the vote of a majority of the directors who are not parties to this Agreement or interested persons of the Investment Manager or of the Corporation, cast in person at a meeting called for the purpose of voting on such renewal.
This Agreement may be terminated without penalty at any time by the Corporation on 60 days' written notice. This Agreement shall automatically terminate in the event of its assignment. The terms "interested persons", "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meaning as those terms are defined in the Investment Company Act of 1940 as amended.
10. The Investment Manager reserves the right to grant the use of the name "LORD ABBETT" or "LORD, ABBETT & CO.", or any derivative thereof, to any other investment company or business enterprise. The Investment Manager reserves the right to withdraw from the Corporation the use of the name "LORD ABBETT" and the use of its registered service mark; at such time of withdrawal of the right to use the name "LORD
ABBETT", the Investment Manager agrees that the question of continuing this Agreement may be submitted to a vote of the Corporation's shareholders. In the event of such withdrawal or the termination of this Agreement, for any reason, the Corporation will, on the written request of the Investment Manager, take such action as may be necessary to change its name and eliminate all reference to the words "LORD ABBETT" in any form, and will no longer use such registered service mark.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by its duly authorized officers and its corporate seal to be affixed hereto, and the Investment Manager has caused this Agreement to be executed by one of its partners all on the day and year first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Ronald P. Lynch
-----------------------
Chairman of the Board
/s/ Thomas Konop
--------------------
Assistant Secretary
|
LORD, ABBETT & CO.
By: /s/ Kenneth B. Cutler
-----------------------
A Partner
|
DISTRIBUTION AGREEMENT
AGREEMENT made this 12th day of July 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland Corporation (hereinafter called the "Corporation"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (hereinafter called the "Distributor").
WHEREAS, the Corporation desires to enter into an agreement with the Distributor for the purpose of finding purchasers for its securities which are issued in various Series, and the Distributor is desirous of undertaking to perform these services upon the terms and conditions hereinafter provided.
NOW, THEREFORE in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Corporation hereby appoints the Distributor its exclusive selling agent for the sale of its shares of capital stock, of all classes, and all other securities now or hereafter created or issued by the Corporation (except notes and other evidences of indebtedness issued for borrowed money), pursuant to paragraph 2 of this Agreement, and the Corporation agrees to issue (and upon request of its shareholders make delivery of certificates for) its shares of stock or other securities, subject to the provisions of its Articles of Incorporation, to purchasers thereof and against payment of the consideration to be received by the Corporation therefor. The Distributor may appoint one or more independent broker-dealers and the Distributor or any such broker-dealer may transmit orders to the Corporation at the office of the Corporation's Transfer Agent in Kansas City, Missouri, for acceptance at its office in New York. Such shares of beneficial interest shall be registered in such name or names and amounts as the Distributor or any such broker-dealer may request from time to time, and all shares of stock when so paid for and issued shall be fully paid and non-assessable.
2. The Distributor will act as exclusive selling agent for the Corporation in selling shares of stock.
The Distributor agrees to sell exclusively through independent broker-dealers, or financial institutions exempt from registration as a broker-dealer, and agrees to use its best efforts to find purchasers for shares of stock of the Corporation to be offered; provided however, that the services of the Distributor under this Agreement are not deemed to be exclusive, and nothing in this Agreement shall prevent Distributor, or any officer, trustee, partner, member or
employee thereof, from providing similar services to other investment companies and other clients or to engage in other activities.
The sales charge or premium relating to each class of shares of capital stock of the Corporation shall be determined by the Board of Directors of the Corporation, but in no event shall the sales charge or premium exceed the maximum rate permitted under Federal regulations, and the amount to be retained by the Corporation on any sale of its shares of capital stock shall in each case be the net asset value thereof (determined as provided in the Articles of the Corporation). From the premium the Corporation agrees to pay the Distributor a sales commission. The Distributor may allow concessions from such sales commissions. In such event the amount of the payment hereunder by the Corporation to the Distributor shall be the difference between the sales commission and any concessions which have been allowed in accordance herewith. The sales commission payable to the Distributor shall not exceed the premium.
Recognizing the need for providing an incentive to sell and providing necessary and continuing informational and investment services to shareholders of the Corporation, the Corporation or the Distributor (by agreement) may pay independent broker-dealers periodic servicing and distribution fees based on percentages of average annual net asset value of shareholder accounts of such broker-dealers. The parties hereto incorporate by reference and agree to the terms and provisions of the 12b-1 Plans of each class of stock of the Corporation.
3. Notwithstanding anything herein to the contrary, sales and distributions of the Corporation's capital stock may be upon any special terms as approved by the Corporation's Board of Directors and discussed in the Corporation's current prospectus.
4. The independent broker-dealers who sell the Corporation's shares may also render other services to the Corporation, such as executing purchases and sales of portfolio securities, providing statistical information, and similar services. The receipt of compensation for such other services shall in no way reduce the amount of the sales commissions payable hereunder by the Corporation to the Distributor or the amount of the commissions, concessions or fees allowed.
5. The Distributor agrees to act as agent of the Corporation in connection with the repurchase of shares of beneficial of the Corporation, or in connection with exchanges of shares between investment companies having the same Distributor, and the Corporation agrees to advise the Distributor of the net asset value of its shares of stock as frequently as may be
mutually agreed, and to accept shares duly tendered to the Distributor. The net asset value shall be determined as provided in the Articles of the Incorporation of the Corporation.
6. The Corporation will pay all fees, costs, expenses and charges in connection with the issuance, federal registration, transfer, redemption and repurchase of its shares of capital stock, including without limitation, all fees, costs, expenses and charges of transfer agents and registrars, all taxes and other Governmental charges, the costs of qualifying or continuing the qualifications of the Trust as broker-dealer, if required, and of registering the shares of the Corporation's capital stock under the state blue sky laws, or similar laws of any jurisdiction (domestic or foreign), costs of preparation and mailing prospectuses to its shareholders, and any other cost, expense or charge not expressly assumed by the Distributor hereunder. The Corporation will also furnish to the Distributor daily such information as may reasonably be requested by the Distributor in order that it may know all of the facts necessary to sell shares of beneficial interest of the Corporation's Stock.
7. The Distributor agrees to pay the cost of all sales literature and other material which it may require or think desirable to use in connection with sale of such shares, including the cost of reproducing the offering prospectus furnished to it by the Corporation, although the Distributor may obtain reimbursement for such expenses through a 12b-1 Plan with respect to each class of shares of beneficial interest of the Corporation. The Corporation agrees to use its best efforts to qualify its shares for sale under the laws of such states of the United States and such other jurisdictions (domestic or foreign) as the Distributor may reasonably request.
If the Distributor pays for other expenses of the Corporation or furnishes the Corporation with services, the cost of which is to be borne by the Corporation under this Agreement, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Corporation pay for such expenses or provide such services in the future.
8. The Distributor agrees to use its best efforts to find purchasers for shares of stock of the Corporation and to make reasonable efforts to sell the same so long as in the judgement of the Distributor and a substantial distribution can be obtained by reasonable efforts. The Distributor is not authorized to act otherwise than in accordance with applicable laws.
9. Neither this Agreement nor any other transaction between the parties hereto pursuant to this Agreement shall be invalidated or in any way affected by the fact that any or all of the trustees, officers, shareholders, or other representatives of the Corporation are or may be interested in the Distributor, or any successor or assignee thereof, or that any or all of the
trustees, officers, partners or other representatives of the Distributor are or may be interested in the Corporation, except as otherwise may be provided in the Investment Company Act of 1940.
10. The Distributor agrees that it will not sell for its own account to the Corporation any stocks, bonds or other securities of any kind of character, except that if it shall own any of the Corporation's shares of stock or other securities, it may sell them to the Corporation on the same terms as any other holder might do.
11. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Agreement and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Corporation or any of the shareholders, creditors, trustees, or officers of the Corporation; provided, however, that nothing herein shall be deemed to protect the Distributor against any liability to the Corporation or its shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
12. The Distributor agrees that it shall observe and be bound by all the terms of the Articles of Incorporation, including any amendments thereto, of the Corporation which shall in any way limit or restrict or prohibit or otherwise regulate any action of the Distributor.
13. This Agreement shall continue in force for two years from the date hereof, and its renewable annually thereafter by specific approval of the Board of Directors of the Corporation or by vote of a majority of the outstanding voting securities of the Corporation; any such renewal shall be approved by the vote of a majority of the Directors who are not parties to this Agreement or interested persons of the Distributor or of the Corporation, cast in person at a meeting called for the purpose of voting on such renewal.
This Agreement may be terminated without penalty at any time by the Board of Directors of the Corporation or by vote of a majority of the outstanding voting securities of the Corporation on 60 days' written notice. This Agreement shall automatically terminate in the event of its assignment. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meaning as those terms are defined in the Investment Company Act of 1940.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by its duly authorized officers and its corporate seal to be affixed thereto, and the Distributor has caused this Agreement to be executed by one of its partners all on the day and year first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
BY: /s/ Kenneth B. Cutler
---------------------
Vice President
Attest:
/s/Thomas Konop
---------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: LORD, ABBETT & CO.
By: /s/ Robert S. Dow
-----------------
A Partner
Managing Member
|
January 28, 2002
Lord Abbett Tax-Free Income Fund, Inc.
90 Hudson Street
Jersey City, NJ 07302-3972
Dear Sirs:
You have requested our opinion in connection with your filing of Amendment No. 33 to the Registration Statement on Form N-1A (the "Amendment") under the Investment Company Act of 1940, as amended, of Lord Abbett Tax-Free Income Fund, Inc., a Maryland Corporation (the "Company"), and in connection therewith your registration of the following shares of capital stock, with a par value of $.001 each, of the Company (collectively, the "Shares"): the Lord Abbett California Tax-Free Income Fund (Classes A, C, and P); the Lord Abbett Connecticut Tax-Free Income Fund (Classes A and P); Lord Abbett Hawaii Tax-Free Income Fund (Classes A and P); Lord Abbett Minnesota Tax-Free Income Fund (Classes A and P); Lord Abbett Missouri Tax-Free Income Fund (Classes A and P); Lord Abbett National Tax-Free Income Fund (Classes A, B, C, and P), Lord Abbett New Jersey Tax-Free Income Fund(Classes A and P); Lord Abbett New York Tax-Free Income Fund (Classes A, C, and P); Lord Abbett Texas Tax-Free Income Fund (Classes A and P); and Lord Abbett Washington Tax-Free Income Fund (Classes A and P).
We have examined and relied upon originals, or copies certified to our satisfaction, of such company records, documents, certificates and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion set forth below.
We are of the opinion that the Shares issued in the continuous offering have been duly authorized and, assuming the issuance of the Shares for cash at net asset value and receipt by the Company of the consideration therefor as set forth in the Amendment and that the number of shares issued does not exceed the number authorized, the Shares will be validly issued, fully paid and nonassessable.
Lord Abbett Tax-Free Income Fund, Inc.
January 28, 2002
We express no opinion as to matters governed by any laws other than the Title 2 of the Maryland Code, Corporations and Associations. We consent to the filing of this opinion solely in connection with the Amendment. In giving such consent, we do not hereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
WILMER, CUTLER & PICKERING
By: /s/ James E. Anderson
James E. Anderson, a partner
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INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment No. 33 to Registration Statement No. 2-88912 on Form N-1A of Lord Abbett Tax-Free Income Fund, Inc. of our report dated November 21, 2001 on the financial statements of Lord Abbett Tax-Free Income Fund, Inc. and to the references to us under the captions "Financial Highlights" in the Prospectus and "Independent Auditors" and "Financial Statements" in the Statement of Additional Information, all of which are part of this Registration Statement.
Deloitte & Touche LLP
New York, New York
January 28, 2002
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. - NATIONAL SERIES - CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (the "Fund"), on behalf of its NATIONAL SERIES (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended the (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class A Shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorized the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide additional incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments received hereunder from the Series in order to (a) finance any activity which is primarily intended to result in the sale of Shares and (b) provide continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder otherwise to encourage such accounts to remain invested in the Shares: PROVIDED that (i) any payments referred to in the foregoing clause (a) shall not exceed the distribution fee permitted to be paid at the time under paragraph 3 of this Plan and shall be authorized by the Board of Directors of
the Fund by a vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments referred to in clause (b) shall not exceed the service fee permitted to be paid at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for remittance
to Authorized Institutions and/or use by the Distributor pursuant to this Plan
(a) service fees and (b) distribution fees, each at an annual rate not to exceed
.25 of 1% of the average annual net asset value of Shares outstanding, except
that service fees payable with respect to Shares that were initially issued , or
are attributable to shares that were initially issued, by the Fund or a
predecessor fund prior to June 1, 1990 shall not exceed .15 of 1% of the average
net asset value of such Shares. The Board of Directors of the Fund shall from
time to time determine the amounts, within the foregoing maximum amounts, that
the Series may pay the Distributor hereunder. Any such fees (which may be waived
by the Authorized Institutions in whole or in part) may be calculated and paid
quarterly or more frequently if approved by the Board of Directors of the Fund.
