LORD ABBETT MUNICIPAL INCOME FUND INC (Form: 485BPOS, Received: 01/25/2013 15:22:59)

Securities Act File No. 002-88912
Investment Company Act File No. 811-03942


	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549

	FORM N-1A

	REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933	x

	Pre-Effective Amendment No.	o

	Post-Effective Amendment No. 65	x

	and/or

	REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	x

	Amendment No. 66	x

LORD ABBETT MUNICIPAL INCOME FUND, INC .

(Exact Name of Registrant as Specified in Charter)


	90 Hudson Street, Jersey City, New Jersey		07302-3973

	(Address of Principal Executive Office)		(Zip Code)

Registrant’s Telephone Number, including Area Code: (800) 201-6984

Thomas R. Phillips, Esq.

Vice President and Assistant Secretary

90 Hudson Street, Jersey City, New Jersey 07302-3973

(Name and Address of Agent for Service)


It is proposed that this filing will become effective (check appropriate box):
	o	immediately upon filing pursuant to paragraph (b)

	x	on February 1, 2013 pursuant to paragraph (b)

	o	60 days after filing pursuant to paragraph (a)(1)

	o	on (date) pursuant to paragraph (a) (1)

	o	75 days after filing pursuant to paragraph (a)(2)

	o	on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

	o	this post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Lord Abbett
Municipal Income Fund

PROSPECTUS

FEBRUARY 1, 2013


SHORT DURATION TAX FREE FUND	CLASS	TICKER	CLASS	TICKER
	A	LSDAX	F	LSDFX
	B	N/A	I	LISDX
	C	LSDCX
INTERMEDIATE TAX FREE FUND	CLASS	TICKER	CLASS	TICKER
	A	LISAX	F	LISFX
	B	LISBX	I	LAIIX
	C	LISCX	P	LISPX
AMT FREE MUNICIPAL BOND FUND	CLASS	TICKER	CLASS	TICKER
	A	LATAX	F	LATFX
	C	LATCX	I	LMCIX
NATIONAL TAX FREE FUND	CLASS	TICKER	CLASS	TICKER
	A	LANSX	F	LANFX
	B	LANBX	I	LTNIX
	C	LTNSX	P	N/A
HIGH YIELD MUNICIPAL BOND FUND	CLASS	TICKER	CLASS	TICKER
	A	HYMAX	F	HYMFX
	B	HYMBX	I	HYMIX
	C	HYMCX	P	HYMPX
CALIFORNIA TAX FREE FUND	CLASS	TICKER	CLASS	TICKER
	A	LCFIX	I	CAILX
	C	CALAX	P	N/A
	F	LCFFX
NEW JERSEY TAX FREE FUND	CLASS	TICKER	CLASS	TICKER
	A	LANJX	I	LINJX
	F	LNJFX	P	N/A
NEW YORK TAX FREE FUND	CLASS	TICKER	CLASS	TICKER
	A	LANYX	I	NYLIX
	C	NYLAX	P	N/A
	F	LNYFX

The Securities and Exchange Commission has not approved or disapproved of these securities or determined whether this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

INVESTMENT PRODUCTS: NOT FDIC INSURED–NO BANK GUARANTEE–MAY LOSE VALUE

TABLE OF CONTENTS

WHAT YOU
SHOULD KNOW
ABOUT
THE FUNDS

Short Duration Tax Free Fund

3

Intermediate Tax Free Fund

13

AMT Free Municipal Bond Fund

23

National Tax Free Fund

33

High Yield Municipal Bond Fund

42

California Tax Free Fund

52

New Jersey Tax Free Fund

61

New York Tax Free Fund

70

MORE
INFORMATION
ABOUT
THE FUNDS

Investment Objective

80

Principal Investment Strategies

80

Principal Risks

87

Disclosure of Portfolio Holdings

94

Management and Organization of the Funds

94

INFORMATION
FOR MANAGING
YOUR FUND
ACCOUNT

Choosing a Share Class

97

Sales Charges

103

Sales Charge Reductions and Waivers

104

Financial Intermediary Compensation

108

Purchases

112

Exchanges

114

Redemptions

115

Account Services and Policies

116

Distributions and Taxes

123

TABLE OF CONTENTS

FINANCIAL
INFORMATION

Short Duration Tax Free Fund

128

Intermediate Tax Free Fund

132

AMT Free Municipal Bond Fund

138

National Tax Free Fund

142

High Yield Municipal Bond Fund

147

California Tax Free Fund

153

New Jersey Tax Free Fund

157

New York Tax Free Fund

160

SHORT DURATION TAX FREE FUND

INVESTMENT OBJECTIVE

The investment objective of the Fund is to seek the maximum amount of interest income exempt from federal income tax as is consistent with reasonable risk.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and certain members of your family invest, or agree to invest in the future, at least $100,000 in the Lord Abbett Family of Funds. More information about these and other discounts is available from your financial professional and in “Sales Charge Reductions and Waivers” on page 104 of the prospectus and “Purchases, Redemptions, Pricing, and Payments to Dealers” on page 8-1 of the statement of additional information (“SAI”).


Shareholder Fees (Fees paid directly from your investment)

Class	A	B	C	F and I

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	2.25%	None	None	None

Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)	None ⁽¹⁾	5.00%	1.00% ⁽²⁾	None

PROSPECTUS – SHORT DURATION TAX FREE FUND

Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)

Class

A

B

C

F

I

Management Fees

0.40%

0.40%

0.40%

0.40%

0.40%

Distribution and Service (12b-1) Fees

0.20%

1.00%

0.86% ⁽³⁾

0.10%

None

Other Expenses

0.10%

0.10%

0.10%

0.10%

0.10%

Total Annual Fund Operating Expenses

0.70%

1.50%

1.36%

0.60%

0.50%

Fee Waiver and/or Expense Reimbursement ⁽⁴⁾⁽⁵⁾

(0.07)%

(0.07)%

(0.07)%

(0.07)%

(0.07)%

Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement ^(4)(5)(6)

0.63%

1.43%

1.29%

0.53%

0.43%

⁽¹⁾

A contingent deferred sales charge (“CDSC”) of 1.00% may be assessed on certain Class A shares purchased or acquired without a sales charge if they are redeemed before the first day of the month of the one-year anniversary of the purchase.

⁽²⁾

A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.

⁽³⁾

The 12b-1 fee the Fund will pay on Class C shares will be a blended rate calculated based on (i) 1.00% of the Fund’s average daily net assets attributable to shares held for less than one year and (ii) 0.80% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C shareholders of the Fund will bear 12b-1 fees at the same rate.

⁽⁴⁾

This amount has been updated from fiscal year amounts to reflect the current fee waiver and/or expense limitation agreement.

⁽⁵⁾

For the period February 1, 2013 through January 31, 2014, Lord, Abbett & Co. LLC has contractually agreed to waive its fees and reimburse expenses to the extent necessary to limit total net annual operating expenses for each class, excluding 12b-1 fees and interest related expenses, to an annual rate of 0.43%. This agreement may be terminated only by the Fund’s Board of Directors.

⁽⁶⁾

This amount includes interest and related expenses from inverse floaters of less than 0.01%.

Example

The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund at the 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, that dividends and distributions are reinvested, and that the Fund’s operating expenses remain the same (except that the example takes into account the fee waiver and expense limitation agreement between the Fund and Lord, Abbett & Co. LLC for the term of the agreement). The example assumes a deduction of the applicable contingent deferred sales charge (“CDSC”) for the one-year, three-year, and five-year periods for Class B shares and for the one-year period for Class C shares. Class B shares automatically convert to Class A shares after approximately eight years. The expense example for Class B shares for the ten-year period reflects the conversion to Class A shares. The first example assumes that you redeem all of your shares at the end of the periods. Although your actual costs may be higher or lower, based on these assumptions, your costs (including any applicable CDSC) would be as shown below. The second example assumes that you do not redeem and instead keep your shares.

PROSPECTUS – SHORT DURATION TAX FREE FUND

Class

If Shares Are Redeemed

If Shares Are Not Redeemed

1 Year

3 Years

5 Years

10 Years

1 Year

3 Years

5 Years

10 Years

Class A Shares

$

288

$

437

$

599

$

1,070

$

288

$

437

$

599

$

1,070

Class B Shares

$

646

$

767

$

1,012

$

1,568

$

146

$

467

$

812

$

1,568

Class C Shares

$

231

$

424

$

738

$

1,629

$

131

$

424

$

738

$

1,629

Class F Shares

$

54

$

185

$

328

$

743

$

54

$

185

$

328

$

743

Class I Shares

$

44

$

153

$

273

$

621

$

44

$

153

$

273

$

621

Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in the annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 18.11% of the average value of its portfolio.

PRINCIPAL INVESTMENT STRATEGIES

For purposes of its investment objective, the Fund uses the volatility of the Barclays Municipal Bond Index: 1 Year (1-2) as an approximation of reasonable risk. To pursue its objective, under normal market conditions, the Fund invests at least 80% of its net assets in municipal bonds that pay interest exempt from federal income tax. Under normal market conditions, the Fund invests primarily in investment grade municipal bonds. Investment grade municipal bonds are rated BBB/Baa or higher (at the time of purchase) by an independent rating agency or are unrated but deemed by Lord Abbett to be of comparable quality.

The Fund may invest up to 20% of its net assets in municipal bonds rated BB/Ba or lower (at the time of purchase) by an independent rating agency or unrated but deemed by Lord Abbett to be of comparable quality (commonly referred to as “below investment grade,” “high yield,” or “junk” bonds).

The Fund may invest in all types of municipal bonds, including general obligation bonds, revenue bonds, municipal leases, and variable rate demand notes. The Fund may invest up to 20% of its net assets in municipal bonds that pay interest subject to the federal alternative minimum tax (“AMT”), including certain private activity bonds (commonly referred to as “AMT paper”). Although the Fund is permitted to invest up to 20% of its net assets in fixed income securities that pay interest subject to federal income tax, the Fund presently has no intention of investing in this manner. The Fund will not invest 25% or more of its total assets in any industry; however, this limitation does not apply to tax-exempt securities issued by governments or their political subdivisions. The Fund may invest in both insured and uninsured municipal bonds.

PROSPECTUS – SHORT DURATION TAX FREE FUND

The Fund may use inverse floaters, which is a type of derivative investment that provides leveraged exposure to underlying municipal bonds whose interest payments vary inversely with changes in short-term tax-exempt interest rates. These investments are intended to increase the Fund’s income and potential investment return and are speculative. The Fund also may invest in other types of derivatives, such as futures, for speculative, hedging, or duration management purposes.

The Fund may invest in securities of any maturity or duration. The Fund’s dollar-weighted average maturity generally is expected to be between one and three years, but will vary with market conditions. Although the Fund may invest significantly in money market securities and their equivalents, it is not a money market fund and is not subject to money market fund requirements.

The Fund’s investment team focuses on credit quality, income tax exemption, total return potential, and call protection in selecting municipal bonds. The Fund generally will sell a security when it believes the security is less likely to benefit from the current market and economic environment, shows signs of deteriorating fundamentals, or has reached its valuation target, among other reasons. The Fund seeks to remain fully invested in accordance with its investment objective; however, in response to adverse market or other unfavorable conditions, the Fund may invest its assets in a temporary defensive manner.

PRINCIPAL RISKS

As with any investment in a mutual fund, investing in the Fund involves risk, including the risk that you may receive little or no return on your investment. When you redeem your shares, they may be worth more or less than what you paid for them, which means that you may lose a portion or all of the money you invested in the Fund.

The following is a summary of certain risks that could adversely affect the Fund’s performance or increase volatility:

•

Portfolio Management Risk – If the strategies used and securities selected by the Fund’s portfolio management fail to produce the intended result, the Fund may suffer losses or underperform other funds with the same investment objective or strategies, even in a rising market.

•

Fixed Income Securities Risk – The Fund is subject to the general risks and considerations associated with investing in debt securities, including the risk that issuers will fail to make timely payments of principal or interest. Typically, shorter-term bonds are less volatile than longer-term bonds; however, longer-term bonds typically offer higher yields and more stable interest income than shorter-term bonds. Lower rated municipal bonds in which the Fund may invest may be more volatile and may decline more in

PROSPECTUS – SHORT DURATION TAX FREE FUND

price in response to negative issuer developments or general economic news than higher rated securities. In addition, as interest rates rise, the Fund’s investments typically will lose value.

•

Municipal Bond Risk – Municipal bonds are subject to the same risks affecting fixed income securities in general. In addition, the price of municipal bonds may be adversely affected by legislative or political changes, tax rulings, judicial action, changes in market and economic conditions, and the fiscal condition of the municipal issuer. The market for municipal bonds generally is less liquid than other securities markets, which may make it more difficult for the Fund to sell its bonds.

•

Below Investment Grade Municipal Bond Risk – Below investment grade municipal bonds typically pay a higher yield than investment grade municipal bonds, but may have greater price fluctuations and have a higher risk of default than investment grade municipal bonds. The market for below investment grade municipal bonds may be less liquid, which may make such bonds more difficult to sell at an acceptable price, especially during periods of increased market volatility or significant market decline.

•

Call Risk – A substantial portion of municipal bonds are “callable,” meaning they give the issuer the right to call or redeem the bonds before maturity. As interest rates decline, these bond issuers may pay off their loans early by buying back the bonds, thus depriving the Fund of above market interest rates. Moreover, the Fund may have to reinvest the prepayment proceeds in lower yielding securities.

•

Concentration Risk – The Fund may concentrate its investments in issuers within a particular state, territory or possession, which may expose the Fund’s assets to negative economic, business or political developments in such region. This focus may adversely affect the value of the Fund’s investments more than if such assets were not so concentrated.

•

Credit Risk – Municipal bonds are subject to the risk that the issuer of a security may not make interest and principal payments as they become due or may default altogether. In addition, 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 based upon the economic and fiscal conditions of each issuer and the municipalities, agencies, instrumentalities, and other issuers within the state, territory or possession. Insured municipal bonds have the credit risk of the insurer in addition to the credit risk of the underlying investment being insured. A decline in the credit quality of private activity bonds usually is directly related to a decline in the credit standing of the facility.

PROSPECTUS – SHORT DURATION TAX FREE FUND

•

Industry Risk – Nongovernmental users of facilities financed by tax-exempt revenue bonds (e.g. companies in the electric utility and health care industries) may have difficulty making payments on their obligations in the event of an economic downturn. This would negatively affect the valuation of bonds issued by such facilities.

•

Derivatives Risk – Loss may result from the Fund’s investments in futures contracts, inverse floaters and other derivative instruments. These instruments may be leveraged so that small changes may produce disproportionate and substantial losses to the Fund. They also may increase the Fund’s interest rate risk and may cause the Fund to realize a limited amount of taxable income. Losses also may arise from the failure of a derivative counterparty to meet its contractual obligations.

•

Extension Risk – Rising interest rates may cause payments to occur at a slower-than-expected rate, extending the duration of a bond and typically reducing its value.

•

Governmental Risk – Government actions, including actions by local, state and regional governments, could have an adverse effect on municipal bond prices. In addition, the Fund’s performance may be affected by local, state, and regional factors depending on the states in which the Fund’s investments are issued.

•

Interest Rate Risk – As interest rates rise, prices of bonds (including tax-exempt bonds) generally fall, causing the Fund’s investments typically to lose value. Interest rate changes typically have a greater effect on the price of longer-term bonds, including inverse floaters, than on shorter-term bonds.

•

Liquidity Risk – It may be difficult for the Fund to sell certain securities, including below investment grade municipal bonds, in a timely manner and at their stated value, which could result in losses to the Fund. In addition, the Fund could experience a loss when selling securities to meet redemption requests if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid.

•

State and Territory Risks – Although the Fund does not focus on a particular state or territory, the Fund’s performance may be affected by local, state, and regional factors. These factors may include, for example, 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 the Fund and may do so disproportionately as a result of the corresponding disproportionate impact of such occurrences on particular state, territory, or local economies. The effects of the national economic recession that began in 2008 caused extraordinary declines in tax revenues,

PROSPECTUS – SHORT DURATION TAX FREE FUND

increased demands for government services and added pressure on budgetary reserves for affected governments. State, territory, and local economies continue to be affected by severely decreased tax revenues and additional pressure on budgets. State and local governments also have relied heavily on federal stimulus funds and other one-time measures to deal with their current budget crises and may face less flexibility and liquidity in the future. All of this could have significant consequences for the Fund because a worsening of the economic position of a state or other issuer of bonds in which the Fund invests could lower the value of the Fund’s investments and could cause you to lose money.

•

Taxability Risk – The Internal Revenue Service (“IRS”) has announced that holders of tax-exempt bonds have risks that their tax-exempt income may be reclassified as taxable if the bonds that they own were issued in an abusive transaction. Although the Fund attempts to purchase only bona fide tax-exempt securities (except for its ability to invest up to 20% of its net assets in municipal bonds that pay interest subject to AMT and fixed income securities that pay interest that is subject to regular federal income tax), there is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-exempt income.

An investment in the Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. For more information on the principal risks of the Fund, please see the “More Information About the Funds – Principal Risks” section in the prospectus.

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, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. No performance is shown for Class B shares because the Fund has not issued Class B shares to date.

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 charge applicable to Class A shares. If the sales charge were reflected, returns would be lower. Performance for the Fund’s other share classes will vary due to the different expenses each class bears. Updated performance information is available at www.lordabbett.com or by calling 888-522-2388.

PROSPECTUS – SHORT DURATION TAX FREE FUND

Bar Chart (per calendar year) — Class A Shares


Best Quarter 1st Q ‘09 +2.36%		Worst Quarter 4th Q ‘10 -0.63%

The table below shows how the Fund’s average annual total returns compare to the returns of a securities index. The Fund’s average annual total returns include applicable sales charges.

The after-tax returns of Class A shares included in the table below are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. In some cases, the return after taxes on distributions and sale of Fund shares may exceed the return before taxes due to a tax benefit resulting from realized losses on a sale of Fund shares at the end of the period that is used to offset other gains. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax- deferred arrangements such as 401(k) plans or Individual Retirement Accounts (“IRAs”). After-tax returns for other share classes are not shown in the table and will vary from those shown for Class A shares.

PROSPECTUS – SHORT DURATION TAX FREE FUND

Average Annual Total Returns
(for the periods ended December 31, 2012)

Class

1 Year

Life of Class

Inception
Date for
Performance

Class A Shares

12/31/2008

Before Taxes

-0.11%

2.88%

After Taxes on Distributions

-0.12%

2.88%

After Taxes on Distributions and Sale of Fund Shares

0.47%

2.78%

Class C Shares

0.49%

2.70%

12/31/2008

Class F Shares

2.26%

3.57%

12/31/2008

Class I Shares

2.35%

3.68%

12/31/2008

Index

Barclays Municipal Bond Index: 1 Year (1-2)
(reflects no deduction for fees, expenses, or taxes)

0.84%

1.76%

12/31/2008

MANAGEMENT

Investment Adviser. The Fund’s investment adviser is Lord, Abbett & Co. LLC.

Portfolio Managers. The portfolio managers jointly and primarily responsible for the day-to-day management of the Fund are:


Portfolio Manager/Title		Member of the Investment Management Team Since

Daniel S. Solender, Partner and Director		2008

Daniel T. Vande Velde, Partner and Portfolio Manager		2008

PURCHASE AND SALE OF FUND SHARES

The minimum initial and additional amounts shown below vary depending on the class of shares you buy and the type of account. Certain financial intermediaries may impose different restrictions than those described below. Class B shares no longer are available for purchase by new or existing investors and only will be issued in connection with (i) an exchange of Class B shares from another Lord Abbett Fund or (ii) a reinvestment of a dividend and/or capital gain distribution. For Class I shares, the minimum investment shown below applies to certain types of institutional investors, but does not apply to registered investment advisers or retirement and benefit plans otherwise eligible to invest in Class I shares. See “Choosing a Share Class – Investment Minimums” in the prospectus for more information.

PROSPECTUS – SHORT DURATION TAX FREE FUND

Investment Minimums — Initial/Additional Investments

Class

A and C

F

I

General and IRAs without Invest-A-Matic Investments

$1,000/No minimum

No minimum

$1 million minimum

Invest-A-Matic Accounts

$250/$50

N/A

N/A

IRAs, SIMPLE and SEP Accounts with Payroll Deductions

No minimum

N/A

N/A

Fee-Based Advisory Programs and Retirement and Benefit Plans

No minimum

No minimum

No minimum

You may sell (redeem) shares through your securities broker, financial professional or financial intermediary. If you have direct account access privileges, you may redeem your shares by contacting the Fund in writing at P.O. Box 219336, Kansas City, MO 64121, by calling 888-522-2388 or by accessing your account online at www.lordabbett.com.

TAX INFORMATION

The Fund’s distributions of interest on municipal bonds generally are not subject to federal income tax; however the Fund may distribute taxable dividends, including distributions of short-term and long-term capital gains. In addition, interest on certain bonds may be subject to the federal alternative minimum tax. To the extent that the Fund’s distributions are derived from interest on bonds that are not exempt from applicable state and local taxes, such distributions will be subject to such state and local taxes.

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase Fund shares through a broker-dealer or other financial intermediary (such as a bank), the Fund and the Fund’s distributor or its affiliates may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your individual financial professional to recommend the Fund over another investment. Ask your individual financial professional or visit your financial intermediary’s website for more information.

PROSPECTUS – SHORT DURATION TAX FREE FUND

INTERMEDIATE TAX FREE FUND

INVESTMENT OBJECTIVE

The investment objective of the Fund is to seek the maximum amount of interest income exempt from federal income tax as is consistent with reasonable risk.

FEES AND EXPENSES


Shareholder Fees (Fees paid directly from your investment)

Class	A	B	C	F, I, and P

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	2.25%	None	None	None

Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)	None ⁽¹⁾	5.00%	1.00% ⁽²⁾	None

PROSPECTUS – INTERMEDIATE TAX FREE FUND


Annual Fund Operating Expenses (Expenses that you pay each year as a percentage of the value of your investment)

Class		A	B	C	F	I	P

Management Fees		0.39%	0.39%	0.39%	0.39%	0.39%	0.39%

Distribution and Service (12b-1) Fees		0.20%	1.00%	0.87% ⁽³⁾	0.10%	None	0.45%

Other Expenses		0.11%	0.11%	0.11%	0.11%	0.11%	0.11%

Total Annual Fund Operating Expenses		0.70%	1.50%	1.37%	0.60%	0.50%	0.95%

Fee Waiver and/or Expense Reimbursement ^{(4) (5)}		(0.01)%	(0.01)%	(0.01)%	(0.01)%	(0.01)%	(0.01)%

Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement ^(4)(5)(6)		0.69%	1.49%	1.36%	0.59%	0.49%	0.94%

⁽¹⁾	A contingent deferred sales charge (“CDSC”) of 1.00% may be assessed on certain Class A shares purchased or acquired without a sales charge if they are redeemed before the first day of the month of the one-year anniversary of the purchase.
⁽²⁾	A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.
⁽³⁾	The 12b-1 fee the Fund will pay on Class C shares will be a blended rate calculated based on (i) 1.00% of the Fund’s average daily net assets attributable to shares held for less than one year and (ii) 0.80% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C shareholders of the Fund will bear 12b-1 fees at the same rate.
⁽⁴⁾	This amount has been updated from fiscal year amounts to reflect the current fee waiver/expense limitation agreement.
⁽⁵⁾	For the period February 1, 2013 through January 31, 2014, Lord, Abbett & Co. LLC has contractually agreed to waive its fees and reimburse expenses to the extent necessary to limit total net annual operating expenses for each class, excluding 12b-1 fees and interest related expenses, to an annual rate of 0.49%. This agreement may be terminated only by the Fund’s Board of Directors.
⁽⁶⁾	This amount includes interest and related expenses from inverse floaters of less than 0.01%.

Example

PROSPECTUS – INTERMEDIATE TAX FREE FUND

Class

If Shares Are Redeemed

If Shares Are Not Redeemed

1 Year

3 Years

5 Years

10 Years

1 Year

3 Years

5 Years

10 Years

Class A Shares

$

294

$

443

$

605

$

1,075

$

294

$

443

$

605

$

1,075

Class B Shares

$

652

$

773

$

1,018

$

1,573

$

152

$

473

$

818

$

1,573

Class C Shares

$

238

$

433

$

749

$

1,645

$

138

$

433

$

749

$

1,645

Class F Shares

$

60

$

191

$

334

$

749

$

60

$

191

$

334

$

749

Class I Shares

$

50

$

159

$

279

$

627

$

50

$

159

$

279

$

627

Class P Shares

$

96

$

302

$

525

$

1,165

$

96

$

302

$

525

$

1,165

PRINCIPAL INVESTMENT STRATEGIES

For purposes of its investment objective, the Fund uses the volatility of the Barclays Municipal Bond Index: 7 Year (6-8) as an approximation of reasonable risk. To pursue its objective, under normal market conditions, the Fund invests at least 80% of its net assets in municipal bonds that pay interest exempt from federal income tax. Under normal market conditions, the Fund invests primarily in investment grade municipal bonds. Investment grade municipal bonds are rated BBB/Baa or higher (at the time of purchase) by an independent rating agency or are unrated but deemed by Lord Abbett to be of comparable quality.

The Fund may invest in all types of municipal bonds, including general obligation bonds, revenue bonds, and municipal leases. The Fund may invest up to 20% of its net assets in municipal bonds that pay interest subject to the federal alternative minimum tax (“AMT”), including certain private activity bonds (commonly referred to as “AMT paper”). Although the Fund is permitted to invest up to 20% of its net assets in fixed income securities that pay interest subject to federal income tax, the Fund presently has no intention of investing in this manner. The Fund will not invest 25% or more of its total assets in any industry; however, this limitation does not apply to tax-exempt securities issued by governments or their political subdivisions. The Fund may invest in both insured and uninsured municipal bonds.

PROSPECTUS – INTERMEDIATE TAX FREE FUND

The Fund may invest in securities of any maturity or duration. The Fund’s dollar-weighted average maturity generally is expected to be between three and ten years, but will vary with market conditions.

PRINCIPAL RISKS

The following is a summary of certain risks that could adversely affect the Fund’s performance or increase volatility:

•

PROSPECTUS – INTERMEDIATE TAX FREE FUND

•

Municipal Bond Risk – Municipal bonds are subject to the same risks affecting fixed income securities in general. In addition, the price of municipal bonds may be adversely affected by legislative or political changes, tax rulings, judicial action, changes in market and economic conditions, and the fiscal condition of the municipal issuer. The market for municipal bonds generally is less liquid than other securities markets, which may make it more difficult for the Fund to sell its bonds.

•

Below Investment Grade Municipal Bond Risk – Below investment grade municipal bonds typically pay a higher yield than investment grade municipal bonds, but may have greater price fluctuations and have a higher risk of default than investment grade municipal bonds. The market for below investment grade municipal bonds may be less liquid, which may make such bonds more difficult to sell at an acceptable price, especially during periods of increased market volatility or significant market decline.

•

Call Risk – A substantial portion of municipal bonds are “callable,” meaning they give the issuer the right to call or redeem the bonds before maturity. As interest rates decline, these bond issuers may pay off their loans early by buying back the bonds, thus depriving the Fund of above market interest rates. Moreover, the Fund may have to reinvest the prepayment proceeds in lower yielding securities.

•

Concentration Risk – The Fund may concentrate its investments in issuers within a particular state, territory or possession, which may expose the Fund’s assets to negative economic, business or political developments in such region. This focus may adversely affect the value of the Fund’s investments more than if such assets were not so concentrated.

•

Credit Risk – Municipal bonds are subject to the risk that the issuer of a security may not make interest and principal payments as they become due or may default altogether. In addition, 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 based upon the economic and fiscal conditions of each issuer and the municipalities, agencies, instrumentalities, and other issuers within the state, territory or possession. Insured municipal bonds have the credit risk of the insurer in addition to the credit risk of the underlying investment being insured. A decline in the credit quality of private activity bonds usually is directly related to a decline in the credit standing of the private user of the facility.

•

Industry Risk – Nongovernmental users of facilities financed by tax-exempt revenue bonds (e.g. companies in the electric utility and health care industries) may have difficulty making payments on their obligations in the event of an economic downturn. This would negatively affect the valuation of bonds issued by such facilities.

PROSPECTUS – INTERMEDIATE TAX FREE FUND

•

Derivatives Risk – Loss may result from the Fund’s investments in futures contracts, inverse floaters and other derivative instruments. These instruments may be leveraged so that small changes may produce disproportionate and substantial losses to the Fund. They also may increase the Fund’s interest rate risk and may cause the Fund to realize a limited amount of taxable income. Losses also may arise from the failure of a derivative counterparty to meet its contractual obligations.

•

Extension Risk – Rising interest rates may cause payments to occur at a slower-than-expected rate, extending the duration of a bond and typically reducing its value.

•

Governmental Risk – Government actions, including actions by local, state and regional governments, could have an adverse effect on municipal bond prices. In addition, the Fund’s performance may be affected by local, state, and regional factors depending on the states in which the Fund’s investments are issued.

•

Interest Rate Risk – As interest rates rise, prices of bonds (including tax-exempt bonds) generally fall, causing the Fund’s investments typically to lose value. Interest rate changes typically have a greater effect on the price of longer-term bonds, including inverse floaters, than on shorter-term bonds.

•

Liquidity Risk – It may be difficult for the Fund to sell certain securities, including below investment grade municipal bonds, in a timely manner and at their stated value, which could result in losses to the Fund. In addition, the Fund could experience a loss when selling securities to meet redemption requests if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid.

•

State and Territory Risks – Although the Fund does not focus on a particular state or territory, the Fund’s performance may be affected by local, state, and regional factors. These factors may include, for example, 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 the Fund and may do so disproportionately as a result of the corresponding disproportionate impact of such occurrences on particular state, territory, or local economies. The effects of the national economic recession that began in 2008 caused extraordinary declines in tax revenues, increased demands for government services and added pressure on budgetary reserves for affected governments. State, territory, and local economies continue to be affected by severely decreased tax revenues and additional pressure on budgets. State and local governments also have relied heavily on federal stimulus funds and other one-time measures to deal with their current

PROSPECTUS – INTERMEDIATE TAX FREE FUND

budget crises and may face less flexibility and liquidity in the future. All of this could have significant consequences for the Fund because a worsening of the economic position of a state or other issuer of bonds in which the Fund invests could lower the value of the Fund’s investments and could cause you to lose money.

•

Taxability Risk – The Internal Revenue Service (“IRS”) has announced that holders of tax-exempt bonds have risks that their tax-exempt income may be reclassified as taxable if the bonds that they own were issued in an abusive transaction. Although the Fund attempts to purchase only bona fide tax-exempt securities (except for its ability to invest up to 20% of its net assets in municipal bonds that pay interest subject to AMT and fixed income securities that pay interest that is subject to regular federal income tax), there is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-exempt income.

PERFORMANCE

PROSPECTUS – INTERMEDIATE TAX FREE FUND

Bar Chart (per calendar year) — Class A Shares


Best Quarter 3rd Q ’09 +6.55%		Worst Quarter 4th Q ’10 -3.48%

The table below shows how the Fund’s average annual total returns compare to the returns of a securities index. The Fund’s average annual total returns include applicable sales charges.

PROSPECTUS – INTERMEDIATE TAX FREE FUND

Average Annual Total Returns
(for the periods ended December 31, 2012)

Class

1 Year

5 Years

Life of Class

Inception
Date for
Performance

Class A Shares

6/30/2003

Before Taxes

3.96%

5.73%

4.29%

After Taxes on Distributions

3.96%

5.73%

4.29%

After Taxes on Distributions and Sale of Fund Shares

3.60%

5.44%

4.16%

Class B Shares

0.56%

5.05%

3.88%

6/30/2003

Class C Shares

4.60%

5.44%

3.77%

6/30/2003

Class F Shares

6.42%

6.29%

6.21%

9/28/2007

Class I Shares

6.59%

–

9.08%

1/31/2011

Class P Shares

6.15%

5.98%

4.33%

6/30/2003

Index

Barclays Municipal Bond Index: 7 Year (6-8)
(reflects no deduction for fees, expenses, or taxes)

4.20%

6.21%

4.88%
6.28%
7.69%

6/30/2003
9/28/2007
1/31/2011

MANAGEMENT

Investment Adviser. The Fund’s investment adviser is Lord, Abbett & Co. LLC.

Portfolio Managers. The portfolio managers jointly and primarily responsible for the day-to-day management of the Fund are:


Portfolio Manager/Title		Member of the Investment Management Team Since

Daniel S. Solender, Partner and Director		2006

Daniel T. Vande Velde, Partner and Portfolio Manager		2007

PURCHASE AND SALE OF FUND SHARES

PROSPECTUS – INTERMEDIATE TAX FREE FUND

investment advisers or retirement and benefit plans otherwise eligible to invest in Class I shares. Class P shares are closed to substantially all new investors. See “Choosing a Share Class – Investment Minimums” in the prospectus for more information.


Investment Minimums — Initial/Additional Investments

Class	A and C	F and P	I

General and IRAs without Invest-A-Matic Investments	$1,000/No minimum	No minimum	$1 million minimum

Invest-A-Matic Accounts	$250/$50	N/A	N/A

IRAs, SIMPLE and SEP Accounts with Payroll Deductions	No minimum	N/A	N/A

Fee-Based Advisory Programs and Retirement and Benefit Plans	No minimum	No minimum	No minimum

TAX INFORMATION

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

PROSPECTUS – INTERMEDIATE TAX FREE FUND

AMT FREE MUNICIPAL BOND FUND

INVESTMENT OBJECTIVE

The investment objective of the Fund is to seek the maximum amount of interest income exempt from federal income tax as is consistent with reasonable risk.

FEES AND EXPENSES


Shareholder Fees (Fees paid directly from your investment)

Class	A	C	F and I

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	2.25%	None	None

Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)	None ⁽¹⁾	1.00% ⁽²⁾	None

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)

Class

A

C

F

I

Management Fees

0.50%

0.50%

0.50%

0.50%

Distribution and Service (12b-1) Fees

0.20%

0.96% ⁽³⁾

0.10%

None

Total Other Expenses

0.21%

0.21%

0.21%

0.21%

Interest and Related Expenses from Inverse Floaters

0.01%

0.01%

0.01%

0.01%

Other Expenses

0.20%

0.20%

0.20%

0.20%

Total Annual Fund Operating Expenses

0.91%

1.67%

0.81%

0.71%

Fee Waiver and/or Expense Reimbursement ⁽⁴⁾⁽⁵⁾

(0.30%)

(0.30%)

(0.30%)

(0.30%)

Total Annual Fund Operating Expenses After Fee Waiver
and/or Expense Reimbursement ⁽⁴⁾⁽⁵⁾

0.61%

1.37%

0.51%

0.41%

⁽¹⁾

A contingent deferred sales charge (“CDSC”) of 1.00% may be assessed on certain Class A shares purchased or acquired without a sales charge if they are redeemed before the first day of the month of the one-year anniversary of the purchase.

⁽²⁾

A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.

⁽³⁾

The 12b-1 fee the Fund will pay on Class C shares will be a blended rate calculated based on (i) 1.00% of the Fund’s average daily net assets attributable to shares held for less than one year and (ii) 0.80% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C shareholders of the Fund will bear 12b-1 fees at the same rate.

⁽⁴⁾

This amount has been updated from fiscal year amounts to reflect the current fee waiver/expense limitation agreement.

⁽⁵⁾

For the period February 1, 2013 through January 31, 2014, Lord, Abbett & Co. LLC has contractually agreed to waive its fees and reimburse expenses to the extent necessary to limit total net annual operating expenses for each class, excluding 12b-1 fees and interest related expenses, to an annual rate of 0.40%. This agreement may be terminated only by the Fund’s Board of Directors.

Example

The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund at the 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, that dividends and distributions are reinvested, and that the Fund’s operating expenses remain the same (except that the example takes into account the fee waiver and expense limitation agreement between the Fund and Lord, Abbett & Co. LLC for the term of the agreement). The example assumes a deduction of the applicable contingent deferred sales charge (“CDSC”) for the one-year period for Class C shares. The first example assumes that you redeem all of your shares at the end of the periods. Although your actual costs may be higher or lower, based on these assumptions, your costs (including any applicable CDSC) would be as shown below. The second example assumes that you do not redeem and instead keep your shares.

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

Class

If Shares Are Redeemed

If Shares Are Not Redeemed

1 Year

3 Years

5 Years

10 Years

1 Year

3 Years

5 Years

10 Years

Class A Shares

$

286

$

479

$

689

$

1,292

$

286

$

479

$

689

$

1,292

Class C Shares

$

239

$

497

$

879

$

1,951

$

139

$

497

$

879

$

1,951

Class F Shares

$

52

$

229

$

420

$

974

$

52

$

229

$

420

$

974

Class I Shares

$

42

$

197

$

365

$

854

$

42

$

197

$

365

$

854

PRINCIPAL INVESTMENT STRATEGIES

For purposes of its investment objective, the Fund uses the volatility of the Barclays Municipal Bond Index as an approximation of reasonable risk. To pursue its objective, under normal market conditions, the Fund invests at least 80% of its net assets in municipal bonds that pay interest exempt from federal income tax. As a non-fundamental policy, the Fund will not invest in municipal bonds that pay interest subject to the federal alternative minimum tax (“AMT”). Under normal market conditions, the Fund invests primarily in investment grade municipal bonds. Investment grade municipal bonds are rated BBB/Baa or higher (at the time of purchase) by an independent rating agency or are unrated but deemed by Lord Abbett to be of comparable quality.

The Fund may invest up to 35% of its net assets in municipal bonds rated BB/Ba or lower (at the time of purchase) by an independent rating agency or unrated but deemed by Lord Abbett to be of comparable quality (commonly referred to as “below investment grade,” “high yield,” or “junk” bonds).

The Fund may invest in all types of municipal bonds, including general obligation bonds, revenue bonds, and municipal leases. Although the Fund is permitted to invest up to 20% of its net assets in fixed income securities that pay interest subject to federal income tax, the Fund presently has no intention of investing in this manner. The Fund will not invest 25% or more of its total assets in any industry; however, this limitation does not apply to tax-exempt securities issued by governments or their political subdivisions. The Fund may invest in both insured and uninsured municipal bonds.

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

These investments are intended to increase the Fund’s income and potential investment return and are speculative. The Fund also may invest in other types of derivatives, such as futures, for speculative, hedging, or duration management purposes.

The Fund’s dollar-weighted average maturity generally is expected to be between ten and twenty-five years, but will vary with market conditions.

PRINCIPAL RISKS

The following is a summary of certain risks that could adversely affect the Fund’s performance or increase volatility:

•

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

tax rulings, judicial action, changes in market and economic conditions, and the fiscal condition of the municipal issuer. The market for municipal bonds generally is less liquid than other securities markets, which may make it more difficult for the Fund to sell its bonds.

•

Below Investment Grade Municipal Bond Risk – Below investment grade municipal bonds typically pay a higher yield than investment grade municipal bonds, but may have greater price fluctuations and have a higher risk of default than investment grade municipal bonds. The market for below investment grade municipal bonds may be less liquid, which may make such bonds more difficult to sell at an acceptable price, especially during periods of increased market volatility or significant market decline.

•

Call Risk – A substantial portion of municipal bonds are “callable,” meaning they give the issuer the right to call or redeem the bonds before maturity. As interest rates decline, these bond issuers may pay off their loans early by buying back the bonds, thus depriving the Fund of above market interest rates. Moreover, the Fund may have to reinvest the prepayment proceeds in lower yielding securities.

•

Concentration Risk – The Fund may concentrate its investments in issuers within a particular state, territory or possession, which may expose the Fund’s assets to negative economic, business or political developments in such region. This focus may adversely affect the value of the Fund’s investments more than if such assets were not so concentrated.

•

Credit Risk – Municipal bonds are subject to the risk that the issuer of a security may not make interest and principal payments as they become due or may default altogether. In addition, 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 based upon the economic and fiscal conditions of each issuer and the municipalities, agencies, instrumentalities, and other issuers within the state, territory or possession. Insured municipal bonds have the credit risk of the insurer in addition to the credit risk of the underlying investment being insured.

•

Industry Risk – Nongovernmental users of facilities financed by tax-exempt revenue bonds (e.g. companies in the electric utility and health care industries) may have difficulty making payments on their obligations in the event of an economic downturn. This would negatively affect the valuation of bonds issued by such facilities.

•

Derivatives Risk – Loss may result from the Fund’s investments in futures contracts, inverse floaters and other derivative instruments. These instruments may be leveraged so that small changes may produce disproportionate and substantial losses to the Fund. They also may increase

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

the Fund’s interest rate risk and may cause the Fund to realize a limited amount of taxable income. Losses also may arise from the failure of a derivative counterparty to meet its contractual obligations.

•

Extension Risk – Rising interest rates may cause payments to occur at a slower-than-expected rate, extending the duration of a bond and typically reducing its value.

•

Governmental Risk – Government actions, including actions by local, state and regional governments, could have an adverse effect on municipal bond prices. In addition, the Fund’s performance may be affected by local, state, and regional factors depending on the states in which the Fund’s investments are issued.

•

Interest Rate Risk – As interest rates rise, prices of bonds (including tax-exempt bonds) generally fall, causing the Fund’s investments typically to lose value. Interest rate changes typically have a greater effect on the price of longer-term bonds, including inverse floaters, than on shorter-term bonds.

•

Liquidity Risk – It may be difficult for the Fund to sell certain securities, including below investment grade municipal bonds, in a timely manner and at their stated value, which could result in losses to the Fund. In addition, the Fund could experience a loss when selling securities to meet redemption requests if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid.

•

State and Territory Risks – Although the Fund does not focus on a particular state or territory, the Fund’s performance may be affected by local, state, and regional factors. These factors may include, for example, 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 the Fund and may do so disproportionately as a result of the corresponding disproportionate impact of such occurrences on particular state, territory, or local economies. The effects of the national economic recession that began in 2008 caused extraordinary declines in tax revenues, increased demands for government services and added pressure on budgetary reserves for affected governments. State, territory, and local economies continue to be affected by severely decreased tax revenues and additional pressure on budgets. State and local governments also have relied heavily on federal stimulus funds and other one-time measures to deal with their current budget crises and may face less flexibility and liquidity in the future. All of this could have significant consequences for the Fund because a worsening of

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

the economic position of a state or other issuer of bonds in which the Fund invests could lower the value of the Fund’s investments and could cause you to lose money.

•

Taxability Risk – The Internal Revenue Service (“IRS”) has announced that holders of tax-exempt bonds have risks that their tax-exempt income may be reclassified as taxable if the bonds that they own were issued in an abusive transaction. Although the Fund attempts to purchase only bona fide tax-exempt securities (except for its ability to invest up to 20% of its net assets in municipal bonds that pay interest subject to regular federal income tax), there is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-exempt income.

PERFORMANCE

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 charge applicable to Class A shares. If the sales charge were reflected, the returns would be lower. Performance for the Fund’s other share classes will vary due to the different expenses each class bears. Updated performance information is available at www.lordabbett.com or by calling 888-522-2388.

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

Bar Chart (per calendar year) — Class A Shares


Best Quarter 2nd Q ’11 +5.67%		Worst Quarter 1st Q ’11 +0.58%

The table below shows how the Fund’s average annual total returns compare to the returns of a securities index. The Fund’s average annual total returns include applicable sales charges.

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

Average Annual Total Returns
(for the periods ended December 31, 2012)

Class

1 Year

Life of Class

Inception
Date for
Performance

Class A Shares

10/29/2010

Before Taxes

10.08%

7.91%

After Taxes on Distributions

10.08%

7.91%

After Taxes on Distributions and Sale of Fund Shares

7.99%

7.37%

Class C Shares

10.68%

8.16%

10/29/2010

Class F Shares

12.73%

9.16%

10/29/2010

Class I Shares

12.92%

9.33%

10/29/2010

Index

Barclays Municipal Bond Index
(reflects no deduction for fees, expenses, or taxes)

6.78%

6.06%

10/29/2010

MANAGEMENT

Investment Adviser. The Fund’s investment adviser is Lord, Abbett & Co. LLC.

Portfolio Manager. The portfolio manager primarily responsible for the day-to-day management of the Fund is:


Portfolio Manager/Title		Member of the Investment Management Team Since

Daniel S. Solender, Partner and Director		2010

PURCHASE AND SALE OF FUND SHARES

The minimum initial and additional amounts shown below vary depending on the class of shares you buy and the type of account. Certain financial intermediaries may impose different restrictions than those described below. For Class I shares, the minimum investment shown below applies to certain types of institutional investors, but does not apply to registered investment advisers or retirement and benefit plans otherwise eligible to invest in Class I shares. See “Choosing a Share Class – Investment Minimums” in the prospectus for more information.

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

TAX INFORMATION

The Fund’s distributions of interest on municipal bonds generally are not subject to regular federal income tax or the federal individual AMT; however the Fund may distribute taxable dividends, as well as taxable distributions of short-term and long-term capital gains. To the extent that the Fund’s distributions are derived from interest on bonds that are not exempt from applicable state and local taxes, such distributions will be subject to such state and local taxes.

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

NATIONAL TAX FREE FUND

INVESTMENT OBJECTIVE

The investment objective of the Fund is to seek the maximum amount of interest income exempt from federal income tax as is consistent with reasonable risk.

FEES AND EXPENSES


Shareholder Fees (Fees paid directly from your investment)

Class	A	B	C	F, I, and P

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	2.25%	None	None	None

Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)	None ⁽¹⁾	5.00%	1.00% ⁽²⁾	None


Annual Fund Operating Expenses (Expenses that you pay each year as a percentage of the value of your investment)

Class		A	B	C	F	I	P

Management Fees		0.43%	0.43%	0.43%	0.43%	0.43%	0.43%

Distribution and Service (12b-1) Fees		0.20%	1.00%	0.84% ⁽³⁾	0.10%	None	0.45%

Total Other Expenses		0.16%	0.16%	0.16%	0.16%	0.16%	0.16%

Interest and Related Expenses from Inverse Floaters		0.06%	0.06%	0.06%	0.06%	0.06%	0.06%

Other Expenses		0.10%	0.10%	0.10%	0.10%	0.10%	0.10%

Total Annual Fund Operating Expenses		0.79%	1.59%	1.43%	0.69%	0.59%	1.04%

⁽¹⁾	A contingent deferred sales charge (“CDSC”) of 1.00% may be assessed on certain Class A shares purchased or acquired without a sales charge if they are redeemed before the first day of the month of the one-year anniversary of the purchase.
⁽²⁾	A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.
⁽³⁾	The 12b-1 fee the Fund will pay on Class C shares will be a blended rate calculated based on (i) 1.00% of the Fund’s average daily net assets attributable to shares held for less than one year and (ii) 0.80% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C shareholders of the Fund will bear 12b-1 fees at the same rate.

PROSPECTUS – NATIONAL TAX FREE FUND

Example

The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund at the 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, that dividends and distributions are reinvested, and that the Fund’s operating expenses remain the same. The example assumes a deduction of the applicable contingent deferred sales charge (“CDSC”) for the one-year, three-year, and five- year periods for Class B shares and for the one-year period for Class C shares. Class B shares automatically convert to Class A shares after approximately eight years. The expense example for Class B shares for the ten-year period reflects the conversion to Class A shares. The first example assumes that you redeem all of your shares at the end of the periods. Although your actual costs may be higher or lower, based on these assumptions, your costs (including any applicable CDSC) would be as shown below. The second example assumes that you do not redeem and instead keep your shares.


Class	If Shares Are Redeemed												If Shares Are Not Redeemed

	1 Year			3 Years			5 Years			10 Years			1 Year			3 Years			5 Years			10 Years

Class A Shares		$	304		$	472		$	654		$	1,181		$	304		$	472		$	654		$	1,181

Class B Shares		$	662		$	802		$	1,066		$	1,674		$	162		$	502		$	866		$	1,674

Class C Shares		$	246		$	452		$	782		$	1,713		$	146		$	452		$	782		$	1,713

Class F Shares		$	70		$	221		$	384		$	859		$	70		$	221		$	384		$	859

Class I Shares		$	60		$	189		$	329		$	738		$	60		$	189		$	329		$	738

Class P Shares		$	106		$	331		$	574		$	1,271		$	106		$	331		$	574		$	1,271

PRINCIPAL INVESTMENT STRATEGIES

PROSPECTUS – NATIONAL TAX FREE FUND

investment grade municipal bonds. Investment grade municipal bonds are rated BBB/Baa or higher (at the time of purchase) by an independent rating agency or are unrated but deemed by Lord Abbett to be of comparable quality.

The Fund’s dollar-weighted average maturity generally is expected to be between ten and twenty-five years, but will vary with market conditions.

PROSPECTUS – NATIONAL TAX FREE FUND

PRINCIPAL RISKS

The following is a summary of certain risks that could adversely affect the Fund’s performance or increase volatility:

•

Municipal Bond Risk – Municipal bonds are subject to the same risks affecting fixed income securities in general. In addition, the price of municipal bonds may be adversely affected by legislative or political changes, tax rulings, judicial action, changes in market and economic conditions, and the fiscal condition of the municipal issuer. The market for municipal bonds generally is less liquid than other securities markets, which may make it more difficult for the Fund to sell its bonds.

•

Below Investment Grade Municipal Bond Risk – Below investment grade municipal bonds typically pay a higher yield than investment grade municipal bonds, but may have greater price fluctuations and have a higher risk of default than investment grade municipal bonds. The market for below investment grade municipal bonds may be less liquid, which may make such bonds more difficult to sell at an acceptable price, especially during periods of increased market volatility or significant market decline.

•

Call Risk – A substantial portion of municipal bonds are “callable”, meaning they give the issuer the right to call or redeem the bonds before maturity. As interest rates decline, these bond issuers may pay off their loans early by

PROSPECTUS – NATIONAL TAX FREE FUND

buying back the bonds, thus depriving the Fund of above market interest rates. Moreover, the Fund may have to reinvest the prepayment proceeds in lower yielding securities.

•

Credit Risk – Municipal bonds are subject to the risk that the issuer of a security may not make interest and principal payments as they become due or may default altogether. In addition, 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 based upon the economic and fiscal conditions of each issuer and the municipalities, agencies, instrumentalities, and other issuers within the state, territory or possession. Insured municipal bonds have the credit risk of the insurer in addition to the credit risk of the underlying investment being insured. A decline in the credit quality of private activity bonds usually is directly related to a decline in the credit standing of the private user of the facility.

•

Industry Risk – Nongovernmental users of facilities financed by tax-exempt revenue bonds (e.g. companies in the electric utility and health care industries) may have difficulty making payments on their obligations in the event of an economic downturn. This would negatively affect the valuation of bonds issued by such facilities.

•

Derivatives Risk – Loss may result from the Fund’s investments in futures contracts, inverse floaters and other derivative instruments. These instruments may be leveraged so that small changes may produce disproportionate and substantial losses to the Fund. They also may increase the Fund’s interest rate risk and may cause the Fund to realize a limited amount of taxable income. Losses also may arise from the failure of a derivative counterparty to meet its contractual obligations.

•

Extension Risk – Rising interest rates may cause payments to occur at a slower-than-expected rate, extending the duration of a bond and typically reducing its value.

•

Governmental Risk – Government actions, including actions by local, state and regional governments, could have an adverse effect on municipal bond prices. In addition, the Fund’s performance may be affected by local, state, and regional factors depending on the states in which the Fund’s investments are issued.

•

Interest Rate Risk – As interest rates rise, prices of bonds (including tax-exempt bonds) generally fall, causing the Fund’s investments typically to lose value. Interest rate changes typically have a greater effect on the price of longer-term bonds, including inverse floaters, than on shorter-term bonds.

PROSPECTUS – NATIONAL TAX FREE FUND

•

Liquidity Risk – It may be difficult for the Fund to sell certain securities, including below investment grade municipal bonds, in a timely manner and at their stated value, which could result in losses to the Fund. In addition, the Fund could experience a loss when selling securities to meet redemption requests if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid.

•

State and Territory Risks – Although the Fund does not focus on a particular state or territory, the Fund’s performance may be affected by local, state, and regional factors. These factors may include, for example, 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 the Fund and may do so disproportionately as a result of the corresponding disproportionate impact of such occurrences on particular state, territory, or local economies. The effects of the national economic recession that began in 2008 caused extraordinary declines in tax revenues, increased demands for government services and added pressure on budgetary reserves for affected governments. State, territory, and local economies continue to be affected by severely decreased tax revenues and additional pressure on budgets. State and local governments also have relied heavily on federal stimulus funds and other one-time measures to deal with their current budget crises and may face less flexibility and liquidity in the future. All of this could have significant consequences for the Fund because a worsening of the economic position of a state or other issuer of bonds in which the Fund invests could lower the value of the Fund’s investments and could cause you to lose money.

•

Taxability Risk – The Internal Revenue Service (“IRS”) has announced that holders of tax-exempt bonds have risks that their tax-exempt income may be reclassified as taxable if the bonds that they own were issued in an abusive transaction. Although the Fund attempts to purchase only bona fide tax-exempt securities (except for its ability to invest up to 20% of its net assets in municipal bonds that pay interest subject to AMT and fixed income securities that pay interest subject to regular federal income tax), there is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax- exempt income.

PROSPECTUS – NATIONAL TAX FREE FUND

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, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. No performance is shown for Class P shares because the Fund has not issued Class P shares to date.

Bar Chart (per calendar year) — Class A Shares


Best Quarter 3rd Q ‘09 +11.02%		Worst Quarter 4th Q ’08 -8.41%

The table below shows how the Fund’s average annual total returns compare to the returns of a securities index. The Fund’s average annual total returns include applicable sales charges.

PROSPECTUS – NATIONAL TAX FREE FUND

tax-deferred arrangements such as 401(k) plans or Individual Retirement Accounts (“IRAs”). After-tax returns for other share classes are not shown in the table and will vary from those shown for Class A shares.


Average Annual Total Returns (for the periods ended December 31, 2012)

Class	1 Year	5 Years	10 Years	Life of Class	Inception Date for Performance

Class A Shares

Before Taxes	11.14%	5.92%	4.46%	–

After Taxes on Distributions	11.14%	5.91%	4.45%	–

After Taxes on Distributions and Sale of Fund Shares	8.79%	5.73%	4.43%	–

Class B Shares	7.91%	5.22%	4.11%	–

Class C Shares	12.02%	5.68%	4.02%	–

Class F Shares	13.87%	6.49%	–	5.96%	9/28/2007

Class I Shares	14.09%	–	–	9.07%	7/26/2010

Index

Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)	6.78%	5.91%	5.10%	5.89% 6.23%	9/28/2007 7/26/2010

MANAGEMENT

Investment Adviser. The Fund’s investment adviser is Lord, Abbett & Co. LLC.

Portfolio Manager. The portfolio manager primarily responsible for the day-to-day management of the Fund is:


Portfolio Manager/Title		Member of the Investment Management Team Since

Daniel S. Solender, Partner and Director		2006

PURCHASE AND SALE OF FUND SHARES

PROSPECTUS – NATIONAL TAX FREE FUND


Investment Minimums — Initial/Additional Investments

Class	A and C	F and P	I

General and IRAs without Invest-A-Matic Investments	$1,000/No minimum	No minimum	$1 million minimum

Invest-A-Matic Accounts	$250/$50	N/A	N/A

IRAs, SIMPLE and SEP Accounts with Payroll Deductions	No minimum	N/A	N/A

Fee-Based Advisory Programs and Retirement and Benefit Plans	No minimum	No minimum	No minimum

TAX INFORMATION

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

PROSPECTUS – NATIONAL TAX FREE FUND

HIGH YIELD MUNICIPAL BOND FUND

INVESTMENT OBJECTIVE

The investment objective of the Fund is to seek a high level of income exempt from federal income tax.

FEES AND EXPENSES


Shareholder Fees (Fees paid directly from your investment)

Class	A	B	C	F, I, and P

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	2.25%	None	None	None

Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)	None ⁽¹⁾	5.00%	1.00% ⁽²⁾	None


Annual Fund Operating Expenses (Expenses that you pay each year as a percentage of the value of your investment)

Class		A	B	C	F	I	P

Management Fees		0.48%	0.48%	0.48%	0.48%	0.48%	0.48%

Distribution and Service (12b-1) Fees		0.20%	1.00%	0.83% ⁽³⁾	0.10%	None	0.45%

Total Other Expenses		0.18%	0.18%	0.18%	0.18%	0.18%	0.18%

Interest and Related Expenses from Inverse Floaters		0.06%	0.06%	0.06%	0.06%	0.06%	0.06%

Other Expenses		0.12%	0.12%	0.12%	0.12%	0.12%	0.12%

Total Annual Fund Operating Expenses		0.86%	1.66% ⁽⁴⁾	1.49%	0.76%	0.66%	1.11% ⁽⁴⁾

⁽¹⁾	A contingent deferred sales charge (“CDSC”) of 1.00% may be assessed on certain Class A shares purchased or acquired without a sales charge if they are redeemed before the first day of the month of the one-year anniversary of the purchase.
⁽²⁾	A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.
⁽³⁾	The 12b-1 fee the Fund will pay on Class C shares will be a blended rate calculated based on (i) 1.00% of the Fund’s average daily net assets attributable to shares held for less than one year and (ii) 0.80% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C shareholders of the Fund will bear 12b-1 fees at the same rate.
⁽⁴⁾	These amounts have been updated from fiscal year amounts to reflect current fees and expenses.

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

Example

The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund at the 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, that dividends and distributions are reinvested, and that the Fund’s operating expenses remain the same. The example assumes a deduction of the applicable contingent deferred sales charge (“CDSC”) for the one-year, three-year, and five- year periods for Class B shares and for the one-year period for Class C shares. Class B shares automatically convert to Class A shares after approximately eight years. The expense example for Class B shares for the ten-year period reflects the conversion to Class A shares. The first example assumes that you redeem all of your shares at the end of the periods. Although your actual costs may be higher or lower, based on these assumptions, your costs (including any applicable CDSC) would be as shown below. The second example assumes that you do not redeem and instead keep your shares.


Class	If Shares Are Redeemed												If Shares Are Not Redeemed

	1 Year			3 Years			5 Years			10 Years			1 Year			3 Years			5 Years			10 Years

Class A Shares		$	311		$	493		$	691		$	1,262		$	311		$	493		$	691		$	1,262

Class B Shares		$	669		$	823		$	1,102		$	1,752		$	169		$	523		$	902		$	1,752

Class C Shares		$	252		$	471		$	813		$	1,779		$	152		$	471		$	813		$	1,779

Class F Shares		$	78		$	243		$	422		$	942		$	78		$	243		$	422		$	942

Class I Shares		$	67		$	211		$	368		$	822		$	67		$	211		$	368		$	822

Class P Shares		$	113		$	353		$	612		$	1,352		$	113		$	353		$	612		$	1,352

PRINCIPAL INVESTMENT STRATEGIES

To pursue its objective, under normal market conditions, the Fund invests at least 80% of its net assets in municipal bonds that pay interest exempt from federal income tax. Under normal market conditions, the Fund invests a substantial portion of its assets in lower rated municipal bonds (commonly referred to as “below investment grade,” “high yield,” or “junk” bonds). Lower rated municipal bonds are rated BB/Ba or lower (at the time of purchase) by an

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

independent rating agency or are unrated but deemed by Lord Abbett to be of comparable quality. Although the Fund may invest in municipal bonds in any rating category, under normal market conditions, the Fund invests at least 50% of its net assets in municipal bonds rated BBB/Baa or lower (at the time of purchase) by an independent rating agency or unrated but deemed by Lord Abbett to be of comparable quality. The Fund may invest without limitation in unrated municipal bonds, which may constitute a significant portion of the Fund’s portfolio. The Fund is nondiversified, which means it may invest a greater portion of its assets in a single issuer than a diversified fund.

The Fund may also invest in defaulted securities (i.e., bonds on which the issuer has not paid principal or interest on time) or securities of issuers that are or may become involved in reorganizations, financial restructurings, or bankruptcy (commonly referred to as “distressed debt”). The Fund presently does not intend to invest more than 20% of its net assets (measured at the time of investment) in such defaulted or distressed securities. However, the Fund’s defaulted or distressed debt holdings may exceed this level from time to time if the Fund purchased securities that were not considered in default or distressed at their time of purchase and such securities subsequently become defaulted or distressed. These investment strategies should be considered to entail higher risk relative to strategies employed by funds that invest primarily in investment grade municipal bonds.

The Fund may invest in all types of municipal bonds, including general obligation bonds, revenue bonds, and municipal leases. The Fund may invest in both insured and uninsured municipal bonds. The Fund may invest up to 100% of its net assets in municipal bonds that pay interest subject to the federal alternative minimum tax (“AMT”), including certain private activity bonds (commonly referred to as “AMT paper”). Although the Fund is permitted to invest up to 20% of its net assets in fixed income securities that pay interest subject to federal income tax, the Fund presently has no intention of investing in this manner.

The Fund may use inverse floaters, which is a type of derivative investment that provide leveraged exposure to underlying municipal bonds whose interest payments vary inversely with changes in short-term tax-exempt interest rates. These investments are intended to increase the Fund’s income and potential investment return and are speculative. The Fund may also invest in other types of derivatives, such as futures, for speculative, hedging, or duration management purposes.

The Fund’s dollar-weighted average maturity generally is expected to be between ten and twenty-five years, but will vary with market conditions.

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

The Fund’s investment team focuses on research to select higher yielding securities that offer attractive value in terms of credit quality and yield. The Fund generally will sell a security when it believes the security is less likely to benefit from the current market and economic environment, shows signs of deteriorating fundamentals, or has reached its valuation target, among other reasons. The Fund seeks to remain fully invested in accordance with its investment objective; however, in response to adverse market or other unfavorable conditions, the Fund may invest its assets in a temporary defensive manner.

PRINCIPAL RISKS

The following is a summary of certain risks that could adversely affect the Fund’s performance or increase volatility:

•

Fixed Income Securities Risk – The Fund is subject to the general risks and considerations associated with investing in debt securities, including the risk that issuers will fail to make timely payments of principal or interest. Typically, shorter-term bonds are less volatile than longer-term bonds; however, longer-term bonds typically offer higher yields and more stable interest income than shorter-term bonds. The Fund invests substantially in lower rated municipal bonds, which may be more volatile and may decline more in price in response to negative issuer developments or general economic news than higher rated securities. In addition, as interest rates rise, the Fund’s investments typically will lose value.

•

Municipal Bond Risk – Municipal bonds are subject to the same risks affecting fixed income securities in general. In addition, the price of municipal bonds may be adversely affected by legislative or political changes, tax rulings, judicial action, changes in market and economic conditions, and the fiscal condition of the municipal issuer. The market for municipal bonds and high yield bonds, in particular, generally is less liquid than other securities markets, which may make it more difficult for the Fund to sell its bonds.

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

•

Below Investment Grade Municipal Bond Risk – Below investment grade municipal bonds typically pay a higher yield than investment grade municipal bonds, but may have greater price fluctuations and have a higher risk of default than investment grade municipal bonds. Below investment grade municipal bonds may be subject to greater credit and liquidity risks than investment grade municipal bonds, which may make below investment grade bonds more difficult to sell at a reasonable price, especially during periods of increased market volatility or significant market decline. Some issuers of below investment grade municipal bonds may be more likely to default as to principal and interest payments after the Fund purchases their securities. Below investment grade municipal bonds are considered predominantly speculative by traditional investment standards.

•

Nondiversification Risk – Because the Fund is nondiversified, it will be more exposed to risks from a single adverse economic, political, or regulatory event than a diversified fund.

•

Call Risk – A substantial portion of municipal bonds are “callable,” meaning they give the issuer the right to call or redeem the bonds before maturity. As interest rates decline, these bond issuers may pay off their loans early by buying back the bonds, thus depriving the Fund of above market interest rates. Moreover, the Fund may have to reinvest the prepayment proceeds in lower yielding securities.

•

Credit Risk – Municipal bonds are subject to the risk that the issuer of a security may not make interest and principal payments as they become due or may default altogether. In addition, 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 based upon the economic and fiscal conditions of each issuer and the municipalities, agencies, instrumentalities, and other issuers within the state, territory or possession. Insured municipal bonds have the credit risk of the insurer in addition to the credit risk of the underlying investment being insured. A decline in the credit quality of private activity bonds usually is directly related to a decline in the credit standing of the private user of the facility.

•

Industry Risk – Nongovernmental users of facilities financed by tax-exempt revenue bonds (e.g. companies in the electric utility and health care industries) may have difficulty making payments on their obligations in the event of an economic downturn. This would negatively affect the valuation of bonds issued by such facilities.

•

Distressed Debt Risk – To the extent that the Fund invests in (or otherwise holds) distressed debt securities, the Fund is subject to an increased risk that it may lose a portion or all of its investment in the distressed debt and may

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

incur higher expenses trying to protect its interests in distressed debt. Moreover, it is unlikely that a liquid market will exist for the Fund to sell its holdings in distressed debt securities.

•

Derivatives Risk – Loss may result from the Fund’s investments in futures contracts, inverse floaters, and other derivative instruments. These instruments may be leveraged so that small changes may produce disproportionate and substantial losses to the Fund. They also may increase the Fund’s interest rate risk and may cause the Fund to realize a limited amount of taxable income. Losses also may arise from the failure of a derivative counterparty to meet its contractual obligations.

•

Extension Risk – Rising interest rates may cause payments to occur at a slower-than-expected rate, extending the duration of a bond and typically reducing its value.

•

Governmental Risk – Government actions, including actions by local, state and regional governments, could have an adverse effect on municipal bond prices. In addition, the Fund’s performance may be affected by local, state, and regional factors depending on the states in which the Fund’s investments are issued.

•

Interest Rate Risk – Prices of bonds, including tax-exempt bonds, generally fall during a rising interest rate environment. Interest rate changes typically have a greater effect on the price of longer-term bonds, including inverse floaters, than on shorter-term bonds. Because the Fund tends to invest in longer-term bonds, including inverse floaters, to a greater degree than some municipal bond funds, it is more sensitive to interest rate risk than those funds.

•

Liquidity Risk – It may be difficult for the Fund to sell certain securities, such as below investment grade municipal bonds, in a timely manner and at their stated value, which could result in losses to the Fund. In addition, the Fund could experience a loss when selling securities to meet redemption requests if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid.

•

State and Territory Risks – Although the Fund does not focus on a particular state or territory, the Fund’s performance may be affected by local, state, and regional factors. These factors may include, for example, 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 the Fund and may do so disproportionately as a result of the corresponding disproportionate impact of such occurrences on particular state, territory, or local economies. The effects of the national economic

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

recession that began in 2008 caused extraordinary declines in tax revenues, increased demands for government services and added pressure on budgetary reserves for affected governments. State, territory, and local economies continue to be affected by severely decreased tax revenues and additional pressure on budgets. State and local governments also have relied heavily on federal stimulus funds and other one-time measures to deal with their current budget crises and may face less flexibility and liquidity in the future. All of this could have significant consequences for the Fund because a worsening of the economic position of a state or other issuer of bonds in which the Fund invests could lower the value of the Fund’s investments and could cause you to lose money.

•

Taxability Risk – The Internal Revenue Service (“IRS”) has announced that holders of tax-exempt bonds have risks that their tax-exempt income may be reclassified as taxable if the bonds that they own were issued in an abusive transaction. There is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-exempt income. In addition, the Fund may invest up to 100% of its net assets in municipal bonds the interest on which may be subject to AMT and invest up to 20% of its net assets in fixed income securities that pay interest that is subject to regular federal income tax. The income from private activity bonds is an item of tax preference for purposes of AMT, which may cause the income to be taxable to you.

PERFORMANCE

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

Bar Chart (per calendar year) — Class A Shares


Best Quarter 3rd Q ’09 +14.65%		Worst Quarter 4th Q ’08 -23.81%

The table below shows how the Fund’s average annual total returns compare to the returns of securities indices. The Fund’s average annual total returns include applicable sales charges.

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

Average Annual Total Returns
(for the periods ended December 31, 2012)

Class

1 Year

5 Years

Life of Class

Inception
Date for
Performance

Class A Shares

12/30/2004

Before Taxes

15.33%

2.67%

2.53%

After Taxes on Distributions

15.31%

2.66%

2.52%

After Taxes on Distributions and Sale of Fund Shares

11.86%

3.02%

2.89%

Class B Shares

11.35%

1.96%

2.29%

12/30/2004

Class C Shares

16.35%

2.49%

2.43%

12/30/2004

Class F Shares

18.08%

3.24%

2.08%

9/28/2007

Class I Shares

18.29%

–

8.12%

7/26/2010

Class P Shares

17.75%

2.95%

2.85%

12/30/2004

Index

Barclays High Yield Municipal Bond Index
(reflects no deduction for fees, expenses, or taxes)

18.14%

6.15%

5.92%
5.25%
10.73%

12/30/2004
9/28/2007
7/26/2010

Barclays 85% High Yield/15% Municipal Bond Index
(reflects no deduction for fees, expenses, or taxes)

16.38%

6.17%

5.83%
5.39%
10.05%

12/30/2004
9/28/2007
7/26/2010

MANAGEMENT

Investment Adviser. The Fund’s investment adviser is Lord, Abbett & Co. LLC.

Portfolio Managers. The portfolio managers jointly and primarily responsible for the day-to-day management of the Fund are:


Portfolio Manager/Title		Member of the Investment Management Team Since

Daniel S. Solender, Partner and Director		2006

Paul A. Langlois, Portfolio Manager		2012

PURCHASE AND SALE OF FUND SHARES

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

another Lord Abbett Fund or (ii) a reinvestment of a dividend and/or capital gain distribution. For Class I shares, the minimum investment shown below applies to certain types of institutional investors, but does not apply to registered investment advisers or retirement and benefit plans otherwise eligible to invest in Class I shares. Class P shares are closed to substantially all new investors. See “Choosing a Share Class – Investment Minimums” in the prospectus for more information.


Investment Minimums — Initial/Additional Investments

Class	A and C	F and P	I

General and IRAs without Invest-A-Matic Investments	$1,000/No minimum	No minimum	$1 million minimum

Invest-A-Matic Accounts	$250/$50	N/A	N/A

IRAs, SIMPLE and SEP Accounts with Payroll Deductions	No minimum	N/A	N/A

Fee-Based Advisory Programs and Retirement and Benefit Plans	No minimum	No minimum	No minimum

TAX INFORMATION

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

CALIFORNIA TAX FREE FUND

INVESTMENT OBJECTIVE

FEES AND EXPENSES


Shareholder Fees (Fees paid directly from your investment)

Class	A	C	F, I, and P

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	2.25%	None	None

Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)	None ⁽¹⁾	1.00% ⁽²⁾	None


Annual Fund Operating Expenses (Expenses that you pay each year as a percentage of the value of your investment)

Class		A	C	F	I	P

Management Fees		0.45%	0.45%	0.45%	0.45%	0.45%

Distribution and Service (12b-1) Fees		0.20%	0.86% ⁽³⁾⁽⁴⁾	0.10%	None	0.45%

Total Other Expenses		0.17%	0.17%	0.17%	0.17%	0.17%

Interest and Related Expenses from Inverse Floaters		0.03%	0.03%	0.03%	0.03%	0.03%

Other Expenses		0.14%	0.14%	0.14%	0.14%	0.14%

Total Annual Fund Operating Expenses		0.82%	1.48% ⁽⁴⁾	0.72%	0.62%	1.07%

⁽¹⁾	A contingent deferred sales charge (“CDSC”) of 1.00% may be assessed on certain Class A shares purchased or acquired without a sales charge if they are redeemed before the first day of the month of the one-year anniversary of the purchase.
⁽²⁾	A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.
⁽³⁾	The 12b-1 fee the Fund will pay on Class C shares will be a blended rate calculated based on (i) 1.00% of the Fund’s average daily net assets attributable to shares held for less than one year and (ii) 0.80% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C shareholders of the Fund will bear 12b-1 fees at the same rate.
⁽⁴⁾	This amount has been updated from fiscal year amounts to reflect current fees and expenses.

PROSPECTUS – CALIFORNIA TAX FREE FUND

Example


Class	If Shares Are Redeemed												If Shares Are Not Redeemed

	1 Year			3 Years			5 Years			10 Years			1 Year			3 Years			5 Years			10 Years

Class A Shares		$	307		$	481		$	670		$	1,216		$	307		$	481		$	670		$	1,216

Class C Shares		$	251		$	468		$	808		$	1,768		$	151		$	468		$	808		$	1,768

Class F Shares		$	74		$	230		$	401		$	894		$	74		$	230		$	401		$	894

Class I Shares		$	63		$	199		$	346		$	774		$	63		$	199		$	346		$	774

Class P Shares		$	109		$	340		$	590		$	1,306		$	109		$	340		$	590		$	1,306

PRINCIPAL INVESTMENT STRATEGIES

For purposes of its investment objective, the Fund uses the volatility of the Barclays Municipal Bond Index as an approximation of reasonable risk. To pursue its objective, under normal market conditions, the Fund invests at least 80% of its net assets in municipal bonds that pay interest exempt from federal income tax and California personal income tax. If the interest on a municipal bond meets these standards, the Fund will treat the bond as qualifying for purposes of the 80% requirement even if the issuer is located outside of California. Under normal market conditions, the Fund invests primarily in

PROSPECTUS – CALIFORNIA TAX FREE FUND

The Fund may invest in all types of municipal bonds, including general obligation bonds, revenue bonds, and municipal leases. The Fund may invest up to 20% of its net assets in municipal bonds that pay interest subject to the federal alternative minimum tax (“AMT”), including certain private activity bonds (commonly referred to as “AMT paper”). Although the Fund is permitted to invest up to 20% of its net assets in fixed income securities that pay interest subject to federal and California personal income taxes, the Fund presently has no intention of investing in this manner. These bonds may include municipal bonds issued by other states, which may be exempt from federal income tax but not from California income tax. The Fund will not invest 25% or more of its total assets in any industry; however, this limitation does not apply to tax-exempt securities issued by governments or their political subdivisions. The Fund may invest in both insured and uninsured municipal bonds.

The Fund’s dollar-weighted average maturity generally is expected to be between ten and twenty-five years, but will vary with market conditions.

PROSPECTUS – CALIFORNIA TAX FREE FUND

PRINCIPAL RISKS

The following is a summary of certain risks that could adversely affect the Fund’s performance or increase volatility:

•

Nondiversification Risk – Because the Fund is nondiversified, it will be more exposed to risks from a single adverse economic, political, or regulatory event than a diversified fund.

PROSPECTUS – CALIFORNIA TAX FREE FUND

•

State Specific Risk – Because the Fund focuses on the State of California, the Fund’s performance may be more affected by local, state, and regional factors than a fund that invests in municipal bonds issued in many states. These factors may include decreased tax revenues, budget deficits, statutory limitations on tax increases, changes in legislation or policies, adverse economic or political changes and changes in the credit ratings assigned to California’s municipal issuers. There also is a risk that the supply of California municipal bonds may be inadequate. In addition, the Fund’s performance also can be tied to the economic and political changes of U.S. territories and possessions, including Puerto Rico. All of this could have significant consequences for the Fund because a worsening of the economic position of a state or other issuer of bonds in which the Fund invests could lower the value of the Fund’s investments and could cause you to lose money.

•

Call Risk – A substantial portion of municipal bonds are “callable”, meaning they give the issuer the right to call or redeem the bonds before maturity. As interest rates decline, these bond issuers may pay off their loans early by buying back the bonds, thus depriving the Fund of above market interest rates. Moreover, the Fund may have to reinvest the prepayment proceeds in lower yielding securities.

•

Credit Risk – Municipal bonds are subject to the risk that the issuer of a security may not make interest and principal payments as they become due or may default altogether. In addition, 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 based upon the economic and fiscal conditions of each issuer and the municipalities, agencies, instrumentalities, and other issuers within the state, territory or possession. Insured municipal bonds have the credit risk of the insurer in addition to the credit risk of the underlying investment being insured. A decline in the credit quality of private activity bonds usually is directly related to a decline in the credit standing of the private user of the facility.

•

Industry Risk – Nongovernmental users of facilities financed by tax-exempt revenue bonds (e.g. companies in the electric utility and health care industries) may have difficulty making payments on their obligations in the event of an economic downturn. This would negatively affect the valuation of bonds issued by such facilities.

•

Derivatives Risk – Loss may result from the Fund’s investments in futures contracts, inverse floaters and other derivative instruments. These instruments may be leveraged so that small changes may produce disproportionate and substantial losses to the Fund. They also may increase

PROSPECTUS – CALIFORNIA TAX FREE FUND

the Fund’s interest rate risk and may cause the Fund to realize a limited amount of taxable income. Losses also may arise from the failure of a derivative counterparty to meet its contractual obligations.

•

Extension Risk – Rising interest rates may cause payments to occur at a slower-than-expected rate, extending the duration of a bond and typically reducing its value.

•

Governmental Risk – Government actions, including actions by local, state and regional governments, could have an adverse effect on municipal bond prices.

•

Interest Rate Risk – As interest rates rise, prices of bonds (including tax-exempt bonds) generally fall, causing the Fund’s investments typically to lose value. Interest rate changes typically have a greater effect on the price of longer-term bonds, including inverse floaters, than on shorter-term bonds.

•

Liquidity Risk – It may be difficult for the Fund to sell certain securities, including below investment grade municipal bonds, in a timely manner and at their stated value, which could result in losses to the Fund. In addition, the Fund could experience a loss when selling securities to meet redemption requests if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid.

•

Taxability Risk – The Internal Revenue Service (“IRS”) has announced that holders of tax-exempt bonds have risks that their tax-exempt income may be reclassified as taxable if the bonds that they own were issued in an abusive transaction. Although the Fund attempts to purchase only bona fide tax-exempt securities (except for its ability to invest up to 20% of its net assets in municipal bonds that pay interest subject to AMT and fixed income securities that pay interest that is subject to regular federal and California income taxes), there is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-exempt income.

PERFORMANCE

PROSPECTUS – CALIFORNIA TAX FREE FUND

and after taxes, is not necessarily an indication of how the Fund will perform in the future. No performance is shown for P shares because the Fund has not issued P shares as of the date of this prospectus.

Bar Chart (per calendar year) — Class A Shares


Best Quarter 3rd Q ’09 +10.78%		Worst Quarter 4th Q ’08 -7.03%

The table below shows how the Fund’s average annual total returns compare to the returns of a securities index. The Fund’s average annual total returns include applicable sales charges.

PROSPECTUS – CALIFORNIA TAX FREE FUND


Average Annual Total Returns (for the periods ended December 31, 2012)

Class		1 Year	5 Years	10 Years	Life of Class	Inception Date for Performance

Class A Shares

Before Taxes		9.38%	5.00%	4.06%	–

After Taxes on Distributions		9.38%	4.99%	4.06%	–

After Taxes on Distributions and Sale of Fund Shares		7.51%	4.90%	4.06%	–

Class C Shares		10.06%	4.78%	3.62%	–

Class F Shares		11.99%	5.58%	–	5.25%	9/28/2007

Class I Shares		12.02%	–	–	13.57%	1/31/2011

Index

	Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)	6.78%	5.91%	5.10%	5.89% 9.55%	9/28/2007 1/31/2011

MANAGEMENT

Investment Adviser. The Fund’s investment adviser is Lord, Abbett & Co. LLC.

Portfolio Managers. The portfolio managers jointly and primarily responsible for the day-to-day management of the Fund are:


Portfolio Manager/Title		Member of the Investment Management Team Since

Daniel S. Solender, Partner and Director		2006

Paul A. Langlois, Portfolio Manager		2012

PURCHASE AND SALE OF FUND SHARES

The minimum initial and additional amounts shown below vary depending on the class of shares you buy and the type of account. Certain financial intermediaries may impose different restrictions than those described below. For Class I shares, the minimum investment shown below applies to certain types of institutional investors, but does not apply to registered investment advisers or retirement and benefit plans otherwise eligible to invest in Class I shares. Class P shares are closed to substantially all new investors. See “Choosing a Share Class – Investment Minimums” in the prospectus for more information.

PROSPECTUS – CALIFORNIA TAX FREE FUND

Investment Minimums — Initial/Additional Investments

Class

A and C

F and P

I

General and IRAs without Invest-A-Matic Investments

$1,000/No minimum

No minimum

$1 million minimum

Invest-A-Matic Accounts

$250/$50

N/A

N/A

IRAs, SIMPLE and SEP Accounts with Payroll Deductions

No minimum

N/A

N/A

Fee-Based Advisory Programs and Retirement and Benefit Plans

No minimum

No minimum

No minimum

TAX INFORMATION

The Fund’s distributions of interest on municipal bonds generally are not subject to federal income tax or California personal income tax; however the Fund may distribute taxable dividends, including distributions of short-term and long-term capital gains. In addition, interest on certain bonds may be subject to the federal alternative minimum tax. To the extent that the Fund’s distributions are derived from interest on bonds that are not exempt from California personal income tax or local taxes, such distributions will be subject to such state and local taxes.

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

PROSPECTUS – CALIFORNIA TAX FREE FUND

NEW JERSEY TAX FREE FUND

INVESTMENT OBJECTIVE

FEES AND EXPENSES


Shareholder Fees (Fees paid directly from your investment)

Class	A	F, I, and P

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	2.25%	None

Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)	None ⁽¹⁾	None


Annual Fund Operating Expenses (Expenses that you pay each year as a percentage of the value of your investment)

Class		A	F	I	P

Management Fees		0.45%	0.45%	0.45%	0.45%

Distribution and Service (12b-1) Fees		0.20%	0.10%	None	0.45%

Total Other Expenses		0.19%	0.19%	0.19%	0.19%

Interest and Related Expenses from Inverse Floaters		0.02%	0.02%	0.02%	0.02%

Other Expenses		0.17%	0.17%	0.17%	0.17%

Total Annual Fund Operating Expenses		0.84%	0.74%	0.64% ⁽²⁾	1.09%

⁽¹⁾	A contingent deferred sales charge (“CDSC”) of 1.00% may be assessed on certain Class A shares purchased or acquired without a sales charge if they are redeemed before the first day of the month of the one-year anniversary of the purchase.
⁽²⁾	This amount has been updated from fiscal year amounts to reflect current fees and expenses.

PROSPECTUS – NEW JERSEY TAX FREE FUND

Example


Class	If Shares Are Redeemed												If Shares Are Not Redeemed

	1 Year			3 Years			5 Years			10 Years			1 Year			3 Years			5 Years			10 Years

Class A Shares		$	309		$	487		$	680		$	1,239		$	309		$	487		$	680		$	1,239

Class F Shares		$	76		$	237		$	411		$	918		$	76		$	237		$	411		$	918

Class I Shares		$	65		$	205		$	357		$	798		$	65		$	205		$	357		$	798

Class P Shares		$	111		$	347		$	601		$	1,329		$	111		$	347		$	601		$	1,329

PRINCIPAL INVESTMENT STRATEGIES

For purposes of its investment objective, the Fund uses the volatility of the Barclays Municipal Bond Index as an approximation of reasonable risk. To pursue its objective, under normal market conditions, the Fund invests at least 80% of its net assets in municipal bonds that pay interest exempt from federal income tax and New Jersey personal income tax. If the interest on a municipal bond meets these standards, the Fund will treat the bond as qualifying for purposes of the 80% requirement even if the issuer is located outside of New Jersey. Under normal market conditions, the Fund invests primarily in investment grade municipal bonds. Investment grade municipal bonds are rated BBB/Baa or higher (at the time of purchase) by an independent rating agency or are unrated but deemed by Lord Abbett to be of comparable quality.

PROSPECTUS – NEW JERSEY TAX FREE FUND

The Fund may invest in all types of municipal bonds, including general obligation bonds, revenue bonds, and municipal leases. The Fund may invest up to 20% of its net assets in municipal bonds that pay interest subject to the federal alternative minimum tax (“AMT”), including certain private activity bonds (commonly referred to as “AMT paper”). Although the Fund is permitted to invest up to 20% of its net assets in fixed income securities that pay interest subject to federal and New Jersey personal income taxes, the Fund presently has no intention of investing in this manner. These bonds may include municipal bonds issued by other states, which may be exempt from federal income tax but not from New Jersey income tax. The Fund will not invest 25% or more of its total assets in any industry; however, this limitation does not apply to tax-exempt securities issued by governments or their political subdivisions. The Fund may invest in both insured and uninsured municipal bonds.

The Fund’s dollar-weighted average maturity generally is expected to be between ten and twenty-five years, but will vary with market conditions.

PROSPECTUS – NEW JERSEY TAX FREE FUND

PRINCIPAL RISKS

The following is a summary of certain risks that could adversely affect the Fund’s performance or increase volatility:

•

Nondiversification Risk – Because the Fund is nondiversified, it will be more exposed to risks from a single adverse economic, political, or regulatory event than a diversified fund.

PROSPECTUS – NEW JERSEY TAX FREE FUND

•

State Specific Risk – Because the Fund focuses on the State of New Jersey, the Fund’s performance may be more affected by local, state, and regional factors than a fund that invests in municipal bonds issued in many states. These factors may include decreased tax revenues, budget deficits, changes in legislation or policies, adverse economic or political changes and changes in the credit ratings assigned to New Jersey’s municipal issuers. There also is a risk that the supply of New Jersey municipal bonds may be inadequate. In addition, the Fund’s performance also can be tied to the economic and political changes of U.S. territories and possessions, including Puerto Rico. All of this could have significant consequences for the Fund because a worsening of the economic position of a state or other issuer of bonds in which the Fund invests could lower the value of the Fund’s investments and could cause you to lose money.

•

Call Risk – A substantial portion of municipal bonds are “callable”, meaning they give the issuer the right to call or redeem the bonds before maturity. As interest rates decline, these bond issuers may pay off their loans early by buying back the bonds, thus depriving the Fund of above market interest rates. Moreover, the Fund may have to reinvest the prepayment proceeds in lower yielding securities.

•

Credit Risk – Municipal bonds are subject to the risk that the issuer of a security may not make interest and principal payments as they become due or may default altogether. In addition, 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 based upon the economic and fiscal conditions of each issuer and the municipalities, agencies, instrumentalities, and other issuers within the state, territory or possession. Insured municipal bonds have the credit risk of the insurer in addition to the credit risk of the underlying investment being insured. A decline in the credit quality of private activity bonds usually is directly related to a decline in the credit standing of the private user of the facility.

•

Industry Risk – Nongovernmental users of facilities financed by tax-exempt revenue bonds (e.g. companies in the electric utility and health care industries) may have difficulty making payments on their obligations in the event of an economic downturn. This would negatively affect the valuation of bonds issued by such facilities.

•

Derivatives Risk – Loss may result from the Fund’s investments in futures contracts, inverse floaters and other derivative instruments. These instruments may be leveraged so that small changes may produce disproportionate and substantial losses to the Fund. They also may increase the Fund’s interest rate risk and may cause the Fund to realize a limited amount of taxable income. Losses also may arise from the failure of a derivative counterparty to meet its contractual obligations.

PROSPECTUS – NEW JERSEY TAX FREE FUND

•

Extension Risk – Rising interest rates may cause payments to occur at a slower-than-expected rate, extending the duration of a bond and typically reducing its value.

•

Governmental Risk – Government actions, including actions by local, state and regional governments, could have an adverse effect on municipal bond prices.

•

Interest Rate Risk – As interest rates rise, prices of bonds (including tax-exempt bonds) generally fall, causing the Fund’s investments typically to lose value. Interest rate changes typically have a greater effect on the price of longer-term bonds, including inverse floaters, than on shorter-term bonds.

•

Liquidity Risk – It may be difficult for the Fund to sell certain securities, including below investment grade municipal bonds, in a timely manner and at their stated value, which could result in losses to the Fund. In addition, the Fund could experience a loss when selling securities to meet redemption requests if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid.

•

Taxability Risk – The Internal Revenue Service (“IRS”) has announced that holders of tax-exempt bonds have risks that their tax-exempt income may be reclassified as taxable if the bonds that they own were issued in an abusive transaction. Although the Fund attempts to purchase only bona fide tax-exempt securities (except for its ability to invest up to 20% of its net assets in municipal bonds that pay interest subject to AMT and fixed income securities that pay interest that is subject to regular federal and New Jersey income taxes), there is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-exempt income.

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, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. No performance is shown for Class P shares because the Fund has not issued Class P shares as of the date of this prospectus.

PROSPECTUS – NEW JERSEY TAX FREE FUND

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 charge applicable to Class A shares. If the sales charge were reflected, returns would be lower. Performance for the Fund’s other share classes will vary due to the different expenses the class bears. Updated performance information is available at www.lordabbett.com or by calling 888-522-2388.

Bar Chart (per calendar year) — Class A Shares


Best Quarter 3rd Q ‘09 +9.08%		Worst Quarter 4th Q ’08 -8.57%

The table below shows how the Fund’s average annual total returns compare to the returns of a securities index. The Fund’s average annual total returns include applicable sales charges.

The after-tax returns of Class A shares included in the table below are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. In some cases, the return after taxes on distributions and sale of Fund shares may exceed the return before taxes due to a tax benefit resulting from realized losses on a sale of Fund shares at the end of the period that is used to offset other gains. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax- deferred arrangements such as 401(k) plans or Individual Retirement Accounts (“IRAs”). After-tax returns for the other share class are not shown in the table and will vary from those shown for Class A shares.

PROSPECTUS – NEW JERSEY TAX FREE FUND


Average Annual Total Returns (for the periods ended December 31, 2012)

Class	1 Year	5 Years	10 Years	Life of Class	Inception Date for Performance

Class A Shares

Before Taxes	8.23%	4.65%	3.74%	–

After Taxes on Distributions	8.23%	4.64%	3.74%	–

After Taxes on Distributions and Sale of Fund Shares	6.70%	4.57%	3.78%	–

Class F Shares	10.82%	5.21%	–	4.89%	9/28/2007

Class I Shares	10.98%	–	–	12.27%	1/31/2011

Index

Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)	6.78%	5.91%	5.10%	5.89% 9.55%	9/28/2007 1/31/2011

MANAGEMENT

Investment Adviser. The Fund’s investment adviser is Lord, Abbett & Co. LLC.

Portfolio Managers. The portfolio managers jointly and primarily responsible for the day-to-day management of the Fund are:


Portfolio Manager/Title		Member of the Investment Management Team Since

Daniel S. Solender, Partner and Director		2006

Philip B. Herman, Portfolio Manager		2010

PURCHASE AND SALE OF FUND SHARES

The minimum initial and additional amounts shown below vary depending on the class of shares you buy and the type of account. Certain financial intermediaries may impose different restrictions than those described below. For Class I shares, the minimum investment shown below applies to certain types of institutional investors, but does not apply to registered investment advisers or retirement and benefit plans otherwise eligible to invest in Class I shares. Class P shares are closed to substantially all new investors. See “Choosing a Share Class – Investment Minimums” in the prospectus for more information.

PROSPECTUS – NEW JERSEY TAX FREE FUND

Investment Minimums — Initial/Additional Investments

Class

A

F and P

I

General and IRAs without Invest-A-Matic Investments

$1,000/No minimum

No minimum

$1 million minimum

Invest-A-Matic Accounts

$250/$50

N/A

N/A

IRAs, SIMPLE and SEP Accounts with Payroll Deductions

No minimum

N/A

N/A

Fee-Based Advisory Programs and Retirement
and Benefit Plans

No minimum

No minimum

No minimum

TAX INFORMATION

The Fund’s distributions of interest on municipal bonds generally are not subject to federal income tax or New Jersey personal income tax; however the Fund may distribute taxable dividends, including distributions of short-term and long-term capital gains. In addition, interest on certain bonds may be subject to the federal alternative minimum tax. To the extent that the Fund’s distributions are derived from interest on bonds that are not exempt from New Jersey personal income tax or local taxes, such distributions will be subject to such state and local taxes.

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

PROSPECTUS – NEW JERSEY TAX FREE FUND

NEW YORK TAX FREE FUND

INVESTMENT OBJECTIVE

The investment objective of the Fund is to seek the maximum amount of interest income exempt from federal income tax as is consistent with reasonable risk. The Fund also seeks as high a level of interest income exempt from the personal income tax of New York State as is consistent with reasonable risk. The Fund also seeks as high a level of interest income exempt from New York City personal income tax as is consistent with reasonable risk.

FEES AND EXPENSES


Shareholder Fees (Fees paid directly from your investment)

Class	A	C	F, I, and P

Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	2.25%	None	None

Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower)	None ⁽¹⁾	1.00% ⁽²⁾	None

PROSPECTUS – NEW YORK TAX FREE FUND

Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)

Class

A

C

F

I

P

Management Fees

0.45%

0.45%

0.45%

0.45%

0.45%

Distribution and Service (12b-1) Fees

0.20%

0.85% ⁽³⁾⁽⁴⁾

0.10%

None

0.45%

Total Other Expenses

0.19%

0.19%

0.19%

0.19%

0.19%

Interest and Related Expenses from Inverse Floaters

0.06%

0.06%

0.06%

0.06%

0.06%

Other Expenses

0.13%

0.13%

0.13%

0.13%

0.13%

Total Annual Fund Operating Expenses

0.84%

1.49% ⁽⁴⁾

0.74%

0.64%

1.09%

⁽¹⁾

A contingent deferred sales charge (“CDSC”) of 1.00% may be assessed on certain Class A shares purchased or acquired without a sales charge if they are redeemed before the first day of the month of the one-year anniversary of the purchase.

⁽²⁾

A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.

⁽³⁾

The 12b-1 fee the Fund will pay on Class C shares will be a blended rate calculated based on (i) 1.00% of the Fund’s average daily net assets attributable to shares held for less than one year and (ii) 0.80% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C shareholders of the Fund will bear 12b-1 fees at the same rate.

⁽⁴⁾

This amount has been updated from fiscal year amounts to reflect current fees and expenses.

Example


Class	If Shares Are Redeemed												If Shares Are Not Redeemed

	1 Year			3 Years			5 Years			10 Years			1 Year			3 Years			5 Years			10 Years

Class A Shares		$	309		$	487		$	680		$	1,239		$	309		$	487		$	680		$	1,239

Class C Shares		$	252		$	471		$	813		$	1,779		$	152		$	471		$	813		$	1,779

Class F Shares		$	76		$	237		$	411		$	918		$	76		$	237		$	411		$	918

Class I Shares		$	65		$	205		$	357		$	798		$	65		$	205		$	357		$	798

Class P Shares		$	111		$	347		$	601		$	1,329		$	111		$	347		$	601		$	1,329

PROSPECTUS – NEW YORK TAX FREE FUND

PRINCIPAL INVESTMENT STRATEGIES

For purposes of its investment objective, the Fund uses the volatility of the Barclays Municipal Bond Index as an approximation of reasonable risk. To pursue its objective, under normal market conditions, the Fund invests at least 80% of its net assets in municipal bonds that pay interest exempt from federal, New York State, and New York City personal income tax. If the interest on a municipal bond meets these standards, the Fund will treat the bond as qualifying for purposes of the 80% requirement even if the issuer is located outside of New York State or New York City. Under normal market conditions, the Fund invests primarily in investment grade municipal bonds. Investment grade municipal bonds are rated BBB/Baa or higher (at the time of purchase) by an independent rating agency or are unrated but deemed by Lord Abbett to be of comparable quality.

The Fund may invest in all types of municipal bonds, including general obligation bonds, revenue bonds, and municipal leases. The Fund may invest up to 20% of its net assets in municipal bonds that pay interest subject to the federal alternative minimum tax (“AMT”), including certain private activity bonds (commonly referred to as “AMT paper”). Although the Fund is permitted to invest up to 20% of its net assets in fixed income securities that pay interest subject to federal, New York State, and New York City income taxes, the Fund presently has no intention of investing in this manner. These bonds may include municipal bonds issued by other states, which may be exempt from federal income tax but not from New York State and New York City income taxes. The Fund will not invest 25% or more of its total assets in any industry; however, this limitation does not apply to tax-exempt securities issued by governments or their political subdivisions. The Fund may invest in both insured and uninsured municipal bonds.

PROSPECTUS – NEW YORK TAX FREE FUND

The Fund’s dollar-weighted average maturity generally is expected to be between ten and twenty-five years, but will vary with market conditions.

PRINCIPAL RISKS

The following is a summary of certain risks that could adversely affect the Fund’s performance or increase volatility:

•

PROSPECTUS – NEW YORK TAX FREE FUND

•

Municipal Bond Risk – Municipal bonds are subject to the same risks affecting fixed income securities in general. In addition, the price of municipal bonds may be adversely affected by legislative or political changes, tax rulings, judicial action, changes in market and economic conditions, and the fiscal condition of the municipal issuer. The market for municipal bonds generally is less liquid than other securities markets, which may make it more difficult for the Fund to sell its bonds.

•

Below Investment Grade Municipal Bond Risk – Below investment grade municipal bonds typically pay a higher yield than investment grade municipal bonds, but may have greater price fluctuations and have a higher risk of default than investment grade municipal bonds. The market for below investment grade municipal bonds may be less liquid, which may make such bonds more difficult to sell at an acceptable price, especially during periods of increased market volatility or significant market decline.

•

Nondiversification Risk – Because the Fund is nondiversified, it will be more exposed to risks from a single adverse economic, political, or regulatory event than a diversified fund.

•

State Specific Risk – Because the Fund focuses on New York State and New York City, the Fund’s performance may be more affected by local, state, and regional factors than a fund that invests in municipal bonds issued in many states. These factors may include decreased tax revenues, budget deficits, changes in legislation or policies, adverse economic or political changes and changes in the credit ratings assigned to New York’s municipal issuers. There also is a risk that the supply of New York municipal bonds may be inadequate. In addition, the Fund’s performance also can be tied to the economic and political changes of U.S. territories and possessions, including Puerto Rico. All of this could have significant consequences for the Fund because a worsening of the economic position of a state or other issuer of bonds in which the Fund invests could lower the value of the Fund’s investments and could cause you to lose money.

•

Call Risk – A substantial portion of municipal bonds are “callable,” meaning they give the issuer the right to call or redeem the bonds before maturity. As interest rates decline, these bond issuers may pay off their loans early by buying back the bonds, thus depriving the Fund of above market interest rates. Moreover, the Fund may have to reinvest the prepayment proceeds in lower yielding securities.

•

Credit Risk – Municipal bonds are subject to the risk that the issuer of a security may not make interest and principal payments as they become due or may default altogether. In addition, 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 based upon the economic and fiscal

PROSPECTUS – NEW YORK TAX FREE FUND

conditions of each issuer and the municipalities, agencies, instrumentalities, and other issuers within the state, territory or possession. Insured municipal bonds have the credit risk of the insurer in addition to the credit risk of the underlying investment being insured. A decline in the credit quality of private activity bonds usually is directly related to a decline in the credit standing of the private user of the facility.

•

Industry Risk – Nongovernmental users of facilities financed by tax-exempt revenue bonds (e.g. companies in the electric utility and health care industries) may have difficulty making payments on their obligations in the event of an economic downturn. This would negatively affect the valuation of bonds issued by such facilities.

•

Derivatives Risk – Loss may result from the Fund’s investments in futures contracts, inverse floaters and other derivative instruments. These instruments may be leveraged so that small changes may produce disproportionate and substantial losses to the Fund. They also may increase the Fund’s interest rate risk and may cause the Fund to realize a limited amount of taxable income. Losses also may arise from the failure of a derivative counterparty to meet its contractual obligations.

•

Extension Risk – Rising interest rates may cause payments to occur at a slower-than-expected rate, extending the duration of a bond and typically reducing its value.

•

Governmental Risk – Government actions, including actions by local, state and regional governments, could have an adverse effect on municipal bond prices.

•

Interest Rate Risk – As interest rates rise, prices of bonds (including tax-exempt bonds) generally fall, causing the Fund’s investments typically to lose value. Interest rate changes typically have a greater effect on the price of longer-term bonds, including inverse floaters, than on shorter-term bonds.

•

Liquidity Risk – It may be difficult for the Fund to sell certain securities, including below investment grade municipal bonds, in a timely manner and at their stated value, which could result in losses to the Fund. In addition, the Fund could experience a loss when selling securities to meet redemption requests if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining prices for the securities sold, or when the securities the Fund wishes to or is required to sell are illiquid.

•

Taxability Risk – The Internal Revenue Service (“IRS”) has announced that holders of tax-exempt bonds have risks that their tax-exempt income may be reclassified as taxable if the bonds that they own were issued in an abusive transaction. Although the Fund attempts to purchase only bona fide tax-exempt securities (except for its ability to invest up to 20% of its net assets in

PROSPECTUS – NEW YORK TAX FREE FUND

municipal bonds that pay interest subject to AMT and fixed income securities that pay interest that is subject to regular federal income tax, New York State, and New York City personal income taxes), there is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-exempt income.

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, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. No performance is shown for Class P shares because the Fund has not issued Class P shares as of the date of this prospectus.

PROSPECTUS – NEW YORK TAX FREE FUND

Bar Chart (per calendar year) — Class A Shares


Best Quarter 3rd Q ’09 +9.49%		Worst Quarter 3rd Q ’08 -6.36%

The table below shows how the Fund’s average annual total returns compare to the returns of a securities index. The Fund’s average annual total returns include applicable sales charges.

PROSPECTUS – NEW YORK TAX FREE FUND

Average Annual Total Returns
(for the periods ended December 31, 2012)

Class

1 Year

5 Years

10 Years

Life of Class

Inception
Date for
Performance

Class A Shares

Before Taxes

7.99%

5.15%

4.17%

–

After Taxes on Distributions

7.99%

5.15%

4.17%

–

After Taxes on Distributions and Sale of Fund Shares

6.54%

5.02%

4.17%

–

Class C Shares

8.83%

4.92%

3.72%

–

Class F Shares

10.62%

5.75%

–

5.43%

9/28/2007

Class I Shares

10.85%

–

–

11.34%

1/31/2011

Index

Barclays Municipal Bond Index
(reflects no deduction for fees, expenses, or taxes)

6.78%

5.91%

5.10%

5.89%
9.55%

9/28/2007
1/31/2011

MANAGEMENT

Investment Adviser. The Fund’s investment adviser is Lord, Abbett & Co. LLC.

Portfolio Managers. The portfolio managers jointly and primarily responsible for the day-to-day management of the Fund are:


Portfolio Manager/Title		Member of the Investment Management Team Since

Daniel S. Solender, Partner and Director		2006

Philip B. Herman, Portfolio Manager		2010

PURCHASE AND SALE OF FUND SHARES

The minimum initial and additional amounts shown below vary depending on the class of shares you buy and the type of account. Certain financial intermediaries may impose different restrictions than those described below. For Class I shares, the minimum investment shown below applies to certain types of institutional investors, but does not apply to registered investment advisers or retirement and benefit plans otherwise eligible to invest in Class I shares. Class P shares are closed to substantially all new investors. See “Choosing a Share Class – Investment Minimums” in the prospectus for more information.

PROSPECTUS – NEW YORK TAX FREE FUND

TAX INFORMATION

The Fund’s distributions of interest on municipal bonds generally are not subject to federal income tax or New York State or New York City personal income tax; however the Fund may distribute taxable dividends, including distributions of short-term and long-term capital gains. In addition, interest on certain bonds may be subject to the federal alternative minimum tax. To the extent that the Fund’s distributions are derived from interest on bonds that are not exempt from New York State or New York City personal income tax, such distributions will be subject to such state and local taxes.

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

PROSPECTUS – NEW YORK TAX FREE FUND

INVESTMENT OBJECTIVE

All Funds (except for the High Yield Municipal Bond Fund)

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 Short Duration Tax Free Fund, Intermediate Tax Free Fund, AMT Free Municipal Bond Fund, and National Tax Free Fund) also seeks as high a level of interest income exempt from the personal income tax of its corresponding state as is consistent with reasonable risk. The New York Tax Free Fund also seeks as high a level of interest income exempt from New York City personal income tax as is consistent with reasonable risk.

High Yield Municipal Bond Fund Only

The investment objective of the Fund is to seek a high level of income exempt from federal income tax.

PRINCIPAL INVESTMENT STRATEGIES

All Funds (except for the High Yield Municipal Bond Fund)

For purposes of pursuing each Fund’s investment objective, each Fund (except for Intermediate Tax Free Fund and Short Duration Tax Free Fund) uses the volatility of the Barclays Municipal Bond Index to approximate reasonable risk. Intermediate Tax Free Fund uses the volatility of the Barclays Municipal Bond Index: 7 Year (6-8) as an approximation of reasonable risk and Short Duration Tax Free Fund uses the Barclays Municipal Bond Index: 1 Year (1-2) as an approximation of reasonable risk. Volatility measures the level of price fluctuations in a Fund’s holdings.

To pursue its investment objective, under normal market conditions, each of Short Duration Tax Free Fund, Intermediate Tax Free Fund, AMT Free Municipal Bond Fund, and National Tax Free Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in municipal bonds that pay interest exempt from federal income tax. To pursue its investment objective, under normal market conditions, each of California Tax Free Fund, New Jersey Tax Free Fund, and New York Tax Free Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in municipal bonds that pay interest exempt from federal income tax and the corresponding state’s personal income tax and, in the case of New York Tax Free Fund, New York City personal income tax. This policy may not be changed without shareholder approval. If the interest on a municipal bond meets the applicable standards described above, a Fund will treat the bond as qualifying for purposes of the 80% requirement even if the issuer is located outside of the named state or, in the case of New York Tax Free Fund, city. Each of California

PROSPECTUS – THE FUNDS

Tax Free Fund, New Jersey Tax Free Fund, and New York Tax Free Fund is nondiversified, which means it may invest a greater portion of its assets in a single issuer than a diversified fund.

Under normal market conditions, each Fund invests primarily in investment grade municipal bonds. Investment grade bonds are rated, at the time of purchase, within the four highest grades assigned by a nationally recognized statistical rating organization such as Moody’s Investors Service, Inc. (“Moody’s”) (Aaa, Aa, A, Baa), Standard & Poor’s Ratings Services (“S&P”), or Fitch Ratings (“Fitch”) (“AAA, AA, A, BBB”) (“Moody’s,” “S&P,” and “Fitch,” respectively; each, an “NRSRO”) or are unrated by NRSROs but deemed by Lord Abbett to be of comparable quality. Each Fund (except for National Tax Free Fund and AMT Free Municipal Bond Fund) may invest up to 20% of its net assets in lower rated municipal bonds. Each of National Tax Free Fund and AMT Free Municipal Bond Fund may invest up to 35% of its net assets in lower rated municipal bonds. Lower rated municipal bonds are rated, at the time of purchase, Ba or lower by Moody’s or BB or lower by S&P or Fitch or are unrated by NRSROs but deemed by Lord Abbett to be of comparable quality (commonly referred to as “below investment grade,” “high yield,” or “junk” bonds).

Each Fund may invest in a variety of municipal bonds, including general obligation bonds, revenue bonds, and municipal leases. Municipal bonds are debt securities issued by or on behalf of states, territories, and possessions of the U.S. (including the District of Columbia) and their political subdivisions, agencies, and instrumentalities that provide income that generally is exempt from federal, state, and/or local personal income taxes. Municipal bonds generally are divided into two types: (1) general obligation bonds, which are secured by the full faith and credit of the issuer and its taxing authority; and (2) revenue bonds, which are payable only from revenues derived from a particular facility or source, including bridges, tolls, or sewer services. Industrial development bonds and private activity bonds are considered revenue bonds. Certain private activity bonds are not tax-exempt. Each Fund may invest in insured municipal bonds covered by insurance policies that guarantee timely payment of principal and interest. The insurance policies do not guarantee the value of the bonds themselves or the value of a Fund’s shares.

Each Fund also may invest in variable rate demand notes. Variable rate demand notes are long-term floating rate bonds issued by municipalities, which give the bondholder the right to put the bonds back to a financial intermediary for payment with as little as one to seven days’ notice.

Each Fund (except for AMT Free Municipal Bond Fund) may invest up to 20% of its net assets in municipal bonds that pay interest that is subject to the federal alternative minimum tax (“AMT”), including certain private activity bonds (commonly referred to as “AMT paper”). Although each Fund (except for AMT

PROSPECTUS – THE FUNDS

Free Municipal Bond Fund) is permitted to invest up to 20% of its net assets in fixed income securities that pay interest that is subject to federal, state, and local income taxes, the Funds presently have no intention of investing in this manner. As a non-fundamental policy (meaning it may be changed by the Board of Directors without shareholder approval), AMT Free Municipal Bond Fund will not invest in municipal bonds that pay interest subject to AMT. Although AMT Free Municipal Bond Fund is permitted to invest up to 20% of its net assets in fixed income securities that pay interest that is subject to regular federal income tax, the Fund presently has no intention of investing in this manner.

Each Fund will not invest more than 25% of its total assets in any industry; however, this limitation does not apply to tax-exempt securities issued by governments or their political subdivisions. Certain types of municipal securities (including general obligation, general appropriation, special assessment, and special tax bonds) are not considered a part of any “industry” for purposes of this industry concentration policy. Therefore, the Fund may invest more than 25% of its total assets in these types of municipal securities.

Each Fund may invest up to 15% of its net assets (measured at the time of investment) in illiquid securities that cannot be disposed of in seven days in the ordinary course of business at fair value. Illiquid securities include: securities that are not readily marketable; certain municipal leases and participation interests; repurchase agreements and time deposits with a notice or demand period of more than seven days; certain structured securities; certain distressed or defaulted securities; and certain restricted securities (i.e., securities with terms that limit their resale to other investors or require registration under the federal securities laws before they can be sold publicly) that Lord Abbett determines to be illiquid.

Each Fund may invest in derivatives for speculative purposes in an attempt to increase income, to manage portfolio duration, or to hedge against portfolio risks. Derivatives are financial instruments that derive their value from the value of an underlying asset, reference rate, or index. Each Fund may invest in the following types of derivatives:

•

Futures Contracts. Each Fund may enter into financial futures contracts for hedging purposes (including to hedge against changes in interest rates and security prices) or for non-hedging purposes (including to gain efficient exposure to markets and to minimize transaction costs). 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 (“OTC”) market. Each Fund currently is not regulated by the Commodity Futures Trading Commission as a commodity pool under the Commodity Exchange Act. Each Fund currently intends to limit its investments in derivatives to avoid such regulation, but a Fund may be subject to regulation as a commodity pool in the future.

PROSPECTUS – THE FUNDS

•

Inverse Floaters. Each Fund may invest up to 20% of its assets in inverse floaters. An inverse floater typically is created by depositing municipal bonds into a special purpose trust that issues short-term floating rate securities (“floaters”) to money market funds and other short-term investors and residual long-term floating rate securities known as “inverse floaters” to long-term investors like the Funds. Holders of the floaters receive coupon payments that reflect short-term tax-exempt interest rates. These rates generally are reset on a weekly basis. Within a specific notice period (usually seven days), holders of the floaters have the right to put such securities back to the trust for payment of par plus any accrued interest. The holder of the inverse floater receives a coupon rate equal to the interest accrued on the underlying bonds minus the coupon payable to the floaters and any fees payable to the trust. The interest payable on the inverse floater moves in the opposite direction of the interest rate payable on the floater. Accordingly, as short-term interest rates rise, inverse floaters are expected to produce less (or perhaps no) current income, but as short-term interest rates fall, inverse floaters are expected to produce more current income.

Each Fund may invest in securities of any maturity or duration. Duration is a mathematical concept that measures a portfolio’s exposure to interest rate changes. Under normal market conditions, each Fund (except for Intermediate Tax Free Fund and Short Duration Tax Free Fund) is expected to maintain a dollar- weighted average maturity of between ten and twenty-five years. Under normal market conditions, each of Intermediate Tax Free Fund and Short Duration Tax Free Fund is expected to maintain a dollar-weighted average maturity of between three and ten years and one and three years, respectively. Short Duration Tax Free Fund may invest in money market securities and their equivalents. However, Short Duration Tax Free Fund is not a money market fund and is not subject to the regulatory requirements applicable to money market funds.

Each Fund’s investment team focuses on the following elements in managing its portfolio: credit quality, which is an issuer’s ability to pay principal and interest when due; income tax exemption, which is the bond issuer’s ability to pay interest exempt from federal, state, and/or local personal income tax; total return potential, which is the return possibility for an investment over a period of time, including appreciation and interest; and call protection, which is assurance by an issuer that it will not redeem a bond earlier than anticipated. Each Fund may sell a security if it no longer meets the Fund’s investment criteria or for a variety of other reasons, including to secure gains, limit losses, maintain its duration, redeploy assets into opportunities believed to be more promising, or satisfy redemption requests, among others. In considering whether to sell a security, each Fund may evaluate factors including the condition of the economy, changes in the issuer’s competitive position or financial condition, changes in the outlook for the issuer’s industry, other buying opportunities in the market, and the

PROSPECTUS – THE FUNDS

impact of the security’s duration on the Fund’s overall duration. None of the Funds will be required to sell a security that has been downgraded after purchase; however, in these cases, each Fund will monitor the situation to determine whether it is advisable for the Fund to continue to hold the security.

Each Fund seeks to remain fully invested in accordance with its investment objective. However, in an attempt to respond to adverse market, economic, political or other conditions, each Fund may take a temporary defensive position by holding some or all of its assets in short-term investments. These investments include cash, commercial paper, money market instruments, repurchase agreements, and U.S. government securities. Taking a temporary defensive position could reduce tax-exempt income and prevent a Fund from achieving its investment objective.

High Yield Municipal Bond Fund Only

To pursue its investment objective, under normal market conditions, the Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in municipal bonds that pay interest exempt from federal income tax. Under normal market conditions, the Fund invests a substantial portion of its assets in lower rated municipal bonds (commonly referred to as “below investment grade,” “high yield,” or “junk” bonds). Lower rated municipal bonds are rated Ba or lower at the time of purchase by a nationally recognized statistical rating organization such as Moody’s Investors Service, Inc. (“Moody’s”) or BB or lower by Standard & Poor’s Ratings Services (“S&P”) or Fitch Ratings (“Fitch”) (“Moody’s,” “S&P,” and “Fitch,” respectively; each an “NRSRO”) or are unrated by a NRSRO but deemed by Lord Abbett to be of comparable quality. Although the Fund may invest in municipal bonds in any rating category, under normal market conditions, the Fund invests at least 50% of its net assets in municipal bonds that, at the time of purchase, are rated BBB/Baa or below by a NRSRO or are unrated by NRSROs but deemed by Lord Abbett to be of comparable quality. The Fund may invest without limitation in unrated municipal bonds, which may constitute a significant portion of the Fund’s portfolio. The Fund is nondiversified, which means it may invest a greater portion of its assets in a single issuer than a diversified fund.

The Fund may invest in defaulted securities (i.e., bonds on which the issuer has not paid principal or interest on time) and securities of issuers that are or may become involved in reorganizations, financial restructurings, or bankruptcy (commonly referred to as “distressed debt”). The Fund presently does not intend to invest more than 20% of its net assets (measured at the time of investment) in such defaulted or distressed securities. However, the Fund’s defaulted or distressed debt holdings may exceed this level from time to time if the Fund purchased securities that were not considered in default or distressed at their time of purchase and such securities subsequently become defaulted or distressed.

PROSPECTUS – THE FUNDS

These investment strategies should be considered to entail higher risk relative to strategies employed by funds that invest primarily in investment grade municipal bonds.

The Fund may invest in all types of municipal bonds, including general obligation bonds, revenue bonds, and municipal leases. Municipal bonds are debt securities issued by or on behalf of states, territories and possessions of the U.S. (including the District of Columbia) and their political subdivisions, agencies, and instrumentalities that provide income that generally is exempt from federal income taxes. Municipal bonds generally are divided into two types: (1) general obligation bonds, which are secured by the full faith and credit of the issuer and its taxing authority; and (2) revenue bonds, which are payable only from revenue derived from a particular facility or source, including bridges, tolls, or sewer services. Industrial development bonds and private activity bonds are considered revenue bonds. Certain private activity bonds are not tax-exempt. The Fund may invest in insured municipal bonds covered by insurance policies that guarantee timely payment of principal and interest. The insurance policies do not guarantee the value of the bonds themselves or the value of the Fund’s shares.

The Fund may invest up to 100% of its net assets in private activity bonds, a type of municipal bond that pays interest subject to the federal alternative minimum tax (“AMT”), including certain private activity bonds (commonly referred to as “AMT paper”). Although the Fund is permitted to invest up to 20% of its net assets in fixed income securities that pay interest that is subject to federal income tax, the Fund presently has no intention of investing in this manner.

The Fund will not invest more than 25% of its total assets in any industry; however, this limitation does not apply to tax-exempt securities issued by governments or their political subdivisions. Certain types of municipal securities (including general obligation, general appropriation, special assessment, and special tax bonds) are not considered a part of any “industry” for purposes of this industry concentration policy. Therefore, the Fund may invest more than 25% of its total assets in these types of municipal securities.

The Fund may invest up to 15% of its net assets (measured at the time of investment) in illiquid securities that cannot be disposed of in seven days in the ordinary course of business at fair value. Illiquid securities include: securities that are not readily marketable; certain municipal leases and participation interests; repurchase agreements and time deposits with a notice or demand period of more than seven days; certain structured securities; certain distressed or defaulted securities; and certain restricted securities (i.e., securities with terms that limit their resale to other investors or require registration under the federal securities laws before they can be sold publicly) that Lord Abbett determines to be illiquid.

PROSPECTUS – THE FUNDS

The Fund may invest in derivatives for speculative purposes in an attempt to increase income, to manage portfolio duration, or to hedge against portfolio risks. Derivatives are financial instruments that derive their value from the value of an underlying asset, reference rate, or index. The Fund may invest in the following types of derivatives:

•

Futures Contracts. The Fund may enter into financial futures contracts for hedging purposes (including to hedge against changes in interest rates and security prices) or for non-hedging purposes (including to gain efficient exposure to markets and to minimize transaction costs). 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 (“OTC”) market. The Fund currently is not regulated as a commodity pool under the Commodity Exchange Act. The Fund currently intends to limit its investments in derivatives to avoid such regulation, but the Fund may be subject to regulation as a commodity pool in the future.

•

Inverse Floaters. The Fund may invest up to 100% of its assets in inverse floaters. An inverse floater typically is created by depositing municipal bonds into a special purpose trust that issues short-term floating rate securities (“floaters”) to money market funds and other short-term investors and residual long-term floating rate securities known as “inverse floaters” to long-term investors like the Fund. Holders of the floaters receive coupon payments that reflect short-term tax-exempt interest rates. These rates generally are reset on a weekly basis. Within a specific notice period (usually seven days), holders of the floaters have the right to put such securities back to the trust for payment of par plus any accrued interest. The holder of the inverse floater receives a coupon rate equal to the interest accrued on the underlying bonds minus the coupon payable to the floaters and any fees payable to the trust. The interest payable on the inverse floater moves in the opposite direction of the interest rate payable on the floater. Accordingly, as short-term interest rates rise, inverse floaters are expected to produce less (or perhaps no) current income, but as short-term interest rates fall, inverse floaters are expected to produce more current income.

The Fund does not limit its investments to securities of a particular maturity. Under normal circumstances, the investment team intends to maintain the dollar-weighted average maturity of the Fund at between ten and twenty-five years.

The investment team focuses on research to select higher yielding securities that offer attractive value in terms of credit quality and yield. The Fund may sell a security if it no longer meets the Fund’s investment criteria or for a variety of other reasons, including to secure gains, limit losses, maintain its duration, redeploy assets into opportunities believed to be more promising, or satisfy redemption requests, among others. In considering whether to sell a security, the

PROSPECTUS – THE FUNDS

Fund may evaluate factors including the condition of the economy, changes in the issuer’s competitive position or financial condition, changes in the outlook for the issuer’s industry, other buying opportunities in the market, and the impact of the security’s duration on the Fund’s overall duration.

The Fund seeks to remain fully invested in accordance with its investment objective. However, in an attempt to respond to adverse market, economic, political or other conditions, the Fund may take a temporary defensive position by holding some or all of its assets in short-term investments. These investments include cash, commercial paper, money market instruments, repurchase agreements, and U.S. government securities. Taking a temporary defensive position could reduce tax-exempt income and prevent the Fund from achieving its investment objective.

PRINCIPAL RISKS

All Funds

The following risk factors may be applicable to each Fund to a greater or lesser extent depending on the particular Fund’s investment objectives and strategies. Risks that could adversely affect the Fund’s performance or increase volatility include the following:

•

Portfolio Management Risk – The strategies used and securities selected by a Fund’s portfolio management may fail to produce the intended result and such Fund may not achieve its objective. The securities selected for a Fund may not perform as well as other securities that were not selected for a Fund. As a result, a Fund may suffer losses or underperform other funds with the same investment objective or strategies, and may generate losses even in a rising market.

•

Fixed Income Securities Risk – Each Fund is subject to the general risks and considerations associated with investing in debt securities, including the risk that issuers will fail to make timely payments of principal or interest or default altogether. Typically, shorter-term bonds are less volatile than longer-term bonds; however, longer-term bonds typically offer higher yields and more stable interest income than shorter-term bonds. Lower rated municipal bonds in which a Fund may invest may be more volatile and may decline more in price in response to negative issuer developments or general economic news than higher rated securities. In addition, as interest rates rise, a Fund’s investments typically will lose value.

•

PROSPECTUS – THE FUNDS

the fiscal condition of the municipal issuer. The market for municipal bonds generally is less liquid than other securities markets, which may make it more difficult for the Fund to sell its bonds.

•

Below Investment Grade Municipal Bond Risk – Below investment grade municipal bonds typically pay a higher yield than investment grade municipal bonds, but they have a higher risk of default than investment grade municipal bonds, and their prices are much more volatile. The market for high yield municipal bonds may be less liquid and may be subject to greater credit risk than investment-grade municipal bonds. Below investment grade municipal bonds may be highly speculative and have poor prospects for reaching investment grade standing. Issuers of below investment grade municipal bonds generally are not as strong financially as those issuers with higher credit ratings, and are more likely to encounter financial difficulties, especially during periods of rising interest rates or other unfavorable economic or market conditions. Below investment grade municipal bonds are subject to the increased risk of an issuer’s inability to meet principal and interest obligations and a greater risk of default. These securities may be subject to greater price volatility due to such factors as specific municipal developments, interest rate sensitivity, negative perceptions of the junk bond markets generally and less secondary market liquidity. Some issuers of below investment grade bonds, may be more likely to default as to principal or interest payments after a Fund purchases their securities. A default, or concerns in the market about an increase in risk of default or the deterioration in the creditworthiness of an issuer, may result in losses to a Fund. A Fund may incur higher expenses to protect its interests in such securities and may lose its entire investment in defaulted bonds.

The secondary market for below investment grade municipal bonds is concentrated in relatively few market makers and is dominated by institutional investors, including mutual funds, insurance companies, and other financial institutions. As a result, the secondary market for such securities is not as liquid as, and is more volatile than, the secondary market for higher rated securities. In addition, market trading volume for lower rated securities is generally lower and the secondary market for such securities could shrink or disappear suddenly and without warning as a result of adverse market or economic conditions, independent of any specific adverse changes in the condition of a particular issuer. Because of the lack of sufficient market liquidity, the Fund may incur losses because it may be required to effect sales at a disadvantageous time and then only at a substantial drop in price. These factors may have an adverse effect on the market price and the Fund’s ability to dispose of particular portfolio investments. A less liquid secondary market also may make it more difficult for the Fund to obtain precise valuations of the below investment grade municipal bonds in its portfolio.

PROSPECTUS – THE FUNDS

•

Call Risk – A substantial portion of municipal bonds are “callable,” meaning they give the issuer the right to call or redeem the bonds before maturity. As interest rates decline, these bond issuers may pay off their loans early by buying back the bonds, thus depriving the Fund of above market interest rates. Moreover, the Fund may have to reinvest the prepayment proceeds in lower yielding securities.

•

Credit Risk – Municipal bonds are subject to the risk that the issuer of a security may not make interest and principal payments as they become due. In addition, 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 based on the economic and fiscal conditions of each issuer and the municipalities, agencies, instrumentalities, and other issuers within the state, territory or possession. Insurance or other credit enhancements supporting the Fund’s investment may be provided by either U.S. or foreign entities. These securities have the credit risk of the entity providing the credit support in addition to the credit risk of the underlying investment that is being enhanced. Credit support provided by foreign entities may be less certain because of the possibility of adverse foreign economic, political or legal developments that may affect the ability of the entity to meet its obligations. A change in the credit rating or the market’s perception of the creditworthiness of any of the municipal bond insurers that insure securities in a Fund’s portfolio may affect the value of the securities they insure, a Fund’s share prices, and Fund performance. A downgrading of an insurer’s credit rating or a default by the insurer could reduce the credit rating of an insured bond and, therefore, its value. The Funds also may be adversely affected by the inability of an insurer to meet its insurance obligations. In addition, a decline in the credit quality of a private activity bond usually is directly related to a decline in the credit standing of the private user of the facility.

•

Industry Risk – Nongovernmental users of facilities financed by tax-exempt revenue bonds (e.g. companies in the electric utility and health care industries) may have difficulty making payments on their obligations in the event of an economic downturn. This would negatively affect the valuation of bonds issued by such facilities. In addition, each industry is subject to its own risks: the electric utility industry is subject to rate regulation vagaries, while the health care industry faces two main challenges – affordability and access.

•

Distressed Debt Risk – Each Fund may hold securities of issuers that are, or are about to be, involved in reorganizations, financial restructurings, or bankruptcy (also known as “distressed debt”). To the extent that a Fund holds distressed debt, that Fund will be subject to the risk that it may lose a portion or all of its investment in the distressed debt and may incur higher

PROSPECTUS – THE FUNDS

expenses trying to protect its interests in distressed debt. In addition, a Fund may invest in additional securities of a defaulted issuer to retain a controlling stake in any bankruptcy proceeding or work-out. A Fund may receive taxable bonds in connection with the terms of a restructuring deal, which could result in taxable income to you. Moreover, it is unlikely that a liquid market will exist for a Fund to sell its holdings in distressed debt securities.

•

Derivatives Risk – To the extent that a Fund uses futures and other derivatives, the Fund will be exposed to the risk that the value of a derivative instrument does not move in correlation with the value of the underlying security, market index or interest rate, or moves in an opposite direction than anticipated by the Fund. Investing in derivatives also includes the risk that the derivatives will become illiquid and that the counterparty to the derivative instrument may fail to perform its obligations. Because derivatives may involve a small amount of cash relative to the total amount of the transaction, the magnitude of losses from derivatives may be greater than the amount originally invested by a Fund in the derivative instrument. In addition, the Fund will be required to segregate permissible liquid assets to cover its obligations under these transactions and may have to liquidate positions before it is desirable to do so to fulfill its requirements to segregate. There is no assurance that the Fund will be able to employ its derivatives strategy successfully. Whether the Fund’s use of derivatives is successful will depend on, among other things, the Fund’s ability to correctly forecast market movements, company and industry valuation levels and trends, and other factors. If the Fund incorrectly forecasts these and other factors, the Fund’s performance could suffer. Derivatives may be leveraged so that small changes may produce disproportionate and substantial losses to a Fund. Loss may result from a Fund’s investments in futures contracts, inverse floaters and other derivative instruments. They also may increase a Fund’s interest rate risk and may cause a Fund to realize a limited amount of taxable income.