Such determinations and approvals by the Board of Directors shall be made and
given by votes of the kind referred to in paragraph 10 of this Plan. Payments by
holders of Shares to the Series of contingent deferred reimbursement charges
relating to distribution fees paid by the Series hereunder shall reduce the
amount of distribution fees for purposes of the annual 0.25% distribution fee
limit. The Distributor will monitor the payments hereunder and shall reduce such
payments or take such other steps as may be necessary to assure that (i) the
payments pursuant to this Plan shall be consistent with Article III, Section 26,
subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service fees, as the same may be in effect
from time to time and (ii) the Series shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of the fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by Series hereunder and shall provide to the Fund's Board of Directors, and the directors shall review at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither the Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgement and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall continue in effect for a period of more than one year from that date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may be amended to increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to the Plan, cast in person at a meeting called for the purpose of voting on such amendment. Amendments to this Plan which do not increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without payment of any penalty
(a) by the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of
this Plan or in any agreement related to the Plan, or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time. This Plan shall automatically terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
---------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. - CALIFORNIA SERIES - CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (the "Fund"), on behalf of its CALIFORNIA SERIES (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended the (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class A Shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorized the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide additional incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments received hereunder from the Series in order to (a) finance any activity which is primarily intended to result in the sale of Shares and (b) provide continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder otherwise to encourage such accounts to remain invested in the Shares: PROVIDED that (i) any payments referred to in the foregoing clause (a) shall not exceed the distribution fee permitted to be paid at the time under paragraph 3 of this Plan and shall be authorized by the Board of Directors of
the Fund by a vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments referred to in clause (b) shall not exceed the service fee permitted to be paid at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for remittance
to Authorized Institutions and/or use by the Distributor pursuant to this Plan
(a) service fees and (b) distribution fees, each at an annual rate not to exceed
.25 of 1% of the average annual net asset value of Shares outstanding. The Board
of Directors of the Fund shall from time to time determine the amounts, within
the foregoing maximum amounts, that the Series may pay the Distributor
hereunder. Any such fees (which may be waived by the Authorized Institutions in
whole or in part) may be calculated and paid quarterly or more frequently if
approved by the Board of Directors of the Fund. Such determinations and
approvals by the Board of Directors shall be made and given by votes of the kind
referred to in paragraph 10 of this Plan. Payments by holders of Shares to the
Series of contingent deferred reimbursement charges relating to distribution
fees paid by the Series hereunder shall reduce the amount of distribution fees
for purposes of the annual 0.25% distribution fee limit. The Distributor will
monitor the payments hereunder and shall reduce such payments or take such other
steps as may be necessary to assure that (i) the payments pursuant to this Plan
shall be consistent with Article III, Section 26, subparagraphs (d)(2) and (5)
of the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. with respect to investment companies with asset-based sales charges and
service fees, as the same may be in effect from time to time and (ii) the Series
shall not pay with respect to any Authorized Institution service fees equal to
more than .25 of 1% of the average annual net asset value of Shares sold by (or
attributable to Shares or shares sold by) such Authorized Institution and held
in an account covered by an Agreement.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of the fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by Series hereunder and shall provide to the Fund's Board of Directors, and the directors shall review at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither the Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the Distributor are or may be "interested persons" of the Fund, except as may otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgement and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall continue in effect for a period of more than one year from that date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may be amended to increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to the Plan, cast in person at a meeting called for the purpose of voting on such amendment. Amendments to this Plan which do not increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without payment of any penalty
(a) by the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreement related to the Plan,
or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under
the Act as in effect at such time. This Plan shall automatically terminate in
the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
------------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. - CONNECTICUT SERIES - CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (the "Fund"), on behalf of its CONNECTICUT SERIES (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended the (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class A Shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorized the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide additional incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments received hereunder from the Series in order to (a) finance any activity which is primarily intended to result in the sale of Shares and (b) provide continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder otherwise to encourage such accounts to remain invested in the Shares: PROVIDED that (i) any payments referred to in the foregoing clause (a) shall not exceed the distribution fee permitted to be paid at the time under paragraph 3 of this Plan and shall be authorized by the Board of Directors of
the Fund by a vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments referred to in clause (b) shall not exceed the service fee permitted to be paid at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for remittance
to Authorized Institutions and/or use by the Distributor pursuant to this Plan
(a) service fees and (b) distribution fees, each at an annual rate not to exceed
.25 of 1% of the average annual net asset value of Shares outstanding. The Board
of Directors of the Fund shall from time to time determine the amounts, within
the foregoing maximum amounts, that the Series may pay the Distributor
hereunder. Any such fees (which may be waived by the Authorized Institutions in
whole or in part) may be calculated and paid quarterly or more frequently if
approved by the Board of Directors of the Fund. Such determinations and
approvals by the Board of Directors shall be made and given by votes of the kind
referred to in paragraph 10 of this Plan. Payments by holders of Shares to the
Series of contingent deferred reimbursement charges relating to distribution
fees paid by the Series hereunder shall reduce the amount of distribution fees
for purposes of the annual 0.25% distribution fee limit. The Distributor will
monitor the payments hereunder and shall reduce such payments or take such other
steps as may be necessary to assure that (i) the payments pursuant to this Plan
shall be consistent with Article III, Section 26, subparagraphs (d)(2) and (5)
of the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. with respect to investment companies with asset-based sales charges and
service fees, as the same may be in effect from time to time and (ii) the Series
shall not pay with respect to any Authorized Institution service fees equal to
more than .25 of 1% of the average annual net asset value of Shares sold by (or
attributable to Shares or shares sold by) such Authorized Institution and held
in an account covered by an Agreement.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of the fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by Series hereunder and shall provide to the Fund's Board of Directors, and the directors shall review at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither the Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the Distributor are or may be "interested persons" of the Fund, except as may otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgement and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall continue in effect for a period of more than one year from that date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may be amended to increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to the Plan, cast in person at a meeting called for the purpose of voting on such amendment. Amendments to this Plan which do not increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without payment of any penalty
(a) by the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreement related to the Plan,
or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under
the Act as in effect at such time. This Plan shall automatically terminate in
the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
------------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. - HAWAII SERIES - CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (the "Fund"), on behalf of its HAWAII SERIES (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended the (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class A Shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorized the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide additional incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments received hereunder from the Series in order to (a) finance any activity which is primarily intended to result in the sale of Shares and (b) provide continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder otherwise to encourage such accounts to remain invested in the Shares: PROVIDED that (i) any payments referred to in the foregoing clause (a) shall not exceed the distribution fee permitted to be paid at the time under paragraph 3 of this Plan and shall be authorized by the Board of Directors of
the Fund by a vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments referred to in clause (b) shall not exceed the service fee permitted to be paid at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for remittance
to Authorized Institutions and/or use by the Distributor pursuant to this Plan
(a) service fees and (b) distribution fees, each at an annual rate not to exceed
.25 of 1% of the average annual net asset value of Shares outstanding, except
that service fees payable with respect to Shares that were initially issued , or
are attributable to shares that were initially issued, by the Fund or a
predecessor fund prior to January 1, 1993 shall not exceed .15 of 1% of the
average net asset value of such Shares. The Board of Directors of the Fund shall
from time to time determine the amounts, within the foregoing maximum amounts,
that the Series may pay the Distributor hereunder. Any such fees (which may be
waived by the Authorized Institutions in whole or in part) may be calculated and
paid quarterly or more frequently if approved by the Board of Directors of the
Fund. Such determinations and approvals by the Board of Directors shall be made
and given by votes of the kind referred to in paragraph 10 of this Plan.
Payments by holders of Shares to the Series of contingent deferred reimbursement
charges relating to distribution fees paid by the Series hereunder shall reduce
the amount of distribution fees for purposes of the annual 0.25% distribution
fee limit. The Distributor will monitor the payments hereunder and shall reduce
such payments or take such other steps as may be necessary to assure that (i)
the payments pursuant to this Plan shall be consistent with Article III, Section
26, subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service fees, as the same may be in effect
from time to time and (ii) the Series shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of the fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by Series hereunder and shall provide to the Fund's Board of Directors, and the directors shall review at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither the Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgement and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall continue in effect for a period of more than one year from that date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may be amended to increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to the Plan, cast in person at a meeting called for the purpose of voting on such amendment. Amendments to this Plan which do not increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without payment of any penalty
(a) by the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of
this Plan or in any agreement related to the Plan, or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time. This Plan shall automatically terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
-----------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. - MINNESOTA SERIES - CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (the "Fund"), on behalf of its MINNESOTA SERIES (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended the (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class A Shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, and subject to the provisions of paragraph 8 of this Plan, it is agreed as follows:
1. The Fund hereby authorized the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide additional incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments received hereunder from the Series in order to (a) finance any activity which is primarily intended to result in the sale of Shares and (b) provide continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder otherwise to encourage such accounts to remain invested in the Shares: PROVIDED that (i) any payments referred to in the foregoing clause (a) shall not exceed the distribution fee permitted to be paid at the time under paragraph 3 of this Plan and shall be authorized by the Board of Directors of
the Fund by a vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments referred to in clause (b) shall not exceed the service fee permitted to be paid at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for remittance
to Authorized Institutions and/or use by the Distributor pursuant to this Plan
(a) service fees and (b) distribution fees, each at an annual rate not to exceed
.25 of 1% of the average annual net asset value of Shares outstanding, except
that service fees payable with respect to Shares that were initially issued, or
are attributable to shares that were initially issued, by the Fund or a
predecessor fund prior to the first day of the calendar quarter subsequent to
the Series' net assets reaching $100 million shall not exceed .15 of 1% of the
average net asset value of such Shares. The Board of Directors of the Fund shall
from time to time determine the amounts, within the foregoing maximum amounts,
that the Series may pay the Distributor hereunder. Any such fees (which may be
waived by the Authorized Institutions in whole or in part) may be calculated and
paid quarterly or more frequently if approved by the Board of Directors of the
Fund. Such determinations and approvals by the Board of Directors shall be made
and given by votes of the kind referred to in paragraph 10 of this Plan.
Payments by holders of Shares to the Series of contingent deferred reimbursement
charges relating to distribution fees paid by the Series hereunder shall reduce
the amount of distribution fees for purposes of the annual 0.25% distribution
fee limit. The Distributor will monitor the payments hereunder and shall reduce
such payments or take such other steps as may be necessary to assure that (i)
the payments pursuant to this Plan shall be consistent with Article III, Section
26, subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service fees, as the same may be in effect
from time to time and (ii) the Series shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of the fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by Series hereunder and shall provide to the Fund's Board of Directors, and the directors shall review at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither the Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any
or all of the directors, officers, partners, members or other representatives of the Distributor are or may be "interested persons" of the Fund, except as may otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgement and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall continue in effect for a period of more than one year from that date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal. Notwithstanding the foregoing, no payments may be made by the Series hereunder prior to or with respect to any period prior to the first day of the calendar quarter subsequent to the Series' net assets reaching $100 million.
9. This Plan may be amended to increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to the Plan, cast in person at a meeting called for the purpose of voting on such amendment. Amendments to this Plan which do not increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without payment of any penalty
(a) by the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreement related to the Plan,
or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under
the Act as in effect at such time. This Plan shall automatically terminate in
the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
-----------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. - MISSOURI SERIES - CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (the "Fund"), on behalf of its MISSOURI SERIES (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended the (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class A Shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorized the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide additional incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments received hereunder from the Series in order to (a) finance any activity which is primarily intended to result in the sale of Shares and (b) provide continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder otherwise to encourage such accounts to remain invested in the Shares: PROVIDED that (i) any payments referred to in the foregoing clause (a) shall not exceed the distribution fee permitted to be paid at the time under paragraph 3 of this Plan and shall be authorized by the Board of Directors of
the Fund by a vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments referred to in clause (b) shall not exceed the service fee permitted to be paid at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for remittance
to Authorized Institutions and/or use by the Distributor pursuant to this Plan
(a) service fees and (b) distribution fees, each at an annual rate not to exceed
.25 of 1% of the average annual net asset value of Shares outstanding. The Board
of Directors of the Fund shall from time to time determine the amounts, within
the foregoing maximum amounts, that the Series may pay the Distributor
hereunder. Any such fees (which may be waived by the Authorized Institutions in
whole or in part) may be calculated and paid quarterly or more frequently if
approved by the Board of Directors of the Fund. Such determinations and
approvals by the Board of Directors shall be made and given by votes of the kind
referred to in paragraph 10 of this Plan. Payments by holders of Shares to the
Series of contingent deferred reimbursement charges relating to distribution
fees paid by the Series hereunder shall reduce the amount of distribution fees
for purposes of the annual 0.25% distribution fee limit. The Distributor will
monitor the payments hereunder and shall reduce such payments or take such other
steps as may be necessary to assure that (i) the payments pursuant to this Plan
shall be consistent with Article III, Section 26, subparagraphs (d)(2) and (5)
of the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. with respect to investment companies with asset-based sales charges and
service fees, as the same may be in effect from time to time and (ii) the Series
shall not pay with respect to any Authorized Institution service fees equal to
more than .25 of 1% of the average annual net asset value of Shares sold by (or
attributable to Shares or shares sold by) such Authorized Institution and held
in an account covered by an Agreement.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of the fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by Series hereunder and shall provide to the Fund's Board of Directors, and the directors shall review at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither the Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the Distributor are or may be "interested persons" of the Fund, except as may otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgement and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall continue in effect for a period of more than one year from that date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may be amended to increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to the Plan, cast in person at a meeting called for the purpose of voting on such amendment. Amendments to this Plan which do not increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without payment of any penalty
(a) by the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreement related to the Plan,
or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under
the Act as in effect at such time. This Plan shall automatically terminate in
the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
-----------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
-----------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. - NEW JERSEY SERIES - CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (the "Fund"), on behalf of its NEW JERSEY SERIES (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended the (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class A Shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorized the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide additional incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments received hereunder from the Series in order to (a) finance any activity which is primarily intended to result in the sale of Shares and (b) provide continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder otherwise to encourage such accounts to remain invested in the Shares: PROVIDED that (i) any payments referred to in the foregoing clause (a) shall not exceed the distribution fee permitted to be paid at the time under paragraph 3 of this Plan and shall be authorized by the Board of Directors of
the Fund by a vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments referred to in clause (b) shall not exceed the service fee permitted to be paid at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for remittance
to Authorized Institutions and/or use by the Distributor pursuant to this Plan
(a) service fees and (b) distribution fees, each at an annual rate not to exceed
.25 of 1% of the average annual net asset value of Shares outstanding, except
that service fees payable with respect to Shares that were initially issued , or
are attributable to shares that were initially issued, by the Fund or a
predecessor fund prior to July 1, 1992 shall not exceed .15 of 1% of the average
net asset value of such Shares.. The Board of Directors of the Fund shall from
time to time determine the amounts, within the foregoing maximum amounts, that
the Series may pay the Distributor hereunder. Any such fees (which may be waived
by the Authorized Institutions in whole or in part) may be calculated and paid
quarterly or more frequently if approved by the Board of Directors of the Fund.
Such determinations and approvals by the Board of Directors shall be made and
given by votes of the kind referred to in paragraph 10 of this Plan. Payments by
holders of Shares to the Series of contingent deferred reimbursement charges
relating to distribution fees paid by the Series hereunder shall reduce the
amount of distribution fees for purposes of the annual 0.25% distribution fee
limit. The Distributor will monitor the payments hereunder and shall reduce such
payments or take such other steps as may be necessary to assure that (i) the
payments pursuant to this Plan shall be consistent with Article III, Section 26,
subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service fees, as the same may be in effect
from time to time and (ii) the Series shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of the fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by Series hereunder and shall provide to the Fund's Board of Directors, and the directors shall review at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither the Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgement and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall continue in effect for a period of more than one year from that date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may be amended to increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to the Plan, cast in person at a meeting called for the purpose of voting on such amendment. Amendments to this Plan which do not increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without payment of any penalty
(a) by the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of
this Plan or in any agreement related to the Plan, or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time. This Plan shall automatically terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
-----------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. - NEW YORK SERIES - CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (the "Fund"), on behalf of its NEW YORK SERIES (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended the (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class A Shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorized the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide additional incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments received hereunder from the Series in order to (a) finance any activity which is primarily intended to result in the sale of Shares and (b) provide continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder otherwise to encourage such accounts to remain invested in the Shares: PROVIDED that (i) any payments referred to in the foregoing clause (a) shall not exceed the distribution fee permitted to be paid at the time under paragraph 3 of this Plan and shall be authorized by the Board of Directors of
the Fund by a vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments referred to in clause (b) shall not exceed the service fee permitted to be paid at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for remittance
to Authorized Institutions and/or use by the Distributor pursuant to this Plan
(a) service fees and (b) distribution fees, each at an annual rate not to exceed
.25 of 1% of the average annual net asset value of Shares outstanding, except
that service fees payable with respect to Shares that were initially issued , or
are attributable to shares that were initially issued, by the Fund or a
predecessor fund prior to June 1, 1990 shall not exceed .15 of 1% of the average
net asset value of such Shares. The Board of Directors of the Fund shall from
time to time determine the amounts, within the foregoing maximum amounts, that
the Series may pay the Distributor hereunder. Any such fees (which may be waived
by the Authorized Institutions in whole or in part) may be calculated and paid
quarterly or more frequently if approved by the Board of Directors of the Fund.