•

Inverse Floater Risk – An inverse floater is a type of derivative debt instrument with a floating or variable interest rate that moves in the opposite direction of the interest rate on another security, normally the floating rate note. Because changes in the interest rate on the floating rate note inversely affect the interest paid on the inverse floater, the value and income of an inverse floater is generally more volatile than the value and income of a fixed rate municipal bond. Inverse floaters have interest rate adjustment formulas which generally reduce or eliminate the interest paid to a Fund when short-term interest rates rise, and increase the interest paid to a Fund when short-term interest rates fall. The value of inverse floaters also falls faster than the value of fixed rate municipal bonds when interest rates rise, and conversely, their value rises more rapidly when interest rates fall. Inverse floaters have varying degrees of liquidity, and the market for these securities is relatively

PROSPECTUS – THE FUNDS

volatile. Inverse floaters tend to underperform the market for fixed rate municipal bonds in a rising long-term interest rate environment, but tend to outperform that market when long-term interest rates decline.

Each Fund may acquire inverse floaters issued by trusts that have been established by a transfer of municipal bonds by the Fund or an agent on behalf of the Fund. Such transfers do not qualify for sale treatment under Statement of Financial Accounting Standard No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities;” therefore, the municipal bonds deposited into such trusts are presented in the Funds’ Schedules of Investments and the proceeds from the transactions are reported as a liability for trust certificates. Interest income from the underlying bonds is recorded by the Funds on an accrual basis. Interest expense incurred on the secured borrowing and other expenses related to remarketing, administration and trustee services to a trust are reported as expenses of the Fund involved. The floating rate trust certificates have interest rates that generally reset weekly and their holders have the option to tender certificates to the trust for redemption at par at each reset date. The inverse floaters held by a Fund provide the Fund the right to (1) cause the holders of a proportional share of floating rate trust certificates to tender their certificates at par and (2) transfer a corresponding share of the municipal bonds from the trust to the Fund.

Holders of the inverse floaters bear the risk of the fluctuation in value of the trust’s underlying municipal bonds because holders of the floaters have the right to tender their notes to back to the trust for payment at par plus accrued interest. This creates effective leverage because a Fund’s net cash investment is significantly less than the value of the underlying bonds. The leverage ratio increases as the value of the floaters becomes a greater proportion of the value of the municipal bonds deposited into the trust.

•

Extension Risk – Rising interest rates may cause payments to occur at a slower-than-expected rate, extending the duration of a bond and typically reducing its value.

•

Governmental Risk – Government actions, including actions by local, state and regional governments, could have an adverse effect on municipal bond prices. In addition, a Fund’s performance may be affected by local, state, and regional factors depending on the states in which the Fund’s investments are issued. These factors may, for example, include economic or political developments, erosion of the tax base, budget deficits and the possibility of credit problems.

•

Interest Rate Risk – Prices of fixed income securities, including tax-exempt securities, generally fall during a rising interest rate environment. Interest rate changes typically have a greater effect on the price of fixed income securities

PROSPECTUS – THE FUNDS

with longer durations. Because all of the Funds (other than the Short Duration Tax Free Fund) tend to invest in longer-term bonds, including inverse floaters, to a greater degree than some municipal bond funds, such Funds normally will be more sensitive to interest rate risk than those other municipal bond funds. Because the Short Duration Tax Free Fund primarily invests in short duration municipal bonds, it is less sensitive to interest rate risk than a fund that invests primarily in longer duration municipal bonds (although the Fund’s investments in inverse floaters increase its interest rate risk).

•

Liquidity Risk – The Fund may need to sell its holdings in order to meet shareholder redemption requests and in doing so could experience a loss if redemption requests are unusually large or frequent. It may be difficult for a Fund to sell certain securities, including below investment grade municipal bonds, illiquid securities, or restricted securities, in a timely manner and at their stated value, which could result in losses to the Fund. The market for below investment grade municipal bonds generally is less liquid than the market for higher rated bonds, subjecting them to greater price fluctuations. 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.

•

Nondiversification Risk – The High Yield Municipal Bond Fund, California Tax Free Fund, New Jersey Tax Free Fund, and New York Tax Free Fund are non-diversified funds. A nondiversified fund may invest a greater portion of its assets in, and own a greater amount of the voting securities of, a single issuer than a diversified fund. As a result, a nondiversified fund will be more exposed to risks from a single adverse economic, political, or regulatory event, as compared with a diversified fund.

•

State and Territory Risks – Because the California Fund and the New Jersey Fund focus on the States of California and New Jersey, respectively, and the New York Fund focuses on New York State and New York City, each such Fund’s performance may be more affected by local, state, and regional factors than a fund that invests in municipal bonds issued in many states. These factors may include, for example, economic or political developments, erosion of the tax base, a downgrade in a state or municipality’s credit rating, and the possibility of credit problems. There also is a risk that the supply of municipal bonds issued by each such state may be inadequate. 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 Tax Free Fund, AMT Free Municipal Bond Fund, High Yield Municipal Bond Fund, Intermediate Tax Free Fund, and Short Duration Tax Free Fund), and may do so disproportionately as a result of the corresponding disproportionate impact of such occurrences on particular

PROSPECTUS – THE FUNDS

state, territory, or local economies. The effects of the national economic recession that began in 2008 caused extraordinary declines in tax revenues, increased demands for government services, and added pressure on budgets for affected governments. State, territory, and local economies continue to be affected by severely decreased tax revenues and additional pressure on budgets. Although states generally have the ability to raise revenue through state income and other taxes, local governments, issuers of industrial development bonds, issuers of private activity bonds and other types of issuers of municipal bonds may face severe difficulties in raising revenue during periods of economic decline or delayed recovery. States also have relied heavily on federal stimulus funds and other one-time measures to deal with their current budget crises and are likely to face less flexibility and liquidity in the future. All of this could have significant consequences for each of the Funds because a worsening of the economic position of a state or other issuer of bonds in which a Fund invests could lower the value of that Fund’s investments and could cause you to lose money.

•

Taxability Risk – The IRS has announced that holders of tax-exempt bonds have risks that their tax-exempt income may be reclassified as taxable if the bonds that they own were issued in an abusive transaction. There is a risk that a bond purchased by a Fund that was issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-exempt income. Furthermore, future legislative, administrative, or court actions could adversely impact the qualification of income from tax-exempt securities as tax-free. Such reclassifications or actions could (i) subject you to increased tax liability, possibly retroactively, and/or (ii) cause the value of a security, and therefore the value of the Fund’s shares, to decline. In such a case, the Fund might be required to send to you and file with the IRS information returns (Forms 1099-DIV) for the current or prior calendar years classifying (or reclassifying) some of its exempt-interest dividends as taxable dividends. On prior year dividends, you might need to file amended income tax returns and pay additional tax and interest to avoid additional penalties and to limit interest charges on these taxable dividends. For all Funds (other than AMT Free Municipal Bond Fund), income from investments in private activity bonds is an item of tax preference for purposes of AMT, which may cause the income to be taxable to you.

•

Zero Coupon, Deferred Interest, Pay-In-Kind, and Capital Appreciation Bonds Risks – Because these securities bear no interest and compound semiannually at the rate fixed at the time of issuance, their value generally is more volatile than the value of other fixed income securities. Since the bondholders do not receive interest payments, when interest rates rise, these securities fall more dramatically in value than bonds paying interest on a

PROSPECTUS – THE FUNDS

current basis. When interest rates fall, these securities rise more rapidly in value because the bonds reflect a fixed rate of return. If the issuer defaults, a Fund may not receive any return on its investment.

An investment in zero coupon and delayed interest securities may cause the Fund to recognize income and make distributions to shareholders before it receives any cash payments on its investment. To generate cash to satisfy distribution requirements, the Fund may have to sell portfolio securities that it otherwise would have continued to hold or to use cash flows from other sources including the sale of Fund shares.

Portfolio Turnover. The Fund may engage in active and frequent trading in seeking to achieve its investment objective, and may have a portfolio turnover rate of over 100% annually. Increased portfolio turnover may result in higher brokerage fees or other transaction costs. These costs are not reflected in the Fund’s annual operating expenses or in the expense example, but such costs can reduce the Fund’s investment performance. If the Fund realizes capital gains when it sells investments, it generally must pay those gains to shareholders, resulting in higher taxes when Fund shares are held in a taxable account. The Financial Highlights table at the end of the prospectus shows the Fund’s portfolio turnover rate during past fiscal years.

Temporary or Defensive Investments. The Fund seeks to remain fully invested in accordance with its investment objective. To respond to adverse economic, market, political or other conditions that are unfavorable for investors, however, the Fund may invest its assets in a temporary defensive manner by holding all or a substantial portion of its assets in cash, cash equivalents or other high quality short-term investments, money market fund shares, and other money market instruments. The Fund also may invest in these types of securities or hold cash while looking for suitable investment opportunities or to maintain liquidity. When investing in this manner, the Fund may be unable to achieve its investment objective.

DISCLOSURE OF PORTFOLIO HOLDINGS

A description of the Funds’ policies and procedures regarding the disclosure of the Funds’ portfolio holdings is available in the SAI. Further information is available at www.lordabbett.com.

MANAGEMENT AND ORGANIZATION OF THE FUNDS

Boards of Directors. The Board oversees the management of the business and affairs of the Funds. The Board meets regularly to review the Funds’ portfolio investments, performance, expenses, and operations. The Board appoints officers

PROSPECTUS – THE FUNDS

who are responsible for the day-to-day operations of the Funds and who execute policies authorized by the Board. At least 75 percent of the Board members are independent of Lord, Abbett & Co. LLC (“Lord Abbett”).

Investment Adviser. The Fund’s investment adviser is Lord Abbett, 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, and manages approximately $128.5 billion in assets across a full range of mutual funds, institutional accounts and separately managed accounts, including $1.7 billion for which Lord Abbett provides investment models to managed account sponsors as of November 30, 2012.

Portfolio Managers. Each Fund is managed by an experienced portfolio manager or a team of experienced portfolio managers responsible for investment decisions together with a team of investment professionals who provide issuer, industry, sector and macroeconomic research and analysis. The SAI contains additional information about portfolio manager compensation, other accounts managed, and ownership of Fund shares.

Daniel S. Solender, Partner and Director, joined Lord Abbett as a member of the municipal team in 2006. Assisting Mr. Solender are Philip B. Herman, Paul A. Langlois, and Daniel T. Vande Velde. Mr. Herman, Portfolio Manager, joined Lord Abbett in 2007 and became a member of the municipal team in 2010. Mr. Langlois, Portfolio Manager, joined Lord Abbett in 2009 and became a member of the municipal team in 2012. Mr. Langlois was formerly employed at J. & W. Seligman & Co. Incorporated where he served as a Senior Vice President and Investment Officer and at Delaware Investments where he served as a Vice President and Analyst. Mr. Vande Velde, Partner and Portfolio Manager, joined Lord Abbett and became a member of the municipal team in 2007. Each portfolio manager’s tenure on a particular Fund’s investment team is reflected under “Management” above.

Mr. Solender is primarily responsible for the day-to-day management of the AMT Free Municipal Bond Fund and the National Tax Free Fund. Messrs. Solender and Herman are jointly and primarily responsible for the day-to-day management of the New Jersey Tax Free Fund and the New York Tax Free Fund. Messrs. Solender and Langlois are jointly and primarily responsible for the day-to-day management of the California Tax Free Fund and the High Yield Municipal Bond Fund. Messrs. Solender and Vande Velde are jointly and primarily responsible for the day-to-day management of the Intermediate Tax Free Fund and the Short Duration Tax Free Fund.

Management Fee. Lord Abbett is entitled to a management fee based on each Fund’s average daily net assets. The management fee is accrued daily and payable monthly.

PROSPECTUS – THE FUNDS

Lord Abbett is entitled to a management fee for Short Duration Tax Free Fund as calculated at the following annual rate:

0.40% on the first $2 billion of average daily net assets;
0.375% on the next $3 billion of average daily net assets; and
0.35% on average daily net assets over $5 billion.

For the fiscal year ended September 30, 2012, the effective annual rate of the fee paid to Lord Abbett, net of any applicable waivers or reimbursements, was 0.31% for Short Duration Tax Free Fund.

Prior to February 1, 2013, Lord Abbett was entitled to a management fee for Intermediate Tax Free Fund as calculated at the following annual rate:

0.40% on the first $2 billion of average daily net assets;
0.375% on the next $3 billion of average daily net assets; and
0.35% on average daily net assets over $5 billion.

Effective February 1, 2013, Lord Abbett is entitled to a management fee for Intermediate Tax Free Fund as calculated at the following annual rate:

0.40% on the first $2 billion of average daily net assets;
0.375% on the next $3 billion of average daily net assets;
0.35% on the next $5 billion of average daily net assets; and
0.32% on average daily net assets over $10 billion.

For the fiscal year ended September 30, 2012, the effective annual rate of the fee paid to Lord Abbett, net of any applicable waivers or reimbursements, was 0.35% for Intermediate Tax Free Fund.

Lord Abbett is entitled to a management fee for each of AMT Free Municipal Bond Fund and High Yield Municipal Bond Fund as calculated at the following annual rate:

0.50% on the first $1 billion of average daily net assets;
0.45% on the next $1 billion of average daily net assets; and
0.40% on average daily net assets over $2 billion.

For the fiscal year ended September 30, 2012, the effective annual rate of the fee paid to Lord Abbett, net of any applicable waivers or reimbursements, was 0.14% for AMT Free Municipal Bond Fund. For the fiscal year ended September 30, 2012, the effective annual rate of the fee paid to Lord Abbett was 0.48% for High Yield Municipal Bond Fund.

Lord Abbett is entitled to a management fee for each of the National Tax Free Fund, California Tax Free Fund, New Jersey Tax Free Fund, and New York Tax Free Fund as calculated at the following annual rate:

PROSPECTUS – THE FUNDS

0.45% on the first $1 billion of average daily net assets;
0.40% on the next $1 billion of average daily net assets; and
0.35% on average daily net assets over $2 billion.

For the fiscal year ended September 30, 2012, the effective annual rate of the fee paid to Lord Abbett was 0.43% for National Tax Free Fund, and was 0.45% for each of California Tax Free Fund, New Jersey Tax Free Fund, and New York Tax Free Fund.

In addition, Lord Abbett provides certain administrative services to each Fund pursuant to an Administrative Services Agreement in return for a fee at an annual rate of 0.04% of each Fund’s average daily net assets. Each Fund pays all of its expenses not expressly assumed by Lord Abbett.

Each year the Board considers whether to approve the continuation of the existing management and administrative services agreements between the Funds and Lord Abbett. A discussion regarding the basis for the Board’s approval generally is available in the Funds’ semiannual report to shareholders for the six-month period ended March 31.

As used in the remaining portion of this prospectus, the terms “a Fund,” “each Fund,” and “the Fund” refer to each Fund individually or the Funds collectively, as the context may require, unless reference to a specific Fund is provided.

CHOOSING A SHARE CLASS

Each class of shares represents an investment in the same portfolio of securities, but each has different availability and eligibility criteria, sales charges, expenses, and dividends, allowing you to choose the available class that best meets your needs. You should read this section carefully to determine which class of shares is best for you and discuss your selection with your financial intermediary. Factors you should consider in choosing a class of shares include:

•

the amount you plan to invest;

•

the length of time you expect to hold your investment;

•

the total costs associated with your investment, including any sales charges that you pay when you buy or sell your Fund shares and expenses that are paid out of Fund assets over time;

•

whether you qualify for any reduction or waiver of sales charges;

•

whether you plan to take any distributions in the near future;

•

the availability of the share class;

PROSPECTUS – THE FUNDS

•

the services that will be available to you depending on the share class you choose; and

•

the amount of compensation that your financial intermediary will receive depending on the share class you choose.

If you plan to invest a large amount and your investment horizon is five years or more, Class A shares may be more advantageous than Class C shares. The higher ongoing annual expenses of Class C shares may cost you more over the long term than the front-end sales charge you would pay on larger purchases of Class A shares.

Key Features of Share Classes. The following table compares key features of each share class. You should review the fee table and example at the front of the prospectus carefully before choosing your share class. As a general matter, share classes with relatively lower expenses tend to have relatively higher dividends. Your financial intermediary can help you decide which class meets your goals. Not all share classes may be available through your financial intermediary. Your financial intermediary may receive different compensation depending upon which class you choose.

PROSPECTUS – THE FUNDS

Class A Shares

Availability

Available through financial intermediaries to individual investors

Front-End Sales Charge

Up to 2.25%; reduced or waived for large purchases and certain investors; eliminated for purchases of $500,000 or more

CDSC

1.00% on redemptions made within one year following purchases of $500,000 or more; waived under certain circumstances

Distribution and Service (12b-1) Fee ⁽¹⁾

0.20% of the Fund’s average daily net assets, comprised of:
Service Fee: 0.15%
Distribution Fee: 0.05%

Conversion

None

Exchange Privilege ⁽²⁾

Class A shares of most Lord Abbett Funds

Class B Shares

Availability

Class B shares no longer are available for purchase by new or existing investors and only will be issued in connection with (i) an exchange of Class B shares from another Lord Abbett Fund or (ii) a reinvestment of a dividend and/or capital gain distribution.

Front-End Sales Charge

None

CDSC

Up to 5.00% on redemptions; reduced over time and eliminated after sixth anniversary of purchase; waived under certain circumstances

Distribution and Service (12b-1) Fee ⁽¹⁾

1.00% of the Fund’s average daily net assets, comprised of:
Service Fee: 0.25%
Distribution Fee: 0.75%

Conversion

Automatic conversion to Class A shares after approximately the eighth anniversary of purchase ⁽³⁾

Exchange Privilege ⁽²⁾

Class B shares of most Lord Abbett Funds

Class C Shares

Availability

Available through financial intermediaries to individual investors; purchases generally must be under $500,000

Front-End Sales Charge

None

CDSC

1.00% on redemptions made before the first anniversary of purchase; waived under certain circumstances

Distribution and Service (12b-1) Fee ⁽¹⁾

Each Fund is subject to Class C service and distribution fees at a blended rate calculated based on (i) a service fee of 0.25% and a distribution fee of 0.75% of the Fund’s average daily net assets attributable to shares held for less than one year and (ii) a service fee of 0.25% and a distribution fee of 0.55% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C shareholders of the Fund will bear service and distribution fees at the same rate.

Conversion

None

Exchange Privilege ⁽²⁾

Class C shares of most Lord Abbett Funds

PROSPECTUS – THE FUNDS

Class F Shares

Availability

Available only to eligible fee-based advisory programs and certain registered investment advisers

Front-End Sales Charge

None

CDSC

None

Distribution and Service (12b-1) Fee ⁽¹⁾

0.10% of the Fund’s average daily net assets, comprised of:
Service Fee: None
Distribution Fee: 0.10%

Conversion

None

Exchange Privilege ⁽²⁾

Class F shares of most Lord Abbett Funds

Class I Shares

Availability

Available only to eligible investors

Front-End Sales Charge

None

CDSC

None

Distribution and Service (12b-1) Fee ⁽¹⁾

None

Conversion

None

Exchange Privilege ⁽²⁾

Class I shares of most Lord Abbett Funds

Class P Shares

Availability

Available on a limited basis through certain financial intermediaries ⁽⁴⁾

Front-End Sales Charge

None

CDSC

None

Distribution and Service (12b-1) Fee ⁽¹⁾

0.45% of the Fund’s average daily net assets, comprised of:
Service Fee: 0.25%
Distribution Fee: 0.20%

Conversion

None

Exchange Privilege ⁽²⁾

Class P shares of most Lord Abbett Funds

⁽¹⁾

The 12b-1 plan provides that the maximum payments that may be authorized by the Board are: for Class A shares, 0.50%; for Class P shares, 0.75%; and for Class B, C, and F shares, 1.00%. The rates shown in the table above are the 12b-1 rates currently authorized by the Board for each share class and may be changed only upon authorization of the Board. The 12b-1 plan does not permit any payments for Class I shares.

⁽²⁾

Ask your financial intermediary about the Lord Abbett Funds available for exchange.

⁽³⁾

Class B shares automatically will convert to Class A shares on the 25th day of the month (or, if the 25th is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted.

⁽⁴⁾

Class P shares are closed to substantially all new investors.

Investment Minimums.

The minimum initial and additional amounts shown below vary depending on the class of shares you buy and the type of account. Certain financial intermediaries may impose different restrictions than those described below. Consult your financial intermediary for more information. Class B shares no longer are available for purchase by new or existing investors and only will be

PROSPECTUS – THE FUNDS

100

issued in connection with (i) an exchange of Class B shares from another Lord Abbett Fund or (ii) a reinvestment of a dividend and/or capital gain distribution. For Class I shares, the minimum investment shown below applies to certain types of institutional investors. Class P shares are closed to substantially all new investors.


Investment Minimums — Initial/Additional Investments

Class	A and C	F and P	I

General and IRAs without Invest-A-Matic Investments	$1,000/No minimum	No minimum	See below

Invest-A-Matic Accounts	$250/$50	N/A	N/A

IRAs, SIMPLE and SEP Accounts with Payroll Deductions	No minimum	N/A	N/A

Fee-Based Advisory Programs and Retirement and Benefit Plans	No minimum	No minimum	No minimum

Class I Share Minimum Investment. Unless otherwise provided, the minimum amount of an initial investment in Class I shares is $1 million. There is no minimum initial investment for (i) purchases through or by registered investment advisers, bank trust departments, and other financial intermediaries otherwise eligible to purchase Class I shares that charge a fee for services that include investment advisory or management services or (ii) purchases by retirement and benefit plans meeting the Class I eligibility requirements described below. These investment minimums may be suspended, changed, or withdrawn by Lord Abbett Distributor LLC (“Lord Abbett Distributor”).

Additional Information About the Availability of Share Classes

Class B Shares. The Fund no longer offers Class B shares for new or additional investments. Existing shareholders of Class B shares may reinvest dividends into Class B shares and exchange their Class B shares for Class B shares of other Lord Abbett Funds as permitted by the current exchange privileges. The 12b-1 fee, CDSC, and conversion features will continue to apply to Class B shares held by shareholders. Any purchase request for Class B shares will be deemed to be a purchase request for Class A shares and will be subject to any applicable sales charge.

Class C Shares. The Fund will not accept purchases of Class C shares of $500,000 or more, or in any amount that, when combined with the value of all shares of Eligible Funds (as defined below) under the terms of rights of accumulation, would result in the investor holding more than $500,000 of shares of Eligible Funds at the time of such purchase, unless an appropriate representative of the investor’s broker-dealer firm (or other financial intermediary, as applicable) provides written authorization for the transaction. Please contact Lord Abbett Distributor with any questions regarding eligibility to purchase Class C shares based on the prior written authorization from the investor’s broker-dealer firm or other financial intermediary.

PROSPECTUS – THE FUNDS

101

Class F Shares. Class F shares generally are available to investors participating in fee-based advisory programs that have (or whose trading agents have) an agreement with Lord Abbett Distributor and to investors that are clients of certain registered investment advisers that have an agreement with Lord Abbett Distributor, if it so deems appropriate.

Class I Shares. Class I shares are available for purchase by the following entities:

•

Institutional investors, including companies, foundations, trusts and endowments, and other entities determined by Lord Abbett Distributor to be institutional investors, making an initial minimum investment of at least $1 million;

•

Registered investment advisers investing on behalf of their advisory clients, provided that in the case of a registered investment adviser that is also a registered broker-dealer, the firm has not entered into any agreement or arrangement whereby Lord Abbett makes payments to the firm out of its own resources for various services, such as marketing support, training and education activities, and other services for which Lord Abbett may make such revenue sharing payments to the firm; and

•

Bank trust departments and trust companies purchasing shares for their clients, provided that the bank or trust company (and its trading agent, if any) has entered into a special arrangement with the Fund and/or Lord Abbett Distributor specifically for such purchases.

Class I shares also are available for purchase by other registered investment companies that are not affiliated with Lord Abbett and operate as funds of funds, at the discretion of Lord Abbett Distributor.

Shareholders who held Class I shares on July 9, 2010 may continue to hold, purchase, exchange, and redeem Class I shares, provided that there has been no change in the registration of the account since that date.

Financial intermediaries should contact Lord Abbett Distributor to determine whether the financial intermediary may be eligible for such purchases.

Class P Shares. Class P shares are closed to substantially all new investors. Existing shareholders holding Class P shares may continue to hold their Class P shares and make additional purchases, redemptions, and exchanges. Class P shares also are available for orders made by or on behalf of a financial intermediary for clients participating in an IRA rollover program sponsored by the financial intermediary that operates the program in an omnibus recordkeeping environment and has entered into special arrangements with the Fund and/or Lord Abbett Distributor specifically for such orders.

PROSPECTUS – THE FUNDS

102

SALES CHARGES

As an investor in the Fund, you may pay one of two types of sales charges: a front-end sales charge that is deducted from your investment when you buy Fund shares or a CDSC that applies when you sell Fund shares.

Class A Share Front-End Sales Charge. Front-end sales charges are applied only to Class A shares. You buy Class A shares at the offering price, which is the net asset value (“NAV”) plus a sales charge. You pay a lower rate as the size of your investment increases to certain levels called breakpoints. You do not pay a sales charge on the Fund’s distributions or dividends you reinvest in additional Class A shares. The table below shows the rate of sales charge you pay (expressed as a percentage of the offering price and the net amount you invest), depending on the amount you purchase.


Front-End Sales Charge — Class A Shares

Your Investment	Front-End Sales Charge as a % of Offering Price	Front-End Sales Charge as a % of Your Investment	To Compute Offering Price Divide NAV by	Maximum Dealer’s Concession as a % of Offering Price

Less than $100,000	2.25%	2.30%	.9775	2.00%

$100,000 to $249,999	1.75%	1.78%	.9825	1.50%

$250,000 to $499,999	1.25%	1.26%	.9875	1.00%

$500,000 and over	No Sales Charge	No Sales Charge	1.0000	†

† See “Dealer Concessions on Class A Share Purchases Without a Front-End Sales Charge.” Note: The above percentages may vary for particular investors due to rounding.

CDSC. Regardless of share class, the CDSC is not charged on shares acquired through reinvestment of dividends or capital gain 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. To minimize the amount of any CDSC, the Fund redeems shares in the following order:


1.				shares acquired by reinvestment of dividends and capital gain distributions (always free of a CDSC);


2.				shares held for six years or more (Class B), or one year or more (Class A and Class C); and

3.				shares held the longest before the sixth anniversary of their purchase (Class B), or before the first anniversary of their purchase (Class A and Class C).

If you buy Class A shares of the Fund under certain purchases with a front-end sales charge waiver or if you acquire Class A shares of the Fund in exchange for Class A shares of another Lord Abbett Fund subject to a CDSC, and you

PROSPECTUS – THE FUNDS

103

redeem any of the Class A shares before the first day of the month in which the one-year anniversary of your purchase falls, a CDSC of 1% normally will be collected. Class F, I, and P shares are not subject to a CDSC.

If you acquire Fund shares through an exchange from another Lord Abbett Fund that originally were purchased subject to a CDSC and you redeem before the applicable CDSC period has expired, you will be charged the CDSC (unless a CDSC waiver applies). The CDSC will be remitted to the appropriate party.

Class B Share CDSC. The CDSC for Class B shares normally applies if you redeem your shares before the sixth anniversary of the day on which the purchase order was accepted. The CDSC will be remitted to Lord Abbett Distributor. The CDSC declines the longer you own your shares, according to the following schedule:


CDSC — Class B Shares

Anniversary of the Day on Which the Purchase Order was Accepted ⁽¹⁾		CDSC on Redemptions (as a % of Amount Subject to CDSC)

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 ⁽²⁾		None

⁽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 1st will be May 1st of each succeeding year.
⁽²⁾	Class B shares automatically will convert to Class A shares on the 25 ^th day of the month (or, if the 25 ^th is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted.

Class C Share CDSC. The 1% CDSC for Class C shares normally applies if you redeem your shares before the first anniversary of your purchase. The CDSC will be remitted to Lord Abbett Distributor.

SALES CHARGE REDUCTIONS AND WAIVERS

Please inform the Fund or your financial intermediary at the time of your purchase of Fund shares if you believe you qualify for a reduced front-end sales charge. More information about sales charge reductions and waivers is available free of charge at www.lordabbett.com/flyers/breakpoints_info.pdf.

PROSPECTUS – THE FUNDS

104

Reducing Your Class A Share Front-End Sales Charge. You may purchase Class A shares at a discount if you qualify under the circumstances outlined below. To receive a reduced front-end sales charge, you must let the Fund or your financial intermediary know at the time of your purchase of Fund shares that you believe you qualify for a discount. If you or a related party have holdings of Eligible Funds (as defined below) in other accounts with your financial intermediary or with other financial intermediaries that may be combined with your current purchases in determining the sales charge as described below, you must let the Fund or your financial intermediary know. You may be asked to provide supporting account statements or other information to allow us or your financial intermediary to verify your eligibility for a discount. If you or your financial intermediary do not notify the Fund or provide the requested information, you may not receive the reduced sales charge for which you otherwise qualify. Class A shares may be purchased at a discount if you qualify under any of the following conditions:

•

Larger Purchases – You may reduce or eliminate your Class A front-end sales charge by purchasing Class A shares in greater quantities. The breakpoint discounts offered by the Fund are indicated in the table under “Sales Charges – Class A Share Front-End Sales Charge.”

•

Rights of Accumulation – A Purchaser (as defined below) may combine the value of Class A, B, C, F, and P shares of any Eligible Fund currently owned with a new purchase of Class A shares of any Eligible Fund in order to reduce the sales charge on the new purchase. Class I share holdings may not be combined for these purposes.

To the extent that your financial intermediary is able to do so, the value of Class A, B, C, F, and P shares of Eligible Funds determined for the purpose of reducing the sales charge of a new purchase under the Rights of Accumulation will be calculated at the higher of: (1) the aggregate current maximum offering price of your existing Class A, B, C, F, and P shares of Eligible Funds; or (2) the aggregate amount you invested in such shares (including dividend reinvestments but excluding capital appreciation) less any redemptions. You should retain any information and account records necessary to substantiate the historical amounts you and any related Purchasers have invested in Eligible Funds. You must inform the Fund and/or your financial intermediary at the time of purchase if you believe your purchase qualifies for a reduced sales charge and you may be requested to provide documentation of your holdings in order to verify your eligibility. If you do not do so, you may not receive all sales charge reductions for which you are eligible.

•

Letter of Intention – In order to reduce your Class A front-end sales charge, a Purchaser may combine purchases of Class A, C, F, and P shares of any Eligible Fund the Purchaser intends to make over the next 13 months in determining the applicable sales charge. The 13-month Letter of Intention

PROSPECTUS – THE FUNDS

105

period commences on the day that the Letter of Intention is received by the Fund, and the Purchaser must tell the Fund that later purchases are subject to the Letter of Intention. Purchases submitted prior to the date the Letter of Intention is received by the Fund are not counted toward the sales charge reduction. Current holdings under Rights of Accumulation may be included in a Letter of Intention in order to reduce the sales charge for purchases during the 13-month period covered by the Letter of Intention. Shares purchased through reinvestment of dividends or distributions are not included. Class I share holdings may not be combined for these purposes. Class A shares valued at 5% of the amount of intended purchases are escrowed and may be redeemed to cover the additional sales charges payable if the intended purchases under the Letter of Intention are not completed. The Letter of Intention is neither a binding obligation on you to buy, nor on the Fund to sell, any or all of the intended purchase amount.

Purchaser

A Purchaser includes: (1) an individual; (2) an individual, his or her spouse, and children under the age of 21; (3) retirement and benefit plans including a 401(k) plan, profit-sharing plan, money purchase plan, defined benefit plan, and 457(b) plan sponsored by a governmental entity, non-profit organization, school district or church to which employer contributions are made, as well as SIMPLE IRA plans and SEP-IRA plans; or (4) a trustee or other fiduciary purchasing shares for a single trust, estate or single fiduciary account. An individual may include under item (1) his or her holdings in Eligible Funds as described above in IRAs, as a sole participant of a retirement and benefit plan sponsored by the individual’s business, and as a participant in a 403(b) plan to which only pre-tax salary deferrals are made. An individual and his or her spouse may include under item (2) their holdings in IRAs, and as the sole participants in retirement and benefit plans sponsored by a business owned by either or both of them. A retirement and benefit plan under item (3) includes all qualified retirement and benefit plans of a single employer and its consolidated subsidiaries, and all qualified retirement and benefit plans of multiple employers registered in the name of a single bank trustee.

Eligible Fund

An Eligible Fund is any Lord Abbett Fund except for (1) Lord Abbett Series Fund, Inc.; (2) Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund, Inc. (“Money Market Fund”) (except for holdings in Money Market Fund which are attributable to any shares exchanged from the Lord Abbett Funds); and (3) 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.

Front-End Sales Charge Waivers. Class A shares may be purchased without a front-end sales charge under any of the following conditions:

•

purchases of $500,000 or more (may be subject to a CDSC);

PROSPECTUS – THE FUNDS

106

•

purchases made by or on behalf of financial intermediaries for clients that pay the financial intermediaries fees in connection with a fee-based advisory program, 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;

•

purchases made with dividends and distributions on Class A shares of another Eligible Fund;

•

purchases by employees of any consenting securities dealer having a sales agreement with Lord Abbett Distributor;

•

purchases involving the concurrent sale of Class B or C shares of the Fund related to the requirements of a settlement agreement that the broker-dealer entered into with a regulatory body relating to share class suitability. These sales transactions will be subject to the assessment of any applicable CDSCs (although the broker-dealer may pay on behalf of the investor or reimburse the investor for any such CDSC), and any investor purchases subsequent to the original concurrent transactions will be at the applicable public offering price, which may include a sales charge; and

•

certain other types of investors may qualify to purchase Class A shares without a front-end sales charge as described in the SAI.

CDSC Waivers. The CDSC generally will not be assessed on Class A, B, or C shares under the circumstances listed in the table below. Certain other types of redemptions may qualify for a CDSC waiver. Documentation may be required and some limitations may apply.


CDSC Waivers		Share Class(es)

Eligible mandatory distributions under the Internal Revenue Code of 1986		A, B, C

Death of the shareholder		B, C

Redemptions under Div-Move and Systematic Withdrawal Plans (up to 12% per year)		B, C

Concurrent Sales. A broker-dealer may pay on behalf of an investor or reimburse an investor for a CDSC otherwise applicable in the case of transactions involving purchases through such broker-dealer where the investor concurrently is selling his or her holdings in Class B or C shares of the Fund and buying Class A shares of the Fund, provided that the purchases are related to the requirements of a settlement agreement that the broker-dealer entered into with a regulatory body relating to share class suitability.

Reinvestment Privilege. If you redeem Class A or B shares of the Fund, you may reinvest some or all of the proceeds in the same class of any Eligible Fund on or before the 60th day after the redemption without a sales charge unless the reinvestment would be prohibited by the Fund’s frequent trading policy. Special

PROSPECTUS – THE FUNDS

107

tax rules may apply. Please see the SAI for more information. If you paid a CDSC when you redeemed your shares, you will be credited with the amount of the CDSC. All accounts involved must have the same registration. This privilege does not apply to purchases made through Invest-A-Matic or other automatic investment services.

FINANCIAL INTERMEDIARY COMPENSATION

As part of a plan for distributing shares, authorized financial intermediaries that sell the Fund’s shares and service its shareholder accounts receive sales and service compensation. Additionally, authorized financial intermediaries may charge a fee to effect transactions in Fund shares.

Sales compensation originates from sales charges that are paid directly by shareholders and 12b-1 distribution fees that are paid by the Fund out of share class assets. Service compensation originates from 12b-1 service fees. Because 12b-1 fees are paid on an ongoing basis, over time the payment of such fees will increase the cost of an investment in the Fund, which may be more than the cost of other types of sales charges. The Fund accrues 12b-1 fees daily at annual rates shown in the “Fees and Expenses” table above based upon average daily net assets. The portion of the distribution and service (12b-1) fees that are paid to financial intermediaries for each share class is as follows:


Class

Fee ⁽¹⁾		A ⁽²⁾	B ⁽²⁾	C ⁽²⁾⁽³⁾	F	I	P

Service		0.15%	0.25%	0.25%	—	—	0.25%

Distribution		—	—	0.50%	—	—	0.20%

⁽¹⁾	The Fund may designate a portion of the aggregate fee as attributable to service activities for purposes of calculating Financial Industry Regulatory Authority, Inc. sales charge limitations.
⁽²⁾	For purchases of Class A shares without a front-end sales charge and for which Lord Abbett Distributor pays distribution- related compensation, and for all purchases of Class B and Class C shares, the 12b-1 payments shall commence 13 months after purchase.
⁽³⁾	Assumes a Class C 12b-1 rate of 1.00%. The 12b-1 fee the Fund will pay on Class C shares will be a blended rate calculated based on (1) 1.00% of the Fund’s average daily net assets attributable to shares held for less than one year and (2) 0.80% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C shareholders of the Fund will bear 12b-1 fees at the same rate.

Lord Abbett Distributor may pay 12b-1 fees to authorized financial intermediaries or use the fees for other distribution purposes, including revenue sharing. The amounts paid by the Fund need not be directly related to expenses. If Lord Abbett Distributor’s actual expenses exceed the fee paid to it, the Fund will not have to pay more than that fee. Conversely, if Lord Abbett Distributor’s expenses are less than the fee it receives, Lord Abbett Distributor will keep the excess amount of the fee.

PROSPECTUS – THE FUNDS

108

Sales Activities. The Fund may use 12b-1 distribution fees to pay authorized financial intermediaries to finance any activity that primarily is intended to result in the sale of shares. Lord Abbett Distributor uses its portion of the distribution fees attributable to the shares of a particular class for activities that primarily are intended to result in the sale of shares of such class. These activities include, but are not limited to, printing of prospectuses and statements of additional information and reports for anyone other than existing shareholders, preparation and distribution of advertising and sales material, expenses of organizing and conducting sales seminars, additional payments to authorized financial intermediaries, maintenance of shareholder accounts, the cost necessary to provide distribution-related services or personnel, travel, office expenses, equipment and other allocable overhead.

Service Activities. Lord Abbett Distributor may pay 12b-1 service fees to authorized financial intermediaries for any activity that primarily is 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.

Dealer Concessions on Class A Share Purchases With a Front-End Sales Charge. See “Sales Charges – Class A Share Front-End Sales Charge” for more information.

Dealer Concessions on Class A Share Purchases Without a Front-End Sales Charge. Except as otherwise set forth in the following paragraphs, Lord Abbett Distributor may pay Dealers distribution-related compensation (i.e., concessions) in connection with purchases of $500,000 or more.

Dealers receive concessions described below on purchases made within a 12-month period beginning with the first NAV purchase of Class A shares for the account. The concession rate resets on each anniversary date of the initial NAV purchase, provided that the account continues to qualify for treatment at NAV. Current holdings of Class B, C, and P shares of Eligible Funds will be included for purposes of calculating the breakpoints in the schedule below and the amount of the concessions payable with respect to the Class A share investment. Concessions may not be paid with respect to Alliance Arrangements unless Lord Abbett Distributor can monitor the applicability of the CDSC.

PROSPECTUS – THE FUNDS

109

Financial intermediaries should contact Lord Abbett Distributor for more complete information on the commission structure.


Dealer Concession Schedule — Class A Shares for Certain Purchases Without a Front-End Sales Charge

The dealer concession received is based on the amount of the Class A share investment as follows:
Class A Investments		Front-End Sales Charge*	Dealer’s Concession

$500,000 to $5 million		None	1.00%

Next $5 million above that		None	0.55%

Next $40 million above that		None	0.50%

Over $50 million		None	0.25%

*	Class A shares purchased without a sales charge will be subject to a 1% CDSC if they are redeemed before the first day of the month in which the one-year anniversary of the purchase falls.

Dealer Concessions on Class B Shares. The Fund no longer offers Class B shares for purchase by new or existing investors (other than through an exchange or reinvestment of a distribution). Accordingly, sales concessions on Class B shares no longer are available.

Dealer Concessions on Class C Shares. Lord Abbett Distributor may pay financial intermediaries selling Class C shares a sales concession of up to 1.00% of the purchase price of the Class C shares and Lord Abbett Distributor will collect and retain any applicable CDSC.

Dealer Concessions on Class F, I and P Shares. Class F, I and P shares are purchased at NAV with no front-end sales charge and no CDSC when redeemed. Accordingly, there are no dealer concessions on these shares.

Revenue Sharing and Other Payments to Dealers and Financial Intermediaries. Lord Abbett (the term “Lord Abbett” in this section also refers to Lord Abbett Distributor unless the context requires otherwise) may make payments to certain financial intermediaries for marketing and distribution support activities. Lord Abbett makes these payments, at its own expense, out of its own resources (including revenues from advisory fees and 12b-1 fees), and without any additional costs to the Fund or the Fund’s shareholders.

These payments, which may include amounts that sometimes are referred to as “revenue sharing” payments, are in addition to the Fund’s fees and expenses described in this prospectus. In general, these payments are intended to compensate or reimburse financial intermediary firms for certain activities, including: promotion of sales of Fund shares, such as placing the Lord Abbett Family of Funds on a preferred list of fund families; making Fund shares available on certain platforms, programs, or trading venues; educating a financial intermediary firm’s sales force about the Lord Abbett Funds; providing services to shareholders; and various other promotional efforts and/or costs. The

PROSPECTUS – THE FUNDS

110

payments made to financial intermediaries may be used to cover costs and expenses related to these promotional efforts, including travel, lodging, entertainment, and meals, among other things. In addition, Lord Abbett may provide payments to a financial intermediary in connection with Lord Abbett’s participation in or support of conferences and other events sponsored, hosted, or organized by the financial intermediary. The aggregate amount of these payments may be substantial and may exceed the actual costs incurred by the financial intermediary in engaging in these promotional activities or services and the financial intermediary firm may realize a profit in connection with such activities or services.

Lord Abbett may make such payments on a fixed or variable basis based on Fund sales, assets, transactions processed, and/or accounts attributable to a financial intermediary, among other factors. Lord Abbett determines the amount of these payments in its sole discretion. In doing so, Lord Abbett may consider a number of factors, including: a financial intermediary’s sales, assets, and redemption rates; the nature and quality of any shareholder services provided by the financial intermediary; the quality and depth of the financial intermediary’s existing business relationships with Lord Abbett; the expected potential to expand such relationships; and the financial intermediary’s anticipated growth prospects. Not all financial intermediaries receive revenue sharing payments and the amount of revenue sharing payments may vary for different financial intermediaries. Lord Abbett may choose not to make payments in relation to certain of the Lord Abbett Funds or certain classes of shares of any particular Fund.

In some circumstances, these payments may create an incentive for a broker-dealer or its investment professionals to recommend or sell Fund shares to you. Lord Abbett may benefit from these payments to the extent the broker-dealers sell more Fund shares or retain more Fund shares in their clients’ accounts because Lord Abbett receives greater management and other fees as Fund assets increase. For more specific information about these payments, including revenue sharing arrangements, made to your broker-dealer or other financial intermediary and the conflicts of interest that may arise from such arrangements, please contact your investment professional. In addition, please see the SAI for more information regarding Lord Abbett’s revenue sharing arrangements with financial intermediaries.

Payments for Recordkeeping, Networking, and Other Services. In addition to the payments from Lord Abbett or Lord Abbett Distributor described above, from time to time, Lord Abbett and Lord Abbett Distributor may have other relationships with financial intermediaries relating to the provision of services to the Fund, such as providing omnibus account services or executing portfolio transactions for the Fund. The Fund generally may pay recordkeeping fees for services provided to plans where the account is a plan-level or fund-level

PROSPECTUS – THE FUNDS

111

omnibus account and plan participants have the ability to determine their investments in particular mutual funds. If your financial intermediary provides these services, Lord Abbett or the Fund may compensate the financial intermediary for these services. In addition, your financial intermediary may have other relationships with Lord Abbett or Lord Abbett Distributor that are not related to the Fund.

For example, the Lord Abbett Funds may enter into arrangements with and pay fees to financial intermediaries that provide recordkeeping or other subadministrative services to certain groups of investors in the Lord Abbett Funds, including participants in retirement and benefit plans, investors in mutual fund advisory programs, investors in variable insurance products and clients of financial intermediaries that operate in an omnibus environment (collectively, “Investors”). The recordkeeping services typically include: (a) establishing and maintaining Investor accounts and records; (b) recording Investor account balances and changes thereto; (c) arranging for the wiring of funds; (d) providing statements to Investors; (e) furnishing proxy materials, periodic Lord Abbett Fund reports, prospectuses and other communications to Investors as required; (f) transmitting Investor transaction information; and (g) providing information in order to assist the Lord Abbett Funds in their compliance with state securities laws. The fees that the Lord Abbett Funds pay are designed to compensate financial intermediaries for such services.

The Lord Abbett Funds also may pay fees to broker-dealers for networking services. Networking services may include but are not limited to:

•

establishing and maintaining individual accounts and records;

•

providing client account statements; and

•

providing 1099 forms and other tax statements.

The networking fees that the Lord Abbett Funds pay to broker-dealers normally result in reduced fees paid by the Fund to the transfer agent, which otherwise would provide these services.

Financial intermediaries may charge additional fees or commissions other than those disclosed in the prospectus, such as a transaction based fee or other fee for its service, and may categorize and disclose these arrangements differently than described in the discussion above and in the SAI. You may ask your financial intermediary about any payments it receives from Lord Abbett or the Fund, as well as about fees and/or commissions it charges.

PURCHASES

Initial Purchases. Lord Abbett Distributor acts as an agent for the Fund to work with financial intermediaries that buy and sell shares of the Fund on behalf of their clients. Generally, Lord Abbett Distributor does not sell Fund shares

PROSPECTUS – THE FUNDS

112

directly to investors. Initial purchases of Fund shares may be made through any financial intermediary that has a sales agreement with Lord Abbett Distributor. Unless you are investing in the Fund through a fee-based program or other financial intermediary, you and your investment professional may fill out the application and send it to the Fund at the address below. To open an account through a fee based program or other type of financial intermediary, you should contact your financial intermediary for instructions on opening an account.

Name of Fund
P.O. Box 219336
Kansas City, MO 64121

Please do not send account applications, purchase, exchange or redemption orders to Lord Abbett’s offices in Jersey City, NJ.

Additional Purchases . You may make additional purchases of Fund shares by contacting your investment professional or financial intermediary. If you have direct account privileges with the Fund, you may make additional purchases by:

•

Telephone. If you have established a bank account of record, you may purchase Fund shares by telephone. You or your investment professional should call the Fund at 888-522-2388.

•

Online. If you have established a bank account of record, you may submit a request online to purchase Fund shares by accessing your account online. Please log onto www.lordabbett.com and enter your account information and personal identification data.

•

Mail. You may submit a written request to purchase Fund shares by indicating the name(s) in which the account is registered, the Fund’s name, the class of shares, your account number, and the dollar amount you wish to purchase. Please include a check for the amount of the purchase, which may be subject to a sales charge. If purchasing Fund shares by mail, your purchase order will not be accepted or processed until such orders are received by the Fund at P.O. Box 219336, Kansas City, MO 64121.

•

Wire. You may purchase Fund shares via wire by sending your purchase amount to: UMB, N.A., Kansas City, routing number: 101000695, bank account number: 987800033-3, FBO: (your account name) and (your Lord Abbett account number). Specify the complete name of the Fund and the class of shares you wish to purchase.

Proper Form. An initial purchase order submitted directly to the Fund, or the Fund’s authorized agent (or the agent’s designee), must contain: (1) an application completed in good order with all applicable requested information; and (2) payment by check or instructions to debit your checking account along with a canceled check containing account information. Additional purchase requests must include all required information and proper form of payment.

PROSPECTUS – THE FUNDS

113

See “Account Services and Policies – Procedures Required by the USA PATRIOT Act” for more information.

Initial and additional purchases of Fund shares are executed at the NAV next determined after the Fund or the Fund’s authorized agent receives your purchase order in proper form. The Fund reserves the right to modify, restrict or reject any purchase order (including exchanges). All purchase orders are subject to acceptance by the Fund.

Insufficient Funds . If you request a purchase and your bank account does not have sufficient funds to complete the transaction at the time it is presented to your bank, your requested transaction will be reversed and you will be subject to any and all losses, fees and expenses incurred by the Fund in connection with processing the insufficient funds transaction. The Fund reserves the right to liquidate all or a portion of your Fund shares to cover such losses, fees and expenses.

EXCHANGES

You or your investment professional may instruct the Fund to exchange shares of any class for shares of the same class of any other Lord Abbett Fund, provided that the fund shares to be acquired in the exchange are available to new investors in such other fund.

If you have direct account privileges with the Fund, you may request an exchange transaction by:

•

Telephone. You or your investment professional should call the Fund at 888-522-2388.

•

Online. You may submit a request online to exchange your Fund shares by accessing your account online. Please log onto www.lordabbett.com and enter your account information and personal identification data.

•

Mail. You may submit a written request to exchange your Fund shares by indicating the name(s) in which the account is registered, the Fund’s name, the class of shares, your account number, the dollar amount or number of shares you wish to exchange, and the name(s) of the Eligible Fund(s) into which you wish to exchange your Fund shares. If submitting a written request to exchange Fund shares, your exchange request will not be processed until the Fund receives the request in good order at P.O. Box 219336, Kansas City, MO 64121.

The Fund may revoke the exchange privilege for all shareholders upon 60 days’ written notice. In addition, there are limitations on exchanging Fund shares for a different class of shares, and moving shares held in certain types of accounts to a

PROSPECTUS – THE FUNDS

114

different type of account or to a new account maintained by a financial intermediary. Please speak with your financial intermediary if you have any questions.

An exchange of Fund shares for shares of another Lord Abbett Fund will be treated as a sale of Fund shares and any gain on the transaction may be subject to federal income tax. You should read the current prospectus for any Lord Abbett Fund into which you are exchanging.

REDEMPTIONS

You may redeem your Fund shares by contacting your investment professional or financial intermediary. If you have direct account privileges with the Fund, you may redeem your Fund shares by:

•

Telephone. You may redeem $100,000 or less from your account by telephone. You or your representative should call the Fund at 888-522-2388.

•

Online. You may submit a request online to redeem your Fund shares by accessing your account online. Please log onto www.lordabbett.com and enter your account information and personal identification data.

•

Mail . You may submit a written request to redeem your Fund shares by indicating the name(s) in which the account is registered, the Fund’s name, your account number, and the dollar amount or number of shares you wish to redeem. If submitting a written request to redeem your shares, your redemption will not be processed until the Fund receives the request in good order at P.O. Box 219336, Kansas City, MO 64121.

Insufficient Account Value. If you request a redemption transaction for a specific amount and your account value at the time the transaction is processed is less than the requested redemption amount, the Fund will deem your request as a request to liquidate your entire account.

Redemption Payments . Redemptions of Fund shares are executed at the NAV next determined after the Fund or your financial intermediary receives your order in proper form. Normally, redemption proceeds are paid within three (but no more than seven) days after your redemption request is received in good order. If you redeem shares that were recently purchased, the Fund may delay the payment of the redemption proceeds until your check, bank draft, electronic funds transfer or wire transfer has cleared, which may take several days. This process may take up to 15 calendar days for purchases by check to clear. Under unusual circumstances, the Fund may postpone payment for more than seven days or suspend redemptions, to the extent permitted by law.

If you have direct account access privileges, the redemption proceeds will be paid by electronic transfer via an automated clearing house deposit to your bank account on record with the Fund. If there is no bank account on record, your

PROSPECTUS – THE FUNDS

115

redemption proceeds normally will be paid by check payable to the registered account owner(s) and mailed to the address to which the account is registered. You may request that your redemption proceeds of at least $1,000 be disbursed by wire to your bank account of record by contacting the Fund and requesting the redemption and wire transfer and providing the proper wiring instructions for your bank account of record.

You may request that redemption proceeds be made payable and disbursed to a person or account other than the shareholder(s) of record, provided that you provide a signature guarantee by an eligible guarantor, including a broker or bank that is a member of the medallion stamp program. Please note that a notary public is not an eligible guarantor.

A guaranteed signature by an eligible guarantor is designed to protect you from fraud. The Fund will require a guaranteed signature by an eligible guarantor on requests for redemption that:

•

Are signed by you in your legal capacity to sign on behalf of another person or entity (i.e., on behalf of an estate or on behalf of a corporation);

•

Request a redemption check to be payable to anyone other than the shareholder(s) of record;

•

Request a redemption check to be mailed to an address other than the address of record;

•

Request redemption proceeds to be payable to a bank other than the bank account of record; or

•

Total more than $100,000.

Redemptions in Kind. The Fund reserves the right to pay redemption proceeds in whole or in part by distributing liquid securities from the Fund’s portfolio. It is not expected that the Fund would pay redemptions by an in kind distribution except in unusual circumstances. If the Fund pays redemption proceeds by distributing securities in kind, you could incur brokerage or other charges and tax liability, and you will bear market risks until the distributed securities are converted into cash.

You should note that your purchase, exchange, and redemption requests may be subject to review and verification on an ongoing basis.

ACCOUNT SERVICES AND POLICIES

Certain of the services and policies described below may not be available through certain financial intermediaries. Contact your financial intermediary for services and policies applicable to you.

PROSPECTUS – THE FUNDS

116

Account Services

Automatic Services for Fund Investors. You may buy or sell shares automatically 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 the application or by calling 888-522-2388.


For investing

Invest-A-Matic* (Dollar-cost averaging)		You can make fixed, periodic investments ($250 initial and $50 subsequent minimum) into your Fund account by means of automatic money transfers from your bank checking account. See the application for instructions.

Div-Move*		You may automatically reinvest the dividends and distributions from your account into another account in any Eligible Fund ($50 minimum).

*	In the case of financial intermediaries maintaining accounts in omnibus recordkeeping environments or in nominee name that aggregate the underlying accounts’ purchase orders for Fund shares, the minimum subsequent investment requirements described above will not apply to such underlying accounts.


For selling shares

Systematic Withdrawal Plan (“SWP”)		You can make regular withdrawals from most Lord Abbett Funds. Automatic cash withdrawals will be paid to you from your account in fixed or variable amounts. To establish an SWP, the value of your shares for Class A or C must be at least $10,000, and for Class B the value of your shares must be at least $25,000.

Class B and C Shares		The CDSC will be waived on redemptions of up to 12% of the current value of your account at the time of your SWP request. For SWP redemptions over 12% per year, the CDSC will apply to the entire redemption. Please contact the Fund for assistance in minimizing the CDSC in this situation. Redemption proceeds due to an SWP for Class B and C shares will be redeemed in the order described under “CDSC” under “Sales Charges.”

Telephone and Online Purchases and Redemptions. Submitting transactions by telephone or online may be difficult during times of drastic economic or market changes or during other times when communications may be under unusual stress. When initiating a transaction by telephone or online, shareholders should be aware of the following considerations:

•

Security. The Fund and its service providers employ verification and security measures for your protection. For your security, telephone and online transaction requests are recorded. You should note, however, that any person with access to your account and other personal information (including personal identification number) may be able to submit instructions by telephone or online. The Fund will not be liable for relying on instructions submitted by telephone or online that the Fund reasonably believes to be genuine.

PROSPECTUS – THE FUNDS

117

•

Online Confirmation. The Fund is not responsible for online transaction requests that may have been sent but not received in good order. Requested transactions received by the Fund in good order are confirmed at the completion of the order and your requested transaction will not be processed unless you receive the confirmation message.

•

No Cancellations. You will be asked to verify the requested transaction and may cancel the request before it is submitted to the Fund. The Fund will not cancel a submitted transaction once it has been received (in good order) and is confirmed at the end of the telephonic or online transaction.

Householding. We have adopted a policy that allows us to send only one copy of the prospectus, proxy material, annual report and semiannual report to certain shareholders residing at the same “household.” This reduces Fund expenses, which benefits you and other shareholders. If you need additional copies or do not want your mailings to be “householded,” please call us at 888-522-2388 or send a written request with your name, the name of your fund or funds, and your account number or numbers to Lord Abbett Family of Funds, P.O. Box 219336, Kansas City, MO 64121.

Account Statements. Every investor automatically receives quarterly account statements.

Account Changes. For any changes you need to make to your account, consult your investment professional or call the Fund at 888-522-2388.

Systematic Exchange. You or your investment professional can establish a schedule of exchanges between the same classes of any other Lord Abbett Fund, provided that the fund shares to be acquired in the exchange are available to new investors in such other fund.

ACCOUNT POLICIES

Pricing of Fund Shares. Under normal circumstances, NAV per share is calculated 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 (including exchanges) of Fund shares are executed at the NAV (subject to any applicable sales charges) next determined after the Fund or the Fund’s authorized agent receives your order in proper form. Purchase and sale orders must be placed by the close of trading on the NYSE in order to receive that day’s NAV; orders placed after the close of trading on the NYSE will receive the next business day’s NAV. Fund shares will not be priced on holidays or other days when the NYSE is closed for trading. In the case of purchase, redemption, or exchange orders placed through your financial intermediary, when acting as the Fund’s authorized agent (or the agent’s designee), the Fund will be deemed to have received the order when the agent or designee receives the order in proper form.

PROSPECTUS – THE FUNDS

118

In calculating NAV, securities (other than those with remaining maturities of 60 days or less) are valued at prices supplied by independent pricing services, which prices reflect broker/dealer-supplied valuations and electronic data processing techniques, and reflect the mean between the bid and asked prices. Securities having remaining maturities of 60 days or less are valued at their amortized cost.

Securities for which prices or market quotations are not readily available, do not accurately reflect fair value in Lord Abbett’s opinion, or have been materially affected by events occurring after the close of the market on which the security is principally traded but before 4:00 p.m. Eastern time are valued by Lord Abbett under fair value procedures approved by and administered under the supervision of the Fund’s Board. These circumstances may arise, for instance, when trading in a security is suspended, the market on which a security is traded closes early, or demand for a security (as reflected by its trading volume) is insufficient and thus calls into question the reliability of the quoted or computed price, or the security is relatively illiquid. The Fund determines fair value in a manner that fairly reflects the market value of the security on the valuation date based on consideration of any information or factors it deems appropriate. These may include recent transactions in comparable securities, information relating to the specific security, developments in the markets and their performance, and current valuations of foreign or U.S. indices. The Fund’s use of fair value pricing may cause the NAV of Fund shares to differ from the NAV that would be calculated using market quotations. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security may be materially different from the value that could be realized upon the sale of that security.

Excessive Trading and Market Timing. The Fund is designed for long-term investors and is not intended to serve as a vehicle for frequent trading in response to short-term swings in the market. Excessive, short-term or market timing trading practices (“frequent trading”) may disrupt management of the Fund, raise its expenses, and harm long-term shareholders in a variety of ways. For example, volatility resulting from frequent trading may cause the Fund difficulty in implementing long-term investment strategies because it cannot anticipate the amount of cash it will have to invest. The Fund may find it necessary to sell portfolio securities at disadvantageous times to raise cash to meet the redemption demands resulting from such frequent trading. Each of these, in turn, could increase tax, administrative, and other costs, and reduce the Fund’s investment return.

To the extent the Fund invests in securities that are thinly traded or relatively illiquid, the Fund also may be particularly susceptible to frequent trading because the current market price for such securities may not accurately reflect current market values. A shareholder may attempt to engage in frequent trading to take advantage of these pricing differences (known as “price arbitrage”). The Fund has adopted fair value procedures that allow the Fund to use values other than

PROSPECTUS – THE FUNDS

119

the closing market prices of these types of securities to reflect what the Fund reasonably believes to be their fair value at the time it calculates its NAV per share. The Fund expects that the use of fair value pricing will reduce a shareholder’s ability to engage successfully in time zone arbitrage and price arbitrage to the detriment of other Fund shareholders, although there is no assurance that fair value pricing will do so. For more information about these procedures, see “Pricing of Fund Shares” above.

The Fund’s Board has adopted additional policies and procedures that are designed to prevent or stop frequent trading. We recognize, however, that it may not be possible to identify and stop or avoid every instance of frequent trading in Fund shares. For this reason, the Fund’s policies and procedures are intended to identify and stop frequent trading that we believe may be harmful to the Fund. For this purpose, we consider frequent trading to be harmful if, in general, it is likely to cause the Fund to incur additional expenses or to sell portfolio holdings for other than investment-strategy-related reasons. Toward this end, we have procedures in place to monitor the purchase, sale and exchange activity in Fund shares by investors and financial intermediaries that place orders on behalf of their clients, which procedures are described below. The Fund may modify its frequent trading policy and monitoring procedures from time to time without notice as and when deemed appropriate to enhance protection of the Fund and its shareholders.

Frequent Trading Policy and Procedures. Under the frequent trading policy, any Lord Abbett Fund shareholder redeeming shares valued at $5,000 or more from a Lord Abbett Fund will be prohibited from investing in the same Lord Abbett Fund for 30 calendar days after the redemption date (the “Policy”). The Policy applies to all redemptions and purchases for an account that are part of an exchange transaction or transfer of assets, but does not apply to the following types of transactions unless Lord Abbett Distributor determines in its sole discretion that the transaction may be harmful to the Fund: (1) systematic purchases and redemptions, such as purchases made through reinvestment of dividends or other distributions, or certain automatic or systematic investment, exchange or withdrawal plans (such as payroll deduction plans, and the Fund’s Invest-A-Matic and Systematic Withdrawal Plans); (2) retirement and benefit plan payroll and/or employer contributions, loans and distributions; (3) purchases or redemptions by a “fund-of-funds” or similar investment vehicle that Lord Abbett Distributor in its sole discretion has determined is not designed to and/or is not serving as a vehicle for frequent trading; (4) purchases by an account that is part of a fee-based program or mutual fund separate account program; and (5) purchases involving certain transfers of assets, rollovers, Roth IRA conversions and IRA recharacterizations; provided that the financial intermediary maintaining the account is able to identify the transaction in its records as one of these transactions. The Policy does not apply to Money Market Fund, Lord Abbett Floating Rate Fund, Lord Abbett Short Duration Income

PROSPECTUS – THE FUNDS

120

Fund, Lord Abbett Intermediate Tax Free Fund, and Lord Abbett Short Duration Tax Free Fund, provided that your financial intermediary is able to implement such exclusions.

In addition to the Policy, we have procedures in place designed to enable us to monitor the purchase, sale and exchange activity in Fund shares by investors and financial intermediaries that place orders on behalf of their clients in order to attempt to identify activity that is inconsistent with the Policy. If, based on these monitoring procedures, we believe that an investor is engaging in, or has engaged in, frequent trading that may be harmful to the Fund, normally, we will notify the investor (and/or the investor’s financial professional) to cease all such activity in the account. If the activity occurs again, we will place a block on all further purchases or exchanges of the Fund’s shares in the investor’s account and inform the investor (and/or the investor’s financial professional) to cease all such activity in the account. The investor then has the option of maintaining any existing investment in the Fund, exchanging Fund shares for shares of Money Market Fund, or redeeming the account. Investors electing to exchange or redeem Fund shares under these circumstances should consider that the transaction may be subject to a CDSC or result in tax consequences. As stated above, although we generally notify the investor (and/or the investor’s financial professional) to cease all activity indicative of frequent trading prior to placing a block on further purchases or exchanges, we reserve the right to immediately place a block on an account or take other action without prior notification when we deem such action appropriate in our sole discretion. While we attempt to apply the Policy and procedures uniformly to detect frequent trading practices, there can be no assurance that we will succeed in identifying all such practices or that some investors will not employ tactics that evade our detection.