Such determinations and approvals by the Board of Directors shall be made and
given by votes of the kind referred to in paragraph 10 of this Plan. Payments by
holders of Shares to the Series of contingent deferred reimbursement charges
relating to distribution fees paid by the Series hereunder shall reduce the
amount of distribution fees for purposes of the annual 0.25% distribution fee
limit. The Distributor will monitor the payments hereunder and shall reduce such
payments or take such other steps as may be necessary to assure that (i) the
payments pursuant to this Plan shall be consistent with Article III, Section 26,
subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service fees, as the same may be in effect
from time to time and (ii) the Series shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of the fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by Series hereunder and shall provide to the Fund's Board of Directors, and the directors shall review at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither the Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgement and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall continue in effect for a period of more than one year from that date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may be amended to increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to the Plan, cast in person at a meeting called for the purpose of voting on such amendment. Amendments to this Plan which do not increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without payment of any penalty
(a) by the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of
this Plan or in any agreement related to the Plan, or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time. This Plan shall automatically terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
-----------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. - TEXAS SERIES - CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (the "Fund"), on behalf of its TEXAS SERIES (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended the (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class A Shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorized the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide additional incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments received hereunder from the Series in order to (a) finance any activity which is primarily intended to result in the sale of Shares and (b) provide continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder otherwise to encourage such accounts to remain invested in the Shares: PROVIDED that (i) any payments referred to in the foregoing clause (a) shall not exceed the distribution fee permitted to be paid at the time under paragraph 3 of this Plan and shall be authorized by the Board of Directors of
the Fund by a vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments referred to in clause (b) shall not exceed the service fee permitted to be paid at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for remittance
to Authorized Institutions and/or use by the Distributor pursuant to this Plan
(a) service fees and (b) distribution fees, each at an annual rate not to exceed
.25 of 1% of the average annual net asset value of Shares outstanding, except
that service fees payable with respect to Shares that were initially issued , or
are attributable to shares that were initially issued, by the Fund or a
predecessor fund prior to June 1, 1990 shall not exceed .15 of 1% of the average
net asset value of such Shares. The Board of Directors of the Fund shall from
time to time determine the amounts, within the foregoing maximum amounts, that
the Series may pay the Distributor hereunder. Any such fees (which may be waived
by the Authorized Institutions in whole or in part) may be calculated and paid
quarterly or more frequently if approved by the Board of Directors of the Fund.
Such determinations and approvals by the Board of Directors shall be made and
given by votes of the kind referred to in paragraph 10 of this Plan. Payments by
holders of Shares to the Series of contingent deferred reimbursement charges
relating to distribution fees paid by the Series hereunder shall reduce the
amount of distribution fees for purposes of the annual 0.25% distribution fee
limit. The Distributor will monitor the payments hereunder and shall reduce such
payments or take such other steps as may be necessary to assure that (i) the
payments pursuant to this Plan shall be consistent with Article III, Section 26,
subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service fees, as the same may be in effect
from time to time and (ii) the Series shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of the fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by Series hereunder and shall provide to the Fund's Board of Directors, and the directors shall review at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither the Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the
Distributor are or may be "interested persons" of the Fund, except as may otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgement and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall continue in effect for a period of more than one year from that date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may be amended to increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to the Plan, cast in person at a meeting called for the purpose of voting on such amendment. Amendments to this Plan which do not increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without payment of any penalty
(a) by the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of
this Plan or in any agreement related to the Plan, or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time. This Plan shall automatically terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
-----------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. - WASHINGTON SERIES - CLASS A SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland corporation (the "Fund"), on behalf of its WASHINGTON SERIES (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended the (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class A Shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof (the "Distribution Agreement").
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor to be used by the Distributor or paid to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares.
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, and subject to the provisions of paragraph 8 of this Plan, it is agreed as follows:
1. The Fund hereby authorized the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide additional incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares.
2. The Fund also hereby authorizes the Distributor to use payments received hereunder from the Series in order to (a) finance any activity which is primarily intended to result in the sale of Shares and (b) provide continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder otherwise to encourage such accounts to remain invested in the Shares: PROVIDED that (i) any payments referred to in the foregoing clause (a) shall not exceed the distribution fee permitted to be paid at the
time under paragraph 3 of this Plan and shall be authorized by the Board of Directors of the Fund by a vote of the kind referred to in paragraph 10 of this Plan and (ii) any payments referred to in clause (b) shall not exceed the service fee permitted to be paid at the time under paragraph 3 of this Plan.
3. The Series is authorized to pay the Distributor hereunder for remittance
to Authorized Institutions and/or use by the Distributor pursuant to this Plan
(a) service fees and (b) distribution fees, each at an annual rate not to exceed
.25 of 1% of the average annual net asset value of Shares outstanding, except
that service fees payable with respect to Shares that were initially issued , or
are attributable to shares that were initially issued, by the Fund or a
predecessor fund prior to the first day of the calendar quarter subsequent to
the Series' net assets reaching $100 million shall not exceed .15 of 1% of the
average net asset value of such Shares. The Board of Directors of the Fund shall
from time to time determine the amounts, within the foregoing maximum amounts,
that the Series may pay the Distributor hereunder. Any such fees (which may be
waived by the Authorized Institutions in whole or in part) may be calculated and
paid quarterly or more frequently if approved by the Board of Directors of the
Fund. Such determinations and approvals by the Board of Directors shall be made
and given by votes of the kind referred to in paragraph 10 of this Plan.
Payments by holders of Shares to the Series of contingent deferred reimbursement
charges relating to distribution fees paid by the Series hereunder shall reduce
the amount of distribution fees for purposes of the annual 0.25% distribution
fee limit. The Distributor will monitor the payments hereunder and shall reduce
such payments or take such other steps as may be necessary to assure that (i)
the payments pursuant to this Plan shall be consistent with Article III, Section
26, subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. with respect to investment companies
with asset-based sales charges and service fees, as the same may be in effect
from time to time and (ii) the Series shall not pay with respect to any
Authorized Institution service fees equal to more than .25 of 1% of the average
annual net asset value of Shares sold by (or attributable to Shares or shares
sold by) such Authorized Institution and held in an account covered by an
Agreement.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of the fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by Series hereunder and shall provide to the Fund's Board of Directors, and the directors shall review at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither the Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be
"interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the Distributor are or may be "interested persons" of the Fund, except as may otherwise be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgement and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective upon the date hereof and shall continue in effect for a period of more than one year from that date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal. Notwithstanding the foregoing, no payments may be made by the Series hereunder prior to or with respect to any period prior to the first day of the calendar quarter subsequent to the Series' net assets reaching $100 million.
9. This Plan may be amended to increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan without a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time, and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to the Plan, cast in person at a meeting called for the purpose of voting on such amendment. Amendments to this Plan which do not increase materially the amount to be spent by the Series hereunder above the maximum amounts referred to in paragraph 3 of this Plan may be made pursuant to paragraph 10 of this Plan.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without payment of any penalty
(a) by the vote of a majority of the directors of the Fund who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreement related to the Plan,
or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under
the Act as in effect at such time. This Plan shall automatically terminate in
the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meanings as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
-----------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC.
CLASS B SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, INC., a Maryland Corporation (the "Fund"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock including the Fund's Class B shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Fund may make certain payments to the Distributor (a) to help reimburse the Distributor for the payment of sales commissions to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and (b) for use by the Distributor in rendering service to the Fund, including paying and financing the payment of sales commissions, service fees, and other costs of distributing and selling Shares as provided in paragraph 3 of this Plan, and
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Fund and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of (a) sales commissions (particularly those paid or financed with payments received hereunder) and (b) service fees received hereunder in order to provide incentives to such Authorized Institutions (i) to sell Shares and (ii) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares, respectively. The Distributor may, from time to time, waive or defer payment of some fees payable at the time of the sale of Shares provided for under paragraph 2 hereof.
2. Subject to possible reductions as provided below in this paragraph 2, the Fund periodically, as determined by the Fund's Board of Directors (in the manner contemplated in paragraph 11), shall pay to the Distributor fees (a) for services, at an annual rate not to exceed .25 of 1% of the average annual net asset value of Shares outstanding and (b) for distribution, at an annual rate not to exceed .75 of 1% of the average annual net asset value of Shares outstanding. Payments
will be based on Shares outstanding during any such period. Shares outstanding include Shares issued for reinvested dividends and distributions. The Board of Directors of the Fund shall from time to time determine the amounts, within the foregoing maximum amounts, that the Fund may pay the Distributor hereunder. Such determinations by the Board of Directors shall be made by votes of the kind referred to in paragraph 11 of this Plan. The service fees mentioned in this paragraph are for the purposes mentioned in clause (b) (ii) of paragraph 1 of this Plan and the distribution fees mentioned in this paragraph are for the purposes mentioned in clause (b) (i) of paragraph 1 of this Plan. The Distributor will monitor the payments hereunder and shall reduce such payments or take such other steps as may be necessary to assure that (x) the payments pursuant to this Plan shall be consistent with Article III, Section 26, subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National Association of Securities Dealers, Inc. with respect to investment companies with asset-based sales charges and service fees as the same may be in effect from time to time and (y) the Fund shall not pay with respect to any Authorized Institution service fees equal to more than .25 of 1% of the average annual net asset value of Shares sold by (or attributable to shares sold by) such Authorized Institution and held in an account covered by an Agreement.
3. The Distributor may use amounts received as distribution fees hereunder from the Fund to engage directly or indirectly in financing any activity which is primarily intended to result in the sale of Shares including, but not limited to: (a) paying and financing the payment of commissions or other payments relating to selling or servicing efforts and (b) paying interest, carrying, or any other financing charges on any unreimbursed distribution or other expense incurred in a prior fiscal year of the Fund whether or not such charges and unreimbursed distribution or other expense are determined to be a legal obligation of the Fund, in whole or in part, by the Fund's Board of Directors. The Fund's Board of Directors (in the manner contemplated in paragraph 11 of this Plan) shall approve the timing, categories and calculation of any payments under this paragraph 3.
4.1. The Fund will pay each person which has acted as Distributor of Shares its Allocable Portion (as such term is defined in paragraphs 13.1 through 13.3) of the distribution fees with respect to Shares of the Fund in consideration of its services as principal underwriter for the Shares of the Fund. The distribution agreement pursuant to which a person acts or acted as principal underwriter of the Shares is referred to as the "Applicable Distribution Agreement". Such person shall be paid its Allocable Portion of such distribution fees notwithstanding such person's termination as Distributor of the Shares, such payments to be changed or terminated only (i) as required by a change in applicable law or a change in accounting policy adopted by the Investment Companies Committee of the AICPA and approved by FASB that results in a determination by the Fund's independent accountants that any sales charges in respect of such Fund, which are not contingent deferred sales charges and which are not yet due and payable, must be accounted for by such Fund as a liability in accordance with GAAP, each after the effective date of this Plan and restatement; (ii) if in the sole discretion of the Board of Directors, after due consideration of such factors as they considered relevant, including the transactions contemplated in any purchase and sale agreement entered into between the Fund's Distributor and any commission financing entity, the Board of Directors determines (in the manner contemplated in paragraph 12), in the exercise of its fiduciary duty, that this Plan and the payments thereunder must be changed or terminated, notwithstanding the effect this action might have on the Fund's ability to offer and sell Shares; or (iii) in connection with a
Complete Termination of this Plan, it being understood that for this purpose a Complete Termination of this Plan occurs only if this Plan is terminated and the Fund has discontinued the distribution of Shares or other back-end load or substantially similar classes of shares; it being understood that such does not include Class C shares, I.E., those sold with a level load. The services rendered by a Distributor for which that Distributor is entitled to receive its Allocable Portion of the distribution fee shall be deemed to have been completed at the time of the initial purchase of the Shares (as defined in the Applicable Distribution Agreement) (whether of that Fund or another fund) taken into account in computing that Distributor's Allocable Portion of the distribution fee.
4.2. The obligation of the Fund to pay the distribution fee shall terminate upon the termination of this Plan in accordance with the terms hereof.
4.3. The right of a Distributor to receive payments hereunder may be transferred by that Distributor (but not the distribution agreement itself or that Distributor's obligations thereunder) in order to raise funds which may be useful or necessary to perform its duties as principal underwriter, and any such transfer shall be effective upon written notice from that Distributor to the Fund. In connection with the foregoing, the Fund is authorized to pay all or part of the distribution fee and/or contingent deferred sales charges with respect to Shares (upon the terms and conditions set forth in the then current Fund prospectus) directly to such transferee as directed by that Distributor.
4.4. As long as this Plan is in effect, the Fund shall not change the manner in which the distribution fee is computed (except as may be required by a change in applicable law or a change in accounting policy adopted by the Investment Companies Committee of the AICPA and approved by FASB that results in a determination by the Fund's independent accountants that any distribution fees which are not yet due and payable, must be accounted for by such Fund as a liability in accordance with GAAP).
5. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of fees which are to be paid by the Fund hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Fund pay such fees in the future.
6. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by the Fund hereunder and shall provide to the Fund's Board of Directors, and the Board of Directors shall review, at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made. Over the long-term the expenses incurred by the Distributor for engaging directly or indirectly in financing any activity which is primarily intended to result in the sale of Shares are likely to be greater then the distribution fees receivable by the Distributor hereunder. Nevertheless, there exists the possibility that for a short-term period the Distributor may not have a sufficient amount of such expenses to warrant reimbursement by receipt of such distribution fees. Although the Distributor undertakes not to make a profit under this Plan, the Plan will be considered a compensation plan (i.e. distribution fees will be paid regardless of expenses incurred) in order to avoid the possibility of the Distributor not being able to receive such distribution fees because of a temporary timing difference between its incurring such expenses and the receipt of such distribution
fees.
7. Neither this Plan nor any other transaction between the Fund and the Distributor, or any successor or assignee thereof, pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the Distributor are or may be "interested persons" of the Fund, except as otherwise may be provided in the Act.
8. The Distributor shall give the Fund the benefit of the Distributor's best judgment and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund or any of its shareholders, creditors, directors or officers; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Fund's shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
9. This Plan shall become effective on the date hereof, and shall continue in effect for a period of more than one year from such date only so long as such continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
10. This Plan may not be amended to increase materially the amount to be spent by the Fund hereunder without the vote of a majority of its outstanding voting securities and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such amendment.
11. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 10 of this Plan may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
12. This Plan may be terminated at any time without the payment of any penalty by (a) the vote of a majority of the directors of the Fund who are not "interested persons" of the Fund and have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, or (b) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in
effect at such time. This Plan shall automatically terminate in the event of its assignment.
13.1. For purposes of this Plan, the Distributor's "Allocable Portion" of
the distribution fee shall be 100% of such distribution fees unless or until the
Fund uses a principal underwriter other than the Distributor. Thereafter the
Allocable Portion shall be the portion of the distribution fee attributable to
(i) Shares of the Fund sold by the Distributor before there is a new principal
underwriter, plus (ii) Shares of the Fund issued in connection with the exchange
of Shares of another Fund in the Lord, Abbett Family of Funds, plus (iii) Shares
of the Fund issued in connection with the reinvestment of dividends and capital
gains.
13.2. The Distributor's Allocable Portion of the distribution fees and the contingent deferred sales charges arising with respect to Shares taken into account in computing the Distributor's Allocable Portion shall be limited under Article III, Sections 26(b) and (d) or other applicable regulations of the National Association of Securities Dealers, Inc. (the "NASD") as if the Shares taken into account in computing the Distributor's Allocable Portion themselves constituted a separate class of shares of the Fund.
13.3. The services rendered by the Distributor for which the Distributor is entitled to receive the Distributor's Allocable Portion of the distribution fees shall be deemed to have been completed at the time of the initial purchase of the Shares (or shares of another Fund in the Lord Abbett Family of Funds) taken into account in computing the Distributor's Allocable Portion. In addition, the Fund will pay to the Distributor any contingent deferred sales charges imposed on redemption of Shares (upon the terms and conditions set forth in the then current Fund prospectus) taken into account in computing the Distributor's Allocable Portion of the distribution fees. Notwithstanding anything to the contrary in this Plan, the Distributor shall be paid its Allocable Portion of the distribution fees regardless of the Distributor's termination as principal underwriter of the Shares of the Fund, or any termination of this Agreement other than in connection with a Complete Termination (as defined in paragraph 4.1) of the Plan as in effect on the date of execution of Distribution Agreement with the new Distributor. Except as provided in paragraph 4.1 and in the preceding sentence, the Fund's obligation to pay the distribution fees to the Distributor shall be absolute and unconditional and shall not be subject to any dispute, offset, counterclaim or defense whatsoever (it being understood that nothing in this sentence shall be deemed a waiver by the Fund of its right separately to pursue any claims it may have against the Distributor and to enforce such claims against any assets of the Distributor (other than the assets represented by the Distributor's rights to be paid its Allocable Portion of the distribution fees and to be paid the contingent deferred sales charges).
14. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meaning as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
ATTEST:
Assistant General Counsel
LORD ABBETT DISTRIBUTOR LLC
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. -- CALIFORNIA SERIES
CLASS C SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, Inc., a Maryland corporation (the "Fund"), on behalf of its CALIFORNIA series (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class C shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor for payment to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and for use by the Distributor as provided in paragraph 3 of this Plan, and
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide incentives to such Authorized Institutions (I) to sell Shares and (II) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares. The Distributor may, from time to time, waive or defer payment of some fees payable at the time of the sale of Shares provided for under paragraph 2 hereof.
2. Subject to possible reduction as provided below in this paragraph 2, the Series shall pay to the Distributor fees (I) at the time of sale of Shares (A) for services, not to exceed .25 of 1% of the net asset value of the Shares sold and (B) for distribution, not to exceed .75 of 1% of the net asset value of the Shares sold; and (II) at each quarter-end after the first anniversary of the sale of Shares (A) for services, at an annual rate not to exceed .25 of 1% of the average annual net asset value of Shares outstanding for one year or more and (B) for distribution, at an annual rate not to exceed .75 of 1% of the average annual net asset value of Shares outstanding for one year or more. For purposes of clause (ii) above, (A) Shares issued pursuant to an exchange for Class C shares of another series of the Fund or another Lord Abbett-sponsored fund (or for shares of a fund acquired by the Fund) will be credited with the time held from the initial purchase of such other shares when determining how long Shares mentioned in clause (ii) have been outstanding and (B) payments will be based on Shares outstanding during any such quarter. Sales in clause (i) above exclude Shares issued for reinvested dividends and distributions, and Shares outstanding in clause (ii) above include Shares issued for reinvested dividends and distributions which have been outstanding for one year or more. The Board of Directors of the Fund shall from time to time determine the amounts, within the foregoing maximum amounts, that the Series may pay the Distributor hereunder. Such determinations by the Board of Directors shall be made by votes of the kind referred to in paragraph 10 of this Plan. The service fees mentioned in this paragraph are for the purposes mentioned in clause (ii) of paragraph 1 of this Plan and the distribution fees mentioned in this paragraph are for the purposes mentioned in clause (i) of paragraph 1 and the second sentence of paragraph 3 of this Plan. The Distributor will monitor the payments hereunder and shall reduce such payments or take such other steps as may be necessary to assure that (X) the payments pursuant to this Plan shall be consistent with Article III, Section 26, subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National Association of Securities Dealers, Inc. with respect to investment companies with asset-based sales charges and service fees as the same may be in effect from time to time and (Y) the Series shall not pay with respect to any Authorized Institution service fees equal to more than .25 of 1% of the average annual net asset value of Shares sold by (or attributable to shares sold by) such Authorized Institution and held in an account covered by an Agreement.
3. The Distributor may use amounts received as distribution fees hereunder from the Series to finance any activity which is primarily intended to result in the sale of Shares including, but not limited to, commissions or other payments relating to selling or servicing efforts. Without limiting the generality of the foregoing, the Distributor may apply up to 10 of the total basis points authorized by the Fund's Board of
Directors designated as the distribution fee referred to in clause (ii)(b) of paragraph 2 to expenses incurred by the Distributor if such expenses are primarily intended to result in the sale of Shares. The Fund's Board of Directors (in the manner contemplated in paragraph 10 of this Plan) shall approve the timing, categories and calculation of any payments under this paragraph 3 other than those referred to in the foregoing sentence.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by the Series hereunder and shall provide to the Fund's Board of Directors, and the Board of Directors shall review, at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither this Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the Distributor are or may be "interested persons" of the Fund, except as otherwise may be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgment and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective on the date hereof, and shall continue in effect for a period of more than one year from such date only so long as such
continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may not be amended to increase materially the amount to be spent by the Series hereunder without the vote of a majority of its outstanding voting securities and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such amendment.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 of this Plan may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without the payment of any penalty by (A) the vote of a majority of the directors of the Fund who are not "interested persons" of the Fund and have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, or (B) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time. This Plan shall automatically terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meaning as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
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Vice President
ATTEST:
/s/ Thomas Konop
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Assistant Secretary
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LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
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A Partner
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RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. -- NATIONAL SERIES
CLASS C SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, Inc., a Maryland corporation (the "Fund"), on behalf of its NATIONAL series (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class C shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor for payment to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and for use by the Distributor as provided in paragraph 3 of this Plan, and
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide incentives to such Authorized Institutions (I) to sell Shares and (II) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares. The Distributor may, from time to time, waive or defer payment of some fees payable at the time of the sale of Shares provided for under paragraph 2 hereof.
2. Subject to possible reduction as provided below in this paragraph 2, the Series shall pay to the Distributor fees (I) at the time of sale of Shares (A) for services, not to exceed .25 of 1% of the net asset value of the Shares sold and (B) for distribution, not to exceed .75 of 1% of the net asset value of the Shares sold; and (II) at each quarter-end after the first anniversary of the sale of Shares (A) for services, at an annual rate not to exceed .25 of 1% of the average annual net asset value of Shares outstanding for one year or more and (B) for distribution, at an annual rate not to exceed .75 of 1% of the average annual net asset value of Shares outstanding for one year or more. For purposes of clause (ii) above, (A) Shares issued pursuant to an exchange for Class C shares of another series of the Fund or another Lord Abbett-sponsored fund (or for shares of a fund acquired by the Fund) will be credited with the time held from the initial purchase of such other shares when determining how long Shares mentioned in clause (ii) have been outstanding and (B) payments will be based on Shares outstanding during any such quarter. Sales in clause (i) above exclude Shares issued for reinvested dividends and distributions, and Shares outstanding in clause (ii) above include Shares issued for reinvested dividends and distributions which have been outstanding for one year or more. The Board of Directors of the Fund shall from time to time determine the amounts, within the foregoing maximum amounts, that the Series may pay the Distributor hereunder. Such determinations by the Board of Directors shall be made by votes of the kind referred to in paragraph 10 of this Plan. The service fees mentioned in this paragraph are for the purposes mentioned in clause (ii) of paragraph 1 of this Plan and the distribution fees mentioned in this paragraph are for the purposes mentioned in clause (i) of paragraph 1 and the second sentence of paragraph 3 of this Plan. The Distributor will monitor the payments hereunder and shall reduce such payments or take such other steps as may be necessary to assure that (X) the payments pursuant to this Plan shall be consistent with Article III, Section 26, subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National Association of Securities Dealers, Inc. with respect to investment companies with asset-based sales charges and service fees as the same may be in effect from time to time and (Y) the Series shall not pay with respect to any Authorized Institution service fees equal to more than .25 of 1% of the average annual net asset value of Shares sold by (or attributable to shares sold by) such Authorized Institution and held in an account covered by an Agreement.
3. The Distributor may use amounts received as distribution fees hereunder from the Series to finance any activity which is primarily intended to result in the sale of Shares including, but not limited to, commissions or other payments relating to selling or servicing efforts. Without limiting the generality of the foregoing, the Distributor may apply up to 10 of the total basis points authorized by the Fund's Board of
Directors designated as the distribution fee referred to in clause (ii)(b) of paragraph 2 to expenses incurred by the Distributor if such expenses are primarily intended to result in the sale of Shares. The Fund's Board of Directors (in the manner contemplated in paragraph 10 of this Plan) shall approve the timing, categories and calculation of any payments under this paragraph 3 other than those referred to in the foregoing sentence.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by the Series hereunder and shall provide to the Fund's Board of Directors, and the Board of Directors shall review, at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither this Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the Distributor are or may be "interested persons" of the Fund, except as otherwise may be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgment and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective on the date hereof, and shall continue in effect for a period of more than one year from such date only so long as such
continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may not be amended to increase materially the amount to be spent by the Series hereunder without the vote of a majority of its outstanding voting securities and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such amendment.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 of this Plan may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without the payment of any penalty by (A) the vote of a majority of the directors of the Fund who are not "interested persons" of the Fund and have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, or (B) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time. This Plan shall automatically terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meaning as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME fUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
---------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
A Partner
|
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
LORD ABBETT TAX-FREE INCOME FUND, INC. -- NEW YORK SERIES
CLASS C SHARES
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of July 12, 1996 by and between LORD ABBETT TAX-FREE INCOME FUND, Inc., a Maryland corporation (the "Fund"), on behalf of its NEW YORK series (the "Series"), and LORD ABBETT DISTRIBUTOR LLC, a New York limited liability company (the "Distributor").
WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "Act"); and the Distributor is the exclusive selling agent of the Fund's shares of capital stock, including the Series' Class C shares (the "Shares") pursuant to the Distribution Agreement between the Fund and the Distributor, dated as of the date hereof, and
WHEREAS, the Fund desires to adopt a Distribution Plan and Agreement (the "Plan") for the Series with the Distributor, as permitted by Rule 12b-1 under the Act, pursuant to which the Series may make certain payments to the Distributor for payment to institutions and persons permitted by applicable law and/or rules to receive such payments ("Authorized Institutions") in connection with sales of Shares and for use by the Distributor as provided in paragraph 3 of this Plan, and
WHEREAS, the Fund's Board of Directors has determined that there is a reasonable likelihood that the Plan will benefit the Series and the holders of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants and of other good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:
1. The Fund hereby authorizes the Distributor to enter into agreements with Authorized Institutions (the "Agreements") which may provide for the payment to such Authorized Institutions of distribution and service fees which the Distributor receives from the Series in order to provide incentives to such Authorized Institutions (I) to sell Shares and (II) to provide continuing information and investment services to their accounts holding Shares and otherwise to encourage their accounts to remain invested in the Shares. The Distributor may, from time to time, waive or defer payment of some fees payable at the time of the sale of Shares provided for under paragraph 2 hereof.
2. Subject to possible reduction as provided below in this paragraph 2, the Series shall pay to the Distributor fees (I) at the time of sale of Shares (A) for services, not to exceed .25 of 1% of the net asset value of the Shares sold and (B) for distribution, not to exceed .75 of 1% of the net asset value of the Shares sold; and (II) at each quarter-end after the first anniversary of the sale of Shares (A) for services, at an annual rate not to exceed .25 of 1% of the average annual net asset value of Shares outstanding for one year or more and (B) for distribution, at an annual rate not to exceed .75 of 1% of the average annual net asset value of Shares outstanding for one year or more. For purposes of clause (ii) above, (A) Shares issued pursuant to an exchange for Class C shares of another series of the Fund or another Lord Abbett-sponsored fund (or for shares of a fund acquired by the Fund) will be credited with the time held from the initial purchase of such other shares when determining how long Shares mentioned in clause (ii) have been outstanding and (B) payments will be based on Shares outstanding during any such quarter. Sales in clause (i) above exclude Shares issued for reinvested dividends and distributions, and Shares outstanding in clause (ii) above include Shares issued for reinvested dividends and distributions which have been outstanding for one year or more. The Board of Directors of the Fund shall from time to time determine the amounts, within the foregoing maximum amounts, that the Series may pay the Distributor hereunder. Such determinations by the Board of Directors shall be made by votes of the kind referred to in paragraph 10 of this Plan. The service fees mentioned in this paragraph are for the purposes mentioned in clause (ii) of paragraph 1 of this Plan and the distribution fees mentioned in this paragraph are for the purposes mentioned in clause (i) of paragraph 1 and the second sentence of paragraph 3 of this Plan. The Distributor will monitor the payments hereunder and shall reduce such payments or take such other steps as may be necessary to assure that (X) the payments pursuant to this Plan shall be consistent with Article III, Section 26, subparagraphs (d)(2) and (5) of the Rules of Fair Practice of the National Association of Securities Dealers, Inc. with respect to investment companies with asset-based sales charges and service fees as the same may be in effect from time to time and (Y) the Series shall not pay with respect to any Authorized Institution service fees equal to more than .25 of 1% of the average annual net asset value of Shares sold by (or attributable to shares sold by) such Authorized Institution and held in an account covered by an Agreement.
3. The Distributor may use amounts received as distribution fees hereunder from the Series to finance any activity which is primarily intended to result in the sale of Shares including, but not limited to, commissions or other payments relating to selling or servicing efforts. Without limiting the generality of the foregoing, the Distributor may apply up to 10 of the total basis points authorized by the Fund's Board of
Directors designated as the distribution fee referred to in clause (ii)(b) of paragraph 2 to expenses incurred by the Distributor if such expenses are primarily intended to result in the sale of Shares. The Fund's Board of Directors (in the manner contemplated in paragraph 10 of this Plan) shall approve the timing, categories and calculation of any payments under this paragraph 3 other than those referred to in the foregoing sentence.
4. The net asset value of the Shares shall be determined as provided in the Articles of Incorporation of the Fund. If the Distributor waives all or a portion of fees which are to be paid by the Series hereunder, the Distributor shall not be deemed to have waived its rights under this Agreement to have the Series pay such fees in the future.
5. The Secretary of the Fund, or in his absence the Chief Financial Officer, is hereby authorized to direct the disposition of monies paid or payable by the Series hereunder and shall provide to the Fund's Board of Directors, and the Board of Directors shall review, at least quarterly, a written report of the amounts so expended pursuant to this Plan and the purposes for which such expenditures were made.
6. Neither this Plan nor any other transaction between the parties hereto pursuant to this Plan shall be invalidated or in any way affected by the fact that any or all of the directors, officers, shareholders, or other representatives of the Fund are or may be "interested persons" of the Distributor, or any successor or assignee thereof, or that any or all of the directors, officers, partners, members or other representatives of the Distributor are or may be "interested persons" of the Fund, except as otherwise may be provided in the Act.
7. The Distributor shall give the Fund the benefit of the Distributor's best judgment and good faith efforts in rendering services under this Plan. Other than to abide by the provisions hereof and render the services called for hereunder in good faith, the Distributor assumes no responsibility under this Plan and, having so acted, the Distributor shall not be held liable or held accountable for any mistake of law or fact, or for any loss or damage arising or resulting therefrom suffered by the Fund, the Series or any of the shareholders, creditors, directors or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund or the Series' shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the reckless disregard of its obligations and duties hereunder.
8. This Plan shall become effective on the date hereof, and shall continue in effect for a period of more than one year from such date only so long as such
continuance is specifically approved at least annually by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such renewal.
9. This Plan may not be amended to increase materially the amount to be spent by the Series hereunder without the vote of a majority of its outstanding voting securities and each material amendment must be approved by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, cast in person at a meeting called for the purpose of voting on such amendment.
10. Amendments to this Plan other than material amendments of the kind referred to in the foregoing paragraph 9 of this Plan may be adopted by a vote of the Board of Directors of the Fund, including the vote of a majority of the directors who are not "interested persons" of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan. The Board of Directors of the Fund may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.
11. This Plan may be terminated at any time without the payment of any penalty by (A) the vote of a majority of the directors of the Fund who are not "interested persons" of the Fund and have no direct or indirect financial interest in the operation of this Plan or in any agreement related to this Plan, or (B) by a shareholder vote in compliance with Rule 12b-1 and Rule 18f-3 under the Act as in effect at such time. This Plan shall automatically terminate in the event of its assignment.