We recognize that financial intermediaries that maintain accounts in omnibus recordkeeping environments or in nominee name may not be able reasonably to apply the Policy due to systems limitations or other reasons. In these instances, Lord Abbett Distributor may review the frequent trading policies and procedures that an individual financial intermediary is able to put in place to determine whether its policies and procedures are consistent with the protection of the Fund and its investors, as described above. Lord Abbett Distributor also will seek the financial intermediary’s agreement to cooperate with Lord Abbett Distributor’s efforts to (1) monitor the financial intermediary’s adherence to its policies and procedures and/or receive an amount and level of information regarding trading activity that Lord Abbett Distributor in its sole discretion deems adequate, and (2) stop any trading activity Lord Abbett Distributor identifies as frequent trading. Nevertheless, these circumstances may result in a financial intermediary’s application of policies and procedures that are less effective at detecting and preventing frequent trading than the policies and procedures adopted by Lord Abbett Distributor and by certain other financial intermediaries. If an investor would like more information concerning the

PROSPECTUS – THE FUNDS

121

policies, procedures and restrictions that may be applicable to his or her account, the investor should contact the financial intermediary placing purchase orders on his or her behalf. A substantial portion of the Fund’s shares may be held by financial intermediaries through omnibus accounts or in nominee name.

With respect to monitoring of accounts maintained by a financial intermediary, to our knowledge, in an omnibus environment or in nominee name, Lord Abbett Distributor will seek to receive sufficient information from the financial intermediary to enable it to review the ratio of purchase versus redemption activity of each underlying sub-account or, if such information is not readily obtainable, in the overall omnibus account(s) or nominee name account(s). If we identify activity that we believe may be indicative of frequent trading activity, we normally will notify the financial intermediary and request it to provide Lord Abbett Distributor with additional transaction information so that Lord Abbett Distributor may determine if any investors appear to have engaged in frequent trading activity. Lord Abbett Distributor’s monitoring activity normally is limited to review of historic account activity. This may result in procedures that may be less effective at detecting and preventing frequent trading than the procedures Lord Abbett Distributor uses in connection with accounts not maintained in an omnibus environment or in nominee name.

If an investor related to an account maintained in an omnibus environment or in nominee name is identified as engaging in frequent trading activity, we normally will request that the financial intermediary take appropriate action to curtail the activity and will work with the relevant party to do so. Such action may include actions similar to those that Lord Abbett Distributor would take, such as issuing warnings to cease frequent trading activity, placing blocks on accounts to prohibit future purchases and exchanges of Fund shares, or requiring that the investor place trades through the mail only, in each case either indefinitely or for a period of time. Again, we reserve the right to immediately attempt to place a block on an account or take other action without prior notification when we deem such action appropriate in our sole discretion. If we determine that the financial intermediary has not demonstrated adequately that it has taken appropriate action to curtail the frequent trading, we may consider seeking to prohibit the account or sub-account from investing in the Fund and/or also may terminate our relationship with the financial intermediary. As noted above, these efforts may be less effective at detecting and preventing frequent trading than the policies and procedures Lord Abbett Distributor uses in connection with accounts not maintained in an omnibus environment or in nominee name. The nature of these relationships also may inhibit or prevent Lord Abbett Distributor or the Fund from assuring the uniform assessment of CDSCs on investors, even though financial intermediaries operating in omnibus environments typically have agreed to assess the CDSCs or assist Lord Abbett Distributor or the Fund in assessing them.

PROSPECTUS – THE FUNDS

122

Procedures Required by the USA PATRIOT Act. To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions, including the Fund, to obtain, verify, and record information that identifies each person who opens an account. What this means for you – when you open an account, we will ask for your name, address, date and place of organization or date of birth, taxpayer identification number or Social Security number, and we may ask for other information that will allow us to identify you. We will ask for this information in the case of persons who will be signing on behalf of certain entities that will own the account. We also may ask for copies of documents. If we are unable to obtain the required information within a short period of time after you try to open an account, we will return your purchase order or account application. Your monies will not be invested until we have all required information. You also should know that we may verify your identity through the use of a database maintained by a third party or through other means. If we are unable to verify your identity, we may liquidate and close the account. This may result in adverse tax consequences. In addition, the Fund reserves the right to reject purchase orders or account applications accompanied by cash, cashier’s checks, money orders, bank drafts, traveler’s checks, and third party or double-endorsed checks, among others.

Small Account Closing Policy. The Fund has established a minimum account balance of $1,000. Subject to the approval of the Fund’s Board of Directors, the Fund may redeem your account (without charging a CDSC) if the NAV of your account falls below $1,000. The Fund will provide you with at least 60 days’ prior written notice before doing so, during which time you may avoid involuntary redemption by making additional investments to satisfy the minimum account balance.

DISTRIBUTIONS AND TAXES

All Funds

Each Fund expects to declare “exempt-interest dividends” from its net investment income daily and pay them monthly. Each Fund expects to distribute any net capital gains annually. All distributions, including exempt-interest dividends, will be reinvested in Fund shares unless you instruct the Fund to pay them to you in cash. Your election to receive distributions in cash and payable by check will apply only to distributions totaling $10.00 or more. Accordingly, any distribution totaling less than $10.00 will be reinvested in Fund shares and will not be paid to you by check. This policy does not apply to you if you have elected to receive distributions that are directly deposited into your bank account. There are no sales charges on reinvestments.

Each Fund seeks to earn income and pay exempt-interest dividends that are 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

PROSPECTUS – THE FUNDS

123

may invest a portion of its assets in securities that pay income that is not exempt from federal income tax. The AMT Free Municipal Bond Fund anticipates that substantially all of its income will be exempt from the federal AMT. For all other Funds, a portion of the exempt-interest dividends you receive may be subject to federal individual AMT. (In the case of High Yield Municipal Bond Fund, all or a portion of the exempt-interest dividends you receive may be subject to federal individual AMT.) Each Fund, other than the AMT Free Municipal Bond Fund, may invest up to 20% (or 100% in the case of High Yield Municipal Bond Fund) of its net assets in private activity bonds (also known as “AMT paper”) that generate income that is an item of tax preference when determining your federal individual or corporate AMT, which may cause the income to be taxable. In addition, certain exempt-interest dividends received from any of the Funds may result in or increase a corporate shareholder’s liability for the corporate AMT, regardless of whether the dividends are a tax preference item.

Distributions of short-term capital gains and gains characterized as market discount are taxable as ordinary income for federal income tax purposes, while distributions of net long-term capital gains are taxable as long-term capital gains, regardless of how long you have owned shares or whether distributions are reinvested or paid in cash. Any sale, redemption or exchange of Fund shares may be taxable.

Exempt-interest dividends are taken into account when determining the taxable portion of your social security or railroad retirement benefits.

If you buy shares when a Fund has realized but not yet either declared or distributed taxable 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 taxable dividend.

Changes in federal or state law or adverse determinations by the IRS or a court, as they relate to certain municipal bonds, may make income from such bonds taxable.

You must provide your Social Security number or other taxpayer identification number to a Fund along with certifications required by the IRS when you open an account. If you do not or it is otherwise legally required to do so, the Fund will withhold 28% “backup withholding” tax from your distributions, sale proceeds, and any other payments to you.

Legislation passed by Congress in 2008 requires mutual funds to report to the Internal Revenue Service the “cost basis” of shares acquired by a shareholder on or after January 1, 2012 that are subsequently redeemed. These requirements generally do not apply to investments through a tax-deferred arrangement or to certain types of entities (such as C corporations). Also, if you hold Fund shares

PROSPECTUS – THE FUNDS

124

through a broker (or another nominee), please contact that broker (nominee) with respect to the reporting of cost basis and available elections for your account.

If you are a direct shareholder, you may request that your cost basis reported on Form 1099-B be calculated using any one of the alternative methods offered by the Fund. Please contact the Fund to make, revoke, or change your election. If you do not affirmatively elect a cost basis method then the Fund will use the average cost basis method.

Please note that you will continue to be responsible for calculating and reporting gains and losses on redemptions of shares purchased prior to January 1, 2012. You are encouraged to consult your tax advisor regarding the application of the new cost basis reporting rules and, in particular, which cost basis calculation method you should elect.

STATE TAXABILITY OF DISTRIBUTIONS

For All Single-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 certain obligations of the federal government and other U.S. instrumentalities paid to shareholders who are residents of that state will be exempt from personal income tax in that state, but exempt-interest dividends derived from interest on obligations of other states and local jurisdictions paid to such shareholders will not be exempt from state and local taxes in that state.

Special rules, described below, may also apply. Even if exempt from personal income 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 personal income and corporate tax purposes. Furthermore, a portion of a Fund’s distributions, including exempt-interest dividends, may be subject to state personal income 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 the corresponding state.

California Tax Free Fund – The Fund seeks to earn income and pay dividends that will be exempt from California personal income taxes. All exempt-interest dividends from the Fund are included in the income of corporate shareholders that are subject to the California franchise tax.

PROSPECTUS – THE FUNDS

125

New Jersey Tax Free Fund – The Fund seeks to earn income and pay dividends that will be exempt from New Jersey personal income taxes. All exempt-interest dividends from the Fund are included in income of corporate shareholders that are subject to the New Jersey corporation business tax.

New York Tax Free Fund – The Fund seeks to earn income and pay dividends that will be exempt from New York State, as well as New York City, personal 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.

For All Multi-State Funds – Shareholders generally will not be able to exclude exempt-interest dividends paid by the Short Duration Tax Free Fund, Intermediate Tax Free Fund, AMT Free Municipal Bond Fund, National Tax Free Fund and High Yield Municipal Bond 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-interest dividends from a Fund to be excludable 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 excludable 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.

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 includable in income for both state personal income and corporate tax purposes. In addition, the portion of the Short Duration Tax Free Fund’s, Intermediate Tax Free Fund’s, National Tax Free Fund’s and High Yield Municipal Bond Fund’s dividends attributable to private activity bonds may be a tax preference item for 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, local, and foreign taxes and how these relate to your own tax situation.

PROSPECTUS – THE FUNDS

126

FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

These tables describe the Funds’ performance for the fiscal periods indicated. “Total Return” shows how much your investment in the Funds would have increased or decreased during each period without considering the effects of sales loads and assuming you had reinvested all dividends and distributions. These Financial Highlights have been audited by Deloitte & Touche LLP, the Funds’ independent registered public accounting firm, in conjunction with their annual audits of the Funds’ financial statements. Financial statements and the report of independent registered public accounting firm thereon appear in the 2012 annual report to shareholders and are incorporated by reference in the SAI, which is available upon request. Certain information reflects financial results for a single Fund share.

PROSPECTUS – THE FUNDS

127

SHORT DURATION TAX FREE FUND

Financial Highlights



	Class A Shares

	Year Ended 9/30									12/12/2008 ^(a) to 9/30/2009
	2012			2011			2010

Per Share Operating Performance

Net asset value, beginning of period		$15.83			$15.80			$15.60			$15.00

Investment operations:

Net investment income ^(b)		.26			.33			.30			.33

Net realized and unrealized gain		.15			.03			.20			.68

Total from investment operations		.41			.36			.50			1.01

Distributions to shareholders from:

Net investment income		(.26	)		(.33	)		(.30	)		(.41	)

Net realized gain		(.01	)		–			–			–

Total distributions		(.27	)		(.33	)		(.30	)		(.41	)

Net asset value, end of period		$15.97			$15.83			$15.80			$15.60

Total Return ^(c)		2.65	%		2.30	%		3.24	%		6.82	% ^(d)

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		.61	%		.59	%		.55	%		.44	% ^(e)

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed		.60	% ^(f)		.58	% ^(f)		.55	% ^(f)		.44	% ^(e)

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		.70	%		.70	%		.70	%		.75	% ^(e)

Net investment income		1.65	%		2.08	%		1.91	%		2.68	% ^(e)

Supplemental Data:

Net assets, end of period (000)		$1,511,237			$1,249,341			$1,326,511			$609,072

Portfolio turnover rate		18.11	%		52.51	%		36.21	%		64.00	%

^(a)

Commencement of operations was 12/12/2008, SEC effective date was 12/10/2008 and date shares became available to the public was 1/2/2009.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.

^(d)

Not annualized.

^(e)

Annualized.

^(f)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – SHORT DURATION TAX FREE FUND

128

SHORT DURATION TAX FREE FUND

Financial Highlights (continued)



	Class C Shares

	Year Ended 9/30									12/12/2008 ^(a) to 9/30/2009
	2012			2011			2010

Per Share Operating Performance

Net asset value, beginning of period		$15.83			$15.80			$15.60			$15.00

Investment operations:

Net investment income ^(b)		.16			.21			.18			.23

Net realized and unrealized gain		.15			.03			.19			.68

Total from investment operations		.31			.24			.37			.91

Distributions to shareholders from:

Net investment income		(.16	)		(.21	)		(.17	)		(.31	)

Net realized gain		(.01	)		–			–			–

Total distributions		(.17	)		(.21	)		(.17	)		(.31	)

Net asset value, end of period		$15.97			$15.83			$15.80			$15.60

Total Return ^(c)		1.97	%		1.56	%		2.42	%		6.10	% ^(d)

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		1.27	%		1.31	%		1.35	%		1.23	% ^(e)

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed		1.26	% ^(f)		1.31	% ^(f)		1.35	% ^(f)		1.23	% ^(e)

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		1.36	%		1.41	%		1.50	%		1.51	% ^(e)

Net investment income		1.00	%		1.36	%		1.12	%		1.88	% ^(e)

Supplemental Data:

Net assets, end of period (000)		$298,123			$244,872			$251,390			$128,116

Portfolio turnover rate		18.11	%		52.51	%		36.21	%		64.00	%

^(a)

Commencement of operations was 12/12/2008, SEC effective date was 12/10/2008 and date shares became available to the public was 1/2/2009.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.

^(d)

Not annualized.

^(e)

Annualized.

^(f)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – SHORT DURATION TAX FREE FUND

129

SHORT DURATION TAX FREE FUND

Financial Highlights (continued)



	Class F Shares

	Year Ended 9/30									12/12/2008 ^(a) to 9/30/2009
	2012			2011			2010

Per Share Operating Performance

Net asset value, beginning of period		$15.83			$15.80			$15.60			$15.00

Investment operations:

Net investment income ^(b)		.27			.34			.32			.36

Net realized and unrealized gain		.16			.03			.20			.66

Total from investment operations		.43			.37			.52			1.02

Distributions to shareholders from:

Net investment income		(.28	)		(.34	)		(.32	)		(.42	)

Net realized gain		(.01	)		–			–			–

Total distributions		(.29	)		(.34	)		(.32	)		(.42	)

Net asset value, end of period		$15.97			$15.83			$15.80			$15.60

Total Return ^(c)		2.75	%		2.40	%		3.34	%		6.90	% ^(d)

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		.51	%		.49	%		.45	%		.34	% ^(e)

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed		.50	% ^(f)		.48	% ^(f)		.45	% ^(f)		.34	% ^(e)

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		.60	%		.60	%		.61	%		.64	% ^(e)

Net investment income		1.72	%		2.18	%		2.02	%		2.88	% ^(e)

Supplemental Data:

Net assets, end of period (000)		$704,486			$365,694			$284,289			$100,723

Portfolio turnover rate		18.11	%		52.51	%		36.21	%		64.00	%

^(a)

Commencement of operations was 12/12/2008, SEC effective date was 12/10/2008 and date shares became available to the public was 1/2/2009.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Total return assumes the reinvestment of all distributions.

^(d)

Not annualized.

^(e)

Annualized.

^(f)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – SHORT DURATION TAX FREE FUND

130

SHORT DURATION TAX FREE FUND

Financial Highlights (concluded)



	Class I Shares

	Year Ended 9/30									12/12/2008 ^(a) to 9/30/2009
	2012			2011			2010

Per Share Operating Performance

Net asset value, beginning of period		$15.83			$15.80			$15.60			$15.00

Investment operations:

Net investment income ^(b)		.28			.35			.33			.34

Net realized and unrealized gain		.16			.04			.20			.70

Total from investment operations		.44			.39			.53			1.04

Distributions to shareholders from:

Net investment income		(.29	)		(.36	)		(.33	)		(.44	)

Net realized gain		(.01	)		–			–			–

Total distributions		(.30	)		(.36	)		(.33	)		(.44	)

Net asset value, end of period		$15.97			$15.83			$15.80			$15.60

Total Return ^(c)		2.83	%		2.48	%		3.43	%		7.04	% ^(d)

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		.41	%		.39	%		.35	%		.25	% ^(e)

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed		.40	% ^(f)		.39	% ^(f)		.34	% ^(f)		.25	% ^(e)

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		.50	%		.49	%		.50	%		.57	% ^(e)

Net investment income		1.77	%		2.22	%		2.11	%		2.71	% ^(e)

Supplemental Data:

Net assets, end of period (000)		$23,111			$6,330			$2,221			$3,407

Portfolio turnover rate		18.11	%		52.51	%		36.21	%		64.00	%

^(a)

Commencement of operations was 12/12/2008, SEC effective date was 12/10/2008 and date shares became available to the public was 1/2/2009.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Total return assumes the reinvestment of all distributions.

^(d)

Not annualized.

^(e)

Annualized.

^(f)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – SHORT DURATION TAX FREE FUND

131

INTERMEDIATE TAX FREE FUND

Financial Highlights



	Class A Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.49			$10.52			$10.28			$9.42			$9.75

Investment operations:

Net investment income ^(a)		.33			.39			.39			.38			.37

Net realized and unrealized gain (loss)		.50			(.03	)		.23			.86			(.32	)

Total from investment operations		.83			.36			.62			1.24			.05

Distributions to shareholders from:

Net investment income		(.33	)		(.39	)		(.38	)		(.38	)		(.38	)

Net asset value, end of year		$10.99			$10.49			$10.52			$10.28			$9.42

Total Return ^(b)		8.04	%		3.55	%		6.22	%		13.50	%		.43	%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		.67	%		.65	%		.63	%		.44	%		.27	%

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed ^(c)		.66	%		.64	%		.63	%		.44	%		.24	%

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		.70	%		.72	%		.71	%		.72	%		.79	%

Net investment income		3.10	%		3.82	%		3.76	%		3.89	%		3.80	%

Supplemental Data:

Net assets, end of year (000)		$2,064,377			$1,385,337			$1,320,285			$798,344			$338,400

Portfolio turnover rate		21.39	%		38.81	%		30.23	%		15.70	%		29.73	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – INTERMEDIATE TAX FREE FUND

132

INTERMEDIATE TAX FREE FUND

Financial Highlights (continued)



	Class B Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.48			$10.51			$10.27			$9.41			$9.74

Investment operations:

Net investment income ^(a)		.25			.31			.31			.30			.31

Net realized and unrealized gain (loss)		.50			(.04	)		.23			.87			(.33	)

Total from investment operations		.75			.27			.54			1.17			(.02	)

Distributions to shareholders from:

Net investment income		(.25	)		(.30	)		(.30	)		(.31	)		(.31	)

Net asset value, end of year		$10.98			$10.48			$10.51			$10.27			$9.41

Total Return ^(b)		7.19	%		2.73	%		5.38	%		12.65	%		(.29	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		1.47	%		1.45	%		1.43	%		1.24	%		1.02	%

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed ^(c)		1.46	%		1.44	%		1.43	%		1.23	%		1.00	%

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		1.50	%		1.52	%		1.51	%		1.52	%		1.67	%

Net investment income		2.34	%		3.03	%		2.98	%		3.10	%		3.15	%

Supplemental Data:

Net assets, end of year (000)		$5,933			$6,526			$7,725			$6,315			$1,966

Portfolio turnover rate		21.39	%		38.81	%		30.23	%		15.70	%		29.73	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – INTERMEDIATE TAX FREE FUND

133

INTERMEDIATE TAX FREE FUND

Financial Highlights (continued)



	Class C Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.48			$10.51			$10.27			$9.41			$9.74

Investment operations:

Net investment income ^(a)		.26			.32			.31			.31			.30

Net realized and unrealized gain (loss)		.50			(.04	)		.24			.87			(.32	)

Total from investment operations		.76			.28			.55			1.18			(.02	)

Distributions to shareholders from:

Net investment income		(.26	)		(.31	)		(.31	)		(.32	)		(.31	)

Net asset value, end of year		$10.98			$10.48			$10.51			$10.27			$9.41

Total Return ^(b)		7.32	%		2.81	%		5.44	%		12.76	%		(.31	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		1.34	%		1.37	%		1.37	%		1.10	%		1.02	%

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed ^(c)		1.34	%		1.36	%		1.37	%		1.09	%		.98	%

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		1.38	%		1.43	%		1.46	%		1.47	%		1.45	%

Net investment income		2.42	%		3.10	%		3.01	%		3.22	%		3.11	%

Supplemental Data:

Net assets, end of year (000)		$699,128			$453,450			$391,138			$180,270			$44,402

Portfolio turnover rate		21.39	%		38.81	%		30.23	%		15.70	%		29.73	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – INTERMEDIATE TAX FREE FUND

134

INTERMEDIATE TAX FREE FUND

Financial Highlights (continued)



	Class F Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.49			$10.52			$10.28			$9.42			$9.75

Investment operations:

Net investment income ^(a)		.34			.40			.40			.38			.39

Net realized and unrealized gain (loss)		.50			(.03	)		.23			.87			(.33	)

Total from investment operations		.84			.37			.63			1.25			.06

Distributions to shareholders from:

Net investment income		(.34	)		(.40	)		(.39	)		(.39	)		(.39	)

Net asset value, end of year		$10.99			$10.49			$10.52			$10.28			$9.42

Total Return ^(b)		8.15	%		3.66	%		6.33	%		13.61	%		.57	%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		.57	%		.55	%		.53	%		.40	%		.13	%

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed ^(c)		.56	%		.54	%		.53	%		.39	%		.10	%

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		.61	%		.62	%		.61	%		.64	%		.67	%

Net investment income		3.19	%		3.92	%		3.86	%		3.90	%		3.97	%

Supplemental Data:

Net assets, end of year (000)		$1,007,950			$547,652			$307,256			$103,873			$1,460

Portfolio turnover rate		21.39	%		38.81	%		30.23	%		15.70	%		29.73	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

Total return assumes the reinvestment of all distributions.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – INTERMEDIATE TAX FREE FUND

135

INTERMEDIATE TAX FREE FUND

Financial Highlights (continued)



	Class I Shares

	Year Ended 9/30/2012			1/31/2011 ^(a) to 9/30/2011

Per Share Operating Performance

Net asset value, beginning of period		$10.50			$9.96

Investment operations:

Net investment income ^(b)					–	^(c)

Net realized and unrealized loss					(.01	)

Total from investment operations					(.01	)

Net asset value on SEC Effective Date, 2/1/2011					$9.95

Investment operations:

Net investment income ^(b)		.34			.27

Net realized and unrealized gain		.51			.55	^(d)

Total from investment operations		.85			.82

Distributions to shareholders from:

Net investment income		(.35	)		(.27	)

Net asset value, end of period		$11.00			$10.50

Total Return ^(e)					8.26	% ^(f)(g)

Total Return ^(e)		8.22	%		8.35	% ^(f)(h)

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		.47	%		.45	% ⁽ⁱ⁾

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed ^(j)		.46	%		.44	% ⁽ⁱ⁾

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		.51	%		.54	% ⁽ⁱ⁾

Net investment income		3.17	%		3.81	% ⁽ⁱ⁾

Supplemental Data:

Net assets, end of period (000)		$37,514			$2,572

Portfolio turnover rate		21.39	%		38.81	%

^(a)

Commencement of operations was 1/31/2011, SEC effective date and date shares first became available to the public was 2/1/2011.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Amount is less than $.01.

^(d)

The per share amount does not represent the net realized and unrealized gain (loss) as presented on the Statements of Operations for the period due to the timing of sales of Fund shares and the amount of per share realized and unrealized gains and losses at such time.

^(e)

Total return assumes the reinvestment of all distributions.

^(f)

Not annualized.

^(g)

Total return for the period 1/31/2011 through 9/30/2011.

^(h)

Total return for the period 2/1/2011 through 9/30/2011.

⁽ⁱ⁾

Annualized.

^(j)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – INTERMEDIATE TAX FREE FUND

136

INTERMEDIATE TAX FREE FUND

Financial Highlights (concluded)



	Class P Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.50			$10.52			$10.28			$9.42			$9.75

Investment operations:

Net investment income ^(a)		.31			.37			.36			.36			.36

Net realized and unrealized gain (loss)		.50			(.03	)		.24			.86			(.33	)

Total from investment operations		.81			.34			.60			1.22			.03

Distributions to shareholders from:

Net investment income		(.31	)		(.36	)		(.36	)		(.36	)		(.36	)

Net asset value, end of year		$11.00			$10.50			$10.52			$10.28			$9.42

Total Return ^(b)		7.79	%		3.41	%		5.99	%		13.27	%		.29	%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		.90	%		.89	%		.86	%		.65	%		.46	%

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed ^(c)		.90	%		.88	%		.86	%		.64	%		.43	%

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		.94	%		.96	%		.94	%		.96	%		1.13	%

Net investment income		2.90	%		3.60	%		3.56	%		3.73	%		3.73	%

Supplemental Data

Net assets, end of year (000)		$15			$14			$13			$13			$11

Portfolio turnover rate		21.39	%		38.81	%		30.23	%		15.70	%		29.73	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

Total return assumes the reinvestment of all distributions.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – INTERMEDIATE TAX FREE FUND

137

AMT FREE MUNICIPAL BOND FUND

Financial Highlights



	Class A Shares

	Year Ended 9/30/2012			10/26/2010 ^(a) to 9/30/2011

Per Share Operating Performance

Net asset value, beginning of period		$15.08			$15.00

Investment operations:

Net investment income ^(b)		.65			.65

Net realized and unrealized gain		1.30			.05

Total from investment operations		1.95			.70

Distributions to shareholders from:

Net investment income		(.65	)		(.62	)

Net asset value, end of period		$16.38			$15.08

Total Return ^(c)		13.16	%		4.90	% ^(d)

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		.55	%		.50	% ^(e)

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed ^(f)		.53	%		.50	% ^(e)

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		.91	%		1.13	% ^(e)

Net investment income		4.12	%		4.81	% ^(e)

Supplemental Data:

Net assets, end of period (000)		$115,862			$62,280

Portfolio turnover rate		17.32	%		54.63	%

^(a)

Commencement of operations and SEC effective date was 10/26/2010 and date shares first became available to the public was 11/1/2010.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.

^(d)

Not annualized.

^(e)

Annualized.

^(f)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

138

AMT FREE MUNICIPAL BOND FUND

Financial Highlights (continued)



	Class C Shares

	Year Ended 9/30/2012			10/26/2010 ^(a) to 9/30/2011

Per Share Operating Performance

Net asset value, beginning of period		$15.07			$15.00

Investment operations:

Net investment income ^(b)		.51			.54

Net realized and unrealized gain		1.32			.04

Total from investment operations		1.83			.58

Distributions to shareholders from:

Net investment income		(.52	)		(.51	)

Net asset value, end of period		$16.38			$15.07

Total Return ^(c)		12.29	%		4.03	% ^(d)

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		1.32	%		1.29	% ^(e)

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed ^(f)		1.30	%		1.29	% ^(e)

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		1.66	%		1.84	% ^(e)

Net investment income		3.22	%		3.97	% ^(e)

Supplemental Data:

Net assets, end of period (000)		$18,242			$2,532

Portfolio turnover rate		17.32	%		54.63	%

^(a)

Commencement of operations and SEC effective date was 10/26/2010 and date shares first became available to the public was 11/1/2010.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.

^(d)

Not annualized.

^(e)

Annualized.

^(f)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

139

AMT FREE MUNICIPAL BOND FUND

Financial Highlights (continued)



	Class F Shares

	Year Ended 9/30/2012			10/26/2010 ^(a) to 9/30/2011

Per Share Operating Performance

Net asset value, beginning of period		$15.09			$15.00

Investment operations:

Net investment income ^(b)		.65			.67

Net realized and unrealized gain		1.30			.05

Total from investment operations		1.95			.72

Distributions to shareholders from:

Net investment income		(.66	)		(.63	)

Net asset value, end of period		$16.38			$15.09

Total Return ^(c)		13.20	%		5.04	% ^(d)

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		.45	%		.40	% ^(e)

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed ^(f)		.44	%		.39	% ^(e)

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		.80	%		.90	% ^(e)

Net investment income		4.08	%		4.85	% ^(e)

Supplemental Data:

Net assets, end of period (000)		$32,554			$3,769

Portfolio turnover rate		17.32	%		54.63	%

^(a)

Commencement of operations and SEC effective date was 10/26/2010 and date shares first became available to the public was 11/1/2010.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Total return assumes the reinvestment of all distributions.

^(d)

Not annualized.

^(e)

Annualized.

^(f)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

140

AMT FREE MUNICIPAL BOND FUND

Financial Highlights (concluded)



	Class I Shares

	Year Ended 9/30/2012			10/26/2010 ^(a) to 9/30/2011

Per Share Operating Performance

Net asset value, beginning of period		$15.08			$15.00

Investment operations:

Net investment income ^(b)		.66			.66

Net realized and unrealized gain		1.33			.07

Total from investment operations		1.99			.73

Distributions to shareholders from:

Net investment income		(.68	)		(.65	)

Net asset value, end of period		$16.39			$15.08

Total Return ^(c)		13.41	%		5.13	% ^(d)

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including management fee waived and expenses reimbursed		.36	%		.29	% ^(e)

Expenses, excluding interest expense, including expense reductions, management fee waived and expenses reimbursed ^(f)		.35	%		.29	% ^(e)

Expenses, excluding expense reductions, management fee waived and expenses reimbursed		.69	%		2.12	% ^(e)

Net investment income		4.10	%		4.91	% ^(e)

Supplemental Data:

Net assets, end of period (000)		$8,372			$11

Portfolio turnover rate		17.32	%		54.63	%

^(a)

Commencement of operations and SEC effective date was 10/26/2010 and date shares first became available to the public was 11/1/2010.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Total return assumes the reinvestment of all distributions.

^(d)

Not annualized.

^(e)

Annualized.

^(f)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – AMT FREE MUNICIPAL BOND FUND

141

NATIONAL TAX FREE FUND

Financial Highlights



	Class A Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.53			$10.84			$10.62			$9.71			$11.12

Investment operations:

Net investment income ^(a)		.50			.52			.54			.52			.51

Net realized and unrealized gain (loss)		.98			(.31	)		.21			.90			(1.41	)

Total from investment operations		1.48			.21			.75			1.42			(.90	)

Distributions to shareholders from:

Net investment income		(.49	)		(.52	)		(.53	)		(.51	)		(.51	)

Net asset value, end of year		$11.52			$10.53			$10.84			$10.62			$9.71

Total Return ^(b)		14.37	%		2.15	%		7.34	%		15.40	%		(8.41	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		.79	%		.83	%		.86	%		.92	%		1.05	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(c)		.73	%		.76	%		.77	%		.77	%		.79	%

Expenses, excluding expense reductions and expenses reimbursed		.79	%		.83	%		.86	%		.92	%		1.06	%

Net investment income		4.52	%		5.12	%		5.12	%		5.49	%		4.77	%

Supplemental Data:

Net assets, end of year (000)		$1,694,729			$1,406,579			$1,007,123			$889,665			$740,198

Portfolio turnover rate		43.81	%		87.43	%		63.31	%		45.22	%		88.15	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – NATIONAL TAX FREE FUND

142

NATIONAL TAX FREE FUND

Financial Highlights (continued)



	Class B Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.58			$10.90			$10.68			$9.75			$11.16

Investment operations:

Net investment income ^(a)		.42			.45			.46			.45			.42

Net realized and unrealized gain (loss)		.99			(.33	)		.21			.91			(1.41	)

Total from investment operations		1.41			.12			.67			1.36			(.99	)

Distributions to shareholders from:

Net investment income		(.41	)		(.44	)		(.45	)		(.43	)		(.42	)

Net asset value, end of year		$11.58			$10.58			$10.90			$10.68			$9.75

Total Return ^(b)		13.52	%		1.26	%		6.48	%		14.48	%		(9.08	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		1.60	%		1.64	%		1.66	%		1.72	%		1.85	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(c)		1.53	%		1.57	%		1.57	%		1.57	%		1.58	%

Expenses, excluding expense reductions and expenses reimbursed		1.60	%		1.64	%		1.66	%		1.72	%		1.86	%

Net investment income		3.77	%		4.31	%		4.33	%		4.70	%		3.94	%

Supplemental Data:

Net assets, end of year (000)		$7,762			$9,190			$16,143			$18,540			$18,032

Portfolio turnover rate		43.81	%		87.43	%		63.31	%		45.22	%		88.15	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – NATIONAL TAX FREE FUND

143

NATIONAL TAX FREE FUND

Financial Highlights (continued)



	Class C Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.54			$10.86			$10.63			$9.73			$11.15

Investment operations:

Net investment income ^(a)		.43			.46			.46			.46			.44

Net realized and unrealized gain (loss)		.98			(.33	)		.23			.89			(1.41	)

Total from investment operations		1.41			.13			.69			1.35			(.97	)

Distributions to shareholders from:

Net investment income		(.42	)		(.45	)		(.46	)		(.45	)		(.45	)

Net asset value, end of year		$11.53			$10.54			$10.86			$10.63			$9.73

Total Return ^(b)		13.64	%		1.38	%		6.69	%		14.58	%		(9.01	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		1.43	%		1.50	%		1.56	%		1.59	%		1.67	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(c)		1.37	%		1.43	%		1.47	%		1.45	%		1.41	%

Expenses, excluding expense reductions and expenses reimbursed		1.43	%		1.50	%		1.56	%		1.59	%		1.68	%

Net investment income		3.87	%		4.44	%		4.40	%		4.78	%		4.13	%

Supplemental Data:

Net assets, end of year (000)		$215,692			$158,714			$181,209			$133,922			$80,301

Portfolio turnover rate		43.81	%		87.43	%		63.31	%		45.22	%		88.15	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – NATIONAL TAX FREE FUND

144

NATIONAL TAX FREE FUND

Financial Highlights (continued)



	Class F Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.52			$10.83			$10.61			$9.71			$11.12

Investment operations:

Net investment income ^(a)		.51			.53			.55			.53			.52

Net realized and unrealized gain (loss)		.98			(.31	)		.21			.89			(1.41	)

Total from investment operations		1.49			.22			.76			1.42			(.89	)

Distributions to shareholders from:

Net investment income		(.50	)		(.53	)		(.54	)		(.52	)		(.52	)

Net asset value, end of year		$11.51			$10.52			$10.83			$10.61			$9.71

Total Return ^(b)		14.48	%		2.24	%		7.43	%		15.44	%		(8.32	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		.69	%		.73	%		.76	%		.81	%		.95	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(c)		.63	%		.66	%		.66	%		.67	%		.69	%

Expenses, excluding expense reductions and expenses reimbursed		.69	%		.73	%		.76	%		.81	%		.97	%

Net investment income		4.58	%		5.21	%		5.18	%		5.45	%		5.00	%

Supplemental Data:

Net assets, end of year (000)		$122,943			$73,983			$62,200			$28,791			$2,310

Portfolio turnover rate		43.81	%		87.43	%		63.31	%		45.22	%		88.15	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

Total return assumes the reinvestment of all distributions.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – NATIONAL TAX FREE FUND

145

NATIONAL TAX FREE FUND

Financial Highlights (concluded)



	Class I Shares

	Year Ended 9/30						7/26/2010 ^(a) to 9/30/2010
	2012			2011

Per Share Operating Performance

Net asset value, beginning of period		$10.53			$10.84			$10.59

Investment operations:

Net investment income ^(b)		.51			.55			.10

Net realized and unrealized gain (loss)		1.00			(.32	)		.25

Total from investment operations		1.51			.23			.35

Distributions to shareholders from:

Net investment income		(.52	)		(.54	)		(.10	)

Net asset value, end of period		$11.52			$10.53			$10.84

Total Return ^(c)		14.62	%		2.40	%		3.31	% ^(d)

Ratios to Average Net Assets:

Expenses, excluding interest expense and including expense reductions ^(e)		.52	%		.54	%		.55	% ^(f)

Expenses, excluding expense reductions		.59	%		.61	%		.64	% ^(f)

Net investment income		4.58	%		5.35	%		5.21	% ^(f)

Supplemental Data:

Net assets, end of period (000)		$78			$11			$10

Portfolio turnover rate		43.81	%		87.43	%		63.31	%

^(a)

Commencement of operations was 7/26/2010 and the SEC effective date was 4/30/2007.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Total return assumes the reinvestment of all distributions.

^(d)

Not annualized.

^(e)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

^(f)

Annualized.

PROSPECTUS – NATIONAL TAX FREE FUND

146

HIGH YIELD MUNICIPAL BOND FUND

Financial Highlights



	Class A Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$11.06			$11.81			$11.49			$11.89			$15.03

Investment operations:

Net investment income ^(a)		.63			.69			.67			.72			.75

Net realized and unrealized gain (loss)		.85			(.77	)		.31			(.37	) ^(b)		(3.13	)

Total from investment operations		1.48			(.08	)		.98			.35			(2.38	)

Distributions to shareholders from:

Net investment income		(.61	)		(.67	)		(.66	)		(.75	)		(.76	)

Net asset value, end of year		$11.93			$11.06			$11.81			$11.49			$11.89

Total Return ^(c)		13.79	%		(.46	)%		8.88	%		4.14	%		(16.33	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		.86	%		.89	%		.91	%		1.03	%		1.27	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(d)		.80	%		.82	%		.80	%		.84	%		.79	%

Expenses, excluding expense reductions and expenses reimbursed		.86	%		.89	%		.91	%		1.03	%		1.30	%

Net investment income		5.52	%		6.24	%		5.88	%		7.13	%		5.50	%

Supplemental Data:

Net assets, end of year (000)		$1,185,644			$919,758			$1,236,637			$976,708			$695,723

Portfolio turnover rate		27.20	%		40.94	%		37.68	%		32.88	%		47.95	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

^(c)

Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.

^(d)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

147

HIGH YIELD MUNICIPAL BOND FUND

Financial Highlights (continued)



	Class B Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$11.07			$11.82			$11.51			$11.91			$15.03

Investment operations:

Net investment income ^(a)		.55			.61			.59			.66			.70

Net realized and unrealized gain (loss)		.85			(.77	)		.30			(.39	) ^(b)		(3.14	)

Total from investment operations		1.40			(.16	)		.89			.27			(2.44	)

Distributions to shareholders from:

Net investment income		(.53	)		(.59	)		(.58	)		(.67	)		(.68	)

Net asset value, end of year		$11.94			$11.07			$11.82			$11.51			$11.91

Total Return ^(c)		12.95	%		(1.19	)%		7.97	%		3.46	%		(16.70	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		1.63	%		1.66	%		1.68	%		1.78	%		1.74	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(d)		1.56	%		1.59	%		1.57	%		1.60	%		1.26	%

Expenses, excluding expense reductions and expenses reimbursed		1.63	%		1.66	%		1.68	%		1.81	%		2.07	%

Net investment income		4.81	%		5.51	%		5.15	%		6.52	%		5.10	%

Supplemental Data:

Net assets, end of year (000)		$12			$11			$11			$10			$10

Portfolio turnover rate		27.20	%		40.94	%		37.68	%		32.88	%		47.95	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

^(c)

Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.

^(d)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

148

HIGH YIELD MUNICIPAL BOND FUND

Financial Highlights (continued)



	Class C Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$11.06			$11.81			$11.50			$11.89			$15.03

Investment operations:

Net investment income ^(a)		.56			.62			.59			.66			.68

Net realized and unrealized gain (loss)		.85			(.77	)		.30			(.37	) ^(b)		(3.14	)

Total from investment operations		1.41			(.15	)		.89			.29			(2.46	)

Distributions to shareholders from:

Net investment income		(.54	)		(.60	)		(.58	)		(.68	)		(.68	)

Net asset value, end of year		$11.93			$11.06			$11.81			$11.50			$11.89

Total Return ^(c)		13.08	%		(1.11	)%		7.99	%		3.57	%		(16.77	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		1.49	%		1.56	%		1.65	%		1.66	%		1.78	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(d)		1.44	%		1.48	%		1.55	%		1.48	%		1.30	%

Expenses, excluding expense reductions and expenses reimbursed		1.49	%		1.56	%		1.65	%		1.67	%		1.93	%

Net investment income		4.91	%		5.59	%		5.14	%		6.55	%		5.00	%

Supplemental Data:

Net assets, end of year (000)		$526,880			$450,802			$585,366			$455,042			$392,360

Portfolio turnover rate		27.20	%		40.94	%		37.68	%		32.88	%		47.95	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

^(c)

Total return does not consider the effects of sales loads and assumes the reinvestment of all distributions.

^(d)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

149

HIGH YIELD MUNICIPAL BOND FUND

Financial Highlights (continued)



	Class F Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$11.07			$11.82			$11.50			$11.90			$15.03

Investment operations:

Net investment income ^(a)		.64			.70			.69			.70			.76

Net realized and unrealized gain (loss)		.85			(.76	)		.30			(.34	) ^(b)		(3.13	)

Total from investment operations		1.49			(.06	)		.99			.36			(2.37	)

Distributions to shareholders from:

Net investment income		(.62	)		(.69	)		(.67	)		(.76	)		(.76	)

Net asset value, end of year		$11.94			$11.07			$11.82			$11.50			$11.90

Total Return ^(c)		13.89	%		(.35	)%		8.98	%		4.25	%		(16.19	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		.76	%		.79	%		.81	%		.91	%		1.20	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(d)		.70	%		.72	%		.71	%		.73	%		.72	%

Expenses, excluding expense reductions and expenses reimbursed		.76	%		.79	%		.81	%		.91	%		1.20	%

Net investment income		5.60	%		6.35	%		5.97	%		6.83	%		5.90	%

Supplemental Data:

Net assets, end of year (000)		$258,682			$175,052			$215,479			$112,500			$4,513

Portfolio turnover rate		27.20	%		40.94	%		37.68	%		32.88	%		47.95	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

^(c)

Total return assumes the reinvestment of all distributions.

^(d)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

150

HIGH YIELD MUNICIPAL BOND FUND

Financial Highlights (continued)



	Class I Shares

	Year Ended 9/30						7/26/2010 ^(a) to 9/30/2010
	2012			2011

Per Share Operating Performance

Net asset value, beginning of period		$11.06			$11.81			$11.58

Investment operations:

Net investment income ^(b)		.66			.68			.12

Net realized and unrealized gain (loss)		.85			(.74	)		.23

Total from investment operations		1.51			(.06	)		.35

Distributions to shareholders from:

Net investment income		(.63	)		(.69	)		(.12	)

Net asset value, end of period		$11.94			$11.06			$11.81

Total Return ^(c)		14.08	%		(.28	)%		3.05	% ^(d)

Ratios to Average Net Assets:

Expenses, excluding interest expense and including expense reductions ^(e)		.60	%		.62	%		.62	% ^(f)

Expenses, excluding expense reductions		.66	%		.70	%		.72	% ^(f)

Net investment income		5.78	%		6.18	%		5.75	% ^(f)

Supplemental Data:

Net assets, end of period (000)		$1,629			$2,258			$112

Portfolio turnover rate		27.20	%		40.94	%		37.68	%

^(a)

Commencement of operations was 7/26/2010 and SEC the effective date was 4/30/2007.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Total return assumes the reinvestment of all distributions.

^(d)

Not annualized.

^(e)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

^(f)

Annualized.

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

151

HIGH YIELD MUNICIPAL BOND FUND

Financial Highlights (concluded)



	Class P Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$11.07			$11.82			$11.50			$11.90			$15.04

Investment operations:

Net investment income ^(a)		.61			.67			.66			.71			.74

Net realized and unrealized gain (loss)		.85			(.77	)		.30			(.39	) ^(b)		(3.13	)

Total from investment operations		1.46			(.10	)		.96			.32			(2.39	)

Distributions to shareholders from:

Net investment income		(.59	)		(.65	)		(.64	)		(.72	)		(.75	)

Net asset value, end of year		$11.94			$11.07			$11.82			$11.50			$11.90

Total Return ^(c)		13.56	%		(.65	)%		8.67	%		3.87	%		(16.34	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		1.08	%		1.11	%		1.12	%		1.26	%		1.35	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(d)		1.02	%		1.04	%		1.02	%		1.08	%		.87	%

Expenses, excluding expense reductions and expenses reimbursed		1.08	%		1.11	%		1.12	%		1.26	%		1.51	%

Net investment income		5.36	%		6.07	%		5.71	%		7.04	%		5.46	%

Supplemental Data:

Net assets, end of year (000)		$12			$11			$11			$10			$10

Portfolio turnover rate		27.20	%		40.94	%		37.68	%		32.88	%		47.95	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

^(c)

Total return assumes the reinvestment of all distributions.

^(d)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – HIGH YIELD MUNICIPAL BOND FUND

152

CALIFORNIA TAX FREE FUND

Financial Highlights



	Class A Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$9.90			$10.24			$10.17			$9.38			$10.57

Investment operations:

Net investment income ^(a)		.43			.48			.47			.45			.45

Net realized and unrealized gain (loss)		.83			(.35	)		.07			.80			(1.18	)

Total from investment operations		1.26			.13			.54			1.25			(.73	)

Distributions to shareholders from:

Net investment income		(.43	)		(.47	)		(.47	)		(.46	)		(.46	)

Net asset value, end of year		$10.73			$9.90			$10.24			$10.17			$9.38

Total Return ^(b)		12.94	%		1.56	%		5.52	%		13.92	%		(7.16	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		.82	%		.85	%		.84	%		.91	%		1.18	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(c)		.79	%		.79	%		.78	%		.78	%		.80	%

Expenses, excluding expense reductions and expenses reimbursed		.82	%		.85	%		.84	%		.91	%		1.18	%

Net investment income		4.16	%		4.96	%		4.74	%		4.87	%		4.41	%

Supplemental Data:

Net assets, end of year (000)		$191,127			$150,423			$166,247			$159,768			$144,165

Portfolio turnover rate		28.15	%		36.60	%		47.68	%		34.04	%		49.17	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – CALIFORNIA TAX FREE FUND

153

CALIFORNIA TAX FREE FUND

Financial Highlights (continued)



	Class C Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$9.90			$10.25			$10.17			$9.39			$10.58

Investment operations:

Net investment income ^(a)		.36			.42			.40			.38			.39

Net realized and unrealized gain (loss)		.83			(.36	)		.08			.80			(1.18	)

Total from investment operations		1.19			.06			.48			1.18			(.79	)

Distributions to shareholders from:

Net investment income		(.36	)		(.41	)		(.40	)		(.40	)		(.40	)

Net asset value, end of year		$10.73			$9.90			$10.25			$10.17			$9.39

Total Return ^(b)		12.23	%		.80	%		4.88	%		13.13	%		(7.73	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		1.45	%		1.50	%		1.55	%		1.60	%		1.79	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(c)		1.42	%		1.44	%		1.49	%		1.48	%		1.41	%

Expenses, excluding expense reductions and expenses reimbursed		1.45	%		1.50	%		1.55	%		1.60	%		1.79	%

Net investment income		3.51	%		4.32	%		4.02	%		4.14	%		3.79	%

Supplemental Data:

Net assets, end of year (000)		$38,712			$28,023			$33,280			$28,896			$18,793

Portfolio turnover rate		28.15	%		36.60	%		47.68	%		34.04	%		49.17	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – CALIFORNIA TAX FREE FUND

154

CALIFORNIA TAX FREE FUND

Financial Highlights (continued)



	Class F Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$9.90			$10.24			$10.17			$9.38			$10.57

Investment operations:

Net investment income ^(a)		.44			.49			.48			.46			.45

Net realized and unrealized gain (loss)		.83			(.35	)		.07			.80			(1.17	)

Total from investment operations		1.27			.14			.55			1.26			(.72	)

Distributions to shareholders from:

Net investment income		(.44	)		(.48	)		(.48	)		(.47	)		(.47	)

Net asset value, end of year		$10.73			$9.90			$10.24			$10.17			$9.38

Total Return ^(b)		13.04	%		1.65	%		5.62	%		14.06	%		(7.07	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		.72	%		.75	%		.74	%		.79	%		1.05	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(c)		.69	%		.69	%		.68	%		.67	%		.67	%

Expenses, excluding expense reductions and expenses reimbursed		.72	%		.75	%		.74	%		.79	%		1.07	%

Net investment income		4.23	%		5.06	%		4.81	%		4.84	%		4.48	%

Supplemental Data:

Net assets, end of year (000)		$22,344			$14,605			$12,683			$6,578			$285

Portfolio turnover rate		28.15	%		36.60	%		47.68	%		34.04	%		49.17	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

Total return assumes the reinvestment of all distributions.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – CALIFORNIA TAX FREE FUND

155

CALIFORNIA TAX FREE FUND

Financial Highlights (concluded)



	Class I Shares

	Year Ended 9/30/2012			1/31/2011 ^(a) to 9/30/2011

Per Share Operating Performance

Net asset value, beginning of period		$9.90			$9.24

Investment operations:

Net investment income ^(b)					— ^(c	⁾

Net realized and unrealized loss					(.01	)

Total from investment operations					(.01	)

Net asset value on SEC Effective Date, 2/1/2011					$9.23

Investment operations:

Net investment income ^(b)		.45			.33

Net realized and unrealized gain		.83			.67	^(d)

Total from investment operations		1.28			1.00

Distributions to shareholders from:

Net investment income		(.45	)		(.33	)

Net asset value, end of period		$10.73			$9.90

Total Return ^(e)					10.89	% ^(f)(g)

Total Return ^(e)		13.17	%		10.99	% ^(f)(h)

Ratios to Average Net Assets:

Expenses, excluding interest expense and including expense reductions ⁽ⁱ⁾		.59	%		.60	% ^(j)

Expenses, excluding expense reductions		.62	%		.69	% ^(j)

Net investment income		4.39	%		5.24	% ^(j)

Supplemental Data:

Net assets, end of period (000)		$13			$11

Portfolio turnover rate		28.15	%		36.60	%

^(a)

Commencement of operations was 1/31/2011, SEC effective date and date shares first became available to the public was 2/1/2011.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Amount is less than $.01.

^(d)

^(e)

Total return assumes the reinvestment of all distributions.

^(f)

Not annualized.

^(g)

Total return for the period 1/31/2011 through 9/30/2011.

^(h)

Total return for the period 2/1/2011 through 9/30/2011.

⁽ⁱ⁾

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

^(j)

Annualized.

PROSPECTUS – CALIFORNIA TAX FREE FUND

156

NEW JERSEY TAX FREE FUND

Financial Highlights



	Class A Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$4.69			$4.85			$4.78			$4.43			$5.00

Investment operations:

Net investment income ^(a)		.19			.21			.21			.21			.21

Net realized and unrealized gain (loss)		.38			(.16	)		.07			.35			(.56	)

Total from investment operations		.57			.05			.28			.56			(.35	)

Distributions to shareholders from:

Net investment income		(.19	)		(.21	)		(.21	)		(.21	)		(.22	)

Net asset value, end of year		$5.07			$4.69			$4.85			$4.78			$4.43

Total Return ^(b)		12.41	%		1.23	%		6.13	%		13.13	%		(7.36	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		.83	%		.85	%		.83	%		.81	%		.90	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed		.82	% ^(c)		.82	% ^(c)		.80	% ^(c)		.81	%		.82	% ^(c)

Expenses, excluding expense reductions and expenses reimbursed		.83	%		.85	%		.83	%		.81	%		.90	%

Net investment income		3.96	%		4.62	%		4.53	%		4.78	%		4.34	%

Supplemental Data:

Net assets, end of year (000)		$136,085			$113,783			$125,722			$128,778			$114,704

Portfolio turnover rate		31.06	%		23.14	%		32.22	%		20.68	%		32.16	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – NEW JERSEY TAX FREE FUND

157

NEW JERSEY TAX FREE FUND

Financial Highlights (continued)



	Class F Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$4.69			$4.85			$4.78			$4.43			$5.00

Investment operations:

Net investment income ^(a)		.20			.22			.22			.21			.21

Net realized and unrealized gain (loss)		.38			(.17	)		.07			.35			(.56	)

Total from investment operations		.58			.05			.29			.56			(.35	)

Distributions to shareholders from:

Net investment income		(.20	)		(.21	)		(.22	)		(.21	)		(.22	)

Net asset value, end of year		$5.07			$4.69			$4.85			$4.78			$4.43

Total Return ^(b)		12.51	%		1.33	%		6.23	%		13.26	%		(7.27	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		.73	%		.75	%		.72	%		.70	%		.74	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed		.72	% ^(c)		.72	% ^(c)		.70	% ^(c)		.70	%		.66	% ^(c)

Expenses, excluding expense reductions and expenses reimbursed		.73	%		.75	%		.72	%		.70	%		.77	%

Net investment income		3.98	%		4.70	%		4.61	%		4.73	%		4.41	%

Supplemental Data:

Net assets, end of year (000)		$7,400			$3,949			$2,775			$969			$48

Portfolio turnover rate		31.06	%		23.14	%		32.22	%		20.68	%		32.16	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

Total return assumes the reinvestment of all distributions.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – NEW JERSEY TAX FREE FUND

158

NEW JERSEY TAX FREE FUND

Financial Highlights (concluded)



	Class I Shares

	Year Ended 9/30/2012			1/31/2011 ^(a) to 9/30/2011

Per Share Operating Performance

Net asset value, beginning of period		$4.69			$4.42

Investment operations:

Net investment income ^(b)					—	^(c)

Net realized and unrealized loss					(.01	)

Total from investment operations					(.01	)

Net asset value on SEC Effective Date, 2/1/2011					$4.41

Investment operations:

Net investment income ^(b)		.21			.15

Net realized and unrealized gain		.37			.28	^(d)

Total from investment operations		.58			.43

Distributions to shareholders from:

Net investment income		(.20	)		(.15	)

Net asset value, end of period		$5.07			$4.69

Total Return ^(e)					9.79	% ^(f)(g)

Total Return ^(e)		12.43	%		10.02	% ^(f)(h)

Ratios to Average Net Assets:

Expenses, excluding interest expense and including expense reductions ⁽ⁱ⁾		.60	%		.59	% ^(j)

Expenses, excluding expense reductions		.61	%		.64	% ^(j)

Net investment income		4.18	%		4.85	% ^(j)

Supplemental Data:

Net assets, end of period (000)		$12			$11

Portfolio turnover rate		31.06	%		23.14	%

^(a)

Commencement of operations was 1/31/2011, SEC effective date and date shares first became available to the public was 2/1/2011.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Amount is less than $.01.

^(d)

^(e)

Total return assumes the reinvestment of all distributions.

^(f)

Not annualized.

^(g)

Total return for the period 1/31/2011 through 9/30/2011.

^(h)

Total return for the period 2/1/2011 through 9/30/2011.

⁽ⁱ⁾

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

^(j)

Annualized.

PROSPECTUS – NEW JERSEY TAX FREE FUND

159

NEW YORK TAX FREE FUND

Financial Highlights



	Class A Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.66			$10.96			$10.78			$9.71			$10.96

Investment operations:

Net investment income ^(a)		.43			.48			.49			.48			.46

Net realized and unrealized gain (loss)		.73			(.30	)		.17			1.06			(1.24	)

Total from investment operations		1.16			.18			.66			1.54			(.78	)

Distributions to shareholders from:

Net investment income		(.44	)		(.48	)		(.48	)		(.47	)		(.47	)

Net asset value, end of year		$11.38			$10.66			$10.96			$10.78			$9.71

Total Return ^(b)		11.05	%		1.85	%		6.37	%		16.49	%		(7.37	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		.84	%		.85	%		.85	%		.87	%		.99	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(c)		.78	%		.78	%		.77	%		.78	%		.78	%

Expenses, excluding expense reductions and expenses reimbursed		.84	%		.85	%		.85	%		.87	%		1.00	%

Net investment income		3.95	%		4.64	%		4.55	%		4.90	%		4.36	%

Supplemental Data:

Net assets, end of year (000)		$285,447			$216,126			$238,259			$231,452			$221,057

Portfolio turnover rate		18.34	%		47.37	%		30.34	%		22.34	%		44.67	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – NEW YORK TAX FREE FUND

160

NEW YORK TAX FREE FUND

Financial Highlights (continued)



	Class C Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.65			$10.95			$10.76			$9.70			$10.96

Investment operations:

Net investment income ^(a)		.36			.42			.41			.41			.40

Net realized and unrealized gain (loss)		.72			(.31	)		.19			1.06			(1.25	)

Total from investment operations		1.08			.11			.60			1.47			(.85	)

Distributions to shareholders from:

Net investment income		(.36	)		(.41	)		(.41	)		(.41	)		(.41	)

Net asset value, end of year		$11.37			$10.65			$10.95			$10.76			$9.70

Total Return ^(b)		10.36	%		1.19	%		5.74	%		15.69	%		(8.02	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		1.47	%		1.50	%		1.54	%		1.55	%		1.63	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(c)		1.42	%		1.43	%		1.46	%		1.46	%		1.41	%

Expenses, excluding expense reductions and expenses reimbursed		1.47	%		1.50	%		1.54	%		1.55	%		1.63	%

Net investment income		3.31	%		3.99	%		3.85	%		4.21	%		3.72	%

Supplemental Data:

Net assets, end of year (000)		$50,407			$38,627			$42,397			$37,554			$31,262

Portfolio turnover rate		18.34	%		47.37	%		30.34	%		22.34	%		44.67	%

^(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.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – NEW YORK TAX FREE FUND

161

NEW YORK TAX FREE FUND

Financial Highlights (continued)



	Class F Shares

	Year Ended 9/30
	2012			2011			2010			2009			2008

Per Share Operating Performance

Net asset value, beginning of year		$10.67			$10.97			$10.78			$9.72			$10.96

Investment operations:

Net investment income ^(a)		.44			.49			.50			.48			.48

Net realized and unrealized gain (loss)		.73			(.30	)		.18			1.06			(1.24	)

Total from investment operations		1.17			.19			.68			1.54			(.76	)

Distributions to shareholders from:

Net investment income		(.45	)		(.49	)		(.49	)		(.48	)		(.48	)

Net asset value, end of year		$11.39			$10.67			$10.97			$10.78			$9.72

Total Return ^(b)		11.15	%		1.95	%		6.57	%		16.51	%		(7.18	)%

Ratios to Average Net Assets:

Expenses, excluding expense reductions and including expenses reimbursed		.74	%		.75	%		.75	%		.77	%		.82	%

Expenses, excluding interest expense, including expense reductions and expenses reimbursed ^(c)		.68	%		.68	%		.67	%		.68	%		.61	%

Expenses, excluding expense reductions and expenses reimbursed		.74	%		.75	%		.75	%		.77	%		.83	%

Net investment income		3.99	%		4.73	%		4.64	%		4.81	%		4.43	%

Supplemental Data:

Net assets, end of year (000)		$16,491			$7,907			$7,631			$3,143			$9

Portfolio turnover rate		18.34	%		47.37	%		30.34	%		22.34	%		44.67	%

^(a)

Calculated using average shares outstanding during the year.

^(b)

Total return assumes the reinvestment of all distributions.

^(c)

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

PROSPECTUS – NEW YORK TAX FREE FUND

162

NEW YORK TAX FREE FUND

Financial Highlights (concluded)



	Class I Shares

	Year Ended 9/30/2012			1/31/2011 ^(a) to 9/30/2011

Per Share Operating Performance

Net asset value, beginning of period		$10.67			$10.10

Investment operations:

Net investment income ^(b)					–	^(c)

Net realized and unrealized loss					(.01	)

Total from investment operations					(.01	)

Net asset value on SEC Effective Date, 2/1/2011					$10.09

Investment operations:

Net investment income ^(b)		.41			.34

Net realized and unrealized gain		.77			.58	^(d)

Total from investment operations		1.18			.92

Distributions to shareholders from:

Net investment income		(.46	)		(.34	)

Net asset value, end of period		$11.39			$10.67

Total Return ^(e)					9.12	% ^(f)(g)

Total Return ^(e)		11.30	%		9.21	% ^(f)(h)

Ratios to Average Net Assets:

Expenses, excluding interest expense and including expense reductions ⁽ⁱ⁾		.58	%		.57	% ^(j)

Expenses, excluding expense reductions		.64	%		.67	% ^(j)

Net investment income		3.68	%		4.91	% ^(j)

Supplemental Data:

Net assets, end of period (000)		$265			$11

Portfolio turnover rate		18.34	%		47.37	%

^(a)

Commencement of operations was 1/31/2011, SEC effective date and date shares first became available to the public was 2/1/2011.

^(b)

Calculated using average shares outstanding during the period.

^(c)

Amount is less than $.01.

^(d)

^(e)

Total return assumes the reinvestment of all distributions.

^(f)

Not annualized.

^(g)

Total return for the period 1/31/2011 through 9/30/2011.

^(h)

Total return for the period 2/1/2011 through 9/30/2011.

⁽ⁱ⁾

Interest expense relates to the liability for floating rate notes issued in conjunction with tender option bond trusts.

^(j)

Annualized.

PROSPECTUS – NEW YORK TAX FREE FUND

163

NOTES:

To Obtain Information:

By telephone. For shareholder account inquiries and for literature requests 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. LLC www.lordabbett.com

Text only versions of Fund documents can be viewed online or downloaded from the SEC: http://www.sec.gov.

You can also obtain copies by visiting the SEC’s Public Reference Room in Washington, DC (phone 202-551-8090) or by sending your request and a duplicating fee to the SEC’s Public Reference Section, Washington, DC 20549-1520 or by sending your request electronically to publicinfo@sec.gov.

ADDITIONAL INFORMATION

More information on each Fund is available free upon request, including the following:

ANNUAL/SEMIANNUAL REPORTS

The Funds’ annual and semiannual reports contain more information about each Fund’s investments and performance. The annual report also includes details about the market conditions and investment strategies that had a significant effect on each Fund’s performance during the last fiscal year. The reports are available free of charge at www.lordabbett.com, and through other means, as indicated on the left.

STATEMENT OF ADDITIONAL INFORMATION (“SAI”)

The SAI provides more details about the Funds and their policies. A current SAI is on file with the SEC and is incorporated by reference (is legally considered part of the prospectus). The SAI is available free of charge at www.lordabbett.com, and through other means, as indicated on the left.

Lord Abbett Municipal Income Fund, Inc.
Lord Abbett Short Duration Tax Free Fund
Lord Abbett Intermediate Tax Free Fund
Lord Abbett AMT Free Municipal Bond Fund
Lord Abbett National Tax-Free Income Fund
Lord Abbett High Yield Municipal Bond Fund
Lord Abbett California Tax-Free Income Fund
Lord Abbett New Jersey Tax-Free Income Fund
Lord Abbett New York Tax-Free Income Fund

Lord Abbett Mutual Fund shares are distributed by: LORD ABBETT DISTRIBUTOR LLC

LATFI-1
(2/13)

Investment Company Act File Number: 811-03942


LORD ABBETT
Statement of Additional Information	February 1, 2013

LORD ABBETT
MUNICIPAL INCOME FUND


SHORT DURATION TAX FREE FUND

CLASS	TICKER	CLASS	TICKER
A	LSDAX	F	LSDFX
B	N/A	I	LISDX
C	LSDCX

INTERMEDIATE TAX FREE FUND

CLASS	TICKER	CLASS	TICKER
A	LISAX	F	LISFX
B	LISBX	I	LAIIX
C	LISCX	P	LISPX

AMT FREE MUNICIPAL BOND FUND

CLASS	TICKER	CLASS	TICKER
A	LATAX	F	LATFX
C	LATCX	I	LMCIX

NATIONAL TAX FREE FUND

CLASS	TICKER	CLASS	TICKER
A	LANSX	F	LANFX
B	LANBX	I	LTNIX
C	LTNSX	P	N/A

HIGH YIELD MUNICIPAL BOND FUND

CLASS	TICKER	CLASS	TICKER
A	HYMAX	F	HYMFX
B	HYMBX	I	HYMIX
C	HYMCX	P	HYMPX

CALIFORNIA TAX FREE FUND

CLASS	TICKER	CLASS	TICKER
A	LCFIX	I	CAILX
C	CALAX	P	N/A
F	LCFFX

NEW JERSEY TAX FREE FUND

CLASS	TICKER	CLASS	TICKER
A	LANJX	I	LINJX
F	LNJFX	P	N/A

NEW YORK TAX FREE FUND

CLASS	TICKER	CLASS	TICKER
A	LANYX	I	NYLIX
C	NYLAX	P	N/A
F	LNYFX

This statement of additional information (“SAI”) is not a prospectus. A prospectus may be obtained from your financial intermediary or from Lord Abbett Distributor LLC (“Lord Abbett Distributor”) at 90 Hudson Street, Jersey City, NJ 07302-3973. This SAI relates to, and should be read in conjunction with, the prospectus for Lord Abbett Municipal Income Fund, Inc. (the “Company”), dated February 1, 2013. Certain capitalized terms used throughout this SAI are defined in the prospectus.

Shareholder account inquiries should be made by directly contacting the Funds or by calling 888-522-2388. The Funds’ audited financial statements are incorporated into this SAI by reference to the Funds’ 2012 annual report. The Funds’ annual and semiannual reports to shareholders are available without charge, upon request by calling 888-522-2388. In addition, you can make inquiries through your financial intermediary.

TABLE OF CONTENTS


		PAGE


1.	Fund History	1-1

2.	Investment Policies	2-1

3.	Management of the Funds	3-1

4.	Control Persons and Principal Holders of Securities	4-1

5.	Investment Advisory and Other Services	5-1

6.	Brokerage Allocations and Other Practices	6-1

7.	Classes of Shares	7-1

8.	Purchases, Redemptions, Pricing, and Payments to Dealers	8-1

9.	Taxation of the Funds	9-1

10.	Underwriter	10-1

11.	Financial Statements	11-1

Appendix A	Municipal Bond Ratings	A-1

Appendix B	State and Territory Risk Factors	B-1

Appendix C	Fund Portfolio Information Recipients	C-1

Appendix D	Proxy Voting Policies and Procedures	D-1

1.
Fund History

The Company was organized as a Maryland corporation on December 27, 1983. The Company has 4,400,001,000 shares of authorized capital stock, $0.001 par value, consisting of the following eight series or portfolios: Lord Abbett Short Duration Tax Free Fund (“Short Duration Tax Free Fund”) offers five classes of shares (A, B, C, F, and I); Lord Abbett Intermediate Tax Free Fund (“Intermediate Fund”), Lord Abbett High Yield Municipal Bond Fund (“High Yield Municipal Bond Fund”), and Lord Abbett National Tax-Free Income Fund (“National Fund”) offer six classes of shares (A, B, C, F, I, and P); Lord Abbett AMT Free Municipal Bond Fund (“AMT Free Municipal Bond Fund”) offers four classes of shares (A, C, F, and I); Lord Abbett New Jersey Tax-Free Income Fund (“New Jersey Fund”) offers four classes of shares (A, F, I, and P); Lord Abbett California Tax-Free Income Fund (“California Fund”) and Lord Abbett New York Tax-Free Income Fund (“New York Fund”) offer five classes of shares (A, C, F, I and P) (each individually a “Fund” or, collectively, the “Funds.”)

As of November 19, 2010, Short Duration Tax Free Fund, Intermediate Fund and High Yield Municipal Bond Fund were reorganized from the Lord Abbett Municipal Income Trust, a Delaware statutory trust, into the Company.

High Yield Municipal Bond Fund, California Fund, New Jersey Fund, and New York Fund are non-diversified, open-end management investment companies registered under the Investment Company Act of 1940, as amended (the “Act”). Short Duration Tax Free Fund, Intermediate Fund, AMT Free Municipal Bond Fund and National Fund, are diversified, open-end management investment companies registered under the Act.

1-1

2.
I nvestment Policies

Fundamental Investment Restrictions . Each Fund’s investment objective cannot be changed without the approval of a “majority of the Fund’s outstanding shares.” ¹ Each Fund also is subject to the following fundamental investment restrictions that cannot be changed without the 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 by the Act) ² in amounts up to 33 ⅓% 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, (iv) each Fund may purchase securities on margin to the extent permitted by applicable law; ³ and (v) the Short Duration Tax Free Fund and AMT Free Municipal Bond Fund may borrow money from other Lord Abbett Funds to the extent permitted by applicable law and any exemptive relief obtained by the Fund;

	(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); ⁴

	(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 (i) the acquisition of bonds, debentures or other corporate debt securities and investments 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, (ii) each Fund may lend its portfolio securities, provided that the lending of portfolio securities may be made only in accordance with applicable law, and (iii) the Short Duration Tax Free Fund and AMT Free Municipal Bond Fund may lend money to other Lord Abbett Funds to the extent permitted by applicable law and any exemptive relief obtained by the Fund;

	(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 that invest in real estate or interests therein), or 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, Intermediate Fund, Short Duration Tax Free Fund, and AMT Free Municipal Bond 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




¹ A “majority of a Fund’s outstanding shares” means the vote of the lesser of (1) 67% or more of the voting securities present at a shareholder meeting, provided that more than 50% of the outstanding voting securities of the Fund are present at the meeting or represented by proxy, or (2) more than 50% of the outstanding voting securities of the Fund regardless of whether such shareholders are present at the meeting (or represented by proxy).
² The term “bank” is defined in Section 2(a)(5) of the Act.
³ U.S. Securities and Exchange Commission (“SEC”) staff guidance currently prohibits a Fund from purchasing any security on margin, except such short-term credits as are necessary for the clearance of transactions.
⁴ Current federal securities laws prohibit the Fund from pledging more than one-third of its total assets (taken at current value) to secure borrowings made in accordance with the investment restrictions above. For the purpose of this restriction the deposit of assets in a segregated account with the Fund’s custodian in connection with any of the Fund’s investment transactions is not considered to be a pledge of the Fund’s assets.

2-1


	(8)	issue senior securities to the extent such issuance would violate applicable law. ⁵

Compliance with these fundamental investment restrictions will be determined at the time of the purchase or sale of the security, except in the case of the first fundamental investment restriction, with which the Funds must comply on a continuous basis.

Non-Fundamental Investment Restrictions . In addition to each Fund’s investment objective, 80% investment policy in the prospectus, and the fundamental investment restrictions above that cannot be changed without shareholder approval, each Fund also is subject to the following non-fundamental investment restrictions that may be changed by the Board of Directors (the “Board”) without shareholder approval.

Each Fund may not:


	(1)	make short sales of securities or maintain a short position except to the extent permitted by applicable law;

	(2)	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 under the Securities Act of 1933, as amended (“Rule 144A”), determined by Lord Abbett to be liquid, subject to the oversight of the Board;

	(3)	invest in securities issued by other investment companies, except to the extent permitted by applicable law;

	(4)	invest in warrants if, at the time of the 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 that are not listed on the New York Stock Exchange (“NYSE”) or American Stock Exchange or a major foreign exchange);

	(5)	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;

	(6)	write, purchase or sell puts, calls, straddles, spreads or combinations thereof, except to the extent permitted in the Fund’s prospectus and SAI, as they may be amended from time to time; or


	(7)	buy from or sell to any of the Company’s officers, directors, employees, or each Fund’s investment adviser or any of the adviser’s officers, partners or employees, any securities other than shares of each Fund. Section 18(f) of the Act prohibits a Fund from issuing senior securities (which generally are defined as securities representing indebtedness), except that a Fund may borrow money from banks in amounts of up to 33⅓% of its total assets (including the amount borrowed).

Compliance with these non-fundamental investment restrictions will be determined at the time of the purchase or sale of the security, except in the case of the second and fourth non-fundamental investment restrictions, with which each Fund must comply at the time of purchase. No Fund will be required to sell illiquid securities if it exceeds the 15% limit due to market activity or the sale of liquid securities, however, in these situations the Fund will take appropriate measures to reduce the percentage of its assets invested in illiquid securities.

Portfolio Turnover Rate . For each of the fiscal years ended September 30, 2012 and 2011, the portfolio turnover rates for the Funds were as follows:


Fund	2012			2011

Short Duration Tax Free Fund		18.11	%		52.51	%
Intermediate Fund		21.39	%		38.81	%
AMT Free Municipal Bond Fund		17.32	%		54.63	%
National Fund		43.81	%		87.43	%
High Yield Municipal Bond Fund		27.20	%		40.94	%
California Fund		28.15	%		36.60	%
New Jersey Fund		31.06	%		23.14	%
New York Fund		18.34	%		47.37	%




⁵ Current federal securities laws prohibit the Fund from issuing senior securities (which generally are defined as securities representing indebtedness), except that the Fund may borrow money from banks in amounts of up to 33⅓% of its total assets (including the amount borrowed).

2-2

Additional Information on Portfolio Risks, Investments, and Techniques . This section provides further information on certain types of investments and investment techniques that each Fund may use and some of the risks associated with some investments and techniques. The composition of a Fund’s portfolio and the investments and techniques that a Fund uses in seeking its investment objective and employing its investment strategies will vary over time. A Fund may use each of the investments and techniques described below at all times, at some times, or not at all.

Average Duration . The Short Duration Tax Free Fund maintains a dollar-weighted average effective portfolio duration between one and three years. Some securities may have periodic interest rate adjustments based upon an index such as the 90-day Treasury Bill rate. This periodic interest rate adjustment tends to lessen the volatility of the security’s price. With respect to securities with an interest rate adjustment period of one year or less, the Fund will, when determining average-weighted duration, treat such a security’s maturity as the amount of time remaining until the next interest rate adjustment.

Borrowing Money . Each Fund may borrow money for certain purposes as described above under “Fundamental Investment Restrictions.” If a Fund borrows money and experiences a decline in its net asset value (“NAV”), the borrowing will increase its losses. A Fund will not purchase additional securities while outstanding borrowings exceed 5% of its total assets.

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. In addition to incurring fees in connection with futures, an investor is required to maintain margin deposits. At the time of entering into a futures transaction, the Fund 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 fluctuates.

Each Fund may purchase and sell futures contracts for hedging purposes (including to hedge against changes in interest rates and securities prices) or for speculative purposes (including to gain efficient exposure to markets and to minimize transaction costs). Each Fund also may enter into closing purchase and sale transactions with respect to such contracts.

Futures contracts present substantial risks, including the following:


	•	While a Fund may benefit from the use of futures, unanticipated market events may result in poorer overall performance than if the Fund had not entered into any futures transactions.

	•	Because perfect correlation between a futures position and a portfolio position that a Fund intends to hedge is impossible to achieve, a hedge may not work as intended, and the Fund thus may 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 a Fund may incur in entering into futures contracts 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 a Fund’s NAV.

	•	As a result of the low margin deposits normally required in futures trading, a relatively small price movement in a contract may result in substantial losses to a Fund.

	•	Futures contracts may be illiquid, and exchanges may limit fluctuations in futures contract prices during a single day.


	High-Yield, Non-Investment Grade or Lower-Rated Municipal Bonds and Other Debt Securities . Each Fund (other than High Yield Municipal Bond Fund, AMT Free Municipal Bond Fund and National Fund) may invest up to 20% of its assets in high-yield debt securities. High Yield Municipal Bond Fund may invest up to 100% of its assets in high-yield debt securities. Each of AMT Free Municipal Bond Fund and National Fund may invest up to 35% of its assets in high-yield debt securities. High-yield debt securities (also referred to as “non-investment grade securities”, “lower-rated debt securities” or “junk bonds”) are rated by a Nationally Recognized Statistical Rating Organization (“NRSRO”) BB/Ba or lower (or unrated by NRSROs but determined by Lord, Abbett & Co. LLC (“Lord Abbett”), each Fund’s investment adviser, to be of comparable quality) and may pay a higher yield, but entail greater risks, than investment grade debt securities. When compared to investment grade debt securities, high-yield debt securities:

2-3



	•	have a higher risk of default and their prices can be much more volatile due to lower liquidity;
	•	tend to be less sensitive to interest rate changes;
	•	are susceptible to negative perceptions of the junk markets generally; and
	•	pose a greater risk that exercise of any of their redemption or call provisions in a declining market may result in their replacement by lower-yielding bonds.


	Since the risk of default is higher among high-yield debt securities, Lord Abbett’s research and analysis are important factors in the selection of such securities. Through portfolio diversification, good credit analysis and attention to current developments and trends in interest rates and economic conditions, each Fund seeks to reduce this risk. There can be no assurance, however, that this risk will in fact be reduced and that losses will not occur.


	The secondary market for non-investment grade securities is concentrated in relatively few market makers and is dominated by institutional investors, including mutual funds, insurance companies and other financial institutions. As a result, the secondary market for such securities is not as liquid as, and is more volatile than, the secondary market for higher rated securities. In addition, market trading volume for lower rated securities is generally lower and the secondary market for such securities could shrink or disappear suddenly and without warning as a result of adverse market or economic conditions, independent of any specific adverse changes in the condition of a particular issuer. Because of the lack of sufficient market liquidity, a Fund may incur losses because it may be required to effect sales at a disadvantageous time and then only at a substantial drop in price. These factors may have an adverse effect on the market price and a Fund’s ability to dispose of particular portfolio investments. A less liquid secondary market also may make it more difficult for a Fund to obtain precise valuations of lower rated securities in its portfolio.

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:


	•	securities that are not readily marketable;

	•	certain municipal leases and participation interests;

	•	repurchase agreements and time deposits with a notice or demand period of more than seven days;

	•	certain structured securities and certain defaulted securities; and

	•	restricted securities, unless Lord Abbett, the Fund’s investment adviser, determines, subject to the oversight of the Board, 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 (“144A Securities”) and is liquid.

144A Securities may be resold to a qualified institutional buyer (“QIB”) without registration and without regard to whether the seller originally purchased the security for investment. Investing in 144A Securities may decrease the liquidity of each Fund’s portfolio to the extent that QIBs 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 . Each Fund may invest in securities of other investment companies subject to limitations prescribed by the Act. These limitations include a prohibition on a Fund acquiring more than 3% of the voting shares of any other investment company, and a prohibition on investing more than 5% of any 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. Each Fund indirectly will bear its proportionate share of any management fees and other expenses paid by the investment companies in which it invests. Such investment companies generally will 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 U.S., the District of Columbia, Puerto Rico, Guam 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” may include 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

2-4

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 most investors’ gross income for federal income tax purposes.

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 authority 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 are, in most cases, revenue bonds and generally do not constitute the pledge of the faith, credit or taxing authority 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.

In addition, municipal bonds include municipal leases, certificates of participation and “moral obligation” bonds. A municipal lease is an obligation issued by a state or local government to acquire equipment or facilities. Certificates of participation represent interests in municipal leases or other instruments, such as installment purchase agreements. Moral obligation bonds are supported by a moral commitment but not a legal obligation of a state or local government. Municipal leases, certificates of participation and moral obligation bonds frequently involve special risks not normally associated with general obligation or revenue bonds. In particular, these instruments permit governmental issuers to acquire property and equipment without meeting constitutional and statutory requirements for the issuance of debt. If, however, the governmental issuer does not periodically appropriate money to enable it to meet its payment obligations under these instruments, it cannot be legally compelled to do so. If a default occurs, the collateral securing the lease obligation may be difficult to dispose of and the Fund may suffer significant losses. Some municipal leases, certificates of participation and moral obligation bonds may be illiquid.

Municipal bonds may also be in the form of a tender option bond, which is a municipal bond (generally held pursuant to a custodial agreement) having a relatively long maturity and bearing interest at a fixed rate substantially higher than prevailing short-term, tax-exempt rates. The bond is typically issued with the agreement of a third party, such as a bank, broker-dealer or other financial institution, which grants the security holders the option, at periodic intervals, to tender their securities to the institution. After payment of a fee to the financial institution that provides this option, the security holder effectively holds a demand obligation that bears interest at the prevailing short-term, tax-exempt rate. An institution may not be obligated to accept tendered bonds in the event of certain defaults or a significant downgrading in the credit rating assigned to the issuer of the bond. The tender option will be taken into account in determining the maturity of the tender option bonds and the applicable Fund’s duration. There is a risk that the Funds will not be considered the owner of a tender option bond for federal income tax purposes, and thus will not be entitled to treat such interest as exempt from federal income tax. Certain tender option bonds may be illiquid.

Each Fund may purchase floating and variable rate obligations, including variable rate demand notes. The value of these obligations is generally more stable than that of a fixed rate obligation in response to changes in interest rate levels. The issuers or financial intermediaries providing demand features may support their ability to purchase the obligations by obtaining credit with liquidity supports. These may include lines of credit, which are conditional commitments to lend, and letters of credit, which will ordinarily be irrevocable both of which may be issued by domestic banks or foreign banks.

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”), Standard & Poor’s Ratings Services (“Standard & Poor’s”) and Fitch Ratings (“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. Credit ratings issued by credit rating agencies are designed to evaluate the safety of principal and interest payments of rated securities. They do not evaluate the market value risk of non-investment grade securities and, therefore, may not fully reflect the true risks of an investment. In addition, credit rating agencies may or may not make timely changes in a rating to reflect changes in the economy or in the conditions of the issuer that affect the market value of the security. Consequently, credit ratings are used only as a preliminary indicator of investment quality.

Some municipal bonds feature credit enhancements, such as lines of credit, municipal bond insurance and standby bond purchase agreements (SBPAs). There is no assurance that any of the municipal bonds purchased by the Funds are subject to these types of guarantees. SBPAs include lines of credit that are issued by a third party, usually a bank, to enhance

2-5

liquidity and ensure repayment of principal and any accrued interest if the underlying municipal bond should default. Municipal bond insurance, which is usually purchased by the bond issuer from a private, nongovernmental insurance company, provides an unconditional and irrevocable guarantee that the insured bond’s principal and interest will be paid when due. Insurance does not guarantee the price of the bond or the share price of any fund. The credit rating of an insured bond reflects the credit rating of the insurer, based on its claims-paying ability. The obligation of a municipal bond insurance company to pay a claim extends over the life of each insured bond. Although defaults on insured municipal bonds have been historically low and municipal bond insurers historically have met their claims, there is no assurance this will continue. A higher-than-expected default rate could strain the insurer’s loss reserves and adversely affect its ability to pay claims to bondholders. The number of municipal bond insurers is relatively small, and not all of them have the highest credit rating. An SBPA can include a liquidity facility that is provided to pay the purchase price of any bonds that cannot be remarketed. The obligation of the liquidity provider (usually a bank) is only to advance funds to purchase tendered bonds that cannot be remarketed and does not cover principal or interest under any other circumstances. The liquidity provider’s obligations under the SBPA are usually subject to numerous conditions, including the continued creditworthiness of the underlying borrower, bond issuer, or bond insurer.

Appendix A hereto contains a description of certain municipal bond ratings.

Securities as a Result of Exchanges or Workouts . Each Fund may hold various instruments received in an exchange or workout of a distressed security (i.e., a low-rated debt security that is in default or at risk of becoming in default). Such instruments may include, but are not limited to, equity securities, warrants, rights, participation interests in sales of assets and contingent-interest obligations.

Short Sales . Each Fund may make short sales of securities or maintain a short position, if at all times when a short position is open the Fund owns an equal amount of such securities (or securities convertible into or exchangeable into an equal amount of such securities), without payment of any further consideration. This is commonly referred to as a “short sale against the box.” Each Fund does not intend to have more than 5% of its net assets (determined at the time of the short sale) subject to short sales. This limit does not apply to a Fund’s use of short positions in U.S. Treasury note futures, or in other security futures, for bona fide hedging purposes or to pursue risk management strategies.

Structured Securities . Each Fund may invest in structured securities. Structured securities are a type of derivative security whose value is determined by reference to changes in the value of specific underlying securities, interest rates, commodities, indices, credit default swaps, or other financial indicators (the “Reference”), or to relative changes in two or more References. The interest rate or principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference or certain specified events. Structured securities may be positively or negatively indexed with the result that the appreciation of the Reference may produce an increase or decrease in the interest rate or the value of the security at maturity. The Funds typically may use these securities as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate risk. These securities may present a greater degree of market risk than other types of fixed income securities and may be more volatile, less liquid and more difficult to price accurately than less complex securities. Changes in the value of structured securities may not correlate perfectly with the underlying asset, rate or index. A Fund could lose more than the principal amount invested.

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, in an amount sufficient to make payment at settlement will be segregated at the Fund’s 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 the investment team may sell when-issued securities prior to settlement, the investment team intends to actually acquire such securities unless a sale appears desirable for investment reasons.

Yield Curve Options . Each Fund may enter into options on the yield “spread” or differential between two securities. Such transactions are referred to as “yield curve” options. In contrast to other types of options, a yield curve option is based on the difference between the yields of designated securities, rather than the prices of the individual securities, and is settled through cash payments. Accordingly, a yield curve option is profitable to the holder if this differential widens (in the case of a call) or narrows (in the case of a put), regardless of whether the yields of the underlying securities increase or decrease.

2-6

The trading of yield curve options is subject to all of the risks associated with the trading of other types of options. In addition, such options present a risk of loss even if the yield of one of the underlying securities remain constant, or if the spread moves in a direction or to an extent which was not anticipated.

Zero Coupon, Deferred Interest, Pay-In-Kind and Capital Appreciation Bonds . Each Fund may invest in zero coupon bonds, deferred interest, pay-in-kind and capital appreciation bonds. These bonds are issued at a discount from their face value because interest payments are typically postponed until maturity. Pay-in-kind securities are securities that have interest payable by the delivery of additional securities.

As the buyer of these types of securities, a Fund will recognize a rate of return determined by the gradual appreciation of the security, which is redeemed at face value on a specified maturity date. The discount varies depending on the time remaining until maturity, as well as market interest rates, liquidity of the security, and the issuer’s perceived credit quality. The discount in the absence of financial difficulties of the issuer, typically decreases as the final maturity date approaches. If the issuer defaults, the Fund involved may not receive any return on its investment.

Because these securities bear no interest and compound semiannually at the rate fixed at the time of issuance, their value generally is more volatile than the value of other fixed income securities. Since the bondholders do not receive interest payments, when interest rates rise, these securities fall more dramatically in value than bonds paying interest on a current basis. When interest rates fall, these securities rise more rapidly in value because the bonds reflect a fixed rate of return.

Investments in these securities may cause a Fund to recognize income and make distributions to shareholders before it receives any cash payments on the investment. To generate cash to satisfy those distribution requirements, a Fund may have to sell portfolio securities that it otherwise might have continued to hold or to use cash flows from other sources such as the sale of Fund shares.

Temporary Defensive Investments . As described in the prospectus, each Fund is authorized to temporarily invest a substantial amount, or even all, of its assets in various short-term fixed-income securities to take a defensive position. Temporary defensive securities include:


	•	Short-Term Taxable Securities. Each Fund may invest in bonds, the interest on which is subject to federal income tax and each Fund may be exempt from its state’s (if applicable) and, in the case of 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.


	•	Bank certificates of deposit and time deposits. Certificates of deposit are certificates issued against funds deposited in a bank or a savings and loan. They are issued for a definite period of time and earn a specified rate of return.

Policies and Procedures Governing Disclosure of Portfolio Holdings . Lord Abbett regularly makes information about the Funds’ portfolio holdings available to the general public at www.lordabbett.com . Generally, Lord Abbett makes a list of the Funds’ top ten holdings publicly available monthly with a 15-day delay (lag) and aggregate holdings information publicly available monthly with a 30-day delay (lag). Lord Abbett generally makes holdings information for each fund-of-funds and for the money market fund publicly available without any delay. In addition, consistent with its fiduciary duty and applicable legal requirements, Lord Abbett may release nonpublic portfolio holdings information to selected third parties to assist with a variety of investment, distribution, and operational processes. For example, Lord Abbett may disclose information about the Funds’ portfolio holdings to a pricing vendor for use in valuing a security. More specifically, Lord Abbett may provide portfolio holdings information to the following categories of third parties before making it available to the public, with a frequency and lag deemed appropriate under the circumstances:


	•	Service providers that render accounting, custody, legal, pricing, proxy voting, trading, and other services to the Funds;

	•	Financial intermediaries that sell Fund shares;

	•	Portfolio evaluators such as Lipper Analytical Services, Inc. and Morningstar, Inc.;

2-7


	•	Data aggregators such as Bloomberg;

	•	Other advisory clients of Lord Abbett that may be managed in a style substantially similar to that of the Funds, including institutional clients and their consultants, managed account program sponsors, and unaffiliated mutual funds; and

	•	Other third parties that may receive portfolio holdings information from Lord Abbett on a case-by-case basis with the authorization of the Funds’ officers.

The Board has adopted policies and procedures that are designed to manage conflicts of interest that may arise from Lord Abbett’s selective disclosure of portfolio holdings information and prevent potential misuses of such information. Lord Abbett’s Chief Compliance Officer administers these policies and procedures and reports to the Board at least annually about the operation of the policies and procedures as part of the Board’s oversight of the Funds’ compliance program.

Under the policies and procedures, Lord Abbett may selectively disclose portfolio holdings information only when it has a legitimate business purpose for doing so and the recipient is obligated to keep the information confidential and not trade based on it (typically by a confidentiality agreement). The sole exception relates to SG Constellation, LLC (“SGC”), which provides financing for the distribution of the Funds’ Class B shares. The fees payable to SGC are based in part on the value of the Funds’ portfolio securities. To reduce the exposure of such fees to market volatility, SGC aggregates the portfolio holdings information provided by all of the mutual funds that participate in its Class B share financing program (including the Lord Abbett Funds) and may engage in certain hedging transactions based on this information. However, SGC will not engage in transactions based solely on the Funds’ portfolio holdings.

Neither the Fund nor Lord Abbett or any of their respective affiliates receives any compensation for disclosing information about the Funds’ portfolio holdings. For this purpose, compensation does not include ordinary investment management or service provider fees.

The portfolio holdings of Lord Abbett’s similarly managed advisory clients may closely mirror the Funds’ portfolio holdings. These clients are not subject to the same portfolio holdings disclosure policies and procedures as the Funds and therefore may disclose information about their own portfolio holdings information more frequently than the Funds disclose information about their portfolio holdings. To mitigate the risk that a recipient of such information could trade ahead of or against the Funds, Lord Abbett seeks assurances that clients will protect the confidentiality of portfolio holdings information by not disclosing it until Lord Abbett makes the Funds’ portfolio holdings publicly available. Lord Abbett also may monitor its clients’ trading activity, particularly in cases in which clients recently received sensitive portfolio holdings information.

The Board also reviews the Funds’ policies and procedures governing these arrangements on an annual basis. These policies and procedures may be modified at any time with the approval of the Board.

Fund Portfolio Information Recipients. Attached as Appendix A is a list of the third parties that are eligible to receive portfolio holdings information pursuant to ongoing arrangements under the circumstances described above.

2-8

3.
M anagement of the Funds

The Board is responsible for the management of the business and affairs of the Company in accordance with the laws of the State of Maryland. The Board elects officers who are responsible for the day-to-day operations of each Fund and who execute policies authorized by the Board. As generally discussed in the Funds’ semiannual report to shareholders, the Board also approves an investment adviser to each Fund and continues to monitor the cost and quality of the services the investment adviser provides, and annually considers whether to renew the contract with the adviser. Generally, each Director holds office until his/her successor is elected and qualified or until his/her earlier resignation or removal, as provided in the Company’s organizational documents.

Lord Abbett, a Delaware limited liability company, is each Fund’s investment adviser. Designated Lord Abbett personnel are responsible for the day-to-day management of each Fund.

Board Leadership Structure
The Board currently has eight Directors, seven of whom are persons who are not “interested persons” of the Fund, sometimes referred to as “Independent Directors.” E. Thayer Bigelow, an Independent Director, serves as the Chairman of the Board. The Board has determined that its leadership structure is appropriate in light of the composition of the Board and its committees and Mr. Bigelow’s long tenure with the Board. The Board believes that its leadership structure enhances the effectiveness of the Board’s oversight role.

The Board generally meets eight times a year, and may hold additional special meetings to address specific matters that arise between regularly scheduled meetings. The Independent Directors also meet regularly without the presence of management and are advised by independent legal counsel.

As discussed more fully below, the Board has delegated certain aspects of its oversight function to committees comprised solely of Independent Directors. The committee structure facilitates the Board’s timely and efficient consideration of matters pertinent to the Funds’ business and affairs and their associated risks.

For simplicity, the following sections use the term “directors/trustees” to refer to Directors of the Fund and the directors/trustees of all other Lord Abbett-sponsored funds.

Interested Director
Ms. Foster is affiliated with Lord Abbett and is an “interested person” of the Company as defined in the Act. Ms. Foster is a director/trustee and officer of each of the 13 Lord Abbett-sponsored funds, which consist of 56 portfolios or series.


Name, Address and Year of Birth	Current Position and Length of Service with the Company	Principal Occupation and Other Directorships During the Past Five Years

Daria L. Foster Lord, Abbett & Co. LLC 90 Hudson Street Jersey City, NJ 07302 (1954)	Director and President since 2006; Chief Executive Officer since 2012	Principal Occupation: Managing Partner of Lord Abbett (since 2007), and was formerly Director of Marketing and Client Service, joined Lord Abbett in 1990. Other Directorships: None.

3-1

Independent Directors
The following Independent Directors also are directors/trustees of each of the 13 Lord Abbett-sponsored funds, which consist of 56 portfolios or series.


Name, Address and Year of Birth	Current Position and Length of Service with the Company	Principal Occupation and Other Directorships During the Past Five Years

E. Thayer Bigelow Lord, Abbett & Co. LLC c/o Legal Dept. 90 Hudson Street Jersey City, NJ 07302 (1941)	Director since 1994; Chairman since 2013	Principal Occupation: Managing General Partner, Bigelow Media, LLC (since 2000); Senior Adviser, Time Warner Inc. (1998–2000). Other Directorships: Currently serves as director of Crane Co. (since 1984) and Huttig Building Products Inc. (since 1998). Previously served as a director of R.H. Donnelley Inc. (2009–2010) and Adelphia Communications Inc. (2003–2007).

Robert B. Calhoun, Jr. Lord, Abbett & Co. LLC c/o Legal Dept. 90 Hudson Street Jersey City, NJ 07302 (1942)	Director since 1998	Principal Occupation: Senior Advisor of Monitor Clipper Partners, a private equity investment fund (since 1997); President of Clipper Asset Management Corp. (1991–2009). Other Directorships: Previously served as a director of Interstate Bakeries Corp. (1991–2008).

Evelyn E. Guernsey Lord, Abbett & Co. LLC c/o Legal Dept. 90 Hudson Street Jersey City, NJ 07302 (1955)	Director since 2011	Principal Occupation: CEO, Americas of J.P. Morgan Asset Management (2004 - 2010). Other Directorships: None.

Julie A. Hill Lord, Abbett & Co. LLC c/o Legal Dept. 90 Hudson Street Jersey City, NJ 07302 (1946)	Director since 2004	Principal Occupation: Owner and CEO of The Hill Company, a business consulting firm (since 1998). Other Directorships: Currently serves as director of Lend Lease Corporation Limited, an international retail and residential property group (since 2006) and WellPoint, Inc., a health benefits company (since 1994). Previously served as a director of Resources Connection, Inc., a consulting firm (2004–2007).

Franklin W. Hobbs Lord, Abbett & Co. LLC c/o Legal Dept. 90 Hudson Street Jersey City, NJ 07302 (1947)	Director since 2000	Principal Occupation: Advisor of One Equity Partners, a private equity firm (since 2004). Other Directorships: Currently serves as director and Chairman of the Board of Ally Financial Inc., a financial services firm (since 2009) and as director of Molson Coors Brewing Company (since 2002).

3-2


Name, Address and Year of Birth	Current Position and Length of Service with the Company	Principal Occupation and Other Directorships During the Past Five Years

James M. McTaggart Lord, Abbett & Co. LLC c/o Legal Dept. 90 Hudson Street Jersey City, NJ 07302 (1947)	Director since 2012	Principal Occupation: Independent management advisor and consultant (since 2012); Vice President, CRA International, Inc. (doing business as Charles River Associates), a global management consulting firm (2009-2012); Founder and Chairman of Marakon Associates, Inc., a strategy consulting firm (1978– 2009); and Officer and Director of Trinsum Group, a holding company (2007-2009). Other Directorships: Currently serves as director of Blyth, Inc., a home products company (since 2004).

James L.L. Tullis Lord, Abbett & Co. LLC c/o Legal Dept. 90 Hudson Street Jersey City, NJ 07302 (1947)	Director since 2006	Principal Occupation: CEO of Tullis-Dickerson and Co. Inc., a venture capital management firm (since 1990). Other Directorships: Currently serves as director of Crane Co. (since 1998). Previously served as a director of Synageva BioPharma Corp., a biopharmaceutical company (2009–2011) and ViaCell, Inc. (2003–2007).

Officers
None of the officers listed below have received compensation from the Company. All of the officers of the Company also may be officers of the other Lord Abbett-sponsored funds and maintain offices at 90 Hudson Street, Jersey City, NJ 07302. Unless otherwise indicated, the position(s) and title(s) listed under the “Principal Occupation During the Past Five Years” column indicate each officer’s position(s) and title(s) with Lord Abbett.


Name and Year of Birth	Current Position with the Company	Length of Service of Current Position	Principal Occupation During the Past Five Years

Daria L. Foster (1954)	President and Chief Executive Officer	Elected as President in 2006 and Chief Executive Officer in 2012.	Managing Partner of Lord Abbett (since 2007), and was formerly Director of Marketing and Client Service, joined Lord Abbett in 1990.

Robert I. Gerber (1954)	Executive Vice President	Elected in 2006	Partner and Chief Investment Officer (since 2007), joined Lord Abbett in 1997 as Director of Taxable Fixed Income Management.

Daniel S. Solender (1965)	Executive Vice President	Elected in 2006	Partner and Director, joined Lord Abbett in 2006.

James W. Bernaiche (1956)	Chief Compliance Officer	Elected in 2004	Partner and Chief Compliance Officer, joined Lord Abbett in 2001.

Joan A. Binstock (1954)	Chief Financial Officer and Vice President	Elected in 1999	Partner and Chief Operations Officer, joined Lord Abbett in 1999.

John K. Forst (1960)	Vice President and Assistant Secretary	Elected in 2005	Deputy General Counsel, joined Lord Abbett in 2004.

3-3


Name and Year of Birth	Current Position with the Company	Length of Service of Current Position	Principal Occupation During the Past Five Years

Philip B. Herman (1977)	Vice President	Elected in 2010	Portfolio Manager, joined Lord Abbett in 2007.

Lawrence H. Kaplan (1957)	Vice President and Secretary	Elected in 1997	Partner and General Counsel, joined Lord Abbett in 1997.

Paul A. Langlois (1968)	Vice President	Elected in 2012	Portfolio Manager, joined Lord Abbett in 2009 and was formerly a Senior Vice President and Investment Officer at J. & W. Seligman & Co. Incorporated and a Vice President and Analyst at Delaware Investments.

A. Edward Oberhaus, III (1959)	Vice President	Elected in 1996	Partner and Director, joined Lord Abbett in 1983.

Thomas R. Phillips (1960)	Vice President and Assistant Secretary	Elected in 2008	Partner and Deputy General Counsel, joined Lord Abbett in 2006.

Lawrence B. Stoller (1963)	Vice President and Assistant Secretary	Elected in 2007	Partner and Senior Deputy General Counsel, joined Lord Abbett in 2007.

Daniel T. Vande Velde (1967)	Vice President	Elected in 2008	Partner and Portfolio Manager, joined Lord Abbett in 2007.

Scott S. Wallner (1955)	AML Compliance Officer	Elected in 2011	Assistant General Counsel, joined Lord Abbett in 2004.

Bernard J. Grzelak (1971)	Treasurer	Elected in 2003	Partner and Director of Fund Administration, joined Lord Abbett in 2003.

Qualifications of Directors/Trustees
The individual qualifications for each of the directors/trustees and related biographical information are noted below. These qualifications led to the conclusion that each should serve as a director/trustee for the Fund, in light of the Fund’s business and structure. In addition to individual qualifications, the following characteristics are among those qualifications applicable to each of the existing directors/trustees and are among the qualifications that the Nominating and Governance Committee will consider for any future nominees:


	•	Irreproachable reputation for integrity, honesty and the highest ethical standards;

	•	Outstanding skills in disciplines deemed by the Nominating and Governance Committee to be particularly relevant to the role of Independent Director, including business acumen, experience relevant to the financial services industry generally and the investment industry particularly, and ability to exercise sound judgment in matters relating to the current and long-term objectives of the Funds;


	•	Understanding and appreciation of the important role occupied by an Independent Director in the regulatory structure governing registered investment companies;


	•	Willingness and ability to contribute positively to the decision making process for the Funds, including appropriate interpersonal skills to work effectively with other Independent Directors;

	•	Desire and availability to serve as an Independent Director for a substantial period of time;

3-4


	•	Absence of conflicts that would interfere with qualifying as an Independent Director; and

	•	Diversity of background.



Interested Director/Trustee:

	•	Daria L. Foster. Board tenure with the Lord Abbett Family of Funds (since 2006), financial services industry experience, chief executive officer experience, corporate governance experience, and civic/community involvement.

	Independent Directors/Trustees:


	•	E. Thayer Bigelow. Board tenure with the Lord Abbett Family of Funds (since 1994), media investment and consulting experience, chief executive officer experience, entrepreneurial background, corporate governance experience, financial expertise, service in academia, and civic/community involvement.

	•	Robert B. Calhoun, Jr. Board tenure with the Lord Abbett Family of Funds (since 1998), financial services industry experience, leadership experience, corporate governance experience, financial expertise, service in academia, and civic/community involvement.

	•	Evelyn E. Guernsey. Board tenure with the Lord Abbett Family of Funds (since 2011), financial services industry experience, chief executive officer experience, marketing experience, corporate governance experience, and civic/community involvement.

	•	Julie A. Hill. Board tenure with the Lord Abbett Family of Funds (since 2004), business management and marketing experience, chief executive officer experience, entrepreneurial background, corporate governance experience, service in academia, and civic/community involvement.

	•	Franklin W. Hobbs. Board tenure with the Lord Abbett Family of Funds (since 2000), financial services industry experience, chief executive officer experience, corporate governance experience, financial expertise, service in academia, and civic/community involvement.


	•	James M. McTaggart. Board tenure with the Lord Abbett Family of Funds (since 2012), financial services industry experience, chief executive officer experience, entrepreneurial background, corporate governance experience, financial expertise, marketing experience, and civic/community involvement.


	•	James L.L. Tullis. Board tenure with the Lord Abbett Family of Funds (since 2006), financial services industry experience, chief executive officer experience, corporate governance experience, financial expertise, and civic/community involvement.

3-5

Committees
The standing committees of the Board are the Audit Committee, the Proxy Committee, the Nominating and Governance Committee, and the Contract Committee. The table below provides information about each such committee’s composition, functions, and responsibilities.


Committee	Committee Members	Number of Meetings Held During the 2012 Fiscal Year	Description
Audit Committee	E. Thayer Bigelow Robert B. Calhoun, Jr. Evelyn E. Guernsey James M. McTaggart*	5	The Audit Committee comprises solely directors/trustees who are not “interested persons” of the Funds. The Audit Committee provides assistance to the Board in fulfilling its responsibilities relating to accounting matters, the reporting practices of the Funds, and the quality and integrity of the Funds’ financial reports. Among other things, the Audit Committee is responsible for reviewing and evaluating the performance and independence of the Funds’ independent registered public accounting firm and considering violations of the Funds’ Code of Ethics to determine what action should be taken. The Audit Committee meets at least quarterly.

Proxy Committee	Julie A. Hill Franklin W. Hobbs James L.L. Tullis	3	The Proxy Committee comprises at least two directors/trustees who are not “interested persons” of the Funds, and also may include one or more directors/trustees who are partners or employees of Lord Abbett. Currently, the Proxy Committee comprises solely Independent Directors. The Proxy Committee shall (i) monitor the actions of Lord Abbett in voting securities owned by the Funds; (ii) evaluate the policies of Lord Abbett in voting securities; and (iii) meet with Lord Abbett to review the policies in voting securities, the sources of information used in determining how to vote on particular matters, and the procedures used to determine the votes in any situation where there may be a conflict of interest.

Nominating and Governance Committee	E. Thayer Bigelow Robert B. Calhoun, Jr. Evelyn E. Guernsey Julie A. Hill Franklin W. Hobbs James M. McTaggart* James L.L. Tullis	6	The Nominating and Governance Committee comprises all directors/trustees who are not “interested persons” of the Funds. Among other things, the Nominating and Governance Committee is responsible for (i) evaluating and nominating individuals to serve as Independent Directors and as committee members; and (ii) periodically reviewing director/trustee compensation. The Nominating and Governance Committee has adopted policies for its consideration of any individual recommended by the Funds’ shareholders to serve as an Independent Director. A shareholder who would like to recommend a candidate may write to the Funds.

3-6

Committee

Committee Members

Number of
Meetings Held
During the
2012
Fiscal Year

Description

Contract Committee

E. Thayer Bigelow
Robert B. Calhoun, Jr.
Evelyn E. Guernsey
Julie A. Hill
Franklin W. Hobbs
James M. McTaggart*
James L.L. Tullis

The Contract Committee comprises all directors/trustees who are not “interested persons” of the Funds. The Contract Committee conducts much of the factual inquiry undertaken by the directors/trustees in connection with the Board’s annual consideration of whether to renew the management and other contracts with Lord Abbett and Lord Abbett Distributor. During the year, the Committee meets with Lord Abbett management and portfolio management to monitor ongoing developments involving Lord Abbett and each Fund’s portfolio.


* Mr. McTaggart was elected to the Nominating and Governance Committee and the Contract Committee effective December 1, 2012 and the Audit Committee effective January 1, 2013.


Board Oversight of Risk Management
Managing the investment portfolios and the operations of the Funds, like all mutual funds, involves certain risks. Lord Abbett (and other Fund service providers, subject to oversight by Lord Abbett) is responsible for day-to-day risk management for the Funds. The Board oversees the Funds’ risk management as part of its general management oversight function. The Board, either directly or through committees, regularly receives and reviews reports from Lord Abbett about the elements of risk that affect or may affect the Funds, including investment risk, operational risk, compliance risk, and legal risk, among other elements of risk related to the operations of the Funds and Lord Abbett, and the steps Lord Abbett takes to mitigate those risks. The Board has appointed a Chief Compliance Officer, who oversees the implementation and testing of the Funds’ compliance program and reports to the Board at least quarterly regarding compliance matters for the Funds, Lord Abbett, and the Funds’ service providers. The Board also has appointed a Chief Legal Officer, who is responsible for overseeing internal reporting requirements imposed under rules adopted by the SEC pursuant to the Sarbanes-Oxley Act of 2002, which are designed to ensure that credible indications of material violations of federal securities laws or breaches of fiduciary duty are investigated and are adequately and appropriately resolved.

In addition to the Board’s direct oversight, the Audit Committee and the Contract Committee play important roles in overseeing risk management on behalf of the Funds. The Audit Committee oversees the risk management efforts for financial reporting, pricing and valuation, and liquidity risk and meets regularly with the Funds’ Chief Financial Officer and independent auditors, as well as with members of management, to discuss financial reporting and audit issues, including risks related to financial controls. The Contract Committee regularly meets with the Funds’ portfolio managers and Lord Abbett’s Chief Investment Officer to discuss investment performance achieved by the Funds and the investment risks assumed by the Funds to achieve that performance.

While Lord Abbett (and the Funds’ service providers) has implemented a number of measures intended to mitigate risk effectively to the extent practicable, it is not possible to eliminate all of the risks that are inherent in the operations of the Funds. Some risks are beyond the control of Lord Abbett and not all risks that may affect the Funds can be identified before the risk arises or before Lord Abbett develops processes and controls to eliminate the occurrence or mitigate the effects of such risks.

3-7

Compensation Disclosure

The following table summarizes the compensation paid to each of the independent directors/trustees.

The second column of the following table sets forth the compensation accrued by the Company for independent directors/trustees. The third column sets forth the total compensation paid by all Lord Abbett-sponsored funds to the independent directors/trustees, and amounts payable but deferred at the option of each director/trustee. No interested director/trustee of the Lord Abbett-sponsored funds and no officer of the funds, received any compensation from the funds for acting as a director/trustee or officer.


Name of Director/Trustee	For the Fiscal Year Ended September 30, 2012 Aggregate Compensation Accrued by the Company ¹		For the Year Ended December 31, 2012 Total Compensation Paid by the Company and Twelve Other Lord Abbett-Sponsored Funds ²

E. Thayer Bigelow	$	34,301	$	304,000
Robert B. Calhoun, Jr.	$	33,256	$	294,000
Evelyn E. Guernsey	$	30,588	$	269,000
Julie A. Hill	$	29,853	$	265,000
Franklin W. Hobbs	$	29,229	$	259,000
Thomas J. Neff ³	$	29,921	$	265,000
James L.L. Tullis	$	30,586	$	269,000
James M. McTaggart ⁴	$	0	$	32,875


¹ Independent 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 each fund to its independent 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 a fund for later distribution to the directors/trustees. In addition, $25,000 of each director’s/trustee’s retainer must be deferred and is deemed invested in shares of a Fund and other Lord Abbett-sponsored funds under the equity-based plan. Of the amounts shown in the second column, the total deferred amounts for Mr. Bigelow, Mr. Calhoun, Ms. Guernsey, Ms. Hill, Mr. Hobbs, Mr. Neff, Mr. Tullis and Mr. McTaggart are $2,872, $33,256, $2,872, $8,340, $29,229, $2,872, $6,241 and $0, respectively.

² The third column shows aggregate compensation, including the types of compensation described in the second column, accrued by all Lord Abbett-sponsored funds during the year ended December 31, 2012, including fees independent directors/trustees have chosen to defer.

³ Effective December 31, 2012, Thomas J. Neff retired from the Board of Directors/Trustees.

⁴ Mr. McTaggart was elected to the Board and the Board of Directors/Trustees of each of the other Lord Abbett-sponsored funds effective December 1, 2012.

The following chart provides certain information about the dollar range of equity securities beneficially owned by each director/trustee in the Company and the other Lord Abbett-sponsored funds as of December 31, 2012. The amounts shown include deferred compensation (including interest) to the directors/trustees deemed invested in fund shares. The amounts ultimately received by the directors/trustees under the deferred compensation plan will be directly linked to the investment performance of the Funds.

3-8


	Dollar Range of Equity Securities in the Funds

Name of Director/Trustee	Short Duration Tax Free Fund	Intermediate Fund	AMT Free Municipal Bond Fund	National Fund	High Yield Municipal Bond Fund

Interested Directors/Trustee:
Robert S. Dow ¹	None	None	None	None	None
Daria L. Foster	Over $100,000	Over $100,000	Over $100,000	Over $100,000	Over $100,00
Independent Directors/Trustee:
E. Thayer Bigelow	$1-$10,000	$1-$10,000	$1-$10,000	$1-$10,000	$1-$10,000
Robert B. Calhoun, Jr.	$1-$10,000	$1-$10,000	$1-$10,000	$10,001-$50,000	$1-$10,000
Evelyn E. Guernsey	$1-$10,000	$1-$10,000	$1-$10,000	$1-$10,000	$1-$10,000
Julie A. Hill	$1-$10,000	$1-$10,000	$1-$10,000	$10,001-$50,000	$10,001-$50,000
Franklin W. Hobbs	$10,001-$50,000	$10,001-$50,000	$1-$10,000	Over $100,000	$10,001-$50,000
James M. McTaggart ²	$1-$10,000	$1-$10,000	$1-$10,000	$1-$10,000	$1-$10,000
Thomas J. Neff ³	$1-$10,000	$1-$10,000	$1-$10,000	$10,001-$50,000	$1-$10,000
James L.L. Tullis	$1-$10,000	$1-$10,000	Over $100,000	$10,001-$50,000	$1-$10,000
¹ Mr. Dow retired as an Interested Director/Trustee effective December 31, 2012.
² Mr. McTaggart was elected to the Board and the Boards of Directors/Trustees of each of the other Lord Abbett-sponsored funds effective December 1, 2012.
³ Mr. Neff retired from the Board and the Boards of Directors/Trustees of each of the other Lord Abbett-sponsored funds effective December 31, 2012.


	Dollar Range of Equity Securities in the Funds

Name of Director/Trustee	California Fund	New Jersey Fund	New York Fund	Aggregate Dollar Range of Equity Securities in Lord Abbett-Sponsored Funds

Interested Directors/Trustee:
Robert S. Dow ¹	None	Over $100,000	Over $100,000		Over $100,000
Daria L. Foster	None	None	Over $100,000		Over $100,000
Independent Directors/Trustee:
E. Thayer Bigelow	$1-$10,000	$1-$10,000	$1-$10,000		Over $100,000
Robert B. Calhoun, Jr.	$1-$10,000	$1-$10,000	$1-$10,000		Over $100,000
Evelyn E. Guernsey	$1-$10,000	$1-$10,000	$1-$10,000		$50,001 -$100,000
Julie A. Hill	$1-$10,000	$1-$10,000	$1-$10,000		Over $100,000
Franklin W. Hobbs	$10,001-$50,000	$1-$10,000	$10,001-$50,000		Over $100,000
James M. McTaggart ²	$1-$10,000	$1-$10,000	$1-$10,000		$1-$10,000
Thomas J. Neff ³	$1-$10,000	$1-$10,000	$1-$10,000		Over $100,000
James L.L. Tullis	$1-$10,000	$1-$10,000	$1-$10,000		Over $100,000
¹ Mr. Dow retired as an Interested Director/Trustee effective December 31, 2012.
² Mr. McTaggart was elected to the Board and the Boards of Directors/Trustees of each of the other Lord Abbett-sponsored funds effective December 1, 2012.
³ Mr. Neff retired from the Board and the Boards of Directors/Trustees of each of the other Lord Abbett-sponsored funds effective December 31, 2012.

Code of Ethics

The directors, trustees and officers of the Lord Abbett-sponsored 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 Company’s, Lord Abbett’s, and Lord Abbett Distributor’s Code of Ethics which complies, in substance, with Rule 17j-1 under the Act and each of the recommendations of the Investment Company Institute’s Advisory Group on Personal Investing (the “Advisory Group”). Among other things, the Code of Ethics 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 (1) investing in a security seven days before or after any Lord Abbett-sponsored fund or Lord Abbett-managed account considers a trade or trades in such security, (2) transacting in a security that the person covers as an analyst or with respect to which the person has participated in a non-public investor meeting with company management within the six months preceding the requested transaction, (3) profiting on trades of the same security within 60 days, (4) trading on material and non-public information, and (5) engaging in market timing activities with respect to the Lord Abbett-sponsored funds. The Code of Ethics imposes

3-9

certain similar requirements and restrictions on the independent directors/trustees of each Lord Abbett-sponsored fund to the extent contemplated by the Act and recommendations of the Advisory Group.

Proxy Voting
The Funds have delegated proxy voting responsibilities to the Funds’ investment adviser, Lord Abbett, subject to the Proxy Committee’s general oversight. Lord Abbett has adopted its own proxy voting policies and procedures for this purpose. A copy of Lord Abbett’s proxy voting policies and procedures is attached as Appendix D.

In addition, the Funds are required to file Form N-PX, with their complete proxy voting records for the twelve months ended June 30 ^th , no later than August 31 ^st of each year. The Funds’ Form N-PX filing is available on the SEC’s website at www.sec.gov. The Funds also have made this information available, without charge, on Lord Abbett’s website at www.lordabbett.com.

3-10

4.
C ontrol Persons and Principal Holders of Securities

Shareholders beneficially owning 25% or more of outstanding shares may be in control and may be able to affect the outcome of certain matters presented for a vote of shareholders. As of January 2, 2013 to the best of our knowledge, the following record holders held 25% or more of a Fund’s outstanding shares:


Intermediate Tax Free Fund
MLPF&S	30.85%
for the Sole Benefit of its Customers
4800 Deer Lake Dr. E. Fl. 3
Jacksonville, FL 32246-6484

Short Duration Tax Free Fund
MLPF&S	37.08%
for the Sole Benefit of its Customers
4800 Deer Lake Dr. E. Fl. 3
Jacksonville, FL 32246-6484

National Tax Free Fund	36.04%
Edward Jones & Co.
201 Progress Parkway
Maryland Heights, MO 63043-3009

New York Tax Free Fund	26.88%
Pershing LLC
1 Pershing Plaza
Jersey City, NJ 07399-0002

As of January 2, 2013, to the best of our knowledge, the only persons or entities who owned of record or were known by the Funds to own beneficially 5% or more of the specified class of a Fund’s outstanding shares were as follows:


Short Duration Tax Free Fund
Edward Jones & Co.	Class A:	9.76%
201 Progress Pkwy	Class C:	11.31%
Maryland Hts, MO 63043-3009

MLPF&S	Class A:	29.74%
for the Sole Benefit of its Customers	Class C:	37.40%
4800 Deer Lake Dr. E. Fl. 3	Class F:	53.95%
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney	Class A:	14.21%
Harborside Financial Center,	Class C:	10.81%
Plaza II, 3 ^rd Floor	Class F:	14.57%
Jersey City, NJ 07311-3907

UBS Financial Services Inc.	Class A:	8.94%
FBO UBS WM USA
OMNI A/C/ M/F
499 Washington Boulevard, FL 9
Jersey City, NY 07310-2055

4-1


Charles Schwab & Co. Inc.	Class I:	23.74%
Special Custody Acct for the Benefit
of Customers
101 Montgomery Street
San Francisco, CA 94104-4151

NFS LLC FEBO	Class I:	13.65%
Lyman F. Orton
PO Box 775850
Steamboat Springs, CO 80477-5850

NFS LLC FEBO	Class I:	6.64%
Mr. Sulentic Irrev Trust 2012
6037 Lakehurst Avenue
Dallas, TX 75230-5035

Pershing LLC	Class A:	11.78%
1 Pershing Plaza
Jersey City, NJ 07399-0002

Special Custody Acct. for the	Class A:	11.64%
Exclusive Benefit of Customer	Class C:	18.16%
2801 Market Street	Class F:	10.14%
Saint Louis, MO 6310-2523

Webbush Securities	Class I:	17.85%
101 Montgomery Street
San Francisco, CA 94104-4151

Intermediate Tax Free Fund

Edward Jones & Co.	Class A:	15.42%
201 Progress Pkwy	Class B:	11.66%
Maryland Hts, MO 63043-3009	Class C:	6.20%

MLPF&S	Class A:	18.16%
for the Sole Benefit of its Customers	Class B:	32.40%
4800 Deer Lake Dr. E. Fl. 3	Class C:	33.65%
Jacksonville, FL 32246-6484	Class F:	54.46%

UBS Financial Services, Inc. FBO	Class A:	14.75%
UBS WM USA	Class C:	6.93%
OMNI A/C M/F
499 Washington Boulevard Floor 9
Jersey City, NJ 07310-2055

Morgan Stanley Smith Barney	Class A:	8.27%
Harborside Financial Center,	Class C:	11.91%
Plaza II, 3 ^rd Floor	Class F:	10.45%
Jersey City, NJ 07311-3907

Lord, Abbett & Co. LLC	Class P:	99.59%
90 Hudson Street
Jersey City, NJ 07302-3900

4-2


SEI Private Trust Co.	Class I:	9.69%
C/O Union Bank ID 797
1 Freedom Valley Drive
Oaks, PA 19456-9989

Charles Schwab & Co., Inc.	Class I:	45.90%
Special Custody Account for the
Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4151

DBTCO	Class I:	25.71%
PO Box 747
Dubuque, IA 52004-0747

National Financial Services	Class A:	8.26%
Febo Customers
200 Liberty Street, #1 WFC
New York, NY 10281-1003

Pershing LLC	Class A:	8.94%
1 Pershing Plaza	Class B:	5.14%
Jersey City, NJ 07399-0002	Class C:	5.00%

Special Custody Acct. for the	Class A:	11.96%
Exclusive Benefit of Customer	Class B:	34.68%
2801 Market Street	Class C:	18.94%
Saint Louis, MO 6310-2523	Class F:	18.59

AMT Free Municipal Bond Fund
Edward Jones & Co.	Class A:	24.23%
201 Progress Pkwy	Class C:	8.17%
Maryland Hts, MO 63043-3009

MLPF&S	Class A:	9.27%
for the Sole Benefit of its Customers	Class C:	33.76%
4800 Deer Lake Dr. E. Fl. 3	Class F:	38.69%
Jacksonville, FL 32246-6484

UBS Financial Services Inc.	Class A:	17.04%
FBO UBS WM USA
OMNI A/C M/F
499 Washington Boulevard Floor 9
Jersey City, NJ 07310-2055

Raymond James	Class C:	12.74%
Omnibus for Mutual Funds House	Class F:	9.71%
Account
880 Carillon Pkwy
St. Petersburg, FL 33716-1100

LPL Financial	Class F:	13.51%
Omnibus Customer Account
House Account Firm
880 Carillion Parkway
St. Petersburg, FL 33716-1100

4-3


Pershing LLC	Class A:	13.56%
1 Pershing Plaza	Class C:	12.12%
Jersey City, NJ 07399-0002

Special Custody Acct. for the	Class A:	13.03%
Exclusive Benefit of Customer	Class C:	13.81%
2801 Market Street
Saint Louis, MO 6310-2523

NFS LLC FEBO	Class I:	58.23%
Jean N. Calhoun
c/o Mountain Financial Services
P.O. Box 7610
Greenwich, CT 06836-7610

NFS LLC FEBO	Class I:	37.48%
Jean N. Calhoun, Robert B. Calhoun
TR E Jean N. Calhoun Marital
P.O. Box 7610
Greenwich, CT 06836-7610

High Yield Municipal Bond Fund
Edward Jones & Co.	Class A:	34.58%
201 Progress Pkwy	Class C:	8.64%
Maryland Hts, MO 63043-3009

MLPF&S	Class A:	8.61%
for the Sole Benefit of its Customers	Class C:	27.21%
4800 Deer Lake Dr. E. Fl. 3	Class F:	35.14%
Jacksonville, FL 32246-6484

UBS Financial Services Inc.	Class A:	15.31%
FBO UBS WM USA	Class C:	9.60%
OMNI A/C M/F
499 Washington Boulevard Floor 9
Jersey City, NJ 07310-2055

Lord, Abbett & Co. LLC	Class P:	99.62%
90 Hudson Street
Jersey City, NJ 07302-3900

Morgan Stanley Smith Barney	Class A:	8.20%
Harborside Financial Center,	Class C:	15.91%
Plaza II, 3 ^rd Floor	Class F:	14.75%
Jersey City, NJ 07311-3907

Raymond James	Class C:	6.12%
Omnibus for Mutual Funds House	Class F:	8.88%
Account
880 Carillon Pkwy
St. Petersburg, FL 33716-1100

Ameritrade Inc.	Class I:	12.77%
PO Box 2226
Omaha, NE 68103-2226

4-4


Charles Schwab & Co., Inc.	Class I:	7.66%
Special Custody Account for the
Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4151

LPL Financial	Class F:	7.51%
Dan Spillance
9785 Towne Center Drive
San Diego, CA 92121-1968

NFS LLC FEBO	Class I:	7.35%
Sally G. Grave
611 Cook Hill Road
Cheshire, CT 06410-3708

NFS LLC FEBO	Class I:	8.70%
Dorris B. Reggie
111 Grand Park Dr. APT# 24
Lafayette, LA 70503-2358

NFS LLC FEBO	Class I:	6.32%
Grandchildren Funds
1066 Vaughn Cresh Dr.
Franklin, TN 37069-7211

NFS LLC FEBO	Class I:	10.13%
Helen McClain Tr
221 Arthur Dr.
Woodstock. IL 60098-2207

Pershing LLC	Class A:	5.67%
1 Pershing Plaza
Jersey City, NJ 07399-0002

Special Custody Acct. for the	Class A:	9.02%
Exclusive Benefit of Customer	Class C:	16.25%
2801 Market Street	Class F:	19.83%
Saint Louis, MO 6310-2523

Fiduciary Audit Cash Acct.	Class B:	43.88%
Crystal Jinkins
330 West Ninth 2 ^nd Floor
Kansas City, MO 64105-1514

Output Audit Cash Acct.	Class B:	43.88%
Crystal Jinkins
330 West Ninth 2 ^nd Floor
Kansas City, MO 64105-1514

Investor Audit Acct.	Class B:	12.24%
Sandy Cusimano
210 W 10 ^th St 7 ^th FL
Kansas City, MO 64105-1614

4-5


California Tax Free Fund
Edward Jones & Co.	Class A:	19.02%
201 Progress Pkwy
Maryland Hts, MO 63043-3009

MLPF&S	Class A:	12.73%
for the Sole Benefit of its Customers	Class C:	28.02%
4800 Deer Lake Dr. E. Fl. 3	Class F:	46.10%
Jacksonville, FL 32246-6484

UBS Financial Services Inc.	Class A:	6.90%
FBO UBS WM USA	Class C:	8.54%
OMNI A/C M/F
499 Washington Boulevard Floor 9
Jersey City, NJ 07310-2055

Morgan Stanley Smith Barney	Class A:	13.21%
Harborside Financial Center,	Class C:	14.61%
Plaza II, 3 ^rd Floor	Class F:	6.21%
Jersey City, NJ 07311-3907

Lord, Abbett & Co. LLC	Class I:	99.58%
90 Hudson Street
Jersey City, NJ 07302-3900

LPL Financial	Class F:	5.14%
Dan Spillance
9785 Towne Center Drive
San Diego, CA 92121-1968

Special Custody Acct. for the	Class A:	17.65%
Exclusive Benefit of Customer	Class C:	30.50%
2801 Market Street	Class F:	36.78%
Saint Louis, MO 6310-2523

National Tax Free Fund
Edward Jones & Co.	Class A:	42.11%
201 Progress Pkwy	Class B:	31.86%
Maryland Hts, MO 63043-3009	Class C:	11.24%

MLPF&S	Class A:	7.46%
for the Sole Benefit of its Customers	Class B:	23.83%
4800 Deer Lake Dr. E. Fl. 3	Class C:	32.74%
Jacksonville, FL 32246-6484	Class F:	39.08%

UBS Financial Services Inc.	Class A:	6.15%
FBO UBS WM USA	Class C:	7.44%
OMNI A/C M/F
499 Washington Boulevard Floor 9
Jersey City, NJ 07310-2055

Raymond James	Class F:	6.62%
Omnibus for Mutual Funds House
Account
880 Carillon Pkwy
St. Petersburg, FL 33716-1100

4-6


Morgan Stanley Smith Barney	Class A:	6.99%
Harborside Financial Center	Class C:	8.46%
Plaza II, 3 ^rd Floor	Class F:	22.25%
Jersey City, NJ 07311

LPL Financial	Class F:	5.09%
Dan Spillance
9785 Towne Center Drive
San Diego, CA 92121-1968

Special Custody Acct. for the	Class A:	6.98%
Exclusive Benefit of Customer	Class B:	21.83%
2801 Market Street	Class C:	15.39%
Saint Louis, MO 6310-2523	Class F:	16.28%


NFS LLC FEBO	Class I:	11.16%
Caroline Awapara
888 Brickell Key Dr. APT# 2808
Miami, FL 33131-2672

NFS LLC FEBO	Class I:	6.07%
David P. Maguire
Judy Maguire
460 SW Cove PT
Depoe Bay, OR 97341-9526

NFS LLC FEBO	Class I:	12.15%
Greg J. Pessemier
5515 Steilacoom BLVD SW STE
132
Lakewood, WA 98499-3126

NFS LLC FEBO	Class I:	12.19%
Johannes B. Larcher
Johannes B & Emily Larcher TR
118 Escavera
Lakeway, TX 78738

NFS LLC FEBO	Class I:	24.19%
David H. Jablonski
Janet B. Jablonski
856 Park Lake CT
Orlando, FL 32803-3908

NFS LLC FEBO	Class I:	14.36%
William D. Wood
Yong C. Wood
12631 Lakebrook DR.
Orlando, FL 32823-8715

NFS LLC FEBO	Class I:	11.93%
Larry Guse
Ellen Guse
10140 Pointview CT
Orlando, FL 32826-6334

4-7


New Jersey Tax Free Fund
Morgan Stanley Smith Barney	Class A:	12.84%
Harborside Financial Center,	Class F:	22.49%
Plaza II, 3 ^rd Floor
Jersey City, NJ 07311-3907

MLPF&S	Class F:	42.76%
for the Sole Benefit of its Customers
4800 Deer Lake Dr. E. Fl. 3
Jacksonville, FL 32246-6484

Christina Seix Dow	Class A:	14.16%
2719 Main Street
Lawrence, NJ 08648-1014

UBS Financial Services Inc.	Class A:	8.82%
FBO UBS WM USA
OMNI A/C M/F
499 Washington Boulevard Floor 9
Jersey City, NJ 07310-2055

Lord, Abbett & Co. LLC	Class I:	99.56%
90 Hudson Street
Jersey City, NJ 07302-3900

Pershing LLC	Class A:	5.72%
1 Pershing Plaza
Jersey City, NJ 07399-0002

Special Custody Acct. for the	Class A:	8.23%
Exclusive Benefit of Customer	Class F:	25.55%
2801 Market Street
Saint Louis, MO 6310-2523

New York Tax Free Fund
MLPF&S	Class A:	12.20%
for the Sole Benefit of its Customers	Class C:	36.73%
4800 Deer Lake Dr. E. Fl. 3	Class F:	35.17%
Jacksonville, FL 32246-6484

Morgan Stanley Smith Barney	Class A:	8.11%
Harborside Financial Center,	Class C:	13.56%
Plaza II, 3 ^rd Floor	Class F:	21.72
Jersey City, NJ 07311-3907

UBS Financial Services Inc.	Class C:	8.15%
FBO UBS WM USA
OMNI A/C M/F
499 Washington Boulevard Floor 9
Jersey City, NJ 07310-2055

Pershing LLC	Class A:	27.91%
1 Pershing Plaza	Class C:	21.45%
Jersey City, NJ 07399-0002	Class F:	25.74%

Special Custody Acct. for the	Class A:	11.79%

4-8


Exclusive Benefit of Customer	Class C:	6.42%
2801 Market Street	Class F:	9.70%
Saint Louis, MO 6310-2523

SEI Private Trust Co.	Class I:	95.39%
1 Freedom Valley Dr.
Oaks, PA 19456-9989

As of January 2, 2013, the Funds’ officers and directors, as a group, owned less than 1% of each class of the Funds’ outstanding shares, except for those Funds’ share classes stated below.