12. So long as this Plan shall remain in effect, the selection and nomination of those directors of the Fund who are not "interested persons" of the Fund are committed to the discretion of such disinterested directors. The terms "interested persons," "assignment" and "vote of a majority of the outstanding voting securities" shall have the same meaning as those terms are defined in the Act.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.
LORD ABBETT TAX-FREE INCOME FUND, INC.
By: /s/ Kenneth B. Cutler
------------------------------
Vice President
ATTEST:
/s/ Thomas Konop
----------------------------
Assistant Secretary
|
LORD ABBETT DISTRIBUTOR LLC
By: /s/ Kenneth B. Cutler
------------------------------
A Partner
|
CUSTODIAN AND INVESTMENT ACCOUNTING AGREEMENT
This Agreement between EACH LEGAL ENTITY LISTED ON EXHIBIT A HERETO, each a business trust or corporation organized and existing under the laws of the jurisdiction indicated on Exhibit A (each a "FUND"), and STATE STREET BANK and TRUST COMPANY, a Massachusetts trust company ("STATE STREET"),
WITNESSETH:
WHEREAS, each Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and
WHEREAS, each Fund intends that this Agreement be applicable to each of its series existing on the date hereof (such series together with all other series subsequently established by the Fund and made subject to this Agreement in accordance with Section 17, be referred to herein as the "PORTFOLIO(S)");
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF STATE STREET AS CUSTODIAN AND RECORDKEEPER. Each Fund hereby appoints State Street as the custodian of the assets of the Portfolios of the Fund, including securities which the Fund, on behalf of the applicable Portfolio, desires to be held in places within the United States ("DOMESTIC SECURITIES") and securities it desires to be held outside the United States ("FOREIGN SECURITIES"). The Fund, on behalf of the Portfolio(s), agrees to deliver to State Street all securities and cash of the Portfolios, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Portfolio(s) from time to time, and the cash consideration received by it for such new or treasury shares of beneficial interest of the Fund representing interests in the Portfolios ("Shares") as may be issued or sold from time to time. State Street shall not be responsible for any property of a Portfolio held or received by the Portfolio and not delivered to State Street.
Upon receipt of "PROPER INSTRUCTIONS" (as such term is defined in Section 6 hereof), State Street shall on behalf of the applicable Portfolio(s) from time to time appoint one or more sub-custodians located in the United States, but only in accordance with an applicable vote by the Board of Trustees or Directors of the Fund (the "BOARD") on behalf of the applicable Portfolio(s). State Street may appoint as sub-custodian for the Fund's foreign securities on behalf of the applicable Portfolio(s) the foreign banking institutions and foreign securities depositories designated in Schedules A and B hereto, but only in accordance with the applicable provisions of Sections 3 and 4 of this Agreement. State Street shall use all reasonable efforts to include in each agreement whereby State Street appoints any such sub-custodian a provision to the effect that the sub-custodian will be liable to State Street for losses and liabilities caused by the negligence, misfeasance, or willful misconduct of the sub-custodian. State Street shall have no more or less responsibility or liability to the Fund on account of any actions or omissions of any sub-custodian so appointed than any such sub-custodian has to State Street.
The Fund hereby constitutes and appoints State Street to perform certain accounting and recordkeeping functions relating to portfolio transactions required of a duly registered investment company under Section 31(a) of the Investment Company Act of 1940, as amended (the "1940 Act") and to calculate the net asset value of the Portfolios.
SECTION 2. DUTIES OF STATE STREET WITH RESPECT TO PROPERTY OF EACH FUND HELD BY STATE STREET IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. State Street shall hold and physically segregate for the account of each Portfolio all non-cash property, to be held by it in the United States, including all domestic securities owned by such Portfolio other than securities which are maintained pursuant to Section 2.8 in a clearing agency registered with the SEC and which acts as a securities depository or in a book-entry system authorized by the U.S. Department of the Treasury (each, a "U.S. SECURITIES SYSTEM").
SECTION 2.2 DELIVERY OF SECURITIES. State Street shall release and deliver domestic securities owned by a Portfolio held by State Street or in a U.S. Securities System account of State Street only upon receipt of Proper Instructions on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.8 hereof;
4) To the depository agent in connection with tender or other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to State Street;
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee or nominees of State Street
or into the name or nominee name of any agent appointed pursuant to
Section 2.7 or into the name or nominee name of any sub-custodian
appointed pursuant to Section 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to State Street;
7) Upon the sale of such securities for the account of the Portfolio, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, State Street shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from State Street's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any corporate action, including without limitation, any calls for redemption, tender or exchange offers, declarations, record and payment dates and amounts of any dividends or income, plan of merger, consolidation, recapitalization, reorganization, readjustment, split-up of shares, changes of par value, or conversion ("CORPORATE ACTION") of the securities of the
issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to State Street;
9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to State Street;
10) For delivery in connection with any loans of securities made by the Portfolio, but only against receipt of adequate collateral as agreed upon from time to time by State Street and the Fund on behalf of the Portfolio, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, except that in connection with any loans for which collateral is to be credited to State Street's account in the book-entry system authorized by the U.S. Department of the Treasury, State Street will not be held liable or responsible for the delivery of securities owned by the Portfolio prior to the receipt of such collateral except as may arise from State Street's own negligence or willful misconduct;
11) For delivery as security in connection with any borrowing by the Fund on behalf of the Portfolio requiring a pledge of assets by the Fund on behalf of the Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, State Street and a broker-dealer registered under the Securities Exchange Act of 1934 (the "EXCHANGE ACT") and a member of The National Association of Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, State Street, and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission ("CFTC") and/or any contract market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent for the Fund (the "TRANSFER AGENT") for delivery to such Transfer Agent or to the holders of Shares in connection with distributions in kind, as may be described from time to time in the currently effective prospectus and statement of additional information of the Fund related to the Portfolio (the "Prospectus"), in satisfaction of requests by holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio specifying the securities of the Portfolio to be delivered and naming the person or persons to whom delivery of such securities shall be made.
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by State Street (other than bearer securities) shall be registered in the name of a Portfolio or in the name of any nominee of a Fund on behalf of a Portfolio or of any nominee of State Street which nominee shall be assigned exclusively to the Portfolio, unless the applicable Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment advisor as the Portfolio, or in the name or nominee name of any agent appointed pursuant to Section 2.7 or in the name or nominee name of any sub-custodian appointed pursuant to Section 1. All securities accepted by State Street on behalf of a Portfolio under the terms of this Agreement shall be in "street name" or other good delivery form. If, however, a Fund directs State Street to maintain securities in "street name", State Street shall utilize all reasonable efforts to timely collect income due the Fund on such securities and to notify the Fund using all reasonable efforts of relevant information regarding securities such as maturities and pendency of calls and Corporate Actions.
SECTION 2.4 BANK ACCOUNTS. State Street shall open and maintain a separate bank account or accounts in the United States in the name of each Portfolio of each Fund, subject only to draft or order by State Street acting pursuant to the terms of this Agreement, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Portfolio, other than cash maintained by the Portfolio in a bank account established and used in accordance with Rule 17f-3 under the 1940 Act. Funds held by State Street for a Portfolio may be deposited by it to its credit as Custodian in the banking department of State Street or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the 1940 Act and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of each applicable Portfolio be approved by vote of a majority of the Board. Such funds shall be deposited by State Street in its capacity as Custodian and shall be withdrawable by State Street only in that capacity.
SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, State Street shall collect on a timely basis all income and other payments with respect to registered domestic securities held hereunder to which each Portfolio shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, such securities are held by State Street or its agent thereof and shall credit such income, as collected, to such Portfolio's custodian account. Without limiting the generality of the foregoing, State Street shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Income due each Portfolio on securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the Fund. State Street will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to State Street of the income to which the Portfolio is properly entitled.
SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, State Street shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of title to such options, futures contracts or options on futures contracts to State Street (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the 1940 Act to act as a custodian and has been designated by State Street as its agent for this purpose) registered in the name of the Portfolio or in the name of a nominee of State Street referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.8 hereof; (c) in the case of repurchase agreements entered into between the Fund on behalf of the Portfolio and State Street, or another bank, or a broker-dealer which is a member of NASD, (i) against delivery of the securities either in certificate form or through an entry crediting State Street's account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Portfolio of securities owned by State Street along with written evidence of the agreement by State Street to repurchase such securities from the Portfolio; or (d) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions from the Fund as defined herein;
2) In connection with conversion, exchange or surrender of securities owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued as set forth in
Section 5 hereof;
4) For the payment of any expense or liability incurred by the Portfolio, including but not limited to the following payments for the account of the Portfolio: interest, taxes, management, accounting, transfer agent and legal fees, and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of securities sold short; and
7) For any proper corporate other purpose, but only upon receipt of Proper Instructions from the Fund on behalf of the Portfolio specifying the amount of such payment and naming the person or persons to whom such payment is to be made.
SECTION 2.7 APPOINTMENT OF AGENTS. State Street may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the 1940 Act to act as a custodian, as its agent to carry out such of the provisions of this Section 2 as State Street may from time to time direct; provided, however, that State Street shall notify the applicable Fund of the appointment of any agent and that such appointment shall not relieve State Street of its responsibilities or liabilities hereunder.
SECTION 2.8 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. State Street may deposit and/or maintain securities owned by a Portfolio in a U.S. Securities System subject to the following provisions:
1) State Street may keep securities of the Portfolio in a U.S. Securities System provided that such securities are represented in an account of State Street in the U.S. Securities System (the "U.S. SECURITIES SYSTEM ACCOUNT") which account shall not include any assets of State Street other than assets held as a fiduciary, custodian or otherwise for customers;
2) The records of State Street with respect to securities of the Portfolio which are maintained in a U.S. Securities System shall identify by book-entry those securities belonging to the Portfolio;
3) State Street shall pay for securities purchased for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that such securities have been transferred to the U.S. Securities System Account, and (ii) the making of an entry on the records of State Street to reflect such payment and transfer for the account of the Portfolio. State Street shall transfer securities sold for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that payment for such securities has been transferred to the U.S. Securities System Account, and (ii) the making of an entry on the records of State Street to reflect such transfer and payment for the account of the Portfolio. Copies of all advices from the U.S. Securities System of transfers of securities for the account of the Portfolio shall identify the Portfolio, be maintained for the Portfolio by State Street and be provided to the Fund at its request. Upon request, State Street shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio in the form of a written advice or notice and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transactions in the U.S. Securities System for the account of the Portfolio;
4) State Street shall provide the Fund with any report obtained by State Street on the U.S. Securities System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the U.S. Securities System;
5) Anything to the contrary in this Agreement notwithstanding, State Street shall be liable to the Fund for the benefit of the Portfolio for any loss or damage to the Portfolio resulting from use of the U.S. Securities System by reason of any negligence, misfeasance or misconduct of State Street or any of its agents or of any of its or their employees or from failure of State Street or any such agent to enforce effectively such rights as it may have against the U.S. Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of State Street with respect to any claim against the U.S. Securities System or any other person which State Street may have as a consequence of any such loss or damage if and to the extent that the Portfolio has not been made whole for any such loss or damage.
SECTION 2.9 SEGREGATED ACCOUNT. State Street shall upon receipt of Proper Instructions on behalf of each applicable Portfolio establish and maintain a segregated account or accounts for and on behalf of each such Portfolio, into which account or accounts may be transferred cash and/or securities, including securities maintained in an account by State Street pursuant to Section 2.8 hereof, (i) in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, State Street and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the CFTC or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio, (ii) for purposes of segregating cash or government securities in connection with options purchased, sold or written by the Portfolio or commodity futures contracts or options thereon purchased or sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio with the procedures required by Investment Company Act Release No. 10666, or any subsequent release of the U.S. Securities and Exchange Commission (the "SEC"), or interpretative opinion of the staff of the SEC, relating to the maintenance of segregated accounts by registered investment companies, and (iv) for any other proper corporate purpose upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio.
SECTION 2.10 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. State Street shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of each Portfolio held by it and in connection with transfers of securities.
SECTION 2.11 PROXIES. State Street shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Portfolio or a nominee of the Portfolio, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Portfolio such proxies, all proxy soliciting materials and all notices relating to such securities.
SECTION 2.12 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the provisions of Section 2.3, State Street shall transmit promptly to each Fund for each Portfolio all written information received by State Street from issuers of securities being held for the Portfolio with respect to Corporate Actions, notices of exercise of call and put options written by the Fund on behalf of the Portfolio and the maturity of futures contracts purchased or sold by the Portfolio. With respect to tender or exchange offers, State Street shall transmit promptly to the Portfolio all written information received by State Street from issuers of the securities whose tender or exchange is sought and from the party (or its agents) making the tender or exchange offer. If the Portfolio desires to take action with respect to any Corporate Action, the Portfolio shall notify State Street at least three business days prior to the date on which State Street is to take such action.
SECTION 3. PROVISIONS RELATING TO RULES 17F-5 AND 17F-7
SECTION 3.1. DEFINITIONS. As used throughout this Agreement, the capitalized terms set forth below shall have the indicated meanings:
"Country Risk" means all factors reasonably related to the systemic risk of holding Foreign Assets in a particular country including, but not limited to, such country's political environment, economic and financial infrastructure (including any Eligible Securities Depository operating in the country), prevailing or developing custody and settlement practices, and laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country; however, "Country Risk" does not include the custody or settlement practices and procedures of an Eligible Foreign Custodian appointed by the Foreign Custody Manager.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule 17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate action of the SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of the 1940 Act; the term does not include any Eligible Securities Depository.
"Eligible Securities Depository" has the meaning set forth in section (b)(1) of Rule 17f-7.
"Foreign Assets" means any of the Portfolios' investments (including foreign currencies) for which the primary market is outside the United States and such cash and cash equivalents as are reasonably necessary to effect the Portfolios' transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(3) of Rule 17f-5.
"Rule 17f-5" means Rule 17f-5 promulgated under the 1940 Act.
"Rule 17f-7" means Rule 17f-7 promulgated under the 1940 Act.
SECTION 3.2. STATE STREET AS FOREIGN CUSTODY MANAGER.
3.2.1 DELEGATION TO STATE STREET AS FOREIGN CUSTODY MANAGER. Each Fund, by
resolution adopted by its Board, hereby delegates to State Street, subject to
Section (b) of Rule 17f-5, the responsibilities set forth in this Section 3.2
with respect to Foreign Assets of the Portfolios held outside the United States,
and State Street hereby accepts such delegation as Foreign Custody Manager with
respect to the Portfolios.
3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall be responsible for performing the delegated responsibilities defined below only with respect to the countries and custody arrangements for each such country listed on Schedule A to this Agreement, which list of countries may be amended from time to time by a Fund with the agreement of the Foreign Custody Manager. The Foreign Custody Manager shall list on Schedule A the Eligible Foreign Custodians selected by the Foreign Custody Manager to maintain the assets of the Portfolios, which list of Eligible Foreign Custodians may be amended from time to time in the sole discretion of the Foreign Custody Manager. The Foreign Custody Manager will provide amended versions of Schedule A in accordance with Section 3.2.5 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open an account or to place or maintain Foreign Assets in a country listed on Schedule A, and the fulfillment by the Fund, on behalf of the Portfolios, of the applicable account opening requirements for such country, the Foreign Custody Manager shall be deemed to have been delegated by the Board on behalf of the Portfolios responsibility as Foreign Custody Manager with respect to that country and to have accepted such delegation. Execution of this Agreement by the Fund shall be deemed to be a Proper Instruction to open an account, or to place or maintain Foreign Assets, in each country listed on Schedule A in which State Street has previously placed or currently maintains Foreign Assets pursuant to the terms of the contract governing the custody arrangement. Following the receipt of Proper Instructions directing the Foreign Custody Manager to close the account of a Portfolio with the Eligible Foreign Custodian selected by the Foreign Custody Manager in a designated country, the delegation by the Board on behalf of the Portfolios to State Street as Foreign Custody Manager for that country shall be deemed to have been withdrawn and State Street shall
immediately cease to be the Foreign Custody Manager of the Portfolios with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated responsibilities with respect to a designated country upon written notice to the Fund. Thirty days (or such longer period to which the parties agree in writing) after receipt of any such notice by the Fund, State Street shall have no further responsibility in its capacity as Foreign Custody Manager to the Fund with respect to the country as to which State Street's acceptance of delegation is withdrawn.