As of January 2, 2013, the Funds’ officers and directors, as a group, owned approximately: 2.12% of AMT Free Municipal Bond Fund’s Class A shares; and 19.02% of New Jersey Tax Free Fund’s Class A shares.

4-9

5.
I nvestment Advisory and Other Services

Investment Adviser
As described under “Management and Organization of the Funds” in the prospectus, Lord Abbett is the Company’s investment adviser. Lord Abbett is a privately held investment manager. The address of Lord Abbett is 90 Hudson Street, Jersey City, NJ 07302-3973.

Under the Management Agreement between Lord Abbett and the Company, on behalf of each Fund, Lord Abbett is entitled to an annual management fee based on each Fund’s average daily net assets. The management fee is allocated to each class of shares based upon the relative proportion of each Fund’s net assets represented by that class. The management fee is accrued daily and payable monthly at the following annual rates:

The management fee for Short Duration Tax Free Fund is calculated at the following annual rate:


	0.40% on the first $2 billion of average daily net assets;
	0.375% on the next $3 billion of average daily net assets; and
	0.35% on average daily net assets over $5 billion.

The management fee for Intermediate Tax Free Fund is calculated at the following annual rate:


	0.40% on the first $2 billion of average daily net assets;
	0.375% on the next $3 billion of average daily net assets;
	0.35% on the next $5 billion of average daily net assets; and
	0.32% on average daily net assets over $10 billion.

The management fee for AMT Free Municipal Bond Fund and High Yield Municipal Bond Fund is calculated at the following annual rate:


	0.50% on the first $1 billion of average daily net assets;
	0.45% on the next $1 billion of average daily net assets; and
	0.40% on average daily net assets over $2 billion.

The management fee for National Fund, California Fund, New Jersey Fund and New York Fund is calculated at the following annual rate:


	0.45% on the first $1 billion of average daily net assets;
	0.40% on the next $1 billion of average daily net assets; and
	0.35% on average daily net assets over $2 billion.

Each Fund’s net expense ratio, after taking into account the management fee waiver and deduction for the Interest and Related Expenses, if applicable*, is as follows:

5-1


Fund	Class A	Class B	Class C	Class F	Class I	Class P

Short Duration Tax Free Fund	0.63%	1.43%	1.29%	0.53%	0.43%	N/A
Intermediate Fund	0.69%	1.49%	1.36%	0.59%	0.49%	0.94%
AMT Free Municipal Bond Fund	0.60%	N/A	1.36%	0.50%	0.40%	N/A
National Fund	0.73%	1.53%	1.37%	0.63%	0.53%	0.98%
High Yield Municipal Bond	0.80%	1.60%	1.43%	0.70%	0.60%	1.05%
California Fund	0.79%	N/A	1.42%	0.69%	0.59%	1.04%
New Jersey Fund	0.82%	N/A	N/A	0.72%	0.62%	1.07%
New York Fund	0.78%	N/A	1.41%	0.68%	0.58%	1.03%



* Interest and Related Expenses (“interest expense”) from Inverse Floaters include certain expenses and fees related to the Fund’s investments in inverse floaters (also known as “residual interest bonds”). Under accounting rules, some of those expenses are liabilities with respect to interest paid on short-term floating rate notes issued by the trusts whose inverse floater certificates are held by the Fund. Accounting rules also require the Fund to recognize additional income in an amount that directly corresponds to these expenses. Therefore, the NAVs per share and total returns have not been affected by these additional expenses. These expenses affect the amount of the Fund’s Total Other Expenses and Total Annual Fund Operating Expenses in the table and the Example in each Fund’s prospectus.

5-2

The management fees paid to Lord Abbett by the Funds (taking into account management fee waivers, if any) for the last three fiscal years ended September 30 ^th were as follows:


	Year Ended September 30, 2012

Fund	Gross Management Fees		Management Fees Waived			Net Management Fees

Short Duration Tax Free Fund	$	8,616,227	$	(1,970,751	)	$	6,645,476
Intermediate Fund ^*	$	12,084,399	$	(1,176,356	)	$	10,908,043
AMT Free Municipal Bond Fund	$	580,452	$	(415,918	)	$	164,534
National Fund	$	7,742,548	$	—		$	7,742,548
High Yield Municipal Bond Fund	$	8,035,042	$	—		$	8,035,042
California Fund	$	979,788	$	—		$	979,788
New Jersey Fund	$	590,519	$	—		$	590,519
New York Fund	$	1,328,761	$	—		$	1,328,761

	Year Ended September 30, 2011

Fund	Gross Management Fees		Management Fees Waived			Net Management Fees

Short Duration Tax Free Fund	$	7,247,394	$	(1,946,198	)	$	5,301,196
Intermediate Fund ^*	$	8,299,632	$	(1,461,583	)	$	6,838,049
AMT Free Municipal Bond Fund	$	159,220	$	(159,220	)	$	—
National Fund	$	6,809,689	$	—		$	6,809,689
High Yield Municipal Bond Fund	$	7,907,579	$	—		$	7,907,579
California Fund	$	851,098	$	—		$	851,098
New Jersey Fund	$	527,489	$	—		$	527,489
New York Fund	$	1,183,890	$	—		$	1,183,890

	Year Ended September 30, 2010

Fund	Gross Management Fees		Management Fees Waived			Net Management Fees

Short Duration Tax Free Fund	$	5,968,660	$	(2,255,100	)	$	3,713,560
Intermediate Fund ^*	$	5,714,382	$	(1,135,995	)	$	4,578,387
AMT Free Municipal Bond Fund ¹		N/A		N/A			N/A
National Fund	$	5,022,525	$	—		$	5,022,525
High Yield Municipal Bond Fund	$	8,418,438	$	—		$	8,418,438
California Fund	$	895,337	$	—		$	895,337
New Jersey Fund	$	566,464	$	—		$	566,464
New York Fund	$	1,221,019	$	—		$	1,221,019



¹ The AMT Free Municipal Bond Fund commenced investment operations on October 29, 2010.

^* Prior to February 1, 2013, the management fee was calculated at the following annual rate:
	0.40% on the first $2 billion of average daily net assets;
	0.375% on the next $3 billion of average daily net assets; and
	0.35% on average daily net assets over $5 billion.

5-3

With respect to Short Duration Tax Free Fund for the period February 1, 2013 through January 31, 2014, Lord Abbett has contractually agreed to waive its fees and reimburse expenses to the extent necessary to limit total net annual operating expenses for each class, excluding 12b-1 fees and interest related expenses, to an annual rate of 0.43%. This agreement may be terminated only by the Board.

With respect to Intermediate Fund for the period February 1, 2013 through January 31, 2014, Lord Abbett has contractually agreed to waive its fees and reimburse expenses to the extent necessary to limit total net annual operating expenses for each class, excluding 12b-1 fees and interest related expenses, to an annual rate of 0.49%. This agreement may be terminated only by the Board.

With respect to AMT Free Municipal Bond Fund for the period February 1, 2013 through January 31, 2014, Lord Abbett has contractually agreed to waive its fees and reimburse expenses to the extent necessary to limit total net annual operating expenses for each class, excluding 12b-1 fees and interest related expenses, to an annual rate of 0.40%. This agreement may be terminated only by the Board.

Each Fund pays all expenses attributable to its operations not expressly assumed by Lord Abbett, including, without limitation, 12b-1 expenses, independent directors’/trustees’ fees and expenses, association membership dues, legal and auditing fees, taxes, transfer and dividend disbursing agent fees, shareholder servicing costs, expenses relating to shareholder meetings, expenses of registering its shares under federal and state securities laws, expenses of preparing, printing and mailing prospectuses and shareholder reports to existing shareholders, insurance premiums, and other expenses connected with executing portfolio transactions.

Administrative Services
Pursuant to an Administrative Services Agreement with the Funds, Lord Abbett provides certain administrative services not involving the provision of investment advice to each Fund. Under the Agreement, each Fund pays Lord Abbett a monthly fee, based on average daily net assets for each month, at an annual rate of 0.04%. The administrative services fee is allocated to each class of shares based upon the relative proportion of the Fund’s net assets represented by that class.

The administrative services fees paid to Lord Abbett by each Fund for the last three fiscal years ended September 30 ^th were as follows:


Fund	2012		2011		2010

Short Duration Tax Free Fund	$	866,283	$	724,739	$	596,866
Intermediate Fund	$	1,235,669	$	832,293	$	571,441
AMT Free Municipal Income Fund	$	46,436	$	12,738*		N/A*
National Fund	$	724,304	$	630,969	$	452,253
High Yield Municipal Bond Fund	$	669,781	$	658,772	$	703,905
California Fund	$	87,092	$	75,653	$	79,586
New Jersey Fund	$	52,941	$	46,888	$	50,353
New York Fund	$	118,112	$	105,235	$	108,535



^* AMT Free Municipal Bond Fund commenced investment operations on October 29, 2010.

Portfolio Managers
As stated in the prospectus, each Fund is managed by an experienced portfolio manager or a team of experienced portfolio managers responsible for investment decisions together with a team of investment professionals who provide issuer, industry, sector and macroeconomic research and analysis.

Daniel S. Solender heads the investment management team of the Funds. Mr. Solender is primarily responsible for the day-to-day management of AMT Free Municipal Bond Fund and National Tax Free Fund. Mr. Solender and Philip B. Herman are jointly and primarily responsible for the day-to-day management of New Jersey Tax Free Fund and New York Tax Free Fund. Mr. Solender and Paul A. Langlois are jointly and primarily responsible for the day-to-day management of California Tax Free Fund and High Yield Municipal Bond Fund. Mr. Solender and Daniel T. Vande Velde are jointly and primarily responsible for the day-to-day management of Short Duration Tax Free Fund and Intermediate Tax Free Fund.

The following table indicates for each Fund as of September 30, 2012 (or another date, if indicated): (1) the number of other accounts managed by each portfolio manager who is jointly and/or primarily responsible for the day-to-day

5-4

management of the Fund within certain categories of investment vehicles; and (2) the total net assets in such accounts managed within each category. For each of the categories a footnote to the table also provides the number of accounts and the total net assets in the accounts with respect to which the management fee is based on the performance of the account. Included in the Registered Investment Companies category are those U.S. registered funds managed or sub-advised by Lord Abbett, including funds underlying variable annuity contracts and variable life insurance policies offered through insurance companies. The Other Pooled Investment Vehicles category includes collective investment funds, offshore funds and similar non-registered investment vehicles. Lord Abbett does not manage any hedge funds. The Other Accounts category encompasses retirement and benefit plans (including both defined contribution and defined benefit plans) sponsored by various corporations and other entities, individually managed institutional accounts of various corporations, other entities and individuals, and separately managed accounts in so-called wrap fee programs sponsored by financial intermediaries unaffiliated with Lord Abbett. (The data shown below are approximate.)

Other Accounts Managed (#Total Net Assets ⁺ )

Fund

Name

Registered
Investment
Companies

Other Pooled
Investment
Vehicles

Other Accounts*

Short Duration Tax Free

Daniel S. Solender

7 / $8,727

0 / $0

8,161 / $7,048

Fund

Daniel T. Vande Velde

1 / $3,805

0 / $0

1 / $.5

Intermediate Fund

Daniel S. Solender

7 / $7,455

0 / $0

8,161 / $7,048

Daniel T. Vande Velde

1/ $2,533

0 / $0

1 / $.5

AMT Free Municipal Bond Fund

Daniel S. Solender

7 / $11,086

0 / $0

8,161 / $7,048

National Fund

Daniel S. Solender

7 / $9,224

0 / $0

8,161 / $7,048

High Yield Municipal Bond

Daniel S. Solender

7 / $9,294

0 / $0

8,161 / $7,048

Fund

Paul A. Langlois

1 / $251

0 / $0

California Fund

Daniel S. Solender

7 / $11,009

0 / $0

8,161 / $7,048

Paul A. Langlois

1 / $1,966

0 / $0

New Jersey Fund

Daniel S. Solender

7 / $11,117

0 / $0

8,161 / $7,048

Philip B. Herman

1 / $352

0 / $0

New York Fund

Daniel S. Solender

7 / $10,908

0 / $0

8,161 / $7,048

Philip B. Herman

1 / $143

0 / $0

⁺ Total net assets are in millions.

* Does not include $15 million for which Lord Abbett provides investment models to managed account sponsors.

Conflicts of Interest

Conflicts of interest may arise in connection with the portfolio managers’ management of the investments of the Funds and the investments of the other accounts included in the table above. Such conflicts may arise with respect to the allocation of investment opportunities among the Funds and other accounts with similar investment objectives and policies. A portfolio manager potentially could use information concerning a Fund’s transactions to the advantage of other accounts and to the detriment of the Funds. To address these potential conflicts of interest, Lord Abbett has adopted and implemented a number of policies and procedures. Lord Abbett has adopted Policies and Procedures Relating to Client Brokerage and Soft Dollars, as well as Evaluations of Proprietary Research and Procedures. The objective of these policies and procedures is to ensure the fair and equitable treatment of transactions and allocation of investment opportunities on behalf of all accounts managed by Lord Abbett. In addition, Lord Abbett’s Code of Ethics sets forth general principles for the conduct of employee personal securities transactions in a manner that avoids any actual or potential conflicts of interest with the interests of Lord Abbett’s clients including the Funds. Moreover, Lord Abbett’s Insider Trading and Receipt of Material Non-Public Information Policy and Procedure sets forth procedures for personnel to follow when they have inside information. Lord Abbett is not affiliated with a full service broker-dealer and therefore does not execute any portfolio transactions through such an entity, a structure that could give rise to additional conflicts. Lord Abbett does not conduct any investment bank functions and does not manage any hedge funds. Lord Abbett does not believe that any material conflicts of interest exist in connection with the portfolio managers’ management of the investments of the Funds and the investments of the other accounts referenced in the table above.

5-5

Compensation of Portfolio Managers

When used in this section, the term “fund” refers to the Funds, as well as any other registered investment companies, pooled investment vehicles and accounts managed by a portfolio manager. Each portfolio manager receives compensation from Lord Abbett consisting of salary, bonus and profit sharing plan contributions. The level of base compensation takes into account the portfolio manager’s experience, reputation and competitive market rates.

Fiscal year-end bonuses, which can be a substantial percentage of overall compensation, are determined after an evaluation of various factors. These factors include the portfolio manager’s investment results and style consistency, the dispersion among funds with similar objectives, the risk taken to achieve the fund returns and similar factors. In considering the portfolio manager’s investment results, Lord Abbett’s senior management may evaluate the Fund’s performance against one or more benchmarks from among the Fund’s primary benchmark and any supplemental benchmarks as disclosed in the prospectus, indexes disclosed as performance benchmarks by the portfolio manager’s other accounts, and other indexes within one or more of the Fund’s peer groups maintained by rating agencies, as well as the Fund’s peer group. In particular, investment results are evaluated based on an assessment of the portfolio manager’s three- and five-year investment returns on a pre-tax basis versus both the benchmark and the peer groups. Finally, there is a component of the bonus that reflects leadership and management of the investment team. The evaluation does not follow a formulaic approach, but rather is reached following a review of these factors. No part of the bonus payment is based on the portfolio manager’s assets under management, the revenues generated by those assets, or the profitability of the portfolio manager’s team. Lord Abbett does not manage hedge funds. In addition, Lord Abbett may designate a bonus payment of a manager for participation in the firm’s senior incentive compensation plan, which provides for a deferred payout over a five-year period. The plan’s earnings are based on the overall asset growth of the firm as a whole. Lord Abbett believes this incentive focuses portfolio managers on the impact their fund’s performance has on the overall reputation of the firm as a whole and encourages exchanges of investment ideas among investment professionals managing different mandates.

Lord Abbett provides a 401(k) profit-sharing plan for all eligible employees. Contributions to a portfolio manager’s profit sharing account are based on a percentage of the portfolio manager’s total base and bonus paid during the fiscal year, subject to a specified maximum amount. The assets of this profit-sharing plan are entirely invested in Lord Abbett-sponsored funds.

Holdings of Portfolio Managers

The following table indicates for each Fund the dollar range of shares beneficially owned by each portfolio manager, who is jointly and/or primarily responsible for the day-to-day management of that Fund, as of September 30, 2012 (or another date, if indicated).

This table includes the value of shares beneficially owned by such portfolio managers through 401(k) plans and certain other plans or accounts, if any.

Dollar Range of Shares in the Funds

Fund

Name

None

$ 1-
$ 10,000

$ 10,001-
$ 50,000

$ 50,001-
$ 100,000

$ 100,001-
$ 500,000

$ 500,001-
$ 1,000,000

Over
$ 1,000,000

Short Duration Tax

Daniel S. Solender ^*

Free Fund

Daniel T. Vande

Velde ^*

Intermediate Fund

Daniel S. Solender ^*

Daniel T. Vande

Velde ^*

AMT Free Municipal

Bond Fund

Daniel S. Solender ^*

National Fund

Daniel S. Solender ^*

High Yield Municipal

Daniel S. Solender ^*

Bond Fund

Paul A. Langlois

California Fund

Daniel S. Solender ^*

Paul A. Langlois

New Jersey Fund

Daniel S. Solender ^*

Philip B. Herman

5-6

Dollar Range of Shares in the Funds

Fund

Name

None

$1-
$10,000

$10,001-
$50,000

$50,001-
$100,000

$100,001-
$500,000

$500,001-
$1,000,000

Over
$1,000,000

New York Fund

Daniel S. Solender ^*

Philip B. Herman

^* Data is as of January 17, 2013.

Principal Underwriter

Lord Abbett Distributor, a New York limited liability company and a subsidiary of Lord Abbett, 90 Hudson Street, Jersey City, NJ 07302-3973, serves as the principal underwriter for each Fund.

Custodian and Accounting Agent

State Street Bank and Trust Company, One Lincoln Street, Boston, MA 02111-2900, is each Fund’s custodian. The custodian pays for and collects proceeds of securities bought and sold by the Funds and attends to the collection of principal and income. In addition, State Street Bank and Trust Company performs certain accounting and recordkeeping functions relating to portfolio transactions and calculates each Fund’s NAV.

Transfer Agent

DST Systems, Inc., 210 West 10 ^th St., Kansas City, MO 64105, serves as the Funds’ transfer agent and dividend disbursing agent pursuant to a Transfer Agency Agreement.

Independent Registered Public Accounting Firm

Deloitte & Touche LLP, Two World Financial Center, New York, NY 10281, is the independent registered public accounting firm of the Funds and must be approved at least annually by the Board to continue in such capacity. Deloitte & Touche LLP performs audit services for the Funds, including the examination of financial statements included in the Funds’ annual report to shareholders.

5-7

6.
B rokerage Allocations and Other Practices

Portfolio Transactions and Brokerage Allocations

Investment and Brokerage Discretion . Each Fund’s Management Agreement authorizes Lord Abbett to place orders for the purchase and sale of portfolio securities. In doing so, Lord Abbett seeks to obtain “best execution” on all portfolio transactions. This means that Lord Abbett 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 taking into account the full range and quality of the broker-dealers’ services. To the extent consistent with obtaining best execution, a Fund may pay a higher commission than some broker-dealers might charge on the same transaction. Lord Abbett is not obligated to obtain the lowest commission rate available for a portfolio transaction exclusive of price, service and qualitative considerations.

Selection of Brokers and Dealers. The policy on best execution governs the selection of broker-dealers and selection of the market and/or trading venue in which to execute the transaction. Normally, traders who are employees of Lord Abbett make the selection of broker-dealers. These traders are responsible for seeking best execution. They also conduct trading for the accounts of other Lord Abbett investment management clients, including investment companies, institutions and individuals. To the extent permitted by law, a Fund, if Lord Abbett considers it advantageous, may make a purchase from or sale to another Lord Abbett-sponsored fund or client without the intervention of any broker-dealer.

Fixed Income Securities . To the extent a Fund purchases or sells fixed-income securities, the Fund generally will deal directly with the issuer or through a primary market-maker acting as principal on a net basis. When dealing with a broker-dealer serving as a primary market-maker, a Fund pays no brokerage commission but the price, which reflects the spread between the bid and ask prices of the security, usually includes undisclosed compensation and may involve the designation of selling concessions. A Fund also may purchase fixed-income securities from underwriters at prices that include underwriting fees.

Equity Securities . Transactions on stock exchanges involve the payment of brokerage commissions. In transactions on stock exchanges in the U.S., these commissions are negotiated. Traditionally, commission rates have not been negotiated on stock markets outside the U.S. While an increasing number of overseas stock markets have adopted a system of negotiated rates or ranges of rates, however, a small number of markets continue to be subject to a non-negotiable schedule of minimum commission rates. To the extent a Fund invests in equity securities, it ordinarily will purchase such securities in its primary trading markets, whether such securities are traded OTC or listed on a stock exchange, and purchase listed securities in the OTC market if such market is deemed the primary market. A Fund may purchase newly issued securities from underwriters, and the price of such transaction usually will include a concession paid to the underwriter by the issuer. When purchasing from dealers serving as market makers, the purchase price paid by a Fund may include the spread between the bid and ask prices of the security.

Evaluating the Reasonableness of Brokerage Commissions Paid . Each Fund pays a commission rate that Lord Abbett believes is appropriate under the circumstances. While Lord Abbett seeks to pay competitive commission rates, a Fund will not necessarily be paying the lowest possible commissions on particular trades if Lord Abbett believes that the Fund has obtained best execution and the commission rates paid by the Fund are reasonable in relation to the value of the services received. Such services include, but are not limited to, showing the Fund trading opportunities, a willingness and ability to take principal positions in securities, knowledge of a particular security or market-proven ability to handle a particular type of trade, providing and/or facilitating Lord Abbett’s use of proprietary and third party research, confidential treatment, promptness and reliability. Lord Abbett may view the value of these services in terms of either a particular transaction or multiple transactions on behalf of one or more accounts that it manages.

On a continuing basis, Lord Abbett seeks to determine what levels of commission rates are reasonable in the marketplace for transactions executed on behalf of a Fund and its other clients. In evaluating the reasonableness of commission rates, Lord Abbett may consider any or all of the following: (a) rates quoted by broker-dealers; (b) the size of a particular transaction, in terms of the number of shares, dollar amount, and number of clients involved; (c) the complexity of a particular transaction in terms of both execution and settlement; (d) the level and type of business done with a particular firm over a period of time; (e) the extent to which the broker-dealer has capital at risk in the transaction; (f) historical commission rates; (g) the value of any research products and services that may be made available to Lord Abbett based on its placement of transactions with the broker-dealer; and (h) rates paid by other institutional investors based on available public information.

6-1

Policies on Broker-Dealer Brokerage and Research Services and Soft Dollars . Lord Abbett may select broker-dealers that furnish Lord Abbett with proprietary and third party brokerage and research services in connection with commissions paid on transactions it places for client accounts to the extent that Lord Abbett believes that the commissions paid are reasonable in relation to the value of the services received. “Commissions,” as defined through applicable guidance issued by the SEC, include fees paid to brokers for trades conducted on an agency basis, and certain mark-ups, markdowns, commission equivalents and other fees received by dealers in riskless principal transactions. The brokerage and research services Lord Abbett receives are within the eligibility requirements of Section 28(e) of the Securities Exchange Act of 1934, as amended (“Section 28(e)”), and, in particular, provide Lord Abbett with lawful and appropriate assistance in the provision of investment advice to client accounts. Brokerage and research services (collectively referred to herein as “Research Services”) include (1) furnishing advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; (2) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and the performance of accounts; and (3) effecting securities transactions and performing functions incidental to securities transactions (such as clearance, settlement, and custody).

Lord Abbett generally allocates securities purchased or sold in a batched transaction among participating client accounts in proportion to the size of the order placed for each account (i.e., pro-rata). In certain strategies, however, a pro-rata allocation of the securities or proceeds may not be possible or desirable. In these cases, Lord Abbett will decide how to allocate the securities or proceeds according to each account’s particular circumstances and needs and in a manner that Lord Abbett believes is fair and equitable to clients over time in light of factors relevant to managing an account. Relevant factors may include, without limitation, client guidelines, an account’s ability to purchase a tradable lot size, cash available for investment, the risk exposure or the risk associated with the particular security, the type of investment, the size of the account, and other holdings in the account. Accordingly, Lord Abbett may increase or decrease the amount of securities allocated to one or more accounts if necessary, under certain circumstances, including (i) to avoid holding odd-lots or small numbers of shares in a client account; (ii) to facilitate the rebalancing of a client account; or (iii) to maintain certain investment guidelines or fixed income portfolio characteristics. Lord Abbett also may deviate from a pro-rata allocation approach when making initial investments for newly established accounts for the purpose of seeking to fully invest such accounts as promptly as possible. In addition, if Lord Abbett is unable to execute fully a batched transaction and determines that it would be impractical to allocate a small number of securities on a pro-rata basis among the participating accounts, Lord Abbett allocates the securities in a manner it determines to be fair to all accounts over time. Thus, in some cases it is possible that the application of the factors described herein may result in allocations in which certain client accounts participating in a batched transaction may receive an allocation when other accounts do not. Non-proportional allocations may occur frequently in the fixed income portfolio management area, in many instances because multiple appropriate or substantially similar investments are available in fixed income strategies, as well as due to other reasons. But non-proportional allocations also could occur in other investment strategies.

At times, Lord Abbett is not able to batch purchases and sales for all accounts or products it is managing, such as when an individually-managed account client directs it to use a particular broker for a trade (sometimes referred to herein as “directed accounts”) or when a client restricts Lord Abbett from selecting certain brokers to execute trades for such account (sometimes referred to herein as “restricted accounts”). When it does not batch purchases and sales among products, Lord Abbett usually uses a rotation process for placing equity transactions on behalf of the different groups of accounts or products with respect to which equity transactions are communicated to the trading desk at or about the same time.

When transactions for all products using a particular investment strategy are communicated to the trading desk at or about the same time, Lord Abbett generally will place trades first for transactions on behalf of the Lord Abbett funds and non-directed, unrestricted individually managed institutional accounts; second for restricted accounts; third for managed account (“MA”), dual contract managed account (“Dual Contract”), and certain model portfolio managed account (“Model-Based”) programs (collectively, MA, Dual Contract, Model-Based and similarly named programs are referred to herein as a “Program” or “Programs”) by Program; and finally for directed accounts. However, Lord Abbett may determine in its sole discretion to place transactions for one group of accounts (e.g., directed accounts, restricted accounts or MA Programs, Dual Contract Programs or Model Based Programs) before or after the remaining accounts based on a variety of factors, including size of overall trade, the broker-dealer’s commitment of capital, liquidity or other conditions of the market, or confidentiality. Most often, however, transactions are communicated to the trading desk first for the Lord Abbett funds and institutional accounts and then for relevant Programs. In those instances, Lord Abbett normally will place transactions first, for the Lord Abbett funds and non-directed, unrestricted institutional accounts, next for restricted accounts, third for MA Programs, Dual Contract Programs and certain Model-Based Programs by Program and then for directed accounts.

If Lord Abbett has received trade instructions from multiple institutional clients, Lord Abbett will rotate the order in which it places equity transactions among the accounts or groups of accounts. Lord Abbett normally will use a rotation methodology designed to treat similarly situated groups of accounts equitably over time. In instances in which the same

6-2

equity securities are used in more than one investment strategy, Lord Abbett normally will place transactions and, if applicable, use its rotation policies, first on behalf of the strategy that it views as the primary strategy. For example, Lord Abbett typically will place transactions/use its rotation for large capitalization equity accounts before those for balanced strategy accounts that use large capitalization securities.

In some cases, Lord Abbett’s batching, allocation and rotation procedures may have an adverse effect on the size of the position purchased or sold by a particular account or the price paid or received by certain accounts. From time to time, these policies may adversely affect the performance of accounts subject to the rotation process. Lord Abbett’s trading practices are intended to avoid systematically favoring one product or group of accounts over another and to provide fair and equitable treatment over time for all products and clients.

Lord Abbett has entered into Client Commission Arrangements with a number of broker-dealers that are involved from time to time in executing, clearing or settling securities transactions on behalf of clients (“Executing Brokers”). Such Client Commission Arrangements provide for the Executing Brokers to pay a portion of the commissions paid by eligible client accounts for securities transactions to providers of Research Services (“Research Providers”). Such Research Providers shall produce and/or provide Research Services for the benefit of Lord Abbett. If a Research Provider plays no role in executing client securities transactions, any Research Services prepared by such Research Provider may constitute third party research. Research Services that are proprietary to the Executing Broker or are otherwise produced by the Executing Broker or its affiliates are referred to herein as proprietary Research Services. Lord Abbett may initiate a significant percentage, including perhaps all, of a client’s equity transactions with Executing Brokers pursuant to Client Commission Arrangements.

Executing Brokers may provide Research Services to Lord Abbett in written form or through direct contact with individuals, including telephone contacts and meetings with securities analysts and/or management representatives from portfolio companies, and may include information as to particular companies and securities as well as market, economic, or other information that assists in the evaluation of investments. Examples of Research Services that Executing Brokers may provide to Lord Abbett include research reports and other information on the economy, industries, groups of securities, individual companies, statistical information, political developments, technical market action, pricing and appraisal services, credit analysis, risk measurement analysis, performance and other analysis. Broker-dealers typically make proprietary research available to investment managers on the basis of their placement of transactions with the broker-dealer. Some broker-dealers will not sell their proprietary research to investment managers on a “hard dollar” (or “unbundled”) basis. Executing Brokers may provide Lord Abbett with proprietary Research Services, at least some of which are useful to Lord Abbett in its overall responsibilities with respect to client accounts Lord Abbett manages. In addition, Lord Abbett may purchase third party research with its own resources.

Lord Abbett believes that access to independent investment research is beneficial to its investment decision-making processes and, therefore, to its clients. Receipt of independent investment research allows Lord Abbett to supplement its own internal research and analysis and makes available the views of, and information from, individuals and the research staffs of other firms. Lord Abbett considers all outside research material and information received in the context of its own internal analysis before incorporating such content into its investment process. As a practical matter, Lord Abbett considers independent investment Research Services to be supplemental to its own research efforts. The receipt of Research Services from broker-dealers therefore does not tend to reduce the need for Lord Abbett to maintain its own research personnel. Any investment advisory or other fees paid by clients to Lord Abbett are not reduced as a result of Lord Abbett’s receipt of Research Services. It is unlikely that Lord Abbett would attempt to generate all of the information presently provided by broker-dealers and third party Research Services in part because Lord Abbett values the receipt of an independent, supplemental viewpoint. Also, the expenses of Lord Abbett would be increased substantially if it attempted to generate such additional information through its own staff or if it paid for these products or services itself. To the extent that Research Services of value are provided by or through such broker-dealers, Lord Abbett will not have to pay for such services itself. These circumstances give rise to potential conflicts of interest which Lord Abbett manages by following internal procedures designed to ensure that the value, type and quality of any products or services it receives from broker-dealers are permissible under Section 28(e) and the regulatory interpretations thereof.

Lord Abbett does not attempt to allocate to any particular client account the relative costs or benefits of Research Services received from a broker-dealer. Rather, Lord Abbett believes that any Research Services received from a broker-dealer are, in the aggregate, of assistance to Lord Abbett in fulfilling its overall responsibilities to its clients. Accordingly, Research Services received for a particular client’s brokerage commissions may be useful to Lord Abbett in the management of that client’s account, but also may be useful in Lord Abbett’s management of other clients’ accounts; similarly, the research received for the commissions of other client accounts may be useful in Lord Abbett’s management of that client account. Thus, Lord Abbett may use Research Services received from broker-dealers in servicing any or all of its accounts, and not all of such services will necessarily be used by Lord Abbett in connection with its management of every client account.

6-3

Such products and services may disproportionately benefit certain clients relative to others based on the amount of brokerage commissions paid by the client account. For example, Lord Abbett may use Research Services obtained through soft dollar arrangements, including Client Commission Arrangements, in its management of certain directed accounts and Program accounts and accounts (as defined below) of clients who may have restricted Lord Abbett’s use of soft dollars regardless of the fact that brokerage commissions paid by such accounts are not used to obtain Research Services.

In some cases, Lord Abbett may receive a product or service from a broker-dealer that has both a “research” and a “non-research” use. When this occurs, Lord Abbett makes a good faith allocation between the research and non-research uses of the product or service. The percentage of the product or service Lord Abbett uses for research purposes may be paid for with client commissions, while Lord Abbett will use its own funds to pay for the percentage of the product or service that it uses for non-research purposes. In making this good faith allocation, Lord Abbett faces a potential conflict of interest, but Lord Abbett believes that its allocation procedures are reasonably designed to ensure that it appropriately allocates the anticipated use of such products or services to their research and non-research uses.

Lord Abbett periodically assesses the contributions of the equity brokerage and Research Services provided by broker-dealers and creates a ranking of broker-dealers reflecting these assessments. Investment managers and research analysts each evaluate the proprietary Research Services they receive from broker-dealers and make judgments as to the value and quality of such services. These assessments may affect the extent to which Lord Abbett trades with a broker-dealer, although the actual amount of transactions placed with a particular broker-dealer may not directly reflect its ranking in the voting process. Assuming identical execution quality, however, there should be a correlation between the level of trading activity with a broker-dealer and the ranking of that broker-dealer’s brokerage and proprietary Research Services. All portfolio transactions placed with such broker-dealers will be effected in accordance with Lord Abbett’s obligation to seek best execution for its client accounts. Lord Abbett periodically monitors the allocation of equity trading among broker-dealers.

From time to time, Lord Abbett prepares a list of Research Providers that it considers to provide valuable Research Services (‘‘Research Firms’’) as determined by Lord Abbett’s investment staff (“Research Evaluation”). Lord Abbett uses the Research Evaluation as a guide for allocating payments for Research Services to Research Firms, including Executing Brokers that may provide proprietary Research Services to Lord Abbett. Lord Abbett may make payments for proprietary Research Services provided by an Executing Broker through the use of commissions paid on trades executed by such Executing Broker pursuant to a Client Commission Arrangement (“Research Commissions”). Lord Abbett also uses the Research Evaluation as a guide for allocating Research Commissions and cash payments from its own resources to Research Firms that are not Executing Brokers. From time to time, Lord Abbett may allocate Research Commissions to pay for a significant portion of the Research Services that it receives. Lord Abbett also reserves the right to pay cash to a Research Firm from its own resources in an amount it determines in its discretion.

Lord Abbett’s arrangements for Research Services do not involve any commitment by Lord Abbett or a Fund regarding the allocation of brokerage business to or among any particular broker-dealer. Rather, Lord Abbett executes portfolio transactions only when they are dictated by investment decisions to purchase or sell portfolio securities. A Fund is prohibited from compensating a broker-dealer for promoting or selling Fund shares by directing a Fund’s portfolio transactions to the broker-dealer or directing any other remuneration to the broker-dealer, including commissions, mark-ups, mark downs or other fees, resulting from a Fund’s portfolio transactions executed by a different broker-dealer. A Fund is permitted to effect portfolio transactions through broker-dealers that also sell shares of the Lord Abbett funds, provided that Lord Abbett does not consider sales of shares of the Lord Abbett funds as a factor in the selection of broker-dealers to execute portfolio transactions. Thus, whether a particular broker-dealer sells shares of the Lord Abbett funds is not a factor considered by Lord Abbett when selecting broker-dealers for portfolio transactions and any such sales neither qualifies nor disqualifies the broker-dealer from executing portfolio transactions for a Fund.

Lord Abbett may select broker-dealers that provide Research Services in order to ensure the continued receipt of such Research Services which Lord Abbett believes are useful in its investment decision-making process. Further, Lord Abbett may have an incentive to execute trades through certain of such broker-dealers with which it has negotiated more favorable arrangements for Lord Abbett to receive Research Services. To the extent that Lord Abbett uses brokerage commissions paid in connection with client portfolio transactions to obtain Research Services, the brokerage commissions paid by such clients might exceed those that might otherwise be paid for execution only. In order to manage these conflicts of interest, Lord Abbett has adopted internal procedures that are designed to ensure that its primary objective in the selection of a broker-dealer is to seek best execution for the portfolio transaction.

Lord Abbett normally seeks to combine or “batch” purchases or sales of a particular security placed at or about the same time for similarly situated accounts, including a Fund, to facilitate “best execution” and to reduce other transaction costs, if relevant. All accounts included in a batched transaction through a broker-dealer that provides Lord Abbett with research or other services pay the same commission rate, regardless of whether one or more accounts has prohibited Lord Abbett from

6-4

receiving any credit toward such services from its commissions. Each account that participates in a particular batched order, including a Fund, will do so at the average share price for all transactions related to that order.

Brokerage Commissions Paid to Independent Broker-Dealer Firms. Each Fund paid total brokerage commissions on transactions of securities to independent broker-dealer firms as follows for the last three fiscal years ended September 30 ^th :


	Fiscal Year Ended September 30,

Fund	2012		2011		2010

Short Duration Tax Free Fund		N/A		N/A		N/A
Intermediate Fund	$	14,960	$	7,369	$	6,181
AMT Free Municipal Bond Fund	$	1,398	$	245		—	¹
National Fund	$	19,245	$	24,400	$	17,935
High Yield Municipal Bond Fund	$	17,114	$	39,147	$	47,617
California Fund	$	2,255	$	3,609	$	3,566
New Jersey Fund	$	1,099	$	1,906	$	2,376
New York Fund	$	3,033	$	5,116	$	6,439


¹ The AMT Free Municipal Bond Fund commenced investment operations on October 29, 2010.

In addition to the purchase of Research Services through Commission Sharing Arrangements, Lord Abbett purchased third party Research Services with its own resources during the fiscal years ended September 30, 2012, 2011, and 2010.

The Funds did not pay any portion of the amounts shown above to firms as a result of directed brokerage transactions to brokers for Research Services provided.

All such portfolio transactions were conducted on a “best execution” basis, as discussed above. The provision of Research Services was not necessarily a factor in the placement of all such transactions.

Regular Broker Dealers Dealers. During the fiscal year ended September 30, 2012 the Funds did not acquire securities of a regular broker or dealer (as defined in Rule 10b-1 under the Act) that derived, or has a parent that derived, more than 15% of its gross revenues from the business of a broker, a dealer, an underwriter, or an investment adviser.

6-5

7 .
Classes of Shares

Each Fund offers investors different classes of shares. The different classes of shares represent investments in the same portfolio of securities but are subject to different expenses and will likely have different share prices. Investors should read this section carefully together with the corresponding section in the Funds’ prospectus 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, series, or funds may be added in the future. The Act requires that where more than one class, series, or fund exists, each class, series, or fund must be preferred over all other classes, series, or funds in respect of assets specifically allocated to such class, series, 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 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, series, or fund in the matter are substantially identical or the matter does not affect any interest of such class, series, or fund. However, Rule 18f-2 exempts the selection of the independent registered public accounting firm, the approval of a contract with a principal underwriter and the election of directors/trustees from the separate voting requirements.

The Company’s By-Laws provide that a Fund shall not hold an annual meeting of its shareholders in any year unless the election of directors is required to be acted on by shareholders under the Act, or unless called by a majority of the Board or by shareholders holding at least one quarter of the outstanding shares of the Funds and entitled to vote at the meeting. A special meeting may be held if called by the Chairman, the President, a Vice President, the Secretary or any director at the request in writing of a majority of the Board or of the shareholders holding at least one quarter of the outstanding shares of the Funds 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 $500,000 or on investments that do not qualify under the other categories listed under “NAV Purchases of Class A Shares” discussed below. If you purchase Class A shares as part of an investment of $500,000 or more 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 before the first day of the month in which the one-year anniversary of your purchase falls, you may pay a contingent deferred sales charge (“CDSC”) of 1% as a percentage of the offering price or redemption proceeds, whichever is lower. Class A shares are subject to service and distribution fees at an annual rate of 0.20% of the average daily NAV of the Class A shares. Other potential fees and expenses related to Class A shares are described in the prospectus and below.

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 normally will 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 NAV of the Class B shares. Other potential fees and expenses related to Class B shares are described in the prospectus and below.

Conversions of Class B Shares. The conversion of Class B shares after approximately the eighth anniversary of their purchase is subject to the continuing availability of a private letter ruling from the Internal Revenue Service (the “IRS”), or an opinion of counsel or tax advisor, 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 NAV 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 normally will pay a CDSC of 1% as a percentage of the offering price or redemption proceeds, whichever is lower, to Lord Abbett Distributor. Class C shares are subject to service and distribution fees at a blended annual rate calculated based on (1) a service fee of 0.25% and a distribution fee of 0.75% of the Fund’s average daily net assets attributable to shares held for less than one year and (2) a service fee of 0.05% and a distribution fee of 0.75% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C

7-1

shareholders of the Fund will bear service and distribution fees at the same rate. Other potential fees and expenses related to Class C shares are described in the prospectus and below.

Class F Shares. If you buy Class F shares, you pay no sales charge at the time of purchase, and if you redeem your shares you pay no CDSC. Class F shares are subject to service and distribution fees at an annual rate of 0.10% of the average daily net assets of the Class F shares. Class F shares generally are available to investors participating in fee-based programs that have (or whose trading agents have) an agreement with Lord Abbett Distributor and to certain investors that are clients of certain registered investment advisors that have an agreement with Lord Abbett Distributor, if it so deems appropriate. Other potential fees and expenses related to Class F shares are described in the prospectus and below.

Class I Shares. If you buy Class I shares, you pay no sales charges or 12b-1 service or distribution fees.

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 0.45% of the average daily NAV of the Class P shares. Class P shares are offered only on a limited basis through certain financial intermediaries. Class P shares are closed to substantially all new investors. However, shareholders that held Class P shares as of October 1, 2007 may continue to hold their Class P shares and may make additional purchases. Class P shares may be redeemed at NAV by existing shareholders, or may be exchanged for shares of another class provided applicable eligibility requirements and sales charges for the other share class are satisfied. Class P shares also are available for orders made by or on behalf of a financial intermediary for clients participating in an IRA rollover program sponsored by the financial intermediary that operates the program in an omnibus recordkeeping environment and has entered into special arrangements with the Fund and/or Lord Abbett Distributor specifically for such orders.

Rule 12b–1 Plan. Each Fund has adopted an Amended and Restated Joint Distribution Plan pursuant to Rule 12b-1 under the Act for all of the Funds’ share classes except Class I shares (the “Plan”). The principal features of the Plan are described in the prospectus; however, this SAI contains additional information that may be of interest to investors. The Plan is a compensation plan, allowing each applicable class to pay a fixed fee to Lord Abbett Distributor that may be more or less than the expenses Lord Abbett Distributor actually incurs for using reasonable efforts to secure purchasers of Fund shares. These efforts may include, but neither are required to include nor are limited to, the following: (a) making payments to authorized institutions in connection with sales of shares and/or servicing of accounts of shareholders holding shares; (b) providing continuing information and investment services to shareholder accounts not serviced by authorized institutions receiving a service fee from Lord Abbett Distributor hereunder and otherwise to encourage shareholder accounts to remain invested in the shares; and (c) otherwise rendering service to a Fund, including paying and financing the payment of sales commissions, service fees and other costs of distributing and selling shares. In adopting the Plan and in approving its continuance, the Board has concluded that there is a reasonable likelihood that the Plan will benefit each applicable class and its 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. Under the Plan, each applicable class compensates Lord Abbett Distributor for financing activities primarily intended to sell shares of the applicable 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 Distributor also uses amounts received under the Plan, as described in the prospectus, for payments to dealers and other agents 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 the Fund.

The Plan provides that the maximum payments that may be authorized by the Board for Class A shares are 0.50%; for Class P shares, 0.75%; and Class B, Class C, and Class F shares, 1.00%; however, the Board has approved payments of 0.20% for Class A shares, 1.00% for Class B shares, a blended rate of 1.00% on shares held for less than one year and 0.80% on shares held for one year or more for Class C shares, 0.10% for Class F shares, and 0.45% for Class P shares. All Class C shareholders of the Fund will bear 12b-1 fees at the same blended rate, regardless of how long they hold their particular shares. The Funds may 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, the Funds will not require payment of any otherwise applicable CDSC.

7-2

The amounts paid by each applicable class of each Fund to Lord Abbett Distributor pursuant to the Plan for the fiscal year ended September 30, 2012 were as follows:


Fund	Class A		Class B		Class C		Class F		Class P

Short Duration Tax Free Fund	$	2,710,669		N/A	$	2,325,322	$	523,834		N/A
Intermediate Fund	$	3,411,974	$	62,215	$	5,007,405	$	783,790	$	65
AMT Free Municipal Bond Fund	$	174,365		N/A	$	89,364	$	14,927		N/A
National Fund	$	3,048,004	$	85,701	$	1,535,132	$	93,461		N/A
High Yield Municipal Bond Fund	$	1,992,030	$	111	$	3,934,291	$	203,655	$	52
California Fund	$	333,579		N/A	$	270,178	$	18,465		N/A
New Jersey Fund	$	251,173		N/A		N/A	$	5,628		N/A
New York Fund	$	478,477		N/A	$	360,133	$	12,328		N/A

The Plan requires the Board to review, on a quarterly basis, written reports of all amounts expended pursuant to the Plan for each class, 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 Plan should be continued. The 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 Company and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan cast in person at a meeting called for the purpose of voting on the Plan. The Plan may not be amended to increase materially above the limits set forth therein the amount spent for distribution expenses thereunder for each class 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 directors/trustees who are not interested persons of the Company and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan. As long as the Plan is in effect, the selection or nomination of Independent Directors/Trustees is committed to the discretion of the Independent Directors/Trustees.

One Independent Director, Evelyn E. Guernsey, may be deemed to have an indirect financial interest in the operation of the Plan. Ms. Guernsey, an Independent Director/Trustee of the Funds, owns outstanding shares of and was affiliated with J.P. Morgan Chase & Co., which (or subsidiaries of which) may receive 12b-1 fees from the Funds and/or other Lord Abbett Funds.

Ms. Foster, is the Managing Member of Lord Abbett, which is the sole member of Lord Abbett Distributor, and as such is deemed to have a financial interest in the Plan.

Payments made pursuant to the Plan are subject to any applicable limitations imposed by rules of the Financial Industry Regulatory Authority, Inc. The Plan terminates automatically if it is assigned. In addition, the Plan may be terminated with respect to a class at any time by vote of a majority of the Independent Directors/Trustees (excluding any Independent Director/Trustee who has a direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan) or by vote of a majority of the outstanding voting securities of the applicable class.

CDSC. A CDSC applies upon early redemption of shares for certain classes, and (i) will be assessed on the lesser of the NAV of the shares at the time of the redemption or the NAV when the shares originally were purchased and (ii) will not be imposed on the amount of your account value represented by the increase in NAV over the initial purchase price (including increases due to the reinvestment of dividends and capital gains distributions) and upon early redemption of shares. In the case of Class A shares, this increase is represented by shares having an aggregate dollar value in your account. In the case of Class B and C shares, this increase is represented by that percentage of each share redeemed where the NAV exceeded the initial purchase price.

Class A Shares. As stated in the prospectus, subject to certain exceptions, if you buy Class A shares of a Fund under certain purchases with a front-end sales charge waiver or if you acquire Class A shares of a Fund 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 before the first day of the month in which the one-year anniversary of your purchase falls, a CDSC of 1% normally will be collected.

Class B Shares (Intermediate Fund, National Fund, and High Yield Municipal Bond Fund only). As stated in the prospectus, subject to certain exceptions, if Class B shares of the Intermediate Fund, National Fund, or High Yield Municipal Bond Fund (or Class B shares of another Lord Abbett-sponsored fund or series 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

7-3

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, for providing distribution-related services to each 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, each Fund redeems Class B 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 Which the Purchase Order was Accepted		CDSC on Redemptions (As a % 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

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 B shares automatically will convert to Class A shares on the 25th day of the month (or, if the 25th is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted.

Class C Shares (All Funds except New Jersey Fund). As stated in the prospectus, subject to certain exceptions, if Class C shares are redeemed before the first anniversary of their purchase, the redeeming shareholder normally will be required to pay to Lord Abbett Distributor a CDSC of 1% of the offering price at the time of purchase or redemption proceeds, whichever is lower. 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 also will be collected by Lord Abbett Distributor.

Eligible Mandatory Distributions. If Class A, B, or C shares represent a part of an individual’s total IRA investment, the CDSC for the applicable share class will be waived only for that part of a mandatory distribution that bears the same relation to the entire mandatory distribution as the investment in that class bears to the total investment.

General. The percentage used to calculate CDSCs described above for Class A, B, and C shares (1% in the case of Class A and C shares, and 5% through 1% in the case of Class B shares) is sometimes hereinafter referred to as the “Applicable Percentage.”

There is no CDSC charged on Class F, I, or P shares; however, financial intermediaries may charge additional fees or commissions other than those disclosed in the prospectus and SAI, such as a transaction based fee or other fee for its service, and may categorize and disclose these arrangements differently than the discussion here or in the prospectus. You may ask your financial intermediary about any payments it receives from Lord Abbett or the Funds, as well as about fees and/or commissions it charges.

With respect to Class A shares, a CDSC will not be assessed at the time of certain transactions including required minimum distributions from an IRA. 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 shares, the CDSC is received by Lord Abbett Distributor and is intended to reimburse all or a portion of the amount paid by Lord Abbett Distributor if the shares are redeemed before a 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 and C shares, the CDSC is received by Lord Abbett Distributor and is intended to reimburse its expenses of providing distribution-related services to the Fund (including recoupment of the commission payments made) in connection with the sale of Class B and C 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 Class B or C distribution fee.

In no event will the amount of the CDSC exceed the Applicable Percentage of the lesser of (i) the NAV 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 his or her account,

7-4

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 NAV, (iii) shares with respect to which no Lord Abbett-sponsored 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 that, together with exchanged shares, have been held continuously (a) until the first day of the month in which the one-year anniversary of the original purchase falls (in the case of Class A shares), (b) for six years or more (in the case of Class B shares), and (c) for one year or more (in the case of Class C shares). In determining whether a CDSC is payable, (i) shares not subject to the CDSC will be redeemed before shares subject to the CDSC and (ii) 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 a 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 advisor. A 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 advisor 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 generally apply to Class A, B, and C, and considered the effect of the higher distribution fees on Class B and C expenses (which will affect your investment return). Of course, the actual performance of your investment cannot be predicted and will vary based on that 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. If you are considering an investment through a fee-based program (available through certain financial intermediaries as Class A, F, I, or P share investments), you should discuss with your financial intermediary which class of shares is available to you and makes the most sense as an appropriate investment.

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 C shares for which no initial sales charge is paid. Because of the effect of class-based expenses, your choice also should depend on how much you plan to invest.

Investing for 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 shares you redeem after holding them for at least 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 12b-1 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.

Investing for the Longer Term. If you plan to invest more than $100,000 over the long term, Class A shares will likely be more advantageous than 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 each 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 may be available in whole or in part to Class A, B, and C shareholders, but not to Class F, I, or P shareholders. Other features (such as Systematic Withdrawal Plans) might not be advisable 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 redemptions during that year). See “Systematic Withdrawal Plan” under “Account Services and Policies” in the prospectus for more information about the 12% annual waiver of the CDSC for Class B and C shares. 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 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 C shares are subject.

7-5

How Do Payments Affect 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 Class B shares and the distribution fee for Class B and 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 a Fund and Class C shareholders. See “Financial Intermediary Compensation” in the prospectus.

What About Shares Offered Through Fee-Based Programs? The Fund may be offered as an investment option in fee-based programs. Financial intermediaries may provide some of the shareholder servicing and account maintenance services with respect to these accounts and their participants, including transfers of registration, dividend payee changes, and generation of confirmation statements, and may arrange for third parties to provide other investment or administrative services. Fee-based program participants generally pay an overall fee that, among other things, covers the cost of these services. These fees and expenses are in addition to those paid by the Fund, and could reduce your ultimate investment return in Fund shares. For questions about such accounts, contact your sponsor or other appropriate organization.

7-6

8 .
Purchases, Redemptions, Pricing, and Payments to Dealers

Pricing of Fund Shares. Information concerning how we value Fund shares is contained in the prospectus under “Account Services and Policies – Pricing of Fund Shares.”

Under normal circumstances, we calculate the NAV per share for each class of the Funds as of the close of the NYSE on each day that the NYSE is open for trading by dividing the total net assets of the class by the number of shares of the class outstanding at the time of calculation. The NYSE is closed on Saturdays and Sundays and on days when it observes the following holidays -- New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The NYSE may change its holiday schedule or hours of operation at any time.

Portfolio securities are valued 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 or foreign securities exchange, or on the NASDAQ National Market System are valued at the last sale price, or if there is no sale on that day, at the last bid, or, in the case of bonds, in the OTC market if that market more accurately reflects the market value of the bonds. Unlisted equity securities are valued at the last transaction price, or if there were no transactions that day, at the mean between the last bid and asked prices. OTC fixed income securities are valued at prices supplied by independent pricing services, which reflect broker-dealer-supplied valuations and electronic data processing techniques reflecting the mean between the bid and asked prices. The principal markets for non-U.S. securities and U.S. fixed income securities also generally close prior to the close of the NYSE. Consequently, values of non-U.S. investments and U.S. fixed income securities will be determined as of the earlier closing of such exchanges and markets unless the Fund prices such a security at its fair value. Securities for which market quotations are not available are valued at fair market value under procedures approved by the Board, as described in the prospectus.

NAV Purchases of Class A Shares. Our Class A shares may be purchased at NAV under the following circumstances:


(a)	purchases of $500,000 or more;

(b)	purchases made with dividends and distributions on Class A shares of another Eligible Fund (as defined in the prospectus);

(c)	purchases by employees of any consenting securities dealer having a sales agreement with Lord Abbett Distributor;

(d)	purchases made by or on behalf of financial intermediaries for clients that pay the financial intermediaries fees in connection with fee-based programs provided that the financial intermediaries or their trading agents have entered into special arrangements with a Fund and/or Lord Abbett Distributor specifically for such purchases;

(e)	purchases by each Lord Abbett-sponsored fund’s directors/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

(f)	purchases involving the concurrent sale of Class B or C shares of a Fund related to the requirements of a settlement agreement that the broker-dealer entered into with a regulatory body relating to share class suitability. These sales transactions will be subject to the assessment of any applicable CDSCs (although the broker-dealer may pay on behalf of the investor or reimburse the investor for any such CDSC), and any investor purchases subsequent to the original concurrent transactions will be at the applicable public offering price, which may include a sales charge.

Class A shares also may be purchased at NAV (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) by employees of our shareholder servicing agent, or (iv) by the trustees or custodians under any pension or profit-sharing plan or payroll deduction IRA established for the benefit of the directors/trustees, employees of Lord Abbett, or employees of our shareholder service agents. Shares are offered at NAV to these investors for the purpose of promoting goodwill with employees and others with whom Lord Abbett Distributor and/or the Funds have a business relationship.

In addition, Class A shares may be acquired without a front-end sales charge in certain exchange transactions. Please see “Exchanges” below.

8-1

Exchanges. To the extent offers and sales may be made in your state, you may exchange some or all of your shares of any class of a Fund for: (i) Lord Abbett-sponsored funds currently offered to the public with a sales charge (front-end, back-end or level); or (ii) Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund, Inc. (“Money Market Fund”). The exchange privilege will not be available with respect to any fund, the shares of which at the time are not available to new investors of the type requesting the exchange. Shareholders in other Lord Abbett-sponsored funds generally have the same right to exchange their shares for the corresponding class of a Fund’s shares.

In addition, shareholders who own any class of shares of an Eligible Fund may exchange such shares for a different class of shares of the same Eligible Fund without any sales charge (or CDSC), provided that (i) such shares are not subject to a CDSC and (ii) such exchange is necessary to facilitate the shareholder’s participation in a fee-based program sponsored by the financial intermediary that is the broker of record on the shareholder’s account that holds the shares to be relinquished as part of the exchange transaction. Likewise, shareholders who participate in a fee-based program sponsored by a financial intermediary and own (directly or beneficially) Class A shares that were purchased with or without a sales charge, Class F shares, or Class P shares may exchange such shares acquired through the shareholder’s participation in such fee-based program for Class A shares of the same Eligible Fund without incurring a sales charge (or a CDSC), provided that (i) such shares are not subject to a CDSC and (ii) the financial intermediary sponsoring the fee-based program is the broker of record on the shareholder’s account that will hold the Class A shares of the Eligible Fund received as a result of the exchange.

Each Fund is designed for long-term investors and is not designed to serve as a vehicle for frequent trading in response to short-term swings in the market. Each Fund reserves the right to modify, restrict, or reject any purchase order or exchange request if the Fund or Lord Abbett Distributor determines that it is in the best interest of the Fund and its shareholders. In addition, each Fund may revoke or modify the privilege for all shareholders upon 60 days’ written notice.

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.

An exchange transaction is based on the relative NAV of the shares being exchanged. The NAV, which normally is calculated each business day at the close of regular trading on the NYSE (typically 4:00 p.m. Eastern time each business day), will be determined after a Fund or its authorized agent receives your exchange order in proper form. Exchanges of Fund shares for shares of another fund generally will be treated as a sale of Fund shares and any gain on the transaction may be subject to federal income tax. 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.

No sales charges are imposed on exchanges, except in the case of exchanges out of Money Market Fund. Exchanges of Money Market Fund shares for shares of any Lord Abbett-sponsored fund (not including shares described under “Div-Move” below) are subject to a sales charge in accordance with the prospectus of that fund unless a sales charge (front-end, back-end or level) was paid on the initial investment in shares of a Lord Abbett-sponsored fund and those shares subsequently were exchanged for shares of Money Market Fund that are currently being exchanged. No CDSC will be charged on an exchange of shares of the same class between Lord Abbett-sponsored funds. Upon redemption of shares out of the Lord Abbett-sponsored funds, the applicable CDSC will be charged. Thus, if shares of a Lord Abbett-sponsored fund are tendered in exchange (“Exchanged Shares”) for shares of the same class of another fund and the Exchanged Shares are subject to a CDSC, the CDSC will carry over to the shares being acquired (including shares of Money Market Fund) (“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. Acquired Shares held in Money Market Fund that are subject to a CDSC will be credited with the time such shares are held in Money Market Fund.

Rights of Accumulation. As stated in the prospectus, Purchasers (as defined in the prospectus) may aggregate their investments in Class A, B, C, F, and P shares of any Eligible Fund so that the Purchaser’s current investment in such shares, plus the Purchaser’s new purchase of Class A shares of any Eligible Fund, may reach a level eligible for a discounted sales charge for such shares. Class I shares are not eligible to be combined with other share classes for purposes of calculating the applicable sales charge on Class A share purchases.

To the extent your financial intermediary is able to do so, the value of Class A, B, C, F, and P shares of Eligible Funds determined for the purpose of reducing the sales charge of a new purchase under the Rights of Accumulation will be calculated at the higher of: (1) the aggregate current maximum offering price of your existing Class A, B, C, F, and P shares

8-2

of Eligible Funds (“Market Value”) determined as of the time your new purchase order is processed; or (2) the aggregate amount you invested in such shares (including reinvestments of dividend and capital gain distributions but excluding capital appreciation) less any redemptions (“Investment Value”). Depending on the way in which the registration information is recorded for the account in which your shares are held, the value of your holdings in that account may not be eligible for calculation at the Investment Value. For example, shares held in accounts maintained by financial intermediaries in nominee or street name may not be eligible for calculation at Investment Value. In such circumstances, the value of the shares may be calculated at Market Value for purposes of Rights of Accumulation.

You should retain any information and account records necessary to substantiate the historical amounts you and any related Purchasers have invested in Eligible Funds. In certain circumstances, unless you provide documentation (or your financial intermediary maintains records) that substantiates a different Investment Value, your shares will be assigned an initial Investment Value for purposes of Rights of Accumulation. Specifically, Class A, B, C, F, and P shares of Eligible Funds acquired in calendar year 2007 or earlier will be assigned an initial Investment Value equal to the Market Value of those holdings as of the last business day of December 31, 2007. Similarly, Class A, B, C, F, and P shares of Eligible Funds transferred to an account with another financial intermediary will be assigned an initial Investment Value equal to the Market Value of such shares on the transfer date. Thereafter, the Investment Value of such shares will increase or decrease according to your actual investments, reinvestments, and redemptions. You must contact your financial intermediary or the Fund if you have additional information that is relevant to the calculation of the Investment Value of your holdings for purposes of reducing sales charges pursuant to the Rights of Accumulation.

Redemptions. A redemption order is in proper form when it contains all of the information and documentation required by the order form or otherwise by Lord Abbett Distributor or a Fund to carry out the order. If you have direct account privileges with the Fund, the Fund will require a guaranteed signature by an eligible guarantor on requests for redemption that exceed $100,000 (formerly $50,000). Accordingly, redemption requests may be submitted by telephone or online without signature guarantee for redemptions up to and including $100,000.

Redemptions may be suspended or payment postponed during any period in which any of the following conditions exist: the NYSE is closed or trading on the NYSE is restricted; an emergency exists as a result of which disposal by a Fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for a Fund to fairly determine the value of the net assets of its portfolio; or the SEC, by order, so permits. Redemptions, even when followed by repurchases, are taxable transactions for shareholders that are subject to U.S. federal income tax.

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 either 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 Plan (“SWP”). The SWP also is described in the prospectus. You may establish an SWP if you own or purchase uncertificated shares having a current offering price value of at least $10,000 in the case of Class A or C shares and $25,000 in the case of Class B shares. With respect to Class B and C shares, the CDSC will be waived on redemptions of up to 12% per year of the current 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 Funds 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. Because 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.