3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES:
(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the provisions of this Section 3.2, the Foreign Custody Manager may place and maintain the Foreign Assets in the care of the Eligible Foreign Custodian selected by the Foreign Custody Manager in each country listed on Schedule A, as amended from time to time. In performing its delegated responsibilities as Foreign Custody Manager to place or maintain Foreign Assets with an Eligible Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign Assets will be subject to reasonable care, based on the standards applicable to custodians in the relevant market, after considering all factors relevant to the safekeeping of such assets, including, without limitation the factors specified in Rule 17f-5(c)(1).
(b) CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody Manager shall determine that the contract governing the foreign custody arrangements with each Eligible Foreign Custodian selected by the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
(c) MONITORING. In each case in which the Foreign Custody Manager maintains
Foreign Assets with an Eligible Foreign Custodian selected by the Foreign
Custody Manager, the Foreign Custody Manager shall establish a system to monitor
(i) the appropriateness of maintaining the Foreign Assets with such Eligible
Foreign Custodian and (ii) the contract governing the custody arrangements
established by the Foreign Custody Manager with the Eligible Foreign Custodian.
In the event the Foreign Custody Manager determines that the custody
arrangements with an Eligible Foreign Custodian it has selected are no longer
appropriate or no longer meet the requirements of Rule 17f-5, the Foreign
Custody Manager shall promptly notify the Board in accordance with Section 3.2.5
hereunder.
3.2.4 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of this Section 3.2, the Board of the applicable Fund, or the Fund's investment adviser, shall be deemed to have considered and determined to accept such Country Risk as is incurred by placing and maintaining the Foreign Assets in each country for which State Street is serving as Foreign Custody Manager of the Portfolios.
3.2.5 REPORTING REQUIREMENTS. The Foreign Custody Manager shall report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the placement of such Foreign Assets with another Eligible Foreign Custodian by providing to the Board an amended Schedule A at the end of the calendar quarter in which an amendment to such Schedule has occurred. The Foreign Custody Manager shall make written reports notifying the Board of any other material change in the foreign custody arrangements of the Portfolios described in this Section 3.2 after the occurrence of the material change.
3.2.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO. In performing the responsibilities delegated to it, the Foreign Custody Manager
agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of assets of management investment companies registered under the 1940 Act would exercise.
3.2.7 REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign Custody Manager represents that it is a U.S. Bank as defined in section (a)(7) of Rule 17f-5. Each Fund represents to State Street that its Board has determined that it is reasonable for the Board to rely on State Street to perform the responsibilities delegated pursuant to this Agreement to State Street as the Foreign Custody Manager of the Portfolios.
3.2.8 EFFECTIVE DATE AND TERMINATION OF STATE STREET AS FOREIGN CUSTODY MANAGER. The Board's delegation to State Street as Foreign Custody Manager of the Portfolios shall be effective as of the date hereof and shall remain in effect until terminated at any time, without penalty, by written notice from the terminating party to the non-terminating party. Termination will become effective thirty (30) days after receipt by the non-terminating party of such notice. The provisions of Section 3.2.2 hereof shall govern the delegation to and termination of State Street as Foreign Custody Manager of the Portfolios with respect to designated countries.
SECTION 3.3 ELIGIBLE SECURITIES DEPOSITORIES.
3.3.1 ANALYSIS AND MONITORING. State Street shall (a) provide each Fund (or its duly-authorized investment manager or investment advisor) with an analysis of the custody risks associated with maintaining assets with the Eligible Securities Depositories set forth on Schedule B hereto in accordance with section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such risks on a continuing basis, and promptly notify a Fund (or its duly-authorized investment manager or investment advisor) of any material change in such risks, in accordance with section (a)(1)(i)(B) of Rule 17f-7.
3.3.2 STANDARD OF CARE. State Street agrees to exercise reasonable care, prudence and diligence in performing the duties set forth in Section 3.3.1.
SECTION 4. DUTIES OF STATE STREET WITH RESPECT TO PROPERTY OF THE PORTFOLIOS HELD OUTSIDE THE UNITED STATES
SECTION 4.1 DEFINITIONS. As used throughout this Agreement, the capitalized terms set forth below shall have the indicated meanings:
"Foreign Securities System" means an Eligible Securities Depository listed on Schedule B hereto.
"Foreign Sub-Custodian" means a foreign banking institution serving as an Eligible Foreign Custodian.
SECTION 4.2. HOLDING SECURITIES. State Street shall identify on its books as belonging to the Portfolios the foreign securities held by each Foreign Sub-Custodian or Foreign Securities System. State Street may hold foreign securities for all of its customers, including the Portfolios, with any Foreign Sub-Custodian in an account that is identified as belonging to State Street for the benefit of its customers, provided however, that (i) the records of State Street with respect to foreign securities of the Portfolios which are maintained in such account shall identify those securities as belonging to the Portfolios and (ii), to the extent permitted and customary in the market in which the account is maintained, State Street shall require that securities so held by the Foreign Sub-Custodian be held separately from any assets of such Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.
SECTION 4.3. FOREIGN SECURITIES SYSTEMS. Foreign securities shall be maintained in a Foreign Securities System in a designated country through arrangements implemented by State Street or a Foreign Sub-Custodian, as applicable, in such country.
SECTION 4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN ASSETS. State Street or a Foreign Sub-Custodian shall release and deliver foreign securities of the Portfolios held by State Street or such Foreign Sub-Custodian, or in a Foreign Securities System account, only upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:
(i) upon the sale of such foreign securities for the Portfolio in accordance with commercially reasonable market practice in the country where such foreign securities are held or traded, including, without limitation: (A) delivery against expectation of receiving later payment; or (B) in the case of a sale effected through a Foreign Securities System, in accordance with the rules governing the operation of the Foreign Securities System;
(ii) in connection with any repurchase agreement related to foreign securities;
(iii)to the depository agent in connection with tender or other similar offers for foreign securities of the Portfolios;
(iv) to the issuer thereof or its agent when such foreign securities are called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name of State Street (or the name of the respective Foreign Sub-Custodian or of any nominee of State Street or such Foreign Sub-Custodian) or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for examination or trade execution in accordance with market custom; provided that in any such case the Foreign Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Foreign Sub-Custodian's own negligence or willful misconduct;
(vii)for exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by the Portfolios requiring a pledge of assets by the Portfolios;
(x) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii)for any other proper corporate purpose, but only upon receipt of Proper Instructions specifying the foreign securities to be delivered and naming the person or persons to whom delivery of such securities shall be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, State Street shall pay out, or direct the respective Foreign Sub-Custodian or the respective Foreign Securities System to pay out, monies of a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio, unless otherwise directed by Proper Instructions, by (A) delivering money to the seller thereof or to a dealer therefor (or an agent for such seller or dealer) against expectation of receiving later delivery of such foreign securities; or (B) in the case of a purchase effected through a Foreign Securities System, in accordance with the rules governing the operation of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of foreign securities of the Portfolio;
(iii)for the payment of any expense or liability of the Portfolio, including but not limited to the following payments: interest, taxes, investment advisory fees, transfer agency fees, fees under this Agreement, legal fees, accounting fees, and other operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange contracts for the Portfolio, including transactions executed with or through State Street or its Foreign Sub-Custodians; (v) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;
(vi) for payment of part or all of the dividends received in respect of securities sold short;
(vii)in connection with the borrowing or lending of foreign securities; and
(viii)for any other proper corporate purpose, but only upon receipt of Proper Instructions specifying the amount of such payment and naming the person or persons to whom such payment is to be made.
4.4.3. MARKET CONDITIONS. Notwithstanding any provision of this Agreement to the contrary, settlement and payment for Foreign Assets received for the account of the Portfolios and delivery of Foreign Assets maintained for the account of the Portfolios may be effected in accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs, including, without limitation, delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) with the expectation of receiving later payment for such Foreign Assets from such purchaser or dealer.
State Street shall provide to the Board the information with respect to custody
and settlement practices in countries in which State Street appoints a Foreign Sub-Custodian described on Schedule C hereto at the time or times set forth on such Schedule. State Street may revise Schedule C from time to time, provided that no such revision shall result in the Board being provided with substantively less information than had been previously provided hereunder.
SECTION 4.5. REGISTRATION OF FOREIGN SECURITIES. The foreign securities maintained in the custody of a Foreign Sub-Custodian (other than bearer securities) shall be registered in the name of the applicable Portfolio or in the name of State Street or in the name of any Foreign Sub-Custodian or in the name of any nominee of the foregoing, and the applicable Fund on behalf of such Portfolio agrees to hold any such nominee harmless from any liability as a holder of record of such foreign securities. State Street or a Foreign Sub-Custodian shall not be obligated to accept securities on behalf of a Portfolio under the terms of this Agreement unless the form of such securities and the manner in which they are delivered are in accordance with reasonable market practice.
SECTION 4.6 BANK ACCOUNTS. State Street shall identify on its books as belonging to each Fund cash (including cash denominated in foreign currencies) deposited with State Street. Where State Street is unable to maintain, or market practice does not facilitate the maintenance of, cash on the books of State Street, a bank account or bank accounts shall be opened and maintained outside the United States on behalf of a Portfolio with a Foreign Sub-Custodian. All accounts referred to in this Section shall be subject only to draft or order by State Street (or, if applicable, such Foreign Sub-Custodian) acting pursuant to the terms of this Agreement to hold cash received by or from or for the account of the Portfolio. Cash maintained on the books of State Street (including its branches, subsidiaries and affiliates), regardless of currency denomination, is maintained in bank accounts established under, and subject to the laws of, The Commonwealth of Massachusetts.
SECTION 4.7. COLLECTION OF INCOME. State Street shall use reasonable commercial efforts to collect all income and other payments with respect to the Foreign Assets held hereunder to which the Portfolios shall be entitled and shall credit such income, as collected, to the applicable Portfolio. In the event that extraordinary measures are required to collect such income, the Fund and State Street shall consult as to such measures and as to the compensation and expenses of State Street relating to such measures.
SECTION 4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities held pursuant to this Section 4, State Street will use reasonable commercial efforts to facilitate the exercise of voting and other shareholder rights, subject always to the laws, regulations and practical constraints that may exist in the country where such securities are issued. The Fund acknowledges that local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of the Fund to exercise shareholder rights.
SECTION 4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES. State Street shall transmit promptly to each Fund written information with respect to Corporate Actions received by State Street via the Foreign Sub-Custodians from issuers of the foreign securities being held for the account of the Portfolios. With respect to tender or exchange offers, State Street shall transmit promptly to a Fund written information with respect to materials so received by State Street from issuers of the foreign securities whose tender or exchange is sought or from the party (or its agents) making the tender or exchange offer. Absent State Street's negligence, misfeasance, or misconduct, State Street shall not be liable for any untimely exercise of any action, right or power in connection
with a Corporate Action unless (i) State Street or the respective Foreign
Sub-Custodian is in actual possession of such foreign securities or property and
(ii) State Street receives Proper Instructions with regard to the Corporate
Action, and both (i) and (ii) occur at least three business days prior to the
date on which State Street is to take action to exercise such right or power.
SECTION 4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which State Street appoints a Foreign Sub-Custodian shall, to the extent possible, require the Foreign Sub-Custodian to exercise reasonable care in the performance of its duties, and to indemnify, and hold harmless, State Street from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the Foreign Sub-Custodian's performance of such obligations. At the Fund's election, the Portfolios shall be entitled to be subrogated to the rights of State Street with respect to any claims against a Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Portfolios have not been made whole for any such loss, damage, cost, expense, liability or claim.
SECTION 4.11 TAX LAW. State Street shall have no responsibility or liability for any obligations now or hereafter imposed on a Fund, the Portfolios or State Street as custodian of the Portfolios by the tax law of the United States or of any state or political subdivision thereof. It shall be the responsibility of each Fund to notify State Street of the obligations imposed on the Fund with respect to the Portfolios or State Street as custodian of the Portfolios by the tax law of countries other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of State Street with regard to such tax law shall be to use reasonable efforts to assist a Fund with respect to any claim for exemption or refund under the tax law of countries for which the Fund has provided such information.
SECTION 4.12. LIABILITY OF CUSTODIAN. State Street shall be liable for the acts or omissions of a Foreign Sub-Custodian to the same extent as set forth with respect to sub- custodians generally in this Agreement and, regardless of whether assets are maintained in the custody of a Foreign Sub-Custodian or a Foreign Securities System, State Street shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism, or any other loss where the Sub- Custodian has otherwise acted with reasonable care.
SECTION 5. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES. State Street shall receive from the distributor for the Shares or from the Transfer Agent and deposit into the account of the appropriate Portfolio such payments as are received for Shares thereof issued or sold from time to time by the Fund. State Street will provide timely notification to the Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose, State Street shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares, State Street is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares, State Street shall honor checks drawn on State Street by a holder of Shares, which checks have been furnished by the Fund to the holder of Shares, when presented to State Street in accordance with such procedures and controls
as are mutually agreed upon from time to time between the Fund and State Street.
SECTION 6. PROPER INSTRUCTIONS. Proper Instructions as used throughout this Agreement means a writing signed or initialed by one or more person or persons as the Board shall have from time to time authorized. Each such writing shall set forth the specific transaction or type of transaction involved, including a specific statement of the purpose for which such action is requested. Each Fund shall provide State Street with a list of persons authorized to give oral instructions. Oral instructions will be considered Proper Instructions if State Street reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. State Street shall give a Fund prompt notice of the receipt of an oral instruction and the Fund shall cause all oral instructions to be confirmed in writing. Proper Instructions may include communications effected directly between electro-mechanical or electronic devices provided that each Fund and State Street agree to security procedures, including but not limited to, the security procedures selected by a Fund in the Funds Transfer Addendum attached hereto. For purposes of this Section, Proper Instructions shall include instructions received by State Street pursuant to any three-party agreement which requires a segregated asset account in accordance with Section 2.10.
SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. State Street may in its discretion, without express authority from a Fund on behalf of each applicable Portfolio: 1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Agreement, provided that all such payments shall be accounted for to a Fund on behalf of the Portfolio; 2) surrender securities in temporary form for securities in definitive form; 3) endorse for collection, in the name of the Portfolio, checks, drafts and other negotiable instruments; and 4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Portfolio except as otherwise directed by the Board.
SECTION 8. EVIDENCE OF AUTHORITY State Street shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper reasonably believed by it to be genuine and to have been properly executed by or on behalf of a Fund. State Street may receive and accept a copy of a resolution certified by the Secretary or an Assistant Secretary of a Fund ("CERTIFIED RESOLUTION") as conclusive evidence (a) of the authority of any person to act in accordance with such resolution or (b) of any determination or of any action by the Board as described in such resolution, and such resolution may be considered as in full force and effect until receipt by State Street of written notice to the contrary.
SECTION 9. DUTIES OF STATE STREET WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF NET ASSET VALUE AND NET INCOME
SECTION 9.1 DELIVERY OF ACCOUNTS AND RECORDS. Fund will turn over or cause to be turned over to State Street all accounts and records needed by State Street to perform its duties and responsibilities hereunder fully and properly. State Street may rely conclusively on the completeness and correctness of such accounts and records.
SECTION 9.2 ACCOUNTS AND RECORDS. State Street will prepare and maintain, under the direction of and as interpreted by each Fund, each Fund's or Portfolio's accountants and/or other advisors, in complete, accurate and current form such accounts and records: (1) required to be maintained by a Fund with respect to portfolio transactions under Section 31(a) of the 1940 Act and the rules and regulations from time to time adopted thereunder; (2) required as a
basis for calculation of each Portfolio's net asset value; and (3) as otherwise agreed upon by the parties. Fund will advise State Street in writing of all applicable record retention requirements, other than those set forth in the 1940 Act. State Street will preserve such accounts and records in the manner and for the periods prescribed in the 1940 Act or for such longer period as is agreed upon by the parties. Each Fund will furnish, in writing or its electronic or digital equivalent, accurate and timely information needed by State Street to complete such accounts and records when such information is not readily available from generally accepted securities industry services or publications. Upon notification from State Street, a Fund will prepare and maintain the books and records as set forth above on a "back-up" basis from the date hereof until completion of the conversion period in the event that State Street is unable to do so as a result of events or circumstances beyond the reasonable control of State Street, including, without limitation, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, work stoppages, natural disasters, or other similar events or acts.
SECTION 9.3 ACCOUNTS AND RECORDS PROPERTY OF EACH FUND. State Street acknowledges that all of the accounts and records maintained by State Street pursuant hereto are the property of a Fund, and will be made available to that Fund for inspection or reproduction within a reasonable period of time, upon demand. State Street will assist a Fund's independent auditors, or upon the prior written approval of a Fund, or upon demand, any regulatory body, in any requested review of that Fund's accounts and records but the Fund will reimburse State Street for all expenses and employee time invested in any such review outside of routine and normal periodic reviews. Upon receipt from a Fund of the necessary information or instructions, State Street will supply information from the books and records it maintains for the Fund that the Fund may reasonably request for tax returns, questionnaires, periodic reports to shareholders and such other reports and information requests as the Fund and State Street may agree upon from time to time.
SECTION 9.4 ADOPTION OF PROCEDURES. State Street and each Fund may from time to time adopt such procedures as they agree upon, and State Street may conclusively assume that no procedure approved or directed by a Fund, a Fund's or Portfolio's accountants or other advisors conflicts with or violates any requirements of the prospectus, articles of incorporation, bylaws, declaration of trust, any applicable law, rule or regulation, or any order, decree or agreement by which the Fund may be bound. Each Fund will be responsible for notifying State Street of any changes in statutes, regulations, rules, requirements or policies which may impact State Street responsibilities or procedures under this Agreement.
SECTION 9.5 VALUATION OF ASSETS. State Street will value the assets of each Portfolio in accordance with a Fund's Instructions utilizing the pricing sources designated by that Fund ("Pricing Sources") on the Price Source and Methodology Authorization Matrix, incorporated herein by this reference.
SECTION 10. RECORDS State Street shall with respect to each Portfolio create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of a Fund under the 1940 Act, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of State Street be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the SEC. State Street shall, at a Fund's request, supply the Fund with a tabulation of securities owned by each Portfolio and held by State Street and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and State Street, include certificate numbers in
such tabulations.
SECTION 11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT State Street shall take all reasonable action, as a Fund on behalf of each applicable Portfolio may from time to time request, to obtain from year to year favorable opinions from the Fund's independent accountants with respect to its activities hereunder in connection with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual reports to the SEC and with respect to any other requirements thereof.
SECTION 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS State Street shall provide each Fund, on behalf of each of the applicable Portfolios at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a U.S. Securities System or a Foreign Securities System, relating to the services provided by State Street under this Agreement; such reports, shall be of sufficient scope and in sufficient detail, as may reasonably be required by a Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state.
SECTION 13. COMPENSATION OF STATE STREET State Street shall be entitled to reasonable compensation for its services and expenses as custodian and recordkeeper, as agreed upon from time to time between each Fund on behalf of each applicable Portfolio and State Street. The initial Fee Schedule is attached hereto as Exhibit B.
SECTION 14. RESPONSIBILITY OF CUSTODIAN So long as and to the extent that it is in the exercise of reasonable care, State Street shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. State Street shall be held to the exercise of reasonable care in carrying out the provisions of this Agreement, but shall be kept indemnified by and shall be without liability to a Fund for any action taken or omitted by it in good faith without negligence, including, without limitation, acting in accordance with any Proper Instruction. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. State Street shall be without liability to a Fund and the applicable Portfolios for any loss, liability, claim or expense resulting from or caused by anything which is part of Country Risk (as defined in Section 3 hereof), including without limitation nationalization, expropriation, currency restrictions, or acts of war, revolution, riots or terrorism.
Except as may arise from State Street's own negligence or willful misconduct or the negligence or willful misconduct of a sub-custodian or agent, State Street shall be without liability to a Fund for any loss, liability, claim or expense resulting from or caused by; (i) events or circumstances beyond the reasonable control of State Street or any sub-custodian or Securities System or any agent or nominee of any of the foregoing, including, without limitation, the interruption, suspension or restriction of trading on or the closure of any securities market, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, work stoppages, natural disasters, or other similar events or acts; (ii) errors by the Fund or its duly-authorized investment manager or investment advisor in their
instructions to State Street provided such instructions have been in accordance
with this Agreement; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to State Street's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of State Street, the Fund,
State Street's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits;
(vi) delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction.
State Street shall be liable for the acts or omissions of a Foreign Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth with respect to sub-custodians generally in this Agreement.
If a Fund on behalf of a Portfolio requires State Street to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of State Street, result in State Street or its nominee assigned to the Fund or the Portfolio being liable for the payment of money or incurring liability of some other form, the Fund on behalf of the Portfolio, as a prerequisite to requiring State Street to take such action, shall provide indemnity to State Street in an amount and form satisfactory to it.
If a Fund requires State Street, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement) or in the event that State Street or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Agreement, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should the Fund fail to repay State Street promptly, State Street shall be entitled to utilize available cash and to dispose of such Portfolio's assets to the extent necessary to obtain reimbursement.
State Street is not responsible or liable for, and each Fund will indemnify and hold State Street harmless from and against, any and all costs, expenses, losses, damages, charges, counsel fees (including, without limitation, disbursements and the allocable cost of in-house counsel), payments and liabilities which may be asserted against or incurred by State Street or for which State Street may be held to be liable, arising out of or attributable to any error, omission, inaccuracy or other deficiency in any Portfolio's accounts and records or other information provided to State Street by or on behalf of a Portfolio, including the accuracy of the prices quoted by the Pricing Sources or for the information supplied by that Fund to value the assets, or the failure of that Fund to provide, or provide in a timely manner, any accounts, records, or information needed by State Street to perform its duties hereunder
State Street shall only be liable for direct damages that are the result of State Street's action or failure to act.
State Street agrees to maintain commercially reasonable back-up and disaster
recovery procedures and plans designed to minimize any loss of data or service interruption. Such procedures and plans include each Fund's provision of certain services as set forth more specifically in Section 9.2 above.
SECTION 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT This Agreement shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party, such termination to take effect not sooner than sixty (60) days after the date of such delivery or mailing; provided, however, that the Fund shall not amend or terminate this Agreement in contravention of any applicable federal or state regulations, or any provision of the Fund's Declaration of Trust, Articles of Incorporation, or other governing documents, and further provided, that a Fund on behalf of one or more of the Portfolios may at any time by action of its Board (i) substitute another bank or trust company for State Street by giving notice as described above to State Street, or (ii) immediately terminate this Agreement in the event of the appointment of a conservator or receiver for State Street by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. Upon termination of the Agreement:
1) each Fund on behalf of each applicable Portfolio shall (a) pay to State Street such compensation as may be due as of the date of such termination and shall likewise reimburse State Street for its reasonable costs, expenses and disbursements, (b) designate a successor recordkeeper (which may be the Fund) by Proper Instructions; and (c) designate a successor custodian by Proper Instruction.
2) Upon payment of all sums due to it from a Fund, State Street shall (a) deliver all accounts and records to the successor recordkeeper (or, if none, to that Fund) at the office of State Street, and (b) deliver to such successor custodian at the office of State Street, duly endorsed and in the form for transfer, all securities of each applicable Portfolio then held by it hereunder and shall transfer to an account of the successor custodian all of the securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, State Street shall, in like manner, upon receipt of a Certified Resolution, deliver at the office of State Street and transfer such securities, funds and other properties in accordance with such resolution.
In the event that no written order designating a successor custodian or Certified Resolution shall have been delivered to State Street on or before the date when such termination shall become effective, then State Street shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by State Street on behalf of each applicable Portfolio and all instruments held by State Street relative thereto and all other property held by it under this Agreement on behalf of each applicable Portfolio, and to transfer to an account of such successor custodian all of the securities of each such Portfolio held in any Securities System. Thereafter, such bank or trust company shall be the successor of State Street under this Agreement.
In the event that accounts, records, securities, funds and other properties
remain in the possession of State Street after the date of termination hereof owing to failure of a Fund to procure the Certified Resolution to appoint a successor custodian, State Street shall be entitled to fair compensation for its services during such period as State Street retains possession of such accounts, records, securities, funds and other properties and the provisions of this Agreement relating to the duties and obligations of State Street shall remain in full force and effect.
SECTION 16. INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with the operation of this Agreement, State Street and each Fund, on behalf of each of the applicable Portfolios, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Fund's Declaration of Trust, Articles of Incorporation, or other governing documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement.
SECTION 17. ADDITIONAL FUNDS. In the event that a Fund establishes one or more series with respect to which it desires to have State Street render services as custodian and recordkeeper under the terms hereof, it shall so notify State Street in writing, and if State Street agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder.
SECTION 18. MASSACHUSETTS LAW TO APPLY. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts.
SECTION 19. PRIOR AGREEMENTS. This Agreement supersedes and terminates, as of the date hereof, all prior Agreements between each Fund on behalf of each of the Portfolios and State Street relating to the custody or recordkeeper of a Fund's assets.
SECTION 20. NOTICES. Any notice, instruction or other instrument required to be given hereunder may be delivered in person to the offices of the parties as set forth herein during normal business hours or delivered prepaid registered mail or by telex, cable or telecopy to the parties at the following addresses or such other addresses as may be notified by any party from time to time.
To a Fund: FUND NAME
90 Hudson Street
Jersey City, NY 07302-3972
Attention: Tracie Richter
Telephone: 201 395-2118
Telecopy: 201-395-3118
To State Street: STATE STREET BANK AND TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64105
Attention: Vice President, Custody
Telephone: 816-871-9478
Telecopy: 816-871-9648
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Such notice, instruction or other instrument shall be deemed to have been served in the case of a registered letter at the expiration of five business days after posting, in the case of cable twenty-four hours after dispatch and, in the case
of telex, immediately on dispatch and if delivered outside normal business hours it shall be deemed to have been received at the next time after delivery when normal business hours commence and in the case of cable, telex or telecopy on the business day after the receipt thereof. Evidence that the notice was properly addressed, stamped and put into the post shall be conclusive evidence of posting.
SECTION 21. REPRODUCTION OF DOCUMENTS. This Agreement and all schedules, addenda, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 22. REMOTE ACCESS SERVICES ADDENDUM. State Street and each Fund agree to be bound by the terms of the Remote Access Services Letter, incorporated herein by this reference.
SECTION 23. NO ASSIGNMENT. Neither a Fund nor State Street shall assign any rights or obligations under this Agreement to any other party without the written consent to such assignment signed by both the Fund and State Street. State Street further agrees that its Kansas City location will be primarily responsible for the performance of the services rendered hereunder unless the Fund agrees otherwise.
SECTION 24. TRUST NOTICE. If a Fund is a Trust, notice is hereby given that this Agreement has been executed on behalf of Fund by the undersigned duly authorized representative of Fund in his/her capacity as such and not individually; and that the obligations of this Agreement are binding only upon the assets and property of Fund and not upon any trustee, officer of shareholder of Fund individually, and, if the Fund is a Massachusetts business trust, that a copy of Fund's Trust Agreement and all amendments thereto is on file with the Secretary of State of Massachusetts.
SECTION 25. SHAREHOLDER COMMUNICATIONS ELECTION. SEC Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, State Street needs the Fund to indicate whether it authorizes State Street to provide the Fund's name, address, and share position to requesting companies whose securities the Fund owns. If a Fund tells State Street "no", State Street will not provide this information to requesting companies. If a Fund tells State Street "yes" or does not check either "yes" or "no" below, State Street is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For each Fund's protection, the Rule prohibits the requesting company from using the Fund's name and address for any purpose other than corporate communications. Please indicate below whether each Fund consents or objects by checking one of the alternatives below.
YES [ ] State Street is authorized to release the Fund's name, address, and
share positions.
NO [X] State Street is not authorized to release the Fund's name, address, and
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share positions.
SECTION 26. LIABILITY OF PORTFOLIOS SEVERAL AND NOT JOINT. The obligations of a Portfolio under this Agreement are enforceable solely against that Portfolio and its assets
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of November 1, 2001.
ON BEHALF OF EACH OF THE LEGAL ENTITIES
LISTED ON EXHIBIT A, ATTACHED HERETO SIGNATURE ATTESTED TO BY:
By: /s/ JOAN A. BINSTOCK By: /s/ TRACIE E. RICHTER Name: Joan A. Binstock Name: Tracie E. Richter Title: Vice President Title: Vice President |
STATE STREET BANK AND TRUST COMPANY SIGNATURE ATTESTED TO BY:
By: /s/ W. ANDREW FRY By: /s/ STEPHEN HILLIARD Name: W. Andrew Fry Name: Stephen Hilliard Title: Senior Vice President Title: Senior Vice President |
EXHIBIT A
ENTITY AND SERIES TYPE OF JURISDICTION
ENTITY
Lord Abbett Developing Growth Fund, Inc. Corporation Maryland
Lord Abbett Affiliated Fund, Inc. Corporation Maryland
Lord Abbett Bond-Debenture Fund, Inc. Corporation Maryland
Lord Abbett Mid-Cap Value Fund, Inc. Corporation Maryland
Lord Abbett Large-Cap Growth Fund Business Trust Delaware
Lord Abbett Blend Trust Business Trust Delaware
Lord Abbett Small-Cap Blend Fund
Lord Abbett Securities Trust Business Trust Delaware
Alpha Series
Lord Abbett All Value Fund
International Series
Lord Abbett Micro-Cap Growth Fund
Lord Abbett Micro-Cap Value Fund
World Bond-Debenture Series
Lord Abbett Research Fund, Inc. Corporation Maryland
Lord Abbett Growth Opportunities Fund
Large-Cap Series
Small-Cap Value Series
Lord Abbett Investment Trust Business Trust Delaware
Balanced Series
Core Fixed Income Fund
Lord Abbett High Yield Fund
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Limited Duration U.S. Government
Securities Series
Lord Abbett Total Return Fund
U.S. Government Securities Series
Lord Abbett Series Fund, Inc. Corporation Maryland
Bond-Debenture Portfolio
Growth and Income Portfolio
International Portfolio
Mid-Cap Value Portfolio
Lord Abbett Global Fund, Inc. Corporation Maryland
Equity Series
Income Series
Lord Abbett Tax-Free Income Fund, Inc. Corporation Maryland
Lord Abbett California Tax-Free
Income Fund
Lord Abbett Connecticut Tax-Free
Income Fund
Lord Abbett Hawaii Tax-Free
Income Fund
Lord Abbett Minnesota Tax-Free
Income Fund
Lord Abbett Missouri Tax-Free
Income Fund
Lord Abbett National Tax-Free
Income Fund
Lord Abbett New Jersey Tax-Free
Income Fund
Lord Abbett New York Tax-Free
Income Fund
Lord Abbett Texas Tax-Free
Income Fund
Lord Abbett Washington Tax-Free
Income Fund
Lord Abbett Tax-Free Income Trust Business Trust Massachusetts
Florida Series
Georgia Series
Michigan Series
Pennsylvania Series
Lord Abbett U.S. Government Securities
Money Market Fund, Inc. Corporation Maryland
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EXHIBIT B
FEE SCHEDULE
REMOTE ACCESS SERVICES ADDENDUM
To Custody and Investment Accounting Agreement by and between State Street Bank and Trust Company and the Lord, Abbett Fund Family dated November 1, 2001
State Street has developed proprietary accounting and other systems, and has acquired licenses for other such systems, which it utilizes in conjunction with the services we provide to you (the "Systems"). In this regard, we maintain certain information in databases under our control and ownership that we make available on a remote basis to our customers (the "Remote Access Services").