Purchases through Financial Intermediaries. The Funds and/or Lord Abbett Distributor have authorized one or more agents to receive on its behalf purchase and redemption orders. Such agents are authorized to designate other

8-3

intermediaries to receive purchase and redemption orders on behalf of the Funds or Lord Abbett Distributor. A Fund will be deemed to have received a purchase or redemption order when an authorized agent or, if applicable, an agent’s authorized designee, receives the order. The order will be priced at the Fund’s NAV next computed after it is received by the Fund’s authorized agent, or if applicable, the agent’s authorized designee. A financial intermediary may charge transaction fees on the purchase and/or sale of Fund shares.

Revenue Sharing and Other Payments to Dealers and Financial Intermediaries. As described in the prospectus, Lord Abbett or Lord Abbett Distributor, in its sole discretion, at its own expense and without cost to the Fund or shareholders, also may make payments to dealers and other firms authorized to accept orders for Fund shares (collectively, “Dealers”) in connection with marketing and/or distribution support for Dealers, shareholder servicing, entertainment, training and education activities for the Dealers, their investment professionals and/or their clients or potential clients, and/or the purchase of products or services from such Dealers. Some of these payments may be referred to as revenue sharing payments. As of the date of this SAI, the Dealers to whom Lord Abbett or Lord Abbett Distributor has agreed to make revenue sharing payments (not including payments for entertainment, and training and education activities for the Dealers, their investment professionals and/or their clients or potential clients) with respect to the Funds and/or other Lord Abbett Funds were as follows:

AIG Advisor Group, Inc.

Allstate Life Insurance Company

Allstate Life Insurance Company of New York

Ameriprise Financial Services, Inc.

Ascensus, Inc.

AXA Equitable Life Insurance Company

B.C. Ziegler and Company

Banc of America

Business Men’s Assurance Company of America/

RBC Insurance

Bodell Overcash Anderson & Co., Inc.

Cadaret, Grant & Co., Inc.

Cambridge Investment Research, Inc.

Charles Schwab & Co., Inc.

Citigroup Global Markets, Inc.

Commonwealth Financial Network

CRI Securities, LLC

Edward D. Jones & Co., L.P.

Family Investors Company

Fidelity Brokerage Services, LLC

Financial Network Investment Corporation (Cetera)

First Security Benefit Life Insurance and Annuity Company

First SunAmerica Life Insurance Company

First Allied Securities, Inc.

Genworth Life & Annuity Insurance Company

Genworth Life Insurance Company of New York

Genworth Financial Investment Services Inc. (Cetera)

Hartford Life and Annuity Insurance Company

Hartford Life Insurance Company

HighTower Holding LLC

Investacorp, Inc.

James I. Black & Co.

Janney Montgomery Scott LLC

Legg Mason Walker Wood Incorporated

Lincoln Financial Network (Lincoln Financial Advisors Corp.

& Lincoln Financial Securities Corp.)

Lincoln Life & Annuity Company of New York

Lincoln National Life Insurance Company

Linsco/Private Ledger Corp.

MassMutual Life Investors Services, Inc.

Merrill Lynch Life Insurance Company/ML Life
Insurance Company of New York (n/k/a Transamerica Advisors)

Merrill Lynch, Pierce, Fenner & Smith
Incorporated (and/or certain of its affiliates)

MetLife Securities, Inc.

Morgan, Keegan & Company, Inc.

Morgan Stanley Smith Barney, LLC

Multi-Financial Securities Corporation (Cetera)

Oppenheimer & Co. Inc.

National Planning Holdings, Inc.

Nationwide Investment Services Corporation

Pacific Life & Annuity Company

Pacific Life Insurance Company

Pershing, LLC

PHL Variable Insurance Company

Phoenix Life and Annuity Company

Phoenix Life Insurance Company

Primevest Financial Services, Inc. (Cetera)

Principal Life Insurance Company

Protective Life Insurance Company

RBC Capital Markets Corporation (formerly RBC Dain

Rauscher)

RBC Capital Markets, LLC

RBC Insurance d/b/a Liberty Life Insurance

Raymond James & Associates, Inc.

Raymond James Financial Services, Inc.

Securian Financial Services, Inc.

Securities America, Inc.

Security Benefit Life Insurance Company

SunAmerica Annuity Life Assurance Company

Sun Life Assurance Company of Canada

Sun Life Insurance and Annuity Company of New York

TIAA-CREF Individual & Institutional Services, LLC

TFS Securities, Inc.

Transamerica Advisors Life Insurance Company

Transamerica Advisors Life Insurance Company of New York

Triad Advisors, Inc.

UBS Financial Services Inc.

U.S. Bancorp Investments, Inc.

Wells Fargo Advisors

Wells Fargo Investments LLC

Woodbury Financial Services, Inc.

8-4

For more specific information about any revenue sharing payments made to your Dealer, you should contact your investment professional. See “Financial Intermediary Compensation” in the prospectus for further information.

Evelyn E. Guernsey, an Independent Director/Trustee of the Funds, owns outstanding shares of and was affiliated with J.P. Morgan Chase & Co., which (or subsidiaries of which) may receive recordkeeping payments from the Funds and/or other Lord Abbett Funds.

Redemptions in Kind. Under circumstances in which it is deemed detrimental to the best interests of each Fund’s shareholders to make redemption payments wholly in cash, each Fund may pay any portion of a redemption in excess of the lesser of $250,000 or 1% of a Fund’s net assets by a distribution in kind of readily marketable securities in lieu of cash.

8-5

9.
T axation of the Funds

Each Fund has elected, has qualified, and intends to continue to qualify for the special tax treatment afforded regulated investment companies under the Internal Revenue Code of 1986, as amended (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 IRS. If a Fund continues to qualify for such tax treatment afforded to a regulated investment company, 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 fails to so qualify, but is eligible for statutory relief, the Fund may be required to pay penalty taxes and/or dispose of certain assets in order to continue to qualify for such tax treatment. If the Fund is not eligible or if the Fund does not choose to avail itself of such relief, all of the Fund’s taxable income will be taxed to the Fund at regular corporate rates and when such income is distributed, such distributions will be further taxed at the shareholder level. Assuming a Fund continues to qualify for the favorable tax treatment afforded to 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.

Assuming that each Fund qualifies for the special tax treatment afforded to a regulated investment company, 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 excludible from gross income under Section 103(a) of the Code (“tax-exempt securities”), the Fund will qualify to pay “exempt-interest” dividends to its shareholders. Those dividends constitute the portion of aggregate dividends (excluding capital gains) as reported to you by each Fund, equal to the excess of the Fund’s excludible interest over certain amounts disallowed as deductions. Exempt-interest dividends paid by each Fund are generally exempt from regular federal income tax; however, the amount of such dividends must be reported on the recipient’s federal income tax return.

While each Fund endeavors to purchase only bona fide tax-exempt securities, there are risks that: (1) a security issued as tax-exempt may be reclassified by the IRS, or a state tax authority, as taxable and/or (ii) future legislative, administrative, or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free. Such reclassifications or actions could cause interest from a security to become taxable, possible retroactively, subjecting you to increased to liability. In addition, such reclassifications or actions could cause the value of a security, and therefore the value of a Fund to decline.

Each Fund (other than High Yield Municipal Bond Fund and AMT Free Municipal Bond Fund) may invest up to 20% of its net assets in certain “private activity bonds” that generate interest that constitute items of tax preference that are subject to the U.S. federal alternative minimum tax for individuals or entities that are subject to such tax. High Yield Municipal Bond Fund may invest up to 100% of its net assets in these private activity bonds. AMT Free Municipal Bond Fund anticipates that substantially all of its income will be exempt from the federal AMT and does not expect to invest in such private activity bonds. Exempt-interest dividends paid by each Fund may result in or increase a corporate shareholder’s liability for the federal alternative minimum tax, regardless of whether the dividends are a tax preference item.

All dividends, other than exempt-interest dividends, are taxable whether a shareholder takes them in cash or reinvests them in additional shares of a Fund. Each Fund may invest a portion of its portfolio in short-term taxable obligations and may engage in transactions generating gains or income which is not tax exempt, such as selling or lending portfolio securities, purchasing non-municipal securities, acquiring debt obligations at a market discount, or entering into options and futures transactions. Dividends paid by a Fund from such taxable net investment income or net realized short-term capital gains are taxable to you as ordinary income. Since none of the Fund’s income is derived primarily from sources that pay “qualified dividend income”, distributions from each Fund’s taxable net investment income generally will not qualify for taxation at the reduced tax rates available to individuals on qualified dividend income. In addition, the Funds generally do not expect that any of the Fund’s dividends will qualify for a dividend-received deduction that might otherwise be available to corporate shareholders.

Distributions paid by a Fund from its net realized long-term capital gains that are reported to you by the Fund as “capital gain dividends” are taxable to you as long-term capital gains, regardless of the length of time you have owned Fund shares. The maximum federal income 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) are taxed at capital gain rates for capital assets held for more than one year. Commencing in 2013, the applicable capital gain rate varies depending on the taxable income and status of the shareholder, but generally is 20% for individual shareholders with taxable income in excess of $400,00 (or $450,000 if married and file jointly) and 15% for individual shareholders with taxable income less than such amounts (unless such shareholders are in the 10% or 15% income tax brackets and meet

9-1

certain other conditions, in which case the applicable rate is 0%). You should also be aware that the benefits of the long-term capital gains rates may be reduced if you are subject to the alternative minimum tax.

While a Fund’s net capital losses for any year cannot be passed through to you, any such losses incurred by a Fund in a taxable year of the Fund commencing prior to December 23, 2010 can be carried forward for a period of up to eight years to offset the Fund’s capital gains in those years and any such losses incurred by a Fund in taxable years commencing on or after such date may be carried forward indefinitely to offset future capital gains of the Fund. Pursuant to a new ordering rule, however, net capital losses incurred in taxable years of a Fund beginning before December 23, 2010 may not be used to offset the Fund’s future capital gains until all net capital losses incurred in taxable years of the Fund beginning after December 22, 2010 have been utilized. To the extent capital gains are offset by such losses, they do not result in tax liability to a Fund and are not expected to be distributed to you as capital gain dividends. Distributions paid by a Fund that do not constitute dividends because they exceed the Fund’s current and accumulated earnings and profits will be treated as a return of capital and reduce the tax basis of your Fund shares. To the extent that such distributions exceed the tax basis of your Fund shares, the excess amounts will be treated as gain from the sale of the shares.

A new 3.8% Medicare tax is now imposed on the net investment income of certain U.S. individuals, estates and trusts whose income exceeds certain thresholds for taxable years beginning after December 31, 2012. For this purpose, “net investment income” does not include exempt-interest dividends, but generally does include taxable dividends (including capital gain dividends) and capital gains recognized from redemptions or exchanges of shares of mutual funds, such as the Funds. For U.S. individuals, this threshold generally will be exceeded if an individual has adjusted gross income that exceeds $200,000 (or $250,000 if the individual is married and files jointly). This 3.8% Medicare tax is in addition to the income taxes that are otherwise imposed on ordinary income and capital gains.

Ordinarily, you are required to take distributions by each Fund into account in the year in which they are made. However, a distribution declared as of a record date in October, November, or December of any year and paid during the following January is treated as received by shareholders on December 31 of the year in which it is declared. Each Fund will send you annual information concerning the tax treatment of dividends and other distributions paid to you by the Fund.

Redemptions and exchanges of Fund shares for shares of another fund generally are taxable events for shareholders that are subject to tax. In general, if Fund shares are sold, you will recognize gain or loss equal to the difference between the amount realized on the sale and your adjusted basis in the shares. Such gain or loss generally will be treated as long-term capital gain or loss if the shares were held for more than one year and otherwise generally will be treated as short-term capital gain or loss. 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 may be disallowed to the extent of the amount of any exempt-interest dividends received. However, this disallowance rule will not apply as long as each Fund continues to declare daily, and distribute monthly, exempt-interest dividends in an amount equal to 90% or more of its net tax-exempt interest. If your holding period is six months or less, any capital loss realized from the sale, exchange, or redemption of such shares, to the extent not previously disallowed, must be treated as long-term capital loss to the extent of any capital gain dividends received with respect to such shares. Commencing in 2013, capital gains recognized from redemptions of Fund shares generally will be included in the calculation of “net investment income” for purposes of the 3.8% Medicare tax applicable to certain U.S. individuals, estates and trusts as discussed above.

Losses on the sale of Fund shares also may be disallowed to the extent that within a period beginning 30 days before the date of the sale and ending 30 days after the date of the sale, you acquire other shares in the same Fund (including pursuant to reinvestment of dividends and/or capital gain distributions). In addition, if shares in a Fund that have been held for less than 91 days are redeemed and the proceeds are reinvested on or before January 31 of the calendar year following the year of the redemption in shares of the same Fund or another fund pursuant to the Reinvestment Privilege, or if shares in a Fund that have been held for less than 91 days are exchanged for the same class of shares in another fund at NAV pursuant to the exchange privilege, all or a portion of any sales charge paid on the shares that are redeemed or exchanged will not be included in the tax basis of such shares under the Code to the extent that a sales charge that would otherwise apply to the shares received is reduced.

Interest on indebtedness incurred by a shareholder to purchase or carry shares of a 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 a 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 advisors 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.

9-2

Futures contracts entered into by a Fund on certain securities, may cause the Fund to recognize gains or losses from marking-to-market even though such futures contracts may not have been performed or closed out. The tax rules applicable to these contracts may affect the characterization of some capital gains and losses realized by the Fund as long-term or short-term. Additionally, the Fund may be required to recognize gain if a futures contract, short sale or other transaction that is not subject to the mark-to-market rules is treated as a “constructive sale” of an “appreciated financial position” held by the Fund under Section 1259 of the Code.

Any net mark-to-market gains and/or gains from constructive sales also may have to be distributed to satisfy the distribution requirements for the Fund’s tax status even though the Fund may receive no corresponding cash amounts, possibly requiring the disposition of portfolio securities or borrowing to obtain the necessary cash. Losses on certain futures contracts and/or offsetting positions (portfolio securities or other positions with respect to which the Fund’s risk of loss is substantially diminished by one or more futures contracts) may also be deferred under the tax straddle rules of the Code, which may also affect the characterization of capital gains or losses from straddle positions and certain successor positions as long-term or short-term. Certain tax elections may be available that would enable the Fund to ameliorate some adverse effects of the tax rules described in this paragraph. The tax rules applicable to futures contracts and straddles may affect the amount, timing and character of the Fund’s income and gains or losses and hence of its distributions to you.

Certain investment practices that the Funds may utilize, such as investing in options, futures, interest rate swaps, credit swaps, total return swaps, and options on swaps and interest rate caps, floors and collars, may affect the amount, character and timing of the recognition of gains and losses by the Funds. Such transactions may in turn affect the amount and character of Fund distributions and may result in the distribution of taxable income to you.

The AMT Free Municipal Bond Fund and National Fund may invest up to 35%, High Yield Municipal Bond Fund may invest up to 100%, and each of the other Funds may invest up to 20%, of its net assets in debt obligations that are in the lowest rating categories or are unrated, including debt obligations of issuers not currently paying interest or who are in default. Investments in debt obligations that are at risk of or in default present special tax issues for a Fund. Tax rules are not entirely clear about issues such as when the Fund may cease to accrue interest, original issue discount or market discount, when and to what extent deductions may be taken for bad debts or worthless securities, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a workout context are taxable. These and other issues will be addressed by each Fund, in the event it invests in such securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a regulated investment company and does not become subject to U.S. federal income or excise tax.

If a Fund invests in certain pay-in-kind securities, zero coupon securities, deferred interest securities or, in general, any other securities with original issue discount (or with market discount if the Fund elects to include market discount in income currently), the Fund generally must accrue income on such investments for each taxable year, which generally will be prior to the receipt of the corresponding cash payments. However, each Fund must distribute, at least annually, all or substantially all of its taxable and tax-exempt income, including such accrued income, to shareholders to qualify as a regulated investment company under the Code and avoid U.S. federal income and excise taxes. Therefore, each Fund may have to dispose of its portfolio securities under disadvantageous circumstances to generate cash, or may have to borrow the cash, to satisfy distribution requirements.

Under Treasury regulations, if you are an individual and recognize a loss with respect to Fund shares of $2 million or more (if you are a corporation, $10 million or more) in any single taxable year (or greater amounts over a combination of years), you may be required to file a disclosure statement with the Internal Revenue Service. A shareholder who fails to make the required disclosure may be subject to substantial penalties.

You may be subject to a 28% withholding tax on reportable dividends, capital gain distributions, and redemption payments and exchanges (“backup withholding”). Generally, you will be subject to backup withholding if a Fund does not have your Social Security number or other certified taxpayer identification number on file, or, to the Fund’s knowledge, the number that you have provided is incorrect or backup withholding is applicable as a result of your previous underreporting of interest or dividend income. When establishing an account, you must certify under penalties of perjury that your Social Security number or other 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 shareholders who are subject to U.S. federal income tax, hold their shares as capital assets and are 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. tax purposes, estates the income of which is subject to U.S. federal income taxation regardless of its source, and trusts if a court within the U.S. 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. tax purposes (e.g., partnerships and disregarded entities) and that owns Fund shares generally will depend upon the status of the owner and the activities of the pass-through entity. Except as otherwise provided, this description does not address the special tax rules that may be applicable to particular

9-3

types of investors, such as financial institutions, insurance companies, securities dealers, or tax-exempt or tax-deferred plans, accounts or entities. 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 advisor regarding the U.S. and foreign tax consequences of the ownership of Fund shares, including the applicable rate of U.S. withholding tax on amounts treated as ordinary dividends from a Fund (other than certain dividends derived from short-term capital gains and qualified interest income of the Fund for taxable years of the Fund commencing prior to January 1, 2014, provided that the Fund chooses to report such dividends in a manner qualifying for such tax treatment), and the applicability of U.S. gift and estate taxes.

Under the Foreign Account Tax Compliance Act (“FATCA”), a Fund may be required to withhold 30% from payments of dividends and gross redemption proceeds by the Fund to (i) certain foreign financial institutions unless they agree to collect and disclose to the IRS (or in certain cases to their country of residence) information regarding their direct and indirect U.S. account holders, and (ii) certain other foreign entities unless they certify certain information about their direct and indirect U.S. owners. This withholding tax is scheduled to be phased in commencing on January 1, 2014 for payments made by a Fund on or after such date.

In order to avoid this withholding, non-exempt foreign financial institutions will have to enter into an agreement with the IRS (unless they are resident in a country that has entered into an Intergovernmental Agreement with the U.S. that provides for an alternative regime) stipulating that they will (1) provide the IRS with certain information about direct and indirect U.S. account holders (such as the name, address and taxpayer identification number of the holders), (2) will comply with verification and due diligence procedures with respect to the identification of U.S. accounts, (3) report to the IRS certain additional information with respect to U.S. accounts maintained by them, and (4) agree to withhold tax on certain payments made to non-compliant foreign financial institutions or to account holders who fail to provide the required information. Certain other foreign entities will need to provide the name, address, and taxpayer identification number of each substantial U.S. owner or a certification of no substantial U.S. ownership, unless certain exceptions apply. The scope of these requirements is potentially subject to material change and shareholders are urged to consult their tax advisers regarding the potential applicability of FATCA to their own situation.

The tax rules of the various states of the U.S. and their local jurisdictions with respect to distributions from the Funds can 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. However, as noted below, 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. The Funds intend to provide to you on an annual basis information to permit you to determine whether Fund dividends derived from interest on state and/or federal obligations may be excluded from state taxable income.

Because everyone’s tax situation is unique, you should consult your tax advisor regarding the treatment of distributions under the federal, state, local, and foreign 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 Fund – For the Fund to qualify to pay exempt-interest dividends for purposes of California personal income tax, at the close of each quarter of the Fund’s taxable year, at least 50% of the value of the Fund’s total assets must consist of California state or local obligations and/or federal obligations the interest from which is exempt from California personal income taxation. If a Fund qualifies to pay exempt-interest dividends, all distributions of the Fund attributable to interest income earned on such California state or local obligations or federal obligations for the taxable year of the Fund will be exempt from California personal income tax.

New Jersey Fund – For the Fund to qualify to pay exempt-interest dividends for purposes of New Jersey personal income tax (i) the Fund must have no investments other than interest-bearing obligations, obligations issued at a discount, cash and cash items, including receivables, and 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 for the taxable year; and (ii) at the close of each quarter of its tax year, at least 80% of the aggregate principal amount of all the Fund’s 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 or in other obligations that are statutorily free from state and local taxation under any other act of New Jersey or under the laws of the U.S. (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

9-4

thereto, and cash and cash items (including receivables) are excluded from the aggregate principal amount of the Fund’s investments. If the Fund qualifies to pay exempt-interest dividends, all distributions attributable to interest or gain on the obligations included in the 80% Test 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 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 that are attributable to interest earned by the Fund on (1) tax-exempt obligations issued by New York State or any political subdivision thereof (including New York City); (2) obligations of the U.S. and its possessions, but only if, at the close of each quarter of the Fund’s taxable year, at least 50% of the value of the Fund’s total assets consists of obligations of the U.S. and its possessions; or (3) obligations of any authority, commission, or instrumentality of the U.S. to the extent federal law exempts such interest from state income taxation.

9-5

10.
U nderwriter

Lord Abbett Distributor, a New York limited liability company and subsidiary of Lord Abbett, 90 Hudson Street, Jersey City, NJ 07302-3973, serves as the principal underwriter for the Funds. The Company 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 each Fund, and to make reasonable efforts to sell Fund shares on a continuous basis, so long as, in Lord Abbett Distributor’s judgment, a substantial distribution can be obtained by reasonable efforts.

For the last three fiscal years, Lord Abbett Distributor, as the Funds’ principal underwriter, received net commissions after allowance of a portion of the sales charge to independent dealers with respect to Class A shares of the Funds as follows:


	Fiscal Year Ended September 30,

	2012		2011		2010

Gross sales charge		8,818,687		5,005,076	$	3,903,397
Amount allowed to dealers		7,604,627		4,308,145	$	3,223,926

Net commission received by Lord Abbett Distributor		1,214,060		696,931	$	679,471

In addition, Lord Abbett Distributor, as the Funds’ principal underwriter, received the following compensation for the fiscal year ended September 30, 2012:


	Compensation on Redemption and Repurchase		Brokerage Commissions in Connection with Fund Transactions		Other Compensation*

Class A	$	0.00	$	0.00	$	1,142,865.71**
Class B	$	0.00	$	0.00	$	36.96
Class C	$	0.00	$	0.00	$	2,265.76**
Class F	$	0.00	$	0.00	$	129,883.11
Class P	$	0.00	$	0.00	$	0.00

* Other Compensation includes fees paid to Lord Abbett Distributor for services rendered with activities primarily intended to result in the sale of Fund shares.

** Excludes 12b-1 payments and CDSC fees received during the first year of the associated investment as repayment of fees advanced by Lord Abbett Distributor to broker/dealers at the time of sale.

10-1

11.
F inancial Statements

The financial statements incorporated herein by reference from the Funds’ 2012 annual report to shareholders have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

11-1

A PPENDIX A

Municipal Bond Ratings

Moody’s Investors Service (Long-Term Obligation Ratings)

Investment Grade

Aaa: Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.

Aa: Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.

A: Obligations rated A are considered upper-medium grade and are subject to low credit risk.

Baa: Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.

Below Investment Grade

Ba: Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.

B: Obligations rated B are considered speculative and are subject to high credit risk.

Caa: Obligations rated Caa are judged to be speculative, of poor standing and are subject to very high credit risk.

Ca: Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.

C: Obligations rated C are the lowest rated class and are typically in default, with little prospect of recovery of principal and interest.

Note : Moody’s appends the following numerical modifiers to each generic rating classification from Aa through Caa: modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; modifier 2 indicates a mid-range ranking; and modifier 3 indicates that the obligation ranks in the lower end of its generic rating category. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms. By their terms, hybrid securities allow for the omission of scheduled dividends, interest, or principal payments, which can potentially result in impairment if such an omission occurs. Hybrid securities may also be subject to contractually allowable write-downs of principal that could result in impairment. Together with the hybrid indicator, the long-term obligation rating assigned to a hybrid security is an expression of the relative credit risk associated with the security.

Standard & Poor’s (“S&P”) (Long-Term Issue Credit Ratings)

Investment Grade

AAA: An obligation rated AAA has the highest rating assigned by S&P. 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 to a 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 an obligation in the higher-rated categories. However, the obligor’s capacity to meet its financial commitment is still strong.

BBB: An obligation rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

A-1

Below Investment Grade

BB, B, CCC, CC, C: Obligations rated BB, B, CCC, CC and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and C the highest degree of speculation. While these obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.

BB: An obligation rated BB is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.

B: An obligation rated B is more vulnerable to nonpayment than obligations rated BB, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation.

CCC: An obligation rated CCC is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.

CC: An obligation that is rated CC is currently highly vulnerable to nonpayment.

C: The C rating is assigned to obligations that are currently highly vulnerable to nonpayment, obligations that have payment arrearages allowed by the terms of the documents, or obligations of an issuer that is the subject of a bankruptcy petition or similar action which have not experienced a payment default. Among others, the C rating may be assigned to subordinated debt, preferred stock or other obligations on which cash payments have been suspended in accordance with the instrument’s terms or when preferred stock is the subject of a distressed exchange offer, whereby some or all of the issuer is either repurchased for an amount of cash or replaced by other instruments having a total value that is less than par.

D: An obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the date due, unless S&P believes that such payments will be made within five business days, irrespective of any grace period. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on the obligation are jeopardized. An obligation’s rating is lowered to a D rating upon completion of a distressed exchange offer, whereby some or all of the issue is either repurchased for an amount of cash or replaced by other instruments having a total value that is less than par.

NR: This indicates that no rating has been requests, that there is insufficient information on which to base a rating, or that S&P does not rate a particular obligation as a matter of policy.

Note: The ratings from “AA” to “CCC” may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

Fitch Ratings (Public Finance Obligations — Long-Term Rating Scales)

Investment Grade

AAA: Highest credit quality. AAA ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be affected by foreseeable events.

AA: Very high credit quality. AA ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

A-2

A: High credit quality. A ratings denote a expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.

BBB: Good credit quality. BBB ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse changes in business or economic conditions are more likely to impair this capacity. This is the lowest investment grade category.

Below Investment Grade

BB: Speculative. BB ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists which supports the servicing of financial commitments. Securities rated in this category are not investment grade.

B: Highly speculative. B ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment.

CCC: Substantial credit risk. CCC ratings indicate that default is a real possibility.

CC: Very high levels of credit risk. CC ratings indicate that default of some kind appears probable.

C: Exceptionally high levels of credit risk. C ratings signal that default appears imminent or inevitable.

D: Default. D ratings indicate a default. Default is generally defined as one of the following:


	•	Failure to make payment of principal and/or interest under the contractual terms of the rated obligation;
	•	The bankruptcy filings, administration, receivership, liquidation or other winding-up or cessation of the business of an issuer/obligor; or
	•	The coercive exchange of an obligation where creditors were offered securities with diminished structural or economic terms compared with the existing obligation.

Notes : In the case of structured and project finance, while the ratings do not address the loss severity given default of the rated liability, loss severity assumptions on the underlying assets are nonetheless typically included as part of the analysis. Loss severity assumptions are used to derive pool cash flows available to service the rated liability. The suffix “sf” denotes an issue that is a structured finance transaction. For an explanation of how Fitch determines structured finance ratings, please see the criteria available at www.Fitchratings.com . In the case of public finance, the ratings do not address the loss given default of the rated liability, focusing instead on the vulnerability to default of the rated liability. The modifiers “+” or “-” may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the ‘AAA’ Long-Term Rating category, or categories below B.

Municipal Short-Term Debt Obligation Ratings

Moody’s Investors Service

Investment Grade

MIG 1: This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing.

MIG 2: This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group.

MIG 3: This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well established.

Below Investment Grade

A-3

SG: This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.

Standard & Poor’s

SP-1: Issues carrying this designation have a strong capacity to pay principal and interest. Issues determined to possess a very strong capacity to pay debt service are given a “plus” (+) designation.

SP-2: Issues carrying this designation have a satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the terms of the notes.

SP-3: Issues carrying this designation have a speculative capacity to pay principal and interest.

Short-Term Debt Ratings

Moody’s Investors Service

P-1 (Prime-1): Issuers (or supporting institutions) so rated have a superior ability to repay short-term debt obligations.

P-2 (Prime-2): Issuers (or supporting institutions) so rated have a strong ability to repay short-term debt obligations.

P-3 (Prime-3): Issuers (or supporting institutions) so rated have an acceptable ability to repay short-term debt obligations.

NP (Not Prime): Issuers (or supporting institutions) so rated do not fall within any of the Prime rating categories.

Standard & Poor’s

A-1: A short-term obligation rated A-1 is rated in the highest category by S&P. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitment on these obligations is extremely strong.

A-2: A short-term obligation rated A-2 is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitments on the obligation is satisfactory.

A-3: A short-term obligation rated A-3 exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

B: A short-term obligation rated B is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties which could lead to the obligor’s inadequate capacity to meet its financial commitments.

C: A short-term obligation rated C is currently vulnerable to nonpayment and is dependent on favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation.

D: A short-term obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the due date, unless S&P believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.

Fitch Ratings

F-1: Highest short term credit quality. Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added “+” to denote any exceptionally strong credit feature.

A-4

F-2: Good short-term credit quality. A good intrinsic capacity for timely payment of financial commitments.

F-3: Fair short-term credit quality. The intrinsic capacity for timely payment of financial commitments is adequate.

B: Speculative short-term credit quality. Minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near-term adverse changes in financial and economic conditions.

C: High short-term default risk. Default is a real possibility.

RD: Restricted default. Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Applicable to entity ratings only.

D: Default. Indicates a broad-based default event for an entity, or the default of a short-term obligation.

A-5

A PPENDIX B

RISK FACTORS REGARDING INVESTMENTS IN PUERTO RICO, CALIFORNIA, NEW JERSEY AND NEW YORK 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, including news reports, state budgetary and financial analyses, and credit analyses prepared by bond rating agencies. The Funds have not verified any of this information.

PUERTO RICO BONDS

As of January 8, 2013, Standard & Poor’s rating on the Commonwealth’s general obligation debt was “BBB”, and Moody’s Investor Service (“Moody’s”) rated the general obligation bonds “Baa3”. Standard & Poor’s and Moody’s each designate a negative outlook for the Commonwealth’s general obligations.

While Puerto Rico has taken significant steps toward fiscal stabilization, the Commonwealth continues to face significant fiscal challenges, including a multi-year trend of chronic budget deficits, high debt levels, a protracted recession, continuing high unemployment, and low workforce participation. The Commonwealth also suffers from a seriously under-funded pension system with no clear plan to address pension reform. Additionally, according to the ratings agencies, the Commonwealth’s track record of poor budget controls and high poverty levels compared to the U.S. average present ongoing challenges. Although Puerto Rico has implemented significant measures to deal with the Commonwealth’s budgetary gaps and economic challenges, including significant expenditure controls and revenue enhancement measures, the Commonwealth’s ratings reflect an economy in recession since 2006, limited economic activity, lower-than-estimated revenue collections, lackluster revenue growth, high government debt levels relative to the size of the economy, structural budget gaps, high spending and other potential fiscal challenges. Significant job losses, a declining population, potential expenses and delays implementing budget solutions arising from the litigation and determination of various ongoing cases, recession in the U.S. economy, the loss or reduction in the flow of federal funds, contraction in the manufacturing and construction sectors, and continued reliance on capital markets for refinancing of a heavy debt burden could further heighten the risks associated with the Commonwealth’s economy. Fitch suggests that a new gubernatorial administration, which assumed office in January 2013, must continue to implement fiscal reforms initiated by the outgoing administration in order for the ratings agencies to maintain their current ratings of the Commonwealth’s debt.

The Constitution of Puerto Rico limits the direct obligations of the Commonwealth evidenced by full faith and credit bonds or notes but establishes a first priority lien on revenues for general obligations and Commonwealth-guaranteed debt.

CALIFORNIA BONDS

As of January 8, 2013, California’s general obligation debt was assigned a rating of A1 by Moody’s and A- by Standard & Poor’s. Moody’s assigns an outlook of stable to the state’s debt, while Standard & Poor’s designates an outlook of positive.

California continues to face moderate long-term economic prospects with highly volatile revenue streams, particularly from sales and income taxes, a sustained high unemployment rate that is above the national rate, and a weak housing market. California’s ongoing fiscal challenges include high debt levels, heavy reliance on borrowing and non-recurring measures that are not available for future fiscal years to fund the state’s deficits, and large retiree benefit and pension obligations. While the Fiscal Year 2013 budget reflects increased income tax revenue as a result of recently passed Proposition 30 (November 2012), the budget contains a number of optimistic revenue assumptions, including $3.2 billion of general fund savings from the dissolution of the redevelopment agencies, $400 million in health care and human services savings that require federal administrative consent, and $500 million in revenue assumed from the auction of cap and trade permits.. The state has operated under budget deficits during recent years, and structural deficits may continue depending on revenue collection and the scope of proposed spending initiatives.. Recent budgetary actions to address the

B-1

deficit have involved significant expenditure reductions, increased borrowing from state and local governments, and one-time measures that are not available for future fiscal years and may weaken cash flows.

The state has a highly progressive personal income tax structure and taxes capital gains at the same rate as other income. As a result, a large portion of the taxes received are paid by a small portion of high-income taxpayers, which leads to a higher level of economic and revenue volatility relative to other states. Additionally, local governments derive revenue from real-estate-based sources, including property taxes and recording taxes and fees when properties transfer. The continued weakness in the real estate market poses a challenge for cities, counties, and other governmental units. Although the California’s liquidity position has strengthened in the last two years after weakness in fiscal 2009 and 20010, the state’s structural imbalance remains very large, and in recent years the state has only managed to solve budget gaps by deferring certain mandatory payments, such as education funding.

Constitutional and political constraints on the state’s budgetary and financial flexibility and ability to deal with financial crisis, including a two-thirds legislative vote required to pass the state budget (which must be in balance) and to raise revenues, and voter approval required for issuing general obligation and deficit bonds, often delay the budget and mid-year budget amendments. Proposition 1A (approved in November 2004) limits the state’s ability to borrow local governments’ property tax revenues and requires repayment by June 30, 2013, and Proposition 98 imposes funding requirements for schools and results in additional funding burdens on the state if local property taxes decline. Proposition 26 (approved in November 2010) expanded the definition of a tax to include certain fees and charges, broadening the scope of revenue generating tools that require a two-thirds legislative vote. These propositions impose important liabilities on the state and may further hamper the state’s ability to enact a realistic and timely budget. Additionally, Constitutional provisions establish priority payments for education and limit the state’s ability to spend proceeds from certain tax revenues and fees. Various constitutional and statutory provisions also may result in limits to and decreases in state and local revenues, and thus affect the ability of California municipal bond issuers to meet their financial obligations. Future amendments to the California Constitution or statutory changes also may affect the ability of the state or local issuers to repay their obligations.

NEW JERSEY BONDS

As of January 8, 2013, Moody’s gives New Jersey a general obligation bond rating of Aa3, and Standard & Poor’s provides a rating of AA-. Moody’s assigns a stable outlook to the state’s general obligation debt, while Standard & Poor’s downgraded its outlook to negative from stable in September 2012, citing New Jersey’s continued reliance on one-time measures to offset revenue shortfalls and significant underfunded pension and other post-employment benefit liabilities.

In recent years, New Jersey’s debt levels have increased and are above historical levels. According to Moody’s, New Jersey has the fourth highest net debt per capita in the nation, and the state suffers from high unemployment compared to the national average.

The state continues to face significant budget shortfalls due in part to lower-than-expected state revenue collections, an increase in demand for state services, and significant pension funding obligations. The 2013 budget remains structurally unbalanced, and continues to rely on nonrecurring revenues, debt restructuring, and optimistic revenue assumptions. Analysts also indicate that the state’s creditworthiness is subject to the following weaknesses: a large unfunded pension liability; significant other post-employment benefit obligations; and an above-average debt burden. The economic effects of Superstorm Sandy, which made direct landfall on the New Jersey shore in October 2012, are not yet fully known, and recovery efforts in the wake of the storm could significantly impede the state’s budgetary rebalancing initiatives. Standard & Poors suggests that Superstorm Sandy has already affected revenue collection for Fiscal Year 2013.

New Jersey has depleted the funds it had reserved for budgetary shortfalls and continues to rely on non-recurring revenues, leaving the state with a sizable structural imbalance. New Jersey’s budget also relies on income and sales taxes, which are sensitive to economic conditions, including the rising unemployment and compensation cutbacks. Job losses in the state’s biggest sectors, including the financial services, professional and business services, construction, manufacturing, trade, transportation and utilities industries, are constraining employment growth. Further downturns in these sectors could adversely affect the state’s economy, and Moody’s has projected that New Jersey’s job growth will rank 36 ^th in the country through 2016. According to Standard & Poor’s credit analysts, these circumstances have caused the state to suffer a “muted” recovery from the national recession.

B-2

State law and the New Jersey Constitution restrict appropriations. Statutory or legislative restrictions may adversely affect a municipality’s or any other bond-issuing authority’s ability to repay its obligations. The New Jersey Supreme Court rejected a legal challenge to the constitutionality of the practice of issuing certain contract bonds without voter approval. Contract bonds, a significant portion of the state’s outstanding debt obligations, differ from general obligation bonds in that contract bonds are not backed by the full faith and credit of the state, but by annual appropriations. In November 2008, New Jersey voters approved an amendment to the Constitution, which provides that the state may not issue bonds that are not backed by a dedicated revenue source without voter approval.

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 an 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 local units’ issuance of debt by limiting the amount of tax anticipation notes that they may issue and requiring their repayment within 120 days of the end of the fiscal year (not later than June 30 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 for such entities, with certain exceptions.

NEW YORK BONDS

Moody’s general obligation bond rating for New York is Aa2 and Standard & Poor’s provides a rating of AA. Moody’s gives the state’s credit a stable outlook, while Standard & Poor’s revised its outlook to positive from stable in August 2012, citing restraint in school aid and Medicaid growth and lowered projected future year general fund budget gaps. Nonetheless, due to New York’s heavy reliance on volatile income tax payments and its high exposure to the securities industry employment, the state’s economy remains vulnerable to adverse investment market conditions. In addition, the economic effects of Superstorm Sandy, which significantly damaged parts of New York City and Long Island in October 2012, are not yet fully known, and recovery efforts in the wake of the storm could impede the state’s budgetary rebalancing initiatives.

Credit rating agency analysts have indicated that the state’s economy also has inherent vulnerability based on the significant geographic disparities between the upstate and downstate areas’ economic performance, and the heavy reliance on the finance and insurance industries in New York City, which are at risk of slowing recovery and potential disruptions related to the Eurozone debt crisis. Unfunded post-employment benefit obligations are estimated to be at least $59.7 billion for state employees, along with $12.4 billion for the state university which will be a source of budget pressure in the future. The level of these unfunded liabilities may have increased since the last valuation date, and because the state funds its post-employment benefits on a pay-as-you-go basis, unfunded liabilities are projected to grow higher.

Tax-supported debt has increased in the last several years. According to Moody’s, New York is the fifth highest in the nation on a per capita basis. The state has authorized short term borrowing and is expected to continue to utilize this option, although Standard & Poors suggests that the state’s cash flow management has improved over the past year. Additionally, New York relies heavily on economic growth downstate, as well as personal income taxes, tourism, and the housing market, which are sensitive to economic conditions and may be slower to recover than the nation as a whole.

The state’s authorities (i.e., government agencies) 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. Although the state has legal flexibility to cut costs, analysts have suggested that political difficulty could hinder budget enactment or midyear gap closing when cuts in politically favored programs are proposed.

B-3

A PPENDIX C

FUND PORTFOLIO INFORMATION RECIPIENTS

The following is a list of the third parties that are eligible to receive portfolio holdings or related information pursuant to ongoing arrangements under the circumstances described above under Investment Policies – Policies and Procedures Governing Disclosure of Portfolio Holdings:


	Portfolio Holdings*

Abel/Noser Corp.		Monthly
Base-Two Investment Systems, Inc.		Daily
Becker, Burke Associates		Monthly
Berthel Schutter		Monthly
Bloomberg L.P.		Daily
Callan Associates Inc.		Monthly
Cambridge Associates LLC		Monthly
Citigroup/The Yield Book, Inc.		Daily
CJS Securities, Inc.		Daily
CL King & Associates		Monthly
Concord Advisory Group Ltd.		Monthly
CTVglobemedia f/k/a Bell GlobeMedia Publishing Co.		Monthly
Curcio Webb		Monthly
Deloitte & Touche LLP		As Requested
Edward D. Jones & Co., L.P.		Monthly
Evaluation Associates, LLC		Monthly
FactSet Research Systems, Inc.		Daily
Financial Model Co. (FMC)		Daily
Hartland & Co.		Monthly
Institutional Shareholder Services, Inc. (ISS)		Daily
Investment Technology Group (ITG)		Daily
Jeffrey Slocum & Associates, Inc.		Monthly
JP Morgan Securities, Inc.		Monthly
Lipper Inc., a Reuters Company		Monthly
Longbow Research		Monthly
Merrill Lynch, Pierce, Fenner & Smith, Incorporated		Monthly
Morningstar Associates, Inc., Morningstar, Inc.		Daily
MSCI Barra		Daily
Muzea Insider Consulting Services		Weekly
Nock, Inc.		Daily
Pierce Park Group		Monthly
Reuters America LLC		Daily
Rocaton Investment Advisors, LLC		Monthly
Rogerscasey		Monthly
SG Constellation LLC		Daily
State Street Corporation		Daily
Sungard Expert Solutions, Inc.		Daily
The Marco Consulting Group		Monthly
Towers Watson Investment Services, Inc. f/k/a Watson Wyatt Worldwide		Monthly
Wall Street Source		Daily

C-1


	Portfolio Holdings*

Wilmer Cutler Pickering Hale and Dorr LLP		As Requested

____________________

* Each Fund may provide its portfolio holdings to (a) third parties that render services to the Fund relating to such holdings (i.e., pricing vendors, ratings organizations, custodians, external administrators, independent registered public accounting firms, counsel, etc.) as appropriate to the service being provided to the Fund, on a daily, monthly, calendar quarterly or annual basis, and (b) third party consultants on a daily, monthly or calendar quarterly basis for the purpose of performing their own analyses with respect to the Fund within one day following each calendar period end.

C-2

A PPENDIX D

LORD, ABBETT & CO. LLC

PROXY VOTING POLICIES AND PROCEDURES


Introduction


Under the Investment Advisers Act of 1940, as amended, Lord, Abbett & Co. LLC (“Lord Abbett” or “we”) acts as a fiduciary that owes each of its clients duties of care and loyalty with respect to all services undertaken on the client’s behalf, including proxy voting. This means that Lord Abbett is required to vote proxies in the manner we believe is in the best interests of each client, including the Lord Abbett Funds (the “Funds”) and their shareholders. We take a long-term perspective in investing our clients’ assets and employ the same perspective in voting proxies on their behalf. Accordingly, we tend to support proxy proposals that we believe are likely to maximize shareholder value over time, whether such proposals were initiated by a company or its shareholders.

Proxy Voting Process Overview


Lord Abbett has a Proxy Group within its Operations Department (the “Proxy Group”) that oversees proxy voting mechanics on a day-to-day basis and provides Lord Abbett’s Proxy Policy Committee (the “Proxy Policy Committee”) and Investment Department personnel with information regarding proxy voting. The Proxy Policy Committee consists of Lord Abbett’s Chief Investment Officer, Director of Domestic Equity Portfolio Management, Director of International Equity, Director of Domestic Equity Research, Chief Administrative Officer for the Investment Department, and General Counsel. Voting decisions are made by the Investment Department in accordance with these policies and procedures and are carried out by the Proxy Group.

Lord Abbett has retained an independent third party service provider (the “Proxy Advisor”) to analyze proxy issues and recommend how to vote on those issues, and to provide assistance in the administration of the proxy process, including maintaining complete proxy voting records. ¹ While Lord Abbett takes into consideration the information and recommendations of the Proxy Advisor, Lord Abbett votes all proxies based on its own proxy voting policies, including Lord Abbett’s conclusions regarding the best interests of the Funds, their shareholders, and other advisory clients, rather than basing decisions solely on the Proxy Advisor’s recommendations.

Lord Abbett has implemented the following three-pronged approach to the proxy voting process:

	•	In cases where we deem any client’s position in a company to be material, ² the relevant investment team is responsible for determining how to vote the security. Once a voting



¹	Lord Abbett currently retains Institutional Shareholder Services Inc. as the Proxy Advisor.
²	We presently consider a position in a particular company to be material if: (1) it represents more than 1% of any client’s portfolio holdings and all clients’ positions in the company together represent more than 1% of the company’s outstanding shares; or (2) all clients positions in the company together represent more than 5% of the company’s outstanding shares. For purposes of determining materiality, we exclude shares held by clients with respect to which Lord Abbett does not have authority to vote proxies. We also exclude shares with respect to which Lord Abbett’s vote is restricted or limited due to super-voting share structures (where one class of shares has super-voting share structures (where one class of shares has super-voting rights that effectively disenfranchise other classes of shares), vote limitation policies, and other similar measures. This definition of materiality is subject to change at our discretion.

D-1


		decision has been made, the investment team provides instructions to the Proxy Group, which is responsible for submitting Lord Abbett’s vote.

	•	In cases where we deem all clients’ positions in a company to be non-material, the Chief Administrative Officer for the Investment Department is responsible for determining how to vote the security. The Chief Administrative Officer may seek guidance from the relevant investment team, the Proxy Policy Committee or any of its members, the Proxy Advisor, or other sources to determine how to vote. Once a voting decision has been made, the Chief Administrative Officer provides instructions to the Proxy Group, which is responsible for submitting Lord Abbett’s vote.

	•	Lord Abbett has identified certain types of proxy proposals that it considers purely administrative in nature and as to which it always will vote in the same manner. The Proxy Group is authorized to vote on such proposals without receiving instructions from the Investment Department, regardless of the materiality of any client’s position. Lord Abbett presently considers the following specific types of proposals to fall within this category: (1) proposals to change a company’s name, as to which Lord Abbett always votes in favor; (2) proposals regarding formalities of shareholder meetings (namely, changes to a meeting’s date, time, or location), as to which Lord Abbett always votes in favor; and (3) proposals to allow shareholders to transact other business at a meeting, as to which Lord Abbett always votes against.

When multiple investment teams manage one or more portfolios that hold the same voting security, the investment team that manages the largest number of shares of the security will be considered to have the dominant position and Lord Abbett will vote all shares on behalf of all clients that hold the security in accordance with the vote determined by the investment team with the dominant position.


Conflicts of Interest


Lord Abbett is an independent, privately held firm with a singular focus on the management of money. Although Lord Abbett does not face the conflicts of interest inherent in being part of a larger financial institution, conflicts of interest nevertheless may arise in the proxy voting process. Such a conflict may exist, for example, when a client’s account holds shares of a company that also is a client of Lord Abbett. We have adopted safeguards designed to ensure that conflicts of interests are identified and resolved in our clients’ best interests rather than our own. These safeguards include, but are not limited to, the following:

	•	Lord Abbett has implemented special voting measures with respect to companies for which one of the Funds’ independent directors/trustees also serves on the board of directors or is a nominee for election to the board of directors. If a Fund owns stock in such a company, Lord Abbett will notify the Funds’ Proxy Committees3 and seek voting instructions from the Committees only in those situations where Lord Abbett proposes not to follow the Proxy Advisor’s recommendations. In these instances, if applicable, the independent



3	The Boards of Directors and Trustees of the Funds have delegated oversight of proxy voting to separate Proxy Committees comprised solely of independent directors and/or trustees, as the case may be. Each Proxy Committee is responsible for, among other things: (1) monitoring Lord Abbett’s actions in voting securities owned by the related Fund; (2) evaluating Lord Abbett’s policies in voting securities; and (3) meeting with Lord Abbett to review the policies in voting securities, the sources of information used in determining how to vote on particular matters, and the procedures used to determine the votes in any situation where there may be a conflict of interest.

D-2


		director/trustee will abstain from any discussions by the Funds’ Proxy Committees regarding the company.

	•	Lord Abbett also has implemented special voting measures with respect to companies that have a significant business relationship with Lord Abbett (including any subsidiaries of such companies). For this purpose, a “significant business relationship” means: (1) a broker dealer firm that is responsible for one percent or more of the Funds’ total dollar amount of shares sold for the last 12 months; (2) a firm that is a sponsor firm with respect to Lord Abbett’s separately managed account business; (3) an institutional account client that has an investment management agreement with Lord Abbett; (4) an institutional investor that, to Lord Abbett’s knowledge, holds at least $5 million in shares of the Funds; and (5) a retirement plan client that, to Lord Abbett’s knowledge, has at least $5 million invested in the Funds. If a Fund owns stock in such a company, Lord Abbett will notify the Funds’ Proxy Committees and seek voting instructions from the Committees only in those situations where Lord Abbett proposes not to follow the Proxy Advisor’s recommendations.

Proxy Voting Guidelines


A general summary of the guidelines that we normally follow in voting proxies appears below. These voting guidelines reflect our general views. We reserve the flexibility to vote in a manner contrary to our general views on particular issues if we believe doing so is in the best interests of our clients, including the Funds and their shareholders. Many different specific types of proposals may arise under the broad categories discussed below, and it is not possible to contemplate every issue on which we may be asked to vote. Accordingly, we will vote on proposals concerning issues not expressly covered by these guidelines based on the specific factors that we believe are relevant.

A.	Auditors – Auditors are responsible for examining, correcting, and verifying the accuracy of a company’s financial statements. Lord Abbett believes that companies normally are in the best position to select their auditors and, therefore, we generally support management’s recommendations concerning the ratification of the selection of auditors. However, we may evaluate such proposals on a case-by-case basis due to concerns about impaired independence, accounting irregularities, or failure of the auditors to act in shareholders’ best economic interests, among other factors we may deem relevant.

B.	Directors

	1.	Election of directors – The board of directors of a company oversees all aspects of the company’s business. Companies and, under certain circumstances, their shareholders, may nominate directors for election by shareholders. Lord Abbett believes that the independent directors currently serving on a company’s board of directors (or a nominating committee comprised of such independent directors) generally are in the best position to identify qualified director nominees. Accordingly, we normally vote in accordance with management’s recommendations on the election of directors. In evaluating a director nominee’s candidacy, however, Lord Abbett may consider the following factors, among others: (1) the nominee’s experience, qualifications, attributes, and skills, as disclosed in the company’s proxy statement; (2) the composition of the board and its committees; (3) whether the nominee is independent of company management; (4) the nominee’s board meeting attendance; (5) the nominee’s history of representing shareholder interests on the company’s board or other boards; (6) the nominee’s investment in the company; (7) the company’s long-term performance relative to a market index; and (8) takeover activity. In

D-3


		evaluating a compensation committee nominee’s candidacy, Lord Abbett may consider additional factors including the nominee’s record on various compensation issues such as tax gross-ups, severance payments, options repricing, and pay for performance, although the nominee’s record as to any single compensation issue alone will not necessarily be determinative. Lord Abbett may withhold votes for some or all of a company’s director nominees on a case-by-case basis.

	2.	Majority voting – Under a majority voting standard, director nominees must be elected by an affirmative majority of the votes cast at a meeting. Majority voting establishes a higher threshold for director election than plurality voting, in which nominees who receive the most votes are elected, regardless of how small the number of votes received is relative to the total number of shares voted. Lord Abbett generally supports proposals that seek to adopt a majority voting standard.

	3.	Board classification – A “classified” or “staggered” board is a structure in which only a portion of a company’s board of directors (typically one-third) is elected each year. A company may employ such a structure to promote continuity of leadership and thwart takeover attempts. Lord Abbett generally votes against proposals to classify a board, absent special circumstances indicating that shareholder interests would be better served by such a structure. In evaluating a classified board proposal, Lord Abbett may consider the following factors, among others: (1) the company’s long-term strategic plan; (2) the extent to which continuity of leadership is necessary to advance that plan; and (3) the need to guard against takeover attempts.

	4.	Independent board and committee members – An independent director is one who serves on a company’s board but is not employed by the company or affiliated with it in any other capacity. While company boards may apply different standards in assessing director independence, including any applicable standards prescribed by stock exchanges and the federal securities laws, a director generally is determined to qualify as independent if the director does not have any material relationship with the company (either directly or indirectly) based on all relevant facts and circumstances. Material relationships can include employment, business, and familial relationships, among others. Lord Abbett believes that independent board and committee membership often helps to mitigate the inherent conflicts of interest that arise when a company’s executive officers also serve on its board and committees. Therefore, we generally support the election of board or committee nominees if such election would cause a majority of a company’s board or committee members to be independent. However, a nominee’s effect on the independent composition of the board or any committee is one of many factors Lord Abbett considers in voting on the nominee and will not necessarily be dispositive.

	5.	Independent board chairman – Proponents of proposals to require independent board chairmen (formerly often referred to as “separation of chairman and chief executive officer” proposals) seek to enhance board accountability and mitigate a company’s risk-taking behavior by requiring that the role of the chairman of the company’s board of directors be filled by an independent director. We generally vote with management on proposals that call for independent board chairmen. We may vote in favor of such proposals on a case-by-case basis, despite management opposition, if we believe that a company’s governance structure does not promote independent oversight through other means, such as a lead director, a board composed of a majority of independent directors, and/or independent board committees. In evaluating independent chairman proposals, we will focus in particular on the presence of a lead director, which is an independent director designated by

D-4


		a board with a non-independent chairman to serve as the primary liaison between company management and the independent directors and act as the independent directors’ spokesperson.

C.	Compensation and Benefits

	1.	General – In the wake of recent corporate scandals and market volatility, shareholders increasingly have scrutinized the nature and amount of compensation paid by a company to its executive officers and other employees. Lord Abbett believes that because a company has exclusive knowledge of material information not available to shareholders regarding its business, financial condition, and prospects, the company itself usually is in the best position to make decisions about compensation and benefits. Accordingly, we generally vote with management on such matters. However, we may oppose management on a case-by-case basis if we deem a company’s compensation to be excessive or inconsistent with its peer companies’ compensation, we believe a company’s compensation measures do not foster a long-term focus among its executive officers and other employees, or we believe a company has not met performance expectations, among other reasons. Discussed below are some specific types of compensation-related proposals that we may encounter.

	2.	Incentive compensation plans – An incentive compensation plan rewards an executive’s performance through a combination of cash compensation and stock awards. Incentive compensation plans are designed to align an executive’s compensation with a company’s long-term performance. As noted above, Lord Abbett believes that management generally is in the best position to assess executive compensation levels and, therefore, generally votes with management on proposals relating to incentive compensation plans. In evaluating such a proposal, however, Lord Abbett may consider the following factors, among others: (1) the executive’s expertise and the value he or she brings to the company; (2) the company’s performance, particularly during the executive’s tenure; (3) the percentage of overall compensation that consists of stock; (4) whether and/or to what extent the incentive compensation plan has any potential to dilute the voting power or economic interests of other shareholders; (5) the features of the plan and costs associated with it; (6) whether the plan provides for repricing or replacement of underwater stock options; and (7) quantitative data from the Proxy Advisor regarding compensation ranges by industry and company size. We also scrutinize very closely the proposed repricing or replacement of underwater stock options, taking into consideration the stock’s volatility, management’s rationale for the repricing or replacement, the new exercise price, and any other factors we deem relevant.

	3.	Say on pay – “Say on pay” proposals give shareholders a nonbinding vote on executive compensation. These proposals are designed to serve as a means of conveying to company management shareholder concerns, if any, about executive compensation. Lord Abbett believes that management generally is in the best position to assess executive compensation. Thus, we generally vote with management on say on pay proposals unless we believe that compensation has been excessive or direct feedback to management about compensation has not resulted in any changes. We also generally vote with management on proposals regarding the frequency of say on pay votes. However, any particular vote will be based on the specific facts and circumstances we deem relevant.

	4.	Pay for performance – “Pay for performance” proposals are shareholder proposals that seek to achieve greater alignment between executive compensation and company performance. Shareholders initiating these proposals tend to focus on board compensation committees’ accountability, the use of independent compensation consultants, enhanced disclosure of

D-5


		compensation packages, and perquisites given to executives. Because Lord Abbett believes that management generally is in the best position to assess executive compensation, we generally follow management’s voting recommendations regarding pay for performance proposals. However, we may evaluate such proposals on a case-by-case basis if we believe a company’s long-term interests and its executives’ financial incentives are not properly aligned or if we question the methodology a company followed in setting executive compensation, among other reasons.

	5.	Clawback provisions – A clawback provision allows a company to recoup or “claw back” incentive compensation paid to an executive if the company later determines that the executive did not actually meet applicable performance goals. For example, such provisions might be used when a company calculated an executive’s compensation based on materially inaccurate or fraudulent financial statements. Some clawback provisions are triggered only if the misalignment between compensation and performance is attributable to improper conduct on the part of the executive. Shareholder proponents of clawback proposals believe that they encourage executive accountability and mitigate a company’s risk-taking behavior. Because Lord Abbett believes that management generally is in the best position to assess executive compensation, we generally vote with management on clawback proposals. We may, however, evaluate such a proposal on a case-by-case basis due to concerns about the amount of compensation paid to the executive, the executive’s or the company’s performance, or accounting irregularities, among other factors we may deem relevant.

	6.	Anti-gross-up policies – Tax “gross-ups” are payments by a company to an executive intended to reimburse some or all of the executive’s tax liability with respect to compensation, perquisites, and other benefits. Because the gross-up payment also is taxable, it typically is inflated to cover the amount of the tax liability and the gross-up payment itself. Critics of such payments argue that they often are not transparent to shareholders and can substantially enhance an executive’s overall compensation. Thus, shareholders increasingly are urging companies to establish policies prohibiting tax gross-ups. Lord Abbett generally favors adoption of anti-tax gross-up policies themselves, but will not automatically vote against a compensation committee nominee solely because the nominee approved a gross-up.

	7.	Severance agreements and executive death benefits – Severance or so-called “golden parachute” payments sometimes are made to departing executives after termination or upon a company’s change in control. Similarly, companies sometimes make executive death benefit or so-called “golden coffin” payments to an executive’s estate. Both practices increasingly are coming under shareholder scrutiny. While we generally vote with management on compensation matters and acknowledge that companies may have contractual obligations to pay severance or executive death benefits, we scrutinize cases in which such benefits are especially lucrative or are granted despite the executive’s or the company’s poor performance, and may vote against management on a case-by-case basis as we deem appropriate. We also generally support proposals to require that companies submit severance agreements and executive death benefits for shareholder ratification.

	8.	Executive pay limits – Lord Abbett believes that a company’s flexibility with regard to its compensation practices is critical to its ability to recruit, retain, and motivate key talent. Accordingly, we generally vote with management on shareholder proposals that seek to impose limits on executive compensation.

D-6


	9.	Employee stock purchase plans – Employee stock purchase plans permit employees to purchase company stock at discounted prices and, under certain circumstances, receive favorable tax treatment when they sell the stock. Lord Abbett generally follows management’s voting recommendation concerning employee stock purchase plans, although we generally do not support plans that are dilutive.

D.	Corporate Matters

	1.	Charter amendments – A company’s charter documents, which may consist of articles of incorporation or a declaration of trust and bylaws, govern the company’s organizational matters and affairs. Lord Abbett believes that management normally is in the best position to determine appropriate amendments to a company’s governing documents. Some charter amendment proposals involve routine matters, such as changing a company’s name or procedures relating to the conduct of shareholder meetings. Lord Abbett believes that such routine matters do not materially affect shareholder interests and, therefore, we vote with management with respect to them in all cases. Other types of charter amendments, however, are more substantive in nature and may impact shareholder interests. We consider such proposals on a case-by-case basis to the extent they are not explicitly covered by these guidelines.

	2.	Changes to capital structure – A company may propose amendments to its charter documents to change the number of authorized shares or create new classes of stock. We generally support proposals to increase a company’s number of authorized shares when the company has articulated a clear and reasonable purpose for the increase (for example, to facilitate a stock split, merger, acquisition, or restructuring). However, we generally oppose share capital increases that would have a dilutive effect. We also generally oppose proposals to create a new class of stock with superior voting rights.

	3.	Reincorporation – We generally follow management’s recommendation regarding proposals to change a company’s state of incorporation, although we consider the rationale for the reincorporation and the financial, legal, and corporate governance implications of the reincorporation. We will vote against reincorporation proposals that we believe contravene shareholders’ interests.

	4.	Mergers, acquisitions, and restructurings – A merger or acquisition involves combining two distinct companies into a single corporate entity. A restructuring involves a significant change in a company’s legal, operational, or structural features. After these kinds of transactions are completed, shareholders typically will own stock in a company that differs from the company whose shares they initially purchased. Thus, Lord Abbett views the decision to approve or reject a potential merger, acquisition, or restructuring as being equivalent to an investment decision. In evaluating such a proposal, Lord Abbett may consider the following factors, among others: (1) the anticipated financial and operating benefits; (2) the offer price; (3) the prospects of the resulting company; and (4) any expected changes in corporate governance and their impact on shareholder rights. We generally vote against management proposals to require a supermajority shareholder vote to approve mergers or other significant business combinations. We generally vote for shareholder proposals to lower supermajority vote requirements for mergers and acquisitions. We also generally vote against charter amendments that attempt to eliminate shareholder approval for acquisitions involving the issuance of more than 10% of a company’s voting stock.

E.	Anti-Takeover Issues and Shareholder Rights

D-7


	1.	Proxy access – Proxy access proposals advocate permitting shareholders to have their nominees for election to a company’s board of directors included in the company’s proxy statement in opposition to the company’s own nominees. Proxy access initiatives enable shareholders to nominate their own directors without incurring the often substantial cost of preparing and mailing a proxy statement, making it less expensive and easier for shareholders to challenge incumbent directors. Lord Abbett generally votes with management on proposals that seek to allow proxy access.

	2.	Shareholder rights plans – Shareholder rights plans or “poison pills” are a mechanism of defending a company against takeover efforts. Poison pills allow current shareholders to purchase stock at discounted prices or redeem shares at a premium after a takeover, effectively making the company more expensive and less attractive to potential acquirers. Companies may employ other defensive tactics in combination with poison pills, such as golden parachutes that take effect upon a company’s change in control and therefore increase the cost of a takeover. Because poison pills can serve to entrench management and discourage takeover offers that may be attractive to shareholders, we generally vote in favor of proposals to eliminate poison pills and proposals to require that companies submit poison pills for shareholder ratification. In evaluating a poison pill proposal, however, Lord Abbett may consider the following factors, among others: (1) the duration of the poison pill; (2) whether we believe the poison pill facilitates a legitimate business strategy that is likely to enhance shareholder value; (3) our level of confidence in management; (4) whether we believe the poison pill will be used to force potential acquirers to negotiate with management and assure a degree of stability that will support good long-range corporate goals; and (5) the need to guard against takeover attempts.

	3.	Chewable pill provisions – A “chewable pill” is a variant of the poison pill that mandates a shareholder vote in certain situations, preventing management from automatically discouraging takeover offers that may be attractive to shareholders. We generally support chewable pill provisions that balance management’s and shareholders’ interests by including: (1) a redemption clause allowing the board to rescind a pill after a potential acquirer’s holdings exceed the applicable ownership threshold; (2) no dead-hand or no-hand pills, which would allow the incumbent board and their approved successors to control the pill even after they have been voted out of office; (3) sunset provisions that allow shareholders to review and reaffirm or redeem a pill after a predetermined time frame; and (4) a qualifying offer clause, which gives shareholders the ability to redeem a poison pill when faced with a bona fide takeover offer.

	4.	Anti-greenmail provisions – An anti-greenmail provision is a special charter provision that prohibits a company’s management from buying back shares at above market prices from potential acquirers without shareholder approval. We generally support such provisions, provided that they are not bundled with other measures that serve to entrench management or discourage attractive takeover offers.

	5.	Fair price provisions – A fair price provision is a special charter provision that requires that all selling shareholders receive the same price from a buyer. Fair price provisions are designed to protect shareholders from inequitable two-tier stock acquisition offers in which some shareholders may be bought out on disadvantageous terms. We generally support such provisions, provided that they are not bundled with other measures that serve to entrench management or discourage attractive takeover offers.

D-8


	6.	Rights to call special shareholder meetings – Proposals regarding rights to call special shareholder meetings normally seek approval of amendments to a company’s charter documents. Lord Abbett generally votes with management on proposals concerning rights to call special shareholder meetings. In evaluating such a proposal, Lord Abbett may consider the following factors, among others: (1) the stock ownership threshold required to call a special meeting; (2) the purposes for which shareholders may call a special meeting; (3) whether the company’s annual meetings offer an adequate forum in which shareholders may raise their concerns; and (4) the anticipated economic impact on the company of having to hold additional shareholder meetings.

	7.	Supermajority vote requirements – A proposal that is subject to a supermajority vote must receive the support of more than a simple majority in order to pass. Supermajority vote requirements can have the effect of entrenching management by making it more difficult to effect change regarding a company and its corporate governance practices. Lord Abbett normally supports shareholders’ ability to approve or reject proposals based on a simple majority vote. Thus, we generally vote for proposals to remove supermajority vote requirements and against proposals to add them.

	8.	Cumulative voting – Under cumulative or proportional voting, each shareholder is allotted a number of votes equal to the number of shares owned multiplied by the number of directors to be elected. This voting regime strengthens the voting power of minority shareholders because it enables shareholders to cast multiple votes for a single nominee. Lord Abbett believes that a shareholder or group of shareholders using this technique to elect a director may seek to have the director represent a narrow special interest rather than the interests of the broader shareholder population. Accordingly, we generally vote against cumulative voting proposals.

	9.	Confidential voting – In a confidential voting system, all proxies, ballots, and voting tabulations that identify individual shareholders are kept confidential. An open voting system, by contrast, gives management the ability to identify shareholders who oppose its proposals. Lord Abbett believes that confidential voting allows shareholders to vote without fear of retribution or coercion based on their views. Thus, we generally support proposals that seek to preserve shareholders’ anonymity.

	10.	Reimbursing proxy solicitation expenses - Lord Abbett generally votes with management on shareholder proposals to require a company to reimburse reasonable expenses incurred by one or more shareholders in a successful proxy contest, and may consider factors including whether the board has a plurality or majority vote standard for the election of directors, the percentage of directors to be elected in the contest, and shareholders’ ability to cumulate their votes for the directors.

	11.	Transacting other business – Lord Abbett believes that proposals to allow shareholders to transact other business at a meeting deprive other shareholders of sufficient time and information to carefully evaluate the relevant business issues and determine how to vote with respect to them. Therefore, Lord Abbett always votes against such proposals.

F.	Social, Political, and Environmental Issues – Proposals relating to social, political, or environmental issues typically are initiated by shareholders and urge a company to disclose certain information or change certain business practices. Lord Abbett evaluates such proposals based on their effect on shareholder value rather than on their ideological merits. We generally follow management’s recommendation on social, political, and environmental proposals and

D-9


	tend to vote against proposals that are unduly burdensome or impose substantial costs on a company with no countervailing economic benefits to the company’s shareholders. Nonetheless, we pay particular attention to highly controversial issues, as well as instances where management has failed repeatedly to take corrective actions with respect to an issue.

G.	Share Blocking – Certain foreign countries impose share blocking restrictions that would prohibit Lord Abbett from trading a company’s stock during a specified period before the company’s shareholder meeting. Lord Abbett believes that in these situations, the benefit of maintaining liquidity during the share blocking period outweighs the benefit of exercising our right to vote. Therefore, it is Lord Abbett’s general policy to not vote securities in cases where share blocking restrictions apply.

Amended: September 13, 2012

LAMI-13
2/13

D-10

LORD ABBETT MUNICIPAL INCOME FUND, INC.
PART C
OTHER INFORMATION


Item 28.		Exhibits.

	(a)	Articles of Incorporation .

		(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. Incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement on Form N-1A filed on January 28, 2002.

		(iii)	Articles Supplementary dated February 2, 1999. Incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement on Form N-1A filed on January 28, 2002.

		(iv)	Articles of Amendment effective January 28, 2005. Incorporated by reference to Post-Effective Amendment No. 37 to the Registration Statement on Form N-1A filed on January 28, 2005.

		(v)	Articles of Supplementary dated April 23, 2007. Incorporated by reference to Post-Effective Amendment No. 42 to the Registration Statement on Form N-1A filed on April 27, 2007.

		(vi)	Articles Supplementary to Articles of Incorporation dated July 31, 2007. Incorporated by reference to Post-Effective Amendment No. 43 to the Registration Statement on Form N-1A filed on September 14, 2007.

		(vii)	Articles of Amendment dated August 30, 2007. Incorporated by reference to Post-Effective Amendment No. 43 to the Registration Statement on Form N-1A filed on September 14, 2007.

		(viii)	Articles Supplementary to Articles of Incorporation dated January 18, 2008. Incorporated by reference to Post-Effective Amendment No. 44 to the Registration Statement on Form N-1A filed on January 28, 2008.

		(ix)	Articles Supplementary to Articles of Incorporation dated July 21, 2010. Incorporated by reference to Post-Effective Amendment No. 48 to the Registration Statement on Form N-1A filed on July 26, 2010.

		(x)	Articles Supplementary to Articles of Incorporation dated November 17, 2010. Incorporated by reference to Post Effective Amendment No. 59 to the Registration Statement on Form N-1A filed on November 19, 2010.

	(b)	By-laws . Amended and Restated By-Laws dated October 25, 2012. Filed herein.

	(c)	Instruments Defining Rights of Security Holders . Not applicable.

	(d)	Investment Advisory Contracts .

		(i)	Management Agreement . Incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement on Form N-1A filed on January 28, 2002.

		(ii)	Addendum to Management Agreement dated October 1, 2004. Incorporated by reference to Post-Effective Amendment No. 38 to the Registration Statement on Form N-1A filed on January 30, 2006.

		(iii)	Addendum to Management Agreement dated October 26, 2010 (Lord Abbett AMT Free Municipal Bond Fund). Incorporated by reference to Post-Effective Amendment No. 57 to the Registration Statement on Form N-1A filed on October 26, 2010.


	(iv)	Addendum to Management Agreement dated as of November 19, 2010 (Lord Abbett High Yield Municipal Bond Fund, Lord Abbett Intermediate Tax Free Fund, and Lord Abbett Short Duration Tax Free Fund) . Incorporated by reference to Post-Effective Amendment No. 60 to the Registration Statement on Form N-1A filed on November 26, 2010.

	(v)	Addendum to Management Agreement dated as of February 1, 2013 (Lord Abbett Intermediate Tax Free Fund). Filed herein.

	(vi)	Expense Limitation Agreement effective February 1, 2013 (Lord Abbett AMT Free Municipal Bond Fund, Lord Abbett Intermediate Tax Free Fund and Lord Abbett Short Duration Tax Free Fund). Filed herein.

(e)	Underwriting Contracts . Distribution Agreement incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement on Form N-1A filed on January 28, 2002.

(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 . Custodian Agreement dated November 1, 2001 and updated Exhibit A dated as of December 15, 2011. Incorporated by reference to Post-Effective Amendment No. 63 to the Registration Statement on Form N-1A filed January 27, 2012.

(h)	Other Material Contracts .

	(i)	Agency Agreement dated April 30, 2010, including amended Schedule A dated as of December 15, 2011. Incorporated by reference to Post-Effective Amendment No. 63 to the Registration Statement on Form N-1A filed January 27, 2012.

	(ii)	Amendment to the Agency Agreement dated April 30, 2010 (amended March 15, 2011). Incorporated by reference to Post-Effective Amendment No. 63 to the Registration Statement on Form N-1A filed January 27, 2012.

	(iii)	Administrative Services Agreement dated December 12, 2002 with amendments Nos. 1-13. Incorporated by reference to Post-Effective Amendment No. 45 to the Registration Statement on Form N-1A filed on January 28, 2009.

	(iv)	Amendment #14 to Administrative Services Agreement dated May 1, 2010. Incorporated by reference to Post-Effective Amendment No. 48 to the Registration Statement on Form N-1A filed on July 26, 2010.

	(v)	Amendment #15 to Administrative Services Agreement dated October 26, 2010. Incorporated by reference to Post-Effective Amendment No. 57 to the Registration Statement on Form N-1A filed on October 26, 2010.

	(vi)	Amendment #16 to Administrative Services Agreement dated as of November 19, 2010. Incorporated by reference to Post-Effective Amendment No. 60 to the Registration Statement on Form N-1A filed on November 26, 2010.

	(vii)	Amendment #17 to Administrative Services Agreement dated as of April 20, 2011. Incorporated by reference to Post-Effective Amendment No. 63 to the Registration Statement on Form N-1A filed January 27, 2012.

	(viii)	Amendment #18 to Administrative Services Agreement dated as of June 15, 2011. Incorporated by


			reference to Post-Effective Amendment No. 63 to the Registration Statement on Form N-1A filed January 27, 2012.

		(ix)	Amendment #19 to Administrative Services Agreement dated as of December 15, 2011. Incorporated by reference to Post-Effective Amendment No. 63 to the Registration Statement on Form N-1A filed January 27, 2012.

	(i)	Legal Opinion . Opinion of Wilmer Cutler Pickering Hale and Dorr LLP. Filed herein.

	(j)	Other Opinion . Consent of Deloitte & Touche LLP. Filed herein.

	(k)	Omitted Financial Statements . Not applicable.

	(l)	Initial Capital Agreements . Not applicable.

	(m)	Rule 12b-1 Plan . Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement for Lord Abbett Family of Funds dated August 10, 2007 with updated Schedule A dated November 28, 2012 and B dated as of November 28, 2012. Filed herein.

	(n)	Rule 18f-3 Plan . Amended and Restated Rule 18f-3 Plan as of July 1, 2008 pursuant to Rule 18f-3(d) under the Investment Company Act of 1940 with updated Schedule A dated as of November 28, 2012. Filed herein.

	(o)	Reserved .

	(p)	Code of Ethics dated as of October 2012. Filed herein.

Item 29.		Persons Controlled by or Under Common Control with the Registrant .

		None.

Item 30.		Indemnification .

		The 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 the 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 the 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 the Registrant, without limiting the authority of the 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, the 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), the 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 the 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 the Registrant nor parties to the proceeding, or (b) an independent legal counsel in a written opinion. Also, the 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) the 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 the 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, the 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 31.		Business and Other Connections of the Investment Adviser .

	(a)	Adviser – Lord, Abbett & Co. LLC

		Lord, Abbett & Co. LLC is the investment adviser of the Registrant and provides investment management services to the Lord Abbett Family of Funds and to various pension plans, institutions and individuals.

	(b)	Set forth below is information relating to the business, profession, vocation or employment of a substantial nature that each partner of the adviser, is or has been engaged in within the last two fiscal years for his/her own account in the capacity of director, officer, employee, partner or trustee of Lord Abbett. The principal business address of each partner is c/o Lord, Abbett & Co. LLC, 90 Hudson Street, Jersey City, NJ 07302-3973.

		None.


Item 32.		Principal Underwriters .

	(a)	Lord Abbett Distributor LLC serves as principal underwriter for the Registrant. Lord Abbett Distributor LLC also serves as principal underwriter for the registered opened investment companies sponsored by Lord, Abbett & Co. LLC.

			Lord Abbett Affiliated Fund, Inc. Lord Abbett Bond-Debenture Fund, Inc. Lord Abbett Developing Growth Fund, Inc. Lord Abbett Equity Trust Lord Abbett Global Fund, Inc. Lord Abbett Investment Trust Lord Abbett Mid Cap Stock Fund, Inc. Lord Abbett Research Fund, Inc. Lord Abbett Securities Trust Lord Abbett Series Fund, Inc. Lord Abbett Stock Appreciation Fund Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund, Inc.

	(b)	Lord Abbett Distributor LLC is a wholly-owned subsidiary of Lord, Abbett & Co. LLC. The principal officers of Lord, Abbett Distributor LLC are:


Name and Principal Business Address*	Positions and/or Offices with Lord Abbett Distributor LLC	Positions and Offices with the Registrant

Daria L. Foster	Chief Executive Officer	President and Chief Executive Officer

Lawrence H. Kaplan	General Counsel	Vice President & Secretary

Lynn M. Gargano	Chief Financial Officer	None

James W. Bernaiche	Chief Compliance Officer	Chief Compliance Officer


		*	Each Officer has a principal business address of: 90 Hudson Street, Jersey City, NJ 07302.

	(c)	Not applicable.

Item 33.		Location of Accounts and Records .

		Registrant maintains the records required by Rules 31a-1(a) and (b) and 31a-2(a) under the Investment Company Act of 1940, as amended (the “1940 Act”) at its main office.

		Lord, Abbett & Co. LLC maintains the records required by Rules 31a-1(f) and 31a-2(e) under the 1940 Act at its main office.

		Certain records such as cancelled stock certificates and correspondence may be physically maintained at the main office of Registrant’s Transfer Agent, Custodian, or Shareholder Servicing Agent within the requirements of Rule 31a-3 under the 1940 Act.


Item 34.	Management Services .

	None.

Item 35.	Undertakings .

	None.

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 State of New Jersey on the 25 ^th day of January, 2013.


LORD ABBETT MUNICIPAL INCOME FUND, INC.

	BY:	/s/ Thomas R. Phillips

		Thomas R. Phillips
		Vice President and Assistant Secretary

	BY:	/s/ Joan A. Binstock

		Joan A. Binstock
		Chief Financial Officer and Vice President

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


/s/ E. Thayer Bigelow*	Chairman and Director	January 25, 2013

E. Thayer Bigelow

/s/ Daria L. Foster*	President, CEO, and Director	January 25, 2013

Daria L. Foster

/s/ Robert B. Calhoun, Jr.*	Director	January 25, 2013

Robert B. Calhoun, Jr.

/s/ Evelyn E. Guernsey*	Director	January 25, 2013

Evelyn E. Guernsey

/s/ Julie A. Hill*	Director	January 25, 2013

Julie A. Hill

/s/ Franklin W. Hobbs*	Director	January 25, 2013

Franklin W. Hobbs

/s/ James M. McTaggart*	Director	January 25, 2013

James M. McTaggart

/s/ James L.L. Tullis*	Director	January 25, 2013

James L.L. Tullis


*BY:	/s/ Thomas R. Phillips

	Thomas R. Phillips
	Attorney-in-Fact*

POWER OF ATTORNEY

Each person whose signature appears below on this Registration Statement hereby constitutes and appoints Lawrence H. Kaplan, Lawrence B. Stoller, Thomas R. Phillips, and Brooke A. Fapohunda, each of them, with full power to act without the other, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities (until revoked in writing) to sign any and all Registration Statements of each Fund enumerated on Exhibit A hereto for which such person serves as a Director/Trustee (including Registration Statements on Forms N-1A and N-14 and any amendments thereto), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.


Signatures	Title	Date


/s/ E. Thayer Bigelow	Chairman and Director/Trustee	January 1, 2013

E. Thayer Bigelow

/s/ Daria L. Foster	President, CEO, and Director/Trustee	January 1, 2013

Daria L. Foster

/s/ Robert B. Calhoun, Jr.	Director/Trustee	January 1, 2013

Robert B. Calhoun, Jr.

/s/ Evelyn E. Guernsey	Director/Trustee	January 1, 2013

Evelyn E. Guernsey

/s/ Julie A. Hill	Director/Trustee	January 1, 2013

Julie A. Hill

/s/ Franklin W. Hobbs	Director/Trustee	January 1, 2013

Franklin W. Hobbs

/s/ James M. McTaggart	Director/Trustee	January 1, 2013

James M. McTaggart

/s/ James L.L. Tullis	Director/Trustee	January 1, 2013

James L.L. Tullis

EXHIBIT A

Lord Abbett Affiliated Fund, Inc.

Lord Abbett Bond-Debenture Fund, Inc.

Lord Abbett Developing Growth Fund, Inc.

Lord Abbett Equity Trust

Lord Abbett Global Fund, Inc.

Lord Abbett Investment Trust

Lord Abbett Mid Cap Stock Fund, Inc.

Lord Abbett Municipal Income Fund, Inc.

Lord Abbett Research Fund, Inc.

Lord Abbett Securities Trust

Lord Abbett Series Fund, Inc.

Lord Abbett Stock Appreciation Fund

Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund, Inc.

Ex 99 (b)

BY-LAWS

LORD ABBETT MUNICIPAL INCOME FUND, INC.

(a Maryland Corporation)

adopted December 23, 1983

as amended and restated October 25, 2012

Table of Contents


		Page


ARTICLE I – Offices		1

Section I.1 – Principal Office		1
Section I.2 – Other Offices		1

ARTICLE II – Stockholders Meetings		1

Section II.1 – Annual Meetings		1
Section II.2 – Special Meetings		3
Section II.3 – Notice of Meetings		4
Section II.4 – Quorum		4

ARTICLE III – Board of Directors		7

Section III.1 – General Powers		7
Section III.2 – Number, Class, Quorum, Election, Term of Office and Qualifications		7
Section III.3 – Vacancies		8
Section III.4 – Regular Meetings		8
Section III.5 – Special Meetings		9
Section III.6 – Telephone Conference Meetings		9
Section III.7 – Fees and Expenses		9
Section III.8 – Transactions with Directors		10
Section III.9 – Committees		11
Section III.10 – Written Consents		12
Section III.11 – Waiver of Notice		12

ARTICLE IV – Officers		12

Section IV.1 – Number and Designation		12
Section IV.2 – Term of Office		13
Section IV.3 – Duties		13

ARTICLE V – Certificate of Stock		13

Section V.1 – Form and Issuance		13
Section V.2 – Transfer of Stock		14
Section V.3 – Lost, Stolen, Destroyed and Mutilated Certificates		14
Section V.4 – Record Date		15


ARTICLE VI – Corporate Books		16

ARTICLE VII – Signatures		17

ARTICLE VIII – Fiscal Year		17

ARTICLE IX – Corporate Seal		17

ARTICLE X – Indemnification		18

ARTICLE XI – Amendments		19

ARTICLE XII – Compliance with Investment Company Act of 1940		20

ARTICLE XIII – Rule of Construction		20

ARTICLE I

OFFICES

Section I.1. Principal Office - The principal office of the Corporation in Maryland shall be in the City of Baltimore, and the name of the resident agent in charge thereof is CSC-Lawyers Incorporating Service Company.

Section I.2. Other Offices - The Corporation may also have an office in such other places as the Board of Directors may from time to time determine.

ARTICLE II

STOCKHOLDERS MEETINGS

Section II.1 Annual Meetings - The Corporation shall not hold an annual meeting of its stockholders in any fiscal year of the Corporation unless required in accordance with the following sentence. The Chairman of the Board or the President shall call an annual meeting of the stockholders when the election of directors is required to be acted on by stockholders under the Investment Company Act of 1940, as amended, and the Chairman of the Board, the President, a Vice President, the Secretary or any director shall call an annual meeting of stockholders at the request in writing of a majority of the Board of Directors or of stockholders holding at least one-quarter of the stock of the Corporation outstanding and entitled to vote at the meeting. Any annual meeting of the stockholders held pursuant to the foregoing sentence shall be held at such time and at

such place, within the City of New York or elsewhere, as may be fixed by the Chairman of the Board or the President or the Board of Directors or by the stockholders holding at least one-quarter of the stock of the Corporation outstanding and entitled to vote, as the case may be, and as may be stated in the notice setting forth such call, provided that any stockholders requesting such meeting shall have paid to the Corporation the reasonably estimated cost of preparing and mailing the notice thereof, which the Secretary shall determine and specify to such stockholders. Any meeting of stockholders held in accordance with this Section 1 shall for all purposes constitute the annual meeting of stockholders for the fiscal year of the Corporation in which the meeting is held and, without limiting the generality of the foregoing, shall be held for the purposes of ( a ) acting on any such matter or matters so required to be acted on by stockholders under the Investment Company Act of 1940, as amended, and ( b ) electing directors to hold the offices of any directors who have held office for more than one year or who have been elected by the Board of Directors to fill vacancies which result from any cause and for transacting such other business as may properly be brought before the meeting. Only such business, in addition to that prescribed by law, by the Articles of Incorporation and by these By-laws, may be brought before such meeting as may be specified by resolution of the Board of Directors or by writing filed with the Secretary of the Corporation and signed by the Chairman of the Board or by the President or by a majority of the directors

or by stockholders holding at least one-quarter of the stock of the Corporation outstanding and entitled to vote at the meeting.

Section II.2. Special Meetings - Special meetings of the stockholders for any purpose or purposes may be held upon call of the Chairman of the Board or the President or by a majority of the Board of Directors, and shall be called by the Chairman of the Board, the President, a Vice President, the Secretary or any director at the request in writing of a majority of the Board of Directors or of stockholders holding at least one-quarter of the stock of the Corporation outstanding and entitled to vote at the meeting, at such time and at such place where an annual meeting of stockholders could be held, as may be fixed by the Chairman of the Board or the President or the Board of Directors or by the stockholders holding at least one-quarter of the stock of the Corporation outstanding and so entitled to vote, as the case may be, and as may be stated in the notice setting forth such call, provided that any stockholders requesting such meeting shall have paid to the Corporation the reasonably estimated cost of preparing and mailing the notice thereof, which the Secretary shall determine and specify to such stockholders. Such request shall state the purpose or purposes of the proposed meeting, and only such purpose or purposes so specified may properly be brought before such meeting. No special meeting need be called upon the request of the holders of less than a majority of the stock of the Corporation outstanding and so entitled to vote to consider any matter

which is substantially the same as a matter voted upon at any special meeting of the stockholders held during the preceding 12 months.

Section II.3. Notice of Meetings - Written or printed notice of every annual or special meeting of stockholders, stating the time and place thereof and the general nature of the business proposed to be transacted at any such meeting, shall be delivered personally or mailed not less than 10 or more than 90 days previous thereto to each stockholder of record entitled to vote at the meeting or entitled to notice of the meeting at his address as the same appears on the books of the Corporation. Meetings may be held without notice if all of the stockholders entitled to vote are present or represented at the meeting or if notice is waived in writing, either before or after the meeting, by those not present or represented at the meeting. No notice of an adjourned meeting of the stockholders other than an announcement of the time and place thereof at the preceding meeting shall be required.

Section II.4. Quorum - The presence in person or by proxy of the holders of a third of the Shares of all Classes issued and outstanding and entitled to vote thereat shall constitute a quorum for the transaction of any business at all meetings of the shareholders except as otherwise provided by law or in the Articles of Incorporation and except that where the holders of the Shares of any Class are entitled to a separate vote as a Class (a “Separate Class”) or where the holders of Shares of two or more (but not all) Classes are required to vote as a single Class (a “Combined Class”), the presence in

person or by proxy of the holders of a majority of the Shares of that Separate Class or Combined Class, as the case may be, issued and outstanding and entitled to vote thereat shall constitute a quorum for such vote. If, however, a quorum with respect to all Classes, a Separate Class or a Combined Class, as the case may be, issued and outstanding and entitled to vote thereat shall constitute a quorum for such vote. If, however, a quorum with respect to all Classes, a Separate Class or a Combined Class, as the case may be, shall not be present or represented at any meeting of the shareholders, the holder of a majority of the Shares of all Classes, such Separate Class of such Combined Class, as the case may be, present in person or by proxy and entitled to vote shall have power to adjourn the meeting from time to time as to all Classes, such Separate Class or such Combined Class, as the case may be, without notice other than announcement at the meeting, until the requisite number of Shares entitled to vote at such meeting shall be present. At such adjourned meeting at which the requisite number of Shares entitled to vote thereat shall be represented any business may be transacted at the meeting as originally notified. The absence from any meeting of stockholders of the number of Shares in excess of a majority of the Shares of all Classes or of the affected Class or Classes, as the case may be, which may be required by laws of the State of Maryland, the Investment Company Act of 1940 or any other applicable law or the Articles of Incorporation, for action upon any given matter shall not prevent action of such meeting upon any other matter or matters which may properly come before the

meeting, if there shall be present thereat, in person or by proxy, holders of the number of Shares required for action in respect of such matter or matters. Section 1. Voting . All elections shall be had and all questions decided by a majority of the votes cast, without regard to Class, at a duly constituted meeting, except as otherwise provided by law or by the Articles of Incorporation or by these By-laws and except that with respect to a question as to which the holders of Shares of any Class or Classes are entitled or required to vote as a Separate Class or a Combined Class, as the case may be, such question shall be decided as to such Separate Class or such Combined Class, as the case may be, by a majority of the votes cast by Shares of such Separate Class or such Combined Class, as the case may be.

With respect to all Shares having voting rights (a) a stockholder may vote the shares owned of record by him either in person or by proxy executed in writing by the stockholder of by his duly authorized attorney-in-fact, provided that no proxy shall be valid after eleven months from its date unless otherwise provided in the proxy and (b) in all elections for directors every stockholder shall have the right to vote, in person or by proxy, the Shares owned of record by him, for as many persons as there are directors to be elected and for whose elections he has a right to vote. Any stockholder may give authorization by telephone, facsimile, or the Internet for another person to execute his or her proxy. Unless otherwise specifically limited by their terms, proxies shall entitle the holder thereof to vote at any adjournment of a meeting.

ARTICLE III

BOARD OF DIRECTORS

Section III.1. General Powers - The property, affairs and business of the Corporation shall be managed by the Board of Directors, provided, however, that the Board of Directors may authorize the Corporation to enter into an agreement or agreements with any person, corporation, association, partnership or other organization, subject to the Board’s supervision and control for the purpose of providing managerial, investment advisory and related services to the Corporation which may include management or supervision of the investment portfolio of the Corporation.

Section III.2. Number, Class, Quorum, Election, Term of Office and Qualifications - The Board of Directors of the Corporation shall consist of not less than three or more than fifteen persons, none of whom need be stockholders of the Corporation. The number of directors (within the above limits) shall be determined by the Board of Directors from time to time, as it sees fit, by vote of a majority of the whole Board. The directors shall be elected at each annual meeting of stockholders and, whether or not elected for a specific term, shall hold office, unless sooner removed, until their respective successors are elected and qualify. One-third of the whole Board, but in no event less than two, shall constitute a quorum for the transaction of business, but if at any meeting of the Board there shall be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time until a quorum shall have

been obtained, when any business may be transacted which might have been transacted at the meeting as originally convened. No notice of an adjourned meeting of the directors other than an announcement of the time and place thereof at the preceding meeting shall be required. The acts of the majority of the directors present at any meeting at which there is a quorum shall be the acts of the Board, except as otherwise provided by law, by the Articles of Incorporation or by these By-laws.

Section III.3. Vacancies - The Board of Directors, by vote of a majority of the whole Board, may elect directors to fill vacancies in the Board resulting from an increase in the number of directors or from any other cause. Directors so chosen shall hold office until their respective successors are elected and qualify, unless sooner displaced pursuant to law or by these By-laws. The stockholders, at any meeting called for the purpose, may, with or without cause, remove any director by the affirmative vote of the holders of a majority of the votes entitled to be cast, and at any meeting called for the purpose may fill the vacancy in the Board thus caused.

Section III.4. Regular Meetings - Regular meetings of the Board of Directors shall be held at such time and place, within or without the State of Maryland, as may from time to time be fixed by Resolution of the Board or as may be specified in the notice of any meeting. No notice of regular meetings of the Board shall be required except as required by the Investment Company Act of 1940, as amended.

Section III.5. Special Meetings - Special meetings of the Board of Directors may be called from time to time by the Chairman of the Board, the President, any Vice President or any two directors. Each special meeting of the Board shall be held at such place, either within or outside the State of Maryland, as shall be designated in the notice of such meeting. Notice of each such meeting shall be mailed to each director, at his residence or usual place of business, at least two days before the day of the meeting, or shall be directed to him at such place by, as permitted by applicable law, telecopy, facsimile, cable or electronic mail, or be delivered to him personally not later than the day before the day of the meeting. Every such notice shall state the time and place of the meeting but need not state the purposes thereof, except as otherwise expressly provided in these By-laws or by statute.

Section III.6. Telephone Conference Meetings - Any meeting of the Board or any committee thereof may be held by conference telephone, regardless where each director may be located at the time, by means of which all persons participating in the meeting can hear each other, and participation in such meeting in such manner shall constitute presence in person at such meeting except where the Investment Company Act of 1940, as amended, specifically requires that the vote of such director be cast in person.

Section III.7. Fees and Expenses - The directors shall receive such fees and expenses for services to the Corporation as may be fixed by the Board of Directors, subject however, to such limitations as may be provided in the Articles of Incorporation.

Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent or otherwise and receiving compensation therefor.

Section III.8. Transactions with Directors - Except as otherwise provided by law or in the Articles of Incorporation, a director of the Corporation shall not in the absence of fraud be disqualified from office by dealing or contracting with the Corporation either as a vendor, purchaser or otherwise, nor in the absence of fraud shall any transaction or contract of the Corporation be void or voidable or affected by reason of the fact that any director, or any firm of which any director is a member, or any corporation of which any director is an officer, director or stockholder, is in any way interested in such transaction or contract, provided that at the meeting of the Board of Directors, at which said contract or transaction is authorized or confirmed, the existence of an interest of such director, firm or corporation is disclosed or made known and there shall be present a quorum of the Board of Directors a majority of which, consisting of directors not so interested, shall approve such contract or transaction. Nor shall any director be liable to account to the Corporation for any profit realized by him from or through any such transaction or contract of the Corporation ratified or approved as aforesaid, by reason of the fact that he or any firm of which he is a member, or any corporation of which he is an officer, director, or stockholder, was interested in such transaction or contract. Directors so interested may be counted when present at meetings

of the Board of Directors for the purpose of determining the existence of a quorum. Any contract, transaction or act of the Corporation or of the Board of Directors (whether or not approved or ratified as hereinabove provided) which shall be ratified by a majority of the votes cast at any annual or special meeting at which a quorum is present called for such purpose, or approved in writing by a majority in interest of the stockholders having voting power without a meeting, shall except as otherwise provided by law, be valid and as binding as though ratified by every stockholder of the Corporation.

Section III.9. Committees - The Board of Directors may, by resolution adopted by a majority of the whole Board, designate one or more committees, each such committee to consist of one or more directors of the Corporation, which, to the extent permitted by law and provided in said resolution, shall have and may exercise the powers of the Board over the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. A majority of the Members of any such committee may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. The Board of Directors shall have power at any time to change the Membership of, to fill vacancies in, or to dissolve any such committee

Section III.10. Written Consents - Any action required or permitted to be taken at any meeting of the Board of Directors or by any committee thereof may be taken without a meeting, if a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes or proceedings of the Board or committee.

Section III.11. Waiver of Notice - Whenever under the provisions of these By-laws, or of the Articles of Incorporation, or of any of the laws of the State of Maryland, or other applicable statute, the Board of Directors is authorized to hold any meeting or take any action after notice or after the lapse of any prescribed period of time, a waiver thereof, in writing, signed by the person or persons entitled to such notice or lapse of time, whether before or after the time of meeting or action stated herein, shall be deemed equivalent thereto. The presence at any meeting of a person or persons entitled to notice thereof shall be deemed a waiver of such notice as to such person or persons.

ARTICLE IV

OFFICERS

Section IV.1. Number and Designation - The Board of Directors shall each year appoint from among their members a Chairman and a President of the Corporation, and shall appoint one or more Vice Presidents, a Secretary and a Treasurer and, from time to time, any other officers and agents as it may deem proper. Any two of

the above mentioned offices, except those of the President and a Vice President, may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument be required by law or by these By-laws to be executed, acknowledged or verified by any two or more officers.

Section IV.2. Term of Office - The term of office of all officers shall be one year or until their respective successors are chosen; but any officer or agent chosen or appointed by the Board of Directors may be removed, with or without cause, at any time, by the affirmative vote of a majority of the members of the Board then in office.

Section IV.3. Duties - Subject to such limitations as the Board of Directors may from time to time prescribe, the officers of the Corporation shall each have such powers and duties as generally appertain to their respective offices as well as such powers and duties as from time to time may be conferred by the Board of Directors.

ARTICLE V

CERTIFICATE OF STOCK

Section V.1. Form and Issuance - Each stockholder of the Corporation shall be entitled upon request, to a certificate or certificates, in such form as the Board of Directors may from time to time prescribe, which shall represent and certify the number of shares of stock of the Corporation owned by such stockholder. The certificates for shares of stock of the Corporation shall bear the signature, either manual or facsimile, of

the Chairman of the Board or the President or a Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, and shall be sealed with the seal of the Corporation or bear a facsimile of such seal. The validity of any stock certificate shall not be affected if any officer whose signature appears thereon ceases to be an officer of the Corporation before such certificate is issued.

Section V.2. Transfer of Stock - The shares of stock of the Corporation shall be transferable on the books of the Corporation by the holder thereof in person or by a duly authorized attorney, upon surrender for cancellation of a certificate or certificates for a like number of shares, with a duly executed assignment and power of transfer endorsed thereon or attached thereto, or, if no certificate has been issued to the holder in respect of shares of stock of the Corporation, upon receipt of written instructions, signed by such holder, to transfer such shares from the account maintained in the name of such holder by the Corporation or its agent. Such proof of the authenticity of the signatures as the Corporation or its agent may reasonably require shall be provided.

Section V.3. Lost, Stolen, Destroyed and Mutilated Certificates - The holder of any stock of the Corporation shall immediately notify the Corporation of any loss, theft, destruction or mutilation of any certificate therefor, and the Board of Directors may, in its discretion, cause to be issued to him a new certificate or certificates of stock, upon the surrender of the mutilated certificate or in the case of loss, theft or destruction of the certificate upon satisfactory proof of such loss, theft, or destruction; and the Board of

Directors may, in its discretion, require the owner of the lost, stolen or destroyed certificate, or his legal representatives, to give to the Corporation and to such registrar or transfer agent as may be authorized or required to countersign such new certificate or certificates a bond, in such sum as they may direct, and with such surety or sureties, as they may direct, as indemnity against any claim that may be made against them or any of them on account of or in connection with the alleged loss, theft, or destruction of any such certificate.

Section V.4. Record Date - The Board of Directors may fix in advance, a date as the record date for the purpose of determining stockholders, of any Class, entitled to notice of, or to vote at, any meeting of stockholders, of any Class, or stockholders of any Class entitled to receive payment of any dividend or the allotment of any rights to that Class, or in order to make a determination of stockholders of any Class for any other proper purpose. Such date, in any case, shall be not more than 90 days, and in case of a meeting of stockholders, not less than 10 days, prior to the date on which the particular action requiring such determination of stockholders is to be taken. In lieu of fixing a record date, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, 20 days prior to the date of any meeting of stockholders or the date for payment of any dividend or the allotment of rights. If the stock transfer books are closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for

at least 10 days immediately preceding such meeting. If no record date is fixed and the stock transfer books are not closed for determination of stockholders, the record date for the determination of stockholders entitled to notice of, or to vote at, a meeting of stockholders shall be at the close of business on the day on which notice of the meeting is mailed or the day 30 days before the meeting, whichever is the closer date to the meeting, and the record date for the determination of stockholders entitled to receive payment of a dividend or an allotment of any rights shall be at the close of business on the day on which the resolution of the Board of Directors declaring the dividend or allotment of rights is adopted, provided that the payment or allotment date shall not be more than 90 days after the date of the adoption of such resolution.

ARTICLE VI

CORPORATE BOOKS

The books of the Corporation may be kept outside the State of Maryland at such place or places as the Board of Directors may from time to time determine. The original or duplicate stock ledger shall be maintained at the office of the Corporation’s transfer agent.

ARTICLE VII

SIGNATURES

Except as otherwise provided in these By-laws or as the Board of Directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts and other obligations made, accepted or endorsed by the Corporation and all endorsements, assignments, transfers, stock powers or other instruments of transfer of securities owned by or standing in the name of the Corporation shall be signed or executed by two officers of the Corporation, who shall be the Chairman of the Board, the President or a Vice President and a Vice President, the Secretary or the Treasurer.

ARTICLE VIII

FISCAL YEAR

The fiscal year of the Corporation shall be established by resolution of the Board of Directors of the Corporation.

ARTICLE IX

CORPORATE SEAL

The corporate seal of the Corporation shall consist of a flat faced circular die with the word “Maryland” together with the name of the Corporation, the year of its

organization, and such other appropriate legend as the Board of Directors may from time to time determine, cut or engrave thereon. In lieu of the corporate seal, when so authorized by the Board of Directors or a duly empowered committee thereof, a facsimile thereof may be impressed or affixed or reproduced.

ARTICLE X

INDEMNIFICATION

As part of the consideration for agreeing to serve and serving as a director of the Corporation, each director of the Corporation shall be indemnified by the Corporation against every judgment, penalty, fine, settlement, and reasonable expense (including attorneys’ fees) actually incurred by the director in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, in which the director was, is, or is threatened to be made a named defendant or respondent (or otherwise becomes a party) by reason of such director’s service in that capacity or status as such, and the amount of every such judgment, penalty, fine, settlement and reasonable expense so incurred by the director shall be paid by the Corporation or, if paid by the director, reimbursed to the director by the Corporation, subject only to the conditions and limitations imposed by the applicable provisions of Section 2-418 of the Corporations and Associations Article of the Annotated Code of the State of Maryland and by the provisions of Section 17(h) of the

United States Investment Company Act of 1940 as interpreted and as required to be implemented by Securities and Exchange Commission Release No. IC-11330 of September 4, 1980. The foregoing shall not limit the authority of the Corporation to indemnify any of its officers, employees or agents to the extent consistent with applicable law.

ARTICLE XI

AMENDMENTS

All By-laws of the Corporation shall be subject to alteration, amendment, or repeal, and new By-laws not inconsistent with any provision of the Articles of Incorporation of the Corporation may be made, either by the affirmative vote of the holders of record of a majority of the outstanding stock of the Corporation entitled to vote in respect thereof, given at an annual meeting or at any special meeting, provided notice of the proposed alteration, amendment, or repeal of the proposed new By-laws is included in or accompanies the notice of such meeting, or by the affirmative vote of a majority of the whole Board of Directors given at a regular special meeting of the Board of Directors, provided that the notice of any such special meeting indicates that the By-laws are to be altered, amended, repealed, or that new By-laws are to be adopted.

ARTICLE XII

COMPLIANCE WITH INVESTMENT COMPANY ACT OF 1940

Investment Company Act of 1940 . No provision of the By-Laws of the Corporation shall be given effect to the extent inconsistent with the requirements of the Investment Company Act of 1940, as amended.

ARTICLE XIII

RULE OF CONSTRUCTION

As used in these By-laws, terms such as “he,” “him,” and “his” shall be understood to be gender neutral and thereby include, as well, “she” and “her,” as appropriate.

EX - 99(d)(v)

Addendum to Management Agreement
between Lord Abbett Municipal Income Fund, Inc., and
Lord, Abbett & Co. LLC
Dated February 1, 2013

Effective February 1, 2013, Lord, Abbett & Co. LLC and Lord Abbett Municipal Income Fund, Inc. on behalf of its series, Lord Abbett Intermediate Tax Free Fund (the “Fund”), do hereby agree that the annual management fee rate for the Fund with respect to paragraph 2 of the management agreement dated December 15, 1994 (“Management Agreement”), shall be as follows:


	.40% of the first $2 billion of average daily net assets;
	.375% of the next $3 billion of average daily net assets;
	.35% of the next $5 billion of average daily net assets; and
	.32% of average daily net assets over $10 billion.

For purposes of Section 15 (a) of the Investment Company Act of 1940, this Addendum and the Management Agreement shall together constitute the investment advisory contract of the Fund.


	Lord Abbett Municipal Income Fund, Inc.

	By:	/s/ Thomas R. Phillips

		Thomas R. Phillips
		Vice President and Assistant Secretary

	Lord, Abbett & Co. LLC

	By:	/s/ Lawrence H. Kaplan

		Lawrence H. Kaplan
		Member and General Counsel

Dated: February 1, 2013

EX - 99(d)(vi)

Expense Limitation Agreement

This Expense Limitation Agreement (the “Agreement”) is made and entered into this 1st day of February, 2013 between Lord, Abbett & Co. LLC (“Lord Abbett”) and Lord Abbett Municipal Income Fund, Inc. (“Income Fund”) with respect to Lord Abbett Short Duration Tax Free Fund (“Short Duration Tax Free Fund”), Lord Abbett Intermediate Tax Free Fund (“Intermediate Tax Free Fund”) and Lord Abbett AMT Free Municipal Bond Fund (“AMT Free Fund”) (collectively, the “Funds”).

In consideration of good and valuable consideration, receipt of which is hereby acknowledged, it is agreed as follows:


	1.	With respect to Short Duration Tax Free Fund, Lord Abbett agrees for the time period set forth in paragraph 4 below to waive all or a portion of its management fee, waive all or a portion of its administrative services fee, and reimburse the Fund’s other expenses to the extent necessary so that total net annual operating expenses for each class, excluding 12b-1 fees and interest related expenses, if any, do not exceed an annual rate of 0.43%.

	2.	With respect to Intermediate Tax Free Fund, Lord Abbett agrees for the time period set forth in paragraph 4 below to waive all or a portion of its management fee, waive all or a portion of its administrative services fee, and reimburse the Fund’s other expenses to the extent necessary so that total net annual operating expenses for each class, excluding 12b-1 fees and interest related expenses, if any, do not exceed an annual rate of 0.49%.

	3.	With respect to AMT Free Fund, Lord Abbett agrees for the time period set forth in paragraph 4 below to waive all or a portion of its management fee, waive all or a portion of its administrative services fee, and reimburse the Fund’s other expenses to the extent necessary so that total net annual operating expenses for each class, excluding 12b-1 fees and interest related expenses, if any, do not exceed an annual rate of 0.40%.

	4.	This Agreement will be effective from February 1, 2013 through January 31, 2014. This Agreement may be terminated only by the Board of Directors of Income Fund upon written notice to Lord Abbett.

[ Signatures follow on next page]

IN WITNESS WHEREOF, Lord Abbett and the Income Fund have caused this Agreement to be executed by a duly authorized member and officer, respectively, to become effective as of the day and year first above written.


	Lord, Abbett & Co. LLC

	By:	/s/ Lawrence H. Kaplan

		Lawrence H. Kaplan
		Member and General Counsel

	Lord Abbett Municipal Income Fund, Inc.

	By:	/s/ Thomas R. Phillips

		Thomas R. Phillips
		Vice President and Assistant Secretary

-2-

EX - 99(i)

(WILMERHALE LOGO)


	Matthew A. Chambers

	+ 1 202 663 6591 (t)
	+ 1 202 553 6363 (f)
	matthew.chambers@wilmerhale.com

January 25, 2013

Lord Abbett Municipal Income Fund, Inc.
90 Hudson Street
Jersey City, NJ 07302-3972

Dear Sirs:

You have requested our opinion in connection with your filing of Post-Effective Amendment No. 65 to the Registration Statement on Form N-1A (the “Amendment”) under the Securities Act of 1933, as amended (Amendment No. 66 under the Investment Company Act of 1940, as amended), of Lord Abbett Municipal Income Fund, Inc., a Maryland corporation (the “Company”), and in connection therewith your registration of shares of capital stock, with a par value of $.001 each, of Classes A, B, C, F, and I of Lord Abbett Short Duration Tax Free Fund; Classes A, B, C, F, I, and P of Lord Abbett Intermediate Tax Free Fund; Classes A, C, F, and I of Lord Abbett AMT Free Municipal Bond Fund; Classes A, B, C, F, I, and P of Lord Abbett National Tax-Free Fund; Classes A, B, C, F, I, and P of Lord Abbett High Yield Municipal Bond Fund; Classes A, C, F, I, and P of Lord Abbett California Tax Free Fund; and Classes A, F, I, and P of Lord Abbett New Jersey Tax Free Fund, and Classes A, C, F, I, and P of Lord Abbett New York Tax Free Fund (collectively, the “Shares”).

We have examined the Articles of Incorporation and By-Laws of the Company, each as amended and restated to date, and originals, or copies certified to our satisfaction, of all pertinent records of the meetings of the directors and stockholders of the Company, the Post-Effective Amendment, the Registration Statement and such other documents relating to the Company as we have deemed material for the purposes of this opinion.

In our examination of the foregoing documents, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, photostatic or other copies, the authenticity of the originals of any such documents and the legal competence of all signatories to such documents. We have also assumed that the number of shares issued does not exceed the number authorized.

We are of the opinion that the Shares issued in the continuous offering have been duly authorized and, when issued and paid for in cash at net asset value in accordance with the terms as set forth in the Amendment, the Shares will be validly issued, fully paid, and nonassessable.

Wilmer Cutler Pickering Hale and Dorr LLP , 1875 Pennsylvania Avenue NW, Washington, DC 20006
Beijing Berlin Boston Brussels London Los Angeles New York Oxford Palo Alto Waltham Washington

(WILMERHALE LOGO)

Lord Abbett Municipal Income Fund, Inc.
January 25, 2013
Page 2

We express no opinion as to matters governed by any laws other than 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
	HALE AND DORR LLP

	By:	/s/ Matthew A. Chambers

		Matthew A. Chambers, a partner

EX - 99(j)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Post-Effective Amendment No. 65 to Registration Statement No. 002-88912 on Form N-1A of our report dated November 20, 2012, relating to the financial statements and financial highlights of Lord Abbett Short Duration Tax Free Fund, Lord Abbett Intermediate Tax Free Fund, Lord Abbett AMT Free Municipal Bond Fund, Lord Abbett National Tax-Free Income Fund, Lord Abbett High Yield Municipal Bond Fund, Lord Abbett California Tax-Free Income Fund, Lord Abbett New Jersey Tax-Free Income Fund, and Lord Abbett New York Tax-Free Income Fund, each a series of Lord Abbett Municipal Income Fund, Inc., appearing in the Annual Report on Form N-CSR of Lord Abbett Municipal Income Fund, Inc. for the year ended September 30, 2012.

We also consent to the references to us under the headings “Financial Highlights” in the Prospectus and “Independent Registered Public Accounting Firm,” “Financial Statements” and “Fund Portfolio Information Recipients” in the Statement of Additional Information, which are part of such Registration Statement.

/s/ DELOITTE & TOUCHE LLP
New York, New York
January 23, 2013

EX-99 (m)

The Lord Abbett Family of Funds
Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement
as of August 10, 2007

AMENDED AND RESTATED RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated as of August 10, 2007 by and between each of the registered, open-end management investment companies acting individually in respect of their constituent series listed on Schedule A hereto (each a “Fund”) and Lord Abbett Distributor LLC, a New York limited liability company (the “Distributor”). This Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement dated as of August 10, 2007 supersedes the Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement dated as of March 23, 2006.

WHEREAS, each Fund is an open-end management investment company or a series thereof registered under the Investment Company Act of 1940, as amended (the “Act”), and the Distributor is the exclusive selling agent of the Fund’s shares of beneficial interest or common stock, as the case may be (“Shares”), pursuant to the Distribution Agreement between the Fund and the Distributor.

WHEREAS, each Fund desires to amend and restate its Distribution Plan and Agreement by adopting and entering into this instrument on a several but not joint basis with each other Fund (as amended and restated, 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 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, with which the Distributor has entered into a dealer or similar agreement (the “Agreements”).

WHEREAS, the Fund’s Board of Directors or Trustees, as the case may be (“Board”), 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 has entered into a Distribution Agreement with the Distributor, under which the Distributor uses reasonable efforts, consistent with its other business, to secure purchasers of the Fund’s Shares. These efforts may include, but neither are required to include nor are limited to, the following: (a) making payments to Authorized Institutions in connection with sales of Shares and/or servicing of accounts of shareholders holding Shares; (b) providing continuing information and investment services to shareholder accounts not serviced by Authorized Institutions receiving a service fee from the Distributor hereunder and otherwise to encourage shareholder accounts to remain invested in the Shares; and (c) otherwise 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 2 of this Plan.

2. (a) Class A Fees .

(i) In consideration for the services provided and the expenses incurred by the Distributor pursuant to the Distribution Agreement and paragraph 1 hereof, the Fund shall pay to the Distributor an aggregate fee at the annual rate of 0.50% of the average daily net asset value of Class A Shares outstanding, subject to paragraph 3 hereof and any reduction specified on Schedule B hereto. Payments by holders of Class A Shares of contingent deferred reimbursement charges relating to distribution fees paid by the Fund hereunder shall reduce the amount of distribution fees for purposes of the annual 0.50% limit in those instances where the Fund is entitled to retain these charges. Notwithstanding the foregoing, the Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund shall pay to the Distributor an aggregate fee at the annual rate of 0.15% of the average daily net asset value of Class A Shares outstanding, subject to paragraph 3 hereof. The Distributor may use all or any portion of the distribution fee received pursuant to this paragraph to compensate Authorized Institutions that have engaged in the sale of Class A Shares or in service activities with respect to Class A Shares pursuant to the Agreements, or to pay any of the expenses associated with other activities authorized under paragraph 1 hereof.

(ii) Subject to the aggregate fee amounts set forth in paragraph 2(a)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed 0.25% of the average daily net asset value of Class A Shares outstanding, subject to any reduction specified on Schedule B hereto. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.

(b) Class B Fees .

(i) In consideration for the services provided and the expenses incurred by the Distributor pursuant to the Distribution Agreement and paragraph 1 hereof, the Fund shall pay to the Distributor an aggregate fee at the annual rate of 1.00% of the average daily net asset value of Class B Shares outstanding, subject to paragraph 3 hereof. Notwithstanding the foregoing, the Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund shall pay to the Distributor an aggregate fee at the annual rate of .75% of the average daily net asset value of Class B Shares outstanding, subject to paragraph 3 hereof. The Distributor may use all or any portion of the distribution fee received pursuant to this paragraph to compensate Authorized Institutions that have engaged in the sale of Class B Shares or in service activities with respect to the Class B Shares pursuant to the Agreements, or to pay any of the expenses associated with other activities authorized under paragraph 1 hereof.

(ii) Subject to the aggregate fee amounts set forth in paragraph 2(b)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value of Class B Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.

(ii) Subject to the aggregate fee amounts set forth in paragraph 2(c)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value of Class C Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.

(d) Class F Fees .

(ii) Subject to the aggregate fee amounts set forth in paragraph 2(d)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value of Class F Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.

(e) Class P Fees .

(ii) Subject to the aggregate fee amounts set forth in paragraph 2(e)(i) hereof,

the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value of Class P Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.

(f) Class R2 Fees .

(ii) Subject to the aggregate fee amounts set forth in paragraph 2(f)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value Class R2 Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.

(g) Class R3 Fees .

(ii) Subject to the aggregate fee amounts set forth in paragraph 2(g)(i) hereof, the Fund may attribute a portion of the distribution fee to service activities, which portion shall not exceed .25% of the average daily net asset value of Class R3 Shares outstanding. The Distributor may use all or a portion of these service fees to compensate Authorized Institutions for service activities as defined in paragraph 5 below.

3. The Board shall from time to time determine the amounts, within the foregoing maximum amounts described in paragraph 2, that the Fund may pay the Distributor hereunder. These determinations and approvals of nonmaterial amendments to this Plan by the Board shall be made and given by votes of the kind referred to in paragraph 9.

4. The net asset value of the Shares shall be determined as provided in the Prospectus and Statement of Additional Information of the Fund. Any fees payable hereunder,

which may be waived by the Distributor or Authorized Institutions in whole or in part, may be calculated and paid at least quarterly. If the Distributor waives all or a portion of the fees that are to be paid by the Fund hereunder, the Distributor shall not be deemed to have waived its rights under this Plan to have the Fund pay fees in the future. Nothing herein shall prohibit the Distributor from collecting Distribution Fees in any given year, as provided hereunder, in excess of expenditures made in that year for activities authorized under paragraph 1 hereof. The Distributor in its sole discretion may assign its right to receive fees hereunder.

5. The Distributor shall provide to the Fund’s Board, and the Board shall review at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which the expenditures were made, including amounts expended for “distribution activities” and/or “service activities.” For purposes of this Plan, “distribution activities” shall mean any activities that are not deemed “service activities.” “Service activities” shall mean activities in connection with the provision of personal, continuing services to shareholder accounts in the Shares; provided, however, that if the National Association of Securities Dealers, Inc. (“NASD”) adopts a definition of “service fee” for purposes of Section 2830(b)(9) of the NASD Conduct Rules or any successor provision that differs from the definition of “service activities” hereunder, or if the NASD adopts a related interpretive position intended to define the same concept, the definition of “service activities” in this paragraph shall be automatically amended, without further action of the parties, to conform to the then effective NASD definition. Overhead and other expenses related to “distribution activities” or “service activities,” including telephone and other communications expenses, may be included in the information regarding amounts expended for these activities.

6. The Distributor shall give the Fund the benefit of the Distributor’s reasonable 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, Board Members, or officers of the Fund; provided however, that nothing herein shall be deemed to protect the Distributor against any liability to the Fund 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.

7. This Plan shall become effective upon the date hereof, and shall continue in effect from year to year so long as the Plan, together with any related agreements, is specifically approved at least annually by votes of a majority of both (a) the Board and (b) those Board Members who are not “interested persons” of the Fund and have no direct or indirect financial interest in the operation of this Plan or any agreements related thereto (“Independent Board Members”), cast in person at a meeting called for the purpose of voting on this approval. If a Fund is a series of a registered investment company, references to the Board, Board Members and Independent Board Members shall be to that or those of the company of which the Fund is a series.

8. This Plan may not be amended to increase materially the amount to be

spent by the Fund hereunder above the maximum amounts referred to in paragraph 2 without a vote of a majority of the outstanding voting securities of the Fund in compliance with Rule 12b-1 and Rule 18f-3 under the Act or any successor statutes, rules or regulations as in effect at that time, and each material amendment must be approved in the manner provided for by paragraph 7. Because this amendment and restatement of the Plan does not increase the fees payable under the Plan as previously in effect, approval in the manner specified in paragraph 7 shall be sufficient for its adoption.

9. Amendments to this Plan other than material amendments of the kind referred to in paragraph 8 may be adopted by a majority of both (a) the Board Members and (b) the Independent Board Members. The Board may, by such a vote, interpret this Plan and make all determinations necessary or advisable for its administration.

10. This Plan may be terminated at any time without the payment of any penalty by the vote of a majority of the Independent Board Members, or by a vote of a majority of the outstanding voting securities of the Fund in compliance with Rule 12b-1 and Rule 18f-3 under the Act or any successor statute, rule or regulation as in effect at that time. This Plan shall automatically terminate in the event of its assignment.

11. So long as this Plan shall remain in effect, the selection and nomination of those Board Members of the Fund who are not “interested persons” of the Fund are committed to the discretion of the incumbent disinterested Board Members. 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.

12. The Funds are adopting and entering into this Plan on a common basis for administrative convenience and not for the reason of creating or incurring any right, privilege, obligation or liability with respect to each other. Without limiting the generality of the foregoing, the obligations of the Funds under this Plan are several and not joint, and no Fund or class of Shares shall have any liability to pay any fee for any other Fund or class of Shares. This Plan shall be severable as to any Fund at the election of the Independent Board Members of that Fund. Additional Funds or classes of Shares may be added and existing Funds or classes of Shares may be removed from the operation of this Plan without action by any other Fund or class of Shares.

13. The obligations of the Fund, including those imposed hereby, are not personally binding upon, nor shall resort be had to the private property of, any of the Board Members, shareholders, officers, employees or agents of the Fund individually, but are binding only upon the assets and property of the Fund. Any and all personal liability, either at common law or in equity, or by statute or constitution, of every Board Member, shareholder, officer, employee or agent for any breach of the Fund of any agreement, representation or warranty hereunder is hereby expressly waived as a condition of and in consideration for the execution of this Agreement by the Fund.

IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the date first above written.


	EACH OF THE FUNDS LISTED ON SCHEDULE A HERETO

	By:	/s/ Lawrence H. Kaplan

		Lawrence H. Kaplan
		Vice President & Secretary

ATTEST:

/s/ Lawrence B. Stoller

Lawrence B. Stoller
Vice President & Assistant Secretary

	LORD ABBETT DISTRIBUTOR LLC

	By:	LORD, ABBETT & CO. LLC

		Managing Member

	By:	/s/ Lawrence H. Kaplan

		Lawrence H. Kaplan
		A Member

SCHEDULE A

The Lord Abbett Family of Funds
Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement
As of November 28, 2012


FUNDS		CLASSES


Lord Abbett Affiliated Fund, Inc.		A, B, C, F, P, R2, R3

Lord Abbett Bond-Debenture Fund, Inc.		A, B, C, F, P, R2, R3

Lord Abbett Developing Growth Fund, Inc.		A, B, C, F, P, R2, R3


Lord Abbett Equity Trust
	Lord Abbett Calibrated Large Cap Value Fund	A, C, F, R2, R3
	Lord Abbett Calibrated Mid Cap Value Fund	A, C, F, R2, R3
	Lord Abbett Small-Cap Blend Fund	A, B, C, F, P, R2, R3

Lord Abbett Global Fund, Inc.
	Lord Abbett Emerging Markets Currency Fund	A, B, C, F, P, R2, R3
	Lord Abbett Global Allocation Fund	A, B, C, F, P, R2, R3

Lord Abbett Investment Trust
	Lord Abbett Balanced Strategy Fund	A, B, C, F, P, R2, R3
	Lord Abbett Convertible Fund	A, B, C, F, P, R2, R3
	Lord Abbett Core Fixed Income Fund	A, B, C, F, P, R2, R3
	Lord Abbett Diversified Equity Strategy Fund	A, B, C, F, P, R2, R3
	Lord Abbett Diversified Income Strategy Fund	A, B, C, F, P, R2, R3
	Lord Abbett Floating Rate Fund	A, B, C, F, R2, R3
	Lord Abbett Growth & Income Strategy Fund	A, B, C, F, P, R2, R3
	Lord Abbett High Yield Fund	A, B, C, F, P, R2, R3
	Lord Abbett Income Fund	A, B, C, F, P, R2, R3
	Lord Abbett Inflation Focused Fund	A, C, F, R2, R3
	Lord Abbett Short Duration Income Fund	A, B, C, F, P, R2, R3
	Lord Abbett Total Return Fund	A, B, C, F, P, R2, R3

Lord Abbett Mid Cap Stock Fund, Inc.		A, B, C, F, P, R2, R3

Lord Abbett Municipal Income Fund, Inc.
	Lord Abbett AMT Free Municipal Bond Fund	A, C, F
	Lord Abbett California Tax-Free Income Fund	A, C, F, P
	Lord Abbett High Yield Municipal Bond Fund	A, B, C, F, P
	Lord Abbett Intermediate Tax-Free Fund	A, B, C, F, P
	Lord Abbett National Tax-Free Income Fund	A, B, C, F, P
	Lord Abbett New Jersey Tax-Free Income Fund	A, F, P
	Lord Abbett New York Tax-Free Income Fund	A, C, F, P
	Lord Abbett Short Duration Tax Free Fund	A, B, C, F

Lord Abbett Research Fund, Inc.
	Lord Abbett Calibrated Dividend Growth Fund	A, B, C, F, P, R2, R3
	Lord Abbett Classic Stock Fund	A, B, C, F, P, R2, R3
	Lord Abbett Growth Opportunities Fund	A, B, C, F, P, R2, R3
	Small-Cap Value Series	A, B, C, F, P, R2, R3

Lord Abbett Securities Trust
	Lord Abbett Alpha Strategy Fund	A, B, C, F, P, R2, R3
	Lord Abbett Fundamental Equity Fund	A, B, C, F, P, R2, R3
	Lord Abbett Growth Leaders Fund	A, B, C, F, R2, R3
	Lord Abbett International Core Equity Fund	A, B, C, F, P, R2, R3
	Lord Abbett International Dividend Income Fund	A, B, C, F, R2, R3
	Lord Abbett International Opportunities Fund	A, B, C, F, P, R2, R3
	Lord Abbett Large-Cap Value Fund	A, B, C, F, P, R2, R3
	Lord Abbett Micro-Cap Growth Fund	A
	Lord Abbett Micro-Cap Value Fund	A
	Lord Abbett Value Opportunities Fund	A, B, C, F, P, R2, R3

Lord Abbett Stock Appreciation Fund		A, B, C, F, P, R2, R3

Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund, Inc.		A, B, C

SCHEDULE B

The Lord Abbett Family of Funds – Class A
Amended and Restated Joint Rule 12b-1 Distribution Plan and Agreement
As of November 28, 2012


Entity / Fund		Service fees payable with respect to Class A Shares that were initially issued, or are attributable to shares that were initially issued, by the Fund or a predecessor fund prior to [DATE] shall not exceed [RATE] of the average net asset value of such Shares:


Lord Abbett Investment Trust –		9/1/85 - .15 of 1%
Lord Abbett Income Fund

Lord Abbett Affiliated Fund		6/1/90 - .15 of 1%

Lord Abbett Bond-Debenture Fund		6/1/90 - .15 of 1%

Lord Abbett Developing Growth Fund		6/1/90 - .15 of 1%

Lord Abbett Mid Cap Stock Fund		6/1/90 - .15 of 1%

Lord Abbett Municipal Income Fund –		6/1/90 - .15 of 1%
Lord Abbett National Tax-Free Income Fund

Lord Abbett Municipal Income Fund –		6/1/90 - .15 of 1%
Lord Abbett New York Tax-Free Income Fund

Lord Abbett Municipal Income Fund –		7/1/92 -.15 of 1%
Lord Abbett New Jersey Tax-Free Income Fund

EX-99 (n)

The Lord Abbett Family of Funds

Amended and Restated Plan as of July 1, 2008

Pursuant to Rule 18f-3(d)
under the Investment Company Act of 1940
(Originally adopted August 15, 1996)

Rule 18f-3 (the “Rule”) under the Investment Company Act of 1940, as amended (the “1940 Act”), requires that the Board of Directors or Trustees of an investment company desiring to offer multiple classes pursuant to the Rule adopt a plan setting forth the separate arrangement and expense allocation of each class, and any related conversion features or exchange privileges. This document constitutes an amended and restated plan (the “Plan”) of each of the investment companies, or series thereof, listed on Schedule A attached hereto (each, a “Fund”). The Plan of any Fund is subject to amendment by action of the Board of Directors or Trustees (the “Board”) of such Fund and without the approval of shareholders of any class, to the extent permitted by law and by the governing documents of such Fund.

The Board, including a majority of the non-interested Board members, has determined that the following separate arrangement and expense allocation, and the related conversion features, if any, and exchange privileges, of each class of each Fund are in the best interest of each class of each Fund individually and each Fund as a whole.

1. CLASS DESIGNATION .

Shares of all Funds except Lord Abbett Series Fund, Inc. shall be divided into Class A, Class B, Class C, Class F, Class P, Class R2, Class R3, and Class I shares as indicated for each Fund on Schedule A attached hereto. In the case of the Lord Abbett Series Fund, Inc., shares of the Growth and Income Portfolio shall be divided into Variable Contract Class shares (Class VC shares) and Class P shares and shares of all other Portfolios shall be comprised of one class of shares as indicated on Schedule A, each of which shall also be known as Class VC shares of the respective Portfolio.

2. SALES CHARGES AND DISTRIBUTION AND SERVICE FEES .

(a) Initial Sales Charge . Class A shares will be traditional front-end sales charge shares, offered at their net asset value (“NAV”) plus a sales charge in the case of each Fund as described in such Fund’s prospectus as from time to time in effect.

Class B shares, Class C shares, Class F shares, Class P shares, Class R2 shares, Class R3 shares, Class I shares, and Class