The Services. This addendum shall govern use of all Systems that State Street may from time to time agree to provide you, the Customer, and your designated investment advisors, consultants or other third parties authorized by State Street who agree to abide by the terms of this Addendum ("Authorized Designees") in order to provide Remote Access Services for the purpose of obtaining and analyzing reports and information.
Security Procedures. You agree to comply, and to cause your Authorized Designees to comply, with remote access operating standards and procedures and with user identification or other password control requirements and other security procedures as may be issued from time to time by State Street for use of the Systems and access to the Remote Access Services. You agree to advise State Street immediately in the event that you learn or have reason to believe that any person to whom you have given access to the Systems or the Remote Access Services has violated or intends to violate the terms of this Addendum and you will cooperate with State Street in seeking injunctive or other equitable relief. You agree to discontinue use of the Systems and Remote Access Services, if requested, for any security reasons cited by State Street.
Fees. Fees and charges (if any) for the use of the Systems and the Remote Access Services and related payment terms shall be as set forth in the fee schedule in effect from time to time between the parties (the "Fee Schedule"). You shall be responsible for any tariffs, duties or taxes imposed or levied by any government or governmental agency by reason of the transactions contemplated by this Agreement, including, without limitation, federal, state and local taxes, use, value added and personal property taxes (other than income, franchise or similar taxes which may be imposed or assessed against State Street). Any claimed exemption from such tariffs, duties or taxes shall be supported by proper documentary evidence delivered to State Street.
Proprietary Information/Injunctive Relief. The Systems and Remote Access Services and the databases, computer programs, screen formats, report formats, interactive design techniques, formulae, processes, systems, software, know-how, algorithms, programs, training aids, printed materials, methods, books, records, files, documentation and other information made available to you by State Street as part of the Remote Access Services and through the use of the Systems and all copyrights, patents, trade secrets and other proprietary rights of State Street and its relevant licensors related thereto are the exclusive, valuable and confidential property of State Street and its relevant licensors, as applicable (the "Proprietary Information"). You agree on behalf of yourself and your Authorized Designees to keep the Proprietary Information confidential and to limit access to your employees and Authorized Designees (under a similar duty of confidentiality) who require access to the Systems for the purposes intended. The foregoing shall not apply to Proprietary Information in the public domain or required by law to be made public.
You agree to use the Remote Access Services only in connection with the proper purposes of this Addendum. You will not, and will cause your employees and Authorized Designees not to, (i) permit any third party to use the Systems or the Remote Access Services, (ii) sell, rent, license or otherwise use the Systems or the Remote Access Services in the operation of a service bureau or for any purpose other than as expressly authorized under this Addendum, (iii) use the Systems or the Remote Access Services for any fund, trust or other investment vehicle without the prior written consent of State Street, or (iv)
allow or cause any information transmitted from State Street's databases, including data from third party sources, available through use of the Systems or the Remote Access Services, to be redistributed or retransmitted for other than use for or on behalf of yourself, as our Customer.
You agree that neither you nor your Authorized Designees will modify the Systems in any way, enhance or otherwise create derivative works based upon the Systems, nor will you or your Authorized Designees reverse engineer, decompile or otherwise attempt to secure the source code for all or any part of the Systems.
You acknowledge that the disclosure of any Proprietary Information, or of any information which at law or equity ought to remain confidential, will immediately give rise to continuing irreparable injury inadequately compensable in damages at law, and that State Street and its licensor, if applicable, shall be entitled to obtain immediate injunctive relief against the breach or threatened breach of any of the foregoing undertakings, in addition to any other legal remedies which may be available.
LIMITED WARRANTIES. State Street represents and warrants that it has the right to grant access to the Systems and to provide the Remote Access Services contemplated herein. Because of the nature of computer information technology, including but not limited to the use of the Internet, and the necessity of relying upon third-party sources, and data and pricing information obtained from third parties, the Systems and Remote Access Services are provided "AS IS", and you and your Authorized Designees shall be solely responsible for the investment decisions, results obtained, regulatory reports and statements produced using the Remote Access Services. State Street and its relevant licensors will not be liable to you or your Authorized Designees for any direct or indirect, special, incidental, punitive or consequential damages arising out of or in any way connected with the Systems or the Remote Access Services, nor shall either party be responsible for delays or nonperformance under this Addendum arising out of any cause or event beyond such party's control.
EXCEPT AS EXPRESSLY SET FORTH IN THIS ADDENDUM, STATE STREET FOR ITSELF AND ITS RELEVANT LICENSORS EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE SYSTEM AND THE SERVICES TO BE RENDERED HEREUNDER, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE.
INFRINGEMENT. State Street will defend or, at our option, settle any claim or action brought against you to the extent that it is based upon an assertion that access to any proprietary System developed and owned by State Street or use of the Remote Access Services through any such proprietary System by you under this Addendum constitutes direct infringement of any United States patent or copyright or misappropriation of a trade secret, provided that you notify State Street promptly in writing of any such claim or proceeding and cooperate with State Street in the defense of such claim or proceeding. Should any such proprietary System or the Remote Access Services accessed thereby or any part thereof become, or in State Street's opinion be likely to become, the subject of a claim of infringement or the like under the patent or copyright or trade secret laws of the United States, State Street shall have the right, at State Street's sole option, to (i) procure for you the right to continue using such System or Remote Access Services, (ii) replace or modify such System or Remote Access Services so that the System or the Remote Access Services becomes noninfringing, or (iii) terminate access to the Remote Access Services without further obligation.
TERMINATION. Either party may terminate access to the Remote Access
Services (i) for any reason by giving the other party at least one-hundred and eighty (180) days' prior written notice in the case of notice of termination by State Street to you or thirty (30) days' notice in the case of notice from you to State Street of termination, or (ii) immediately for failure of the other party to comply with any material term and condition of the Addendum by giving the other party written notice of termination. In the event of termination, you will return to State Street all Proprietary Information in your possession or in the possession of your Authorized Designees. The foregoing provisions with respect to confidentiality and infringement will survive termination for a period of three (3) years.
MISCELLANEOUS. Except as provided in the next sentence, this Addendum constitutes our entire understanding with respect to access to the Systems and the Remote Access Services. If any State Street custody, accounting or other services agreement with you contains terms and conditions relating to computer systems or data access, this Addendum shall constitute an amendment and supplement to them, and in the event of any inconsistency the provisions providing the greatest benefit to State Street shall control. This Addendum cannot be modified or altered except in a writing duly executed by both of us and shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.
STATE STREET
SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Country Subcustodian Non-Mandatory
Depositories
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale de Banque --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano S.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada State Street Trust Company Canada --
Chile Citibank, N.A. Deposito Central
de Valores S.A.
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
Costa Rica Banco BCT S.A. --
Croatia Privredna Banka Zagreb d.d --
Cyprus The Cyprus Popular Bank Ltd. --
Czech Republic Ceskoslovenska Obchodni --
Banka, A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Merita Bank Limited --
France Banque Paribas --
Germany Dresdner Bank AG --
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Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A. The Bank of Greece,
System for Monitoring
Transactions in
Securities in Book-
Entry Form
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
Iceland Icebank Ltd.
India Deutsche Bank AG --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and Merchant --
Bank Ltd.
Japan The Fuji Bank, Limited Japan Securities
Depository Center
Sumitomo Bank, Ltd.
Jordan British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
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Republic of Korea The Hongkong and Shanghai Banking
Corporation Limited
Latvia JSC Hansabank-Latvija --
Lebanon British Bank of the Middle East
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa -
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse
Oman British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
Poland Citibank (Poland) S.A. --
Bank Polska Kasa Opieki S.A.
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Portugal Banco Comercial Portugus --
Romania ING Bank N.V. --
Russia Credit Suisse First Boston AO, Moscow --
(as delegate of Credit Suisse
First Boston, Zurich)
Singapore The Development Bank --
of Singapore Limited
Slovak Republic Ceskoslovenska Obchodni Banka, A.S. --
Slovenia Bank Austria d.d. Ljubljana --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland UBS AG --
Taiwan - R.O.C. Central Trust of China --
Thailand Standard Chartered Bank --
Trinidad & Tobago Republic Bank Limited --
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
Ottoman Bank
Ukraine ING Bank, Ukraine --
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United Kingdom State Street Bank and Trust Company, --
London Branch
Uruguay Citibank, N.A. --
Venezuela Citibank, N.A. --
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
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Euroclear (The Euroclear System)/State Street London Limited
Cedel, S.A. (Cedel Bank, socit anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
STATE STREET
SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Reserve Bank Information and Transfer System
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium Caisse Interprofessionnelle de Depot et
de Virement de Titres S.A.
Banque Nationale de Belgique
Brazil Companhia Brasileira de Liquidacao e
Custodia (CBLC)
Bolsa de Valores de Rio de Janeiro
All SSB clients presently use CBLC
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Central de Custodia e de Liquidacao Financeira
de Titulos
Bulgaria Central Depository AD
Bulgarian National Bank
Canada The Canadian Depository for Securities Limited
People's Republic Shanghai Securities Central Clearing and
of China Registration Corporation
Shenzhen Securities Central Clearing Co., Ltd.
Costa Rica Central de Valores S.A. (CEVAL)
Croatia Ministry of Finance
National Bank of Croatia
Czech Republic Stredisko cennych papiru
Czech National Bank
Denmark Vaerdipapircentralen (the Danish Securities Center)
Egypt Misr Company for Clearing, Settlement,
and Central Depository
Estonia Eesti Vaartpaberite Keskdepositoorium
Finland The Finnish Central Securities Depository
France Societe Interprofessionnelle pour la Compensation des
Valeurs Mobilires (SICOVAM)
Germany Deutsche Borse Clearing AG
Greece The Central Securities Depository
(Apothetirion Titlon AE)
Hong Kong The Central Clearing and Settlement System
Central Money Markets Unit
Hungary The Central Depository and Clearing
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House (Budapest) Ltd. (KELER)
[Mandatory for Gov't Bonds only;
SSB does not use for other securities]
India The National Securities Depository Limited
Indonesia Bank Indonesia
Ireland Central Bank of Ireland
Securities Settlement Office
Israel The Tel Aviv Stock Exchange Clearing House Ltd.
Bank of Israel
Italy Monte Titoli S.p.A.
Banca d'Italia
Ivory Coast Depositaire Central - Banque de Reglement
Jamaica The Jamaican Central Securities Depository
Japan Bank of Japan Net System
Kenya Central Bank of Kenya
Republic of Korea Korea Securities Depository Corporation
Latvia The Latvian Central Depository
Lebanon The Custodian and Clearing Center of
Financial Instruments for Lebanon
and the Middle East (MIDCLEAR) S.A.L.
The Central Bank of Lebanon
Lithuania The Central Securities Depository of Lithuania
Malaysia The Malaysian Central Depository Sdn. Bhd.
Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping System
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Mauritius The Central Depository & Settlement Co. Ltd.
Mexico S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de Valores)
Morocco Maroclear
The Netherlands Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. (NECIGEF)
De Nederlandsche Bank N.V.
New Zealand New Zealand Central Securities Depository Limited
Norway Verdipapirsentralen (the Norwegian
Registry of Securities)
Oman Muscat Securities Market
Pakistan Central Depository Company of Pakistan Limited
Peru Caja de Valores y Liquidaciones S.A. (CAVALI)
Philippines The Philippines Central Depository, Inc.
The Registry of Scripless Securities
(ROSS) of the Bureau of the Treasury
Poland The National Depository of Securities
(Krajowy Depozyt Papierow Wartos'ciowych)
Central Treasury Bills Registrar
Portugal Central de Valores Mobiliarios (Central)
Romania National Securities Clearing, Settlement and
Depository Co.
Bucharest Stock Exchange Registry Division
Singapore The Central Depository (Pte)
Limited
Monetary Authority of Singapore
Slovak Republic Stredisko Cennych Papierov
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National Bank of Slovakia
Slovenia Klirinsko Depotna Druzba d.d.
South Africa The Central Depository Limited
Spain Servicio de Compensacion y
Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
Sri Lanka Central Depository System (Pvt) Limited
Sweden Vardepapperscentralen AB
(the Swedish Central Securities Depository)
Switzerland Schweizerische Effekten - Giro AG
Taiwan - R.O.C. The Taiwan Securities Central
Depository Co., Ltd.
Thailand Thailand Securities Depository Company Limited
Tunisia Societe Tunisienne Interprofessionelle de
Compensation et de Depot de Valeurs Mobilieres
Central Bank of Tunisia
Tunisian Treasury
Turkey Takas ve Saklama Bankasi A.S. (TAKASBANK)
Central Bank of Turkey
Ukraine The National Bank of Ukraine
United Kingdom The Bank of England,
The Central Gilts Office and
The Central Moneymarkets Office
Uruguay Central Bank of Uruguay
Venezuela Central Bank of Venezuela
Zambia Lusaka Central Depository Limited
Bank of Zambia
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* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE C
MARKET INFORMATION
Publication/Type of Information Brief Description
(Frequency)
The Guide to Custody in World Markets An overview of safekeeping and
(annually) settlement practices and procedures
in each market in which State Street
Bank and Trust Company offers
custodial services.
Global Custody Network Review Information relating to the operating
(annually) history and structure of depositories
and subcustodians located in the
markets in which State Street Bank
and Trust Company offers custodial
services, including transnational
depositories.
Global Legal Survey With respect to each market in which
(annually) State Street Bank and Trust Company
offers custodial services, opinions
relating to whether local law
restricts (i) access of a fund's
independent public accountants to
books and records of a Foreign Sub-
Custodian or Foreign Securities
System, (ii) the Fund's ability to
recover in the event of bankruptcy or
insolvency of a Foreign Sub-Custodian
or Foreign Securities System, (iii)
the Fund's ability to recover in the
event of a loss by a Foreign Sub-
Custodian or Foreign Securities
System, and (iv) the ability of a
foreign investor to convert cash and
cash equivalents to U.S. dollars.
Subcustodian Agreements Copies of the subcustodian contracts
(annually) State Street Bank and Trust Company
has entered into with each
subcustodian in the markets in which
State Street Bank and Trust Company
offers subcustody services to its US
mutual fund clients.
39
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Network Bulletins (weekly): Developments of interest to investors
in the markets in which State Street
Bank and Trust Company offers
custodial services.
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Foreign Custody Advisories (as necessary): With respect to markets in which State Street Bank and Trust Company offers custodial services which exhibit special custody risks, developments which may impact State Street's ability to deliver expected levels of service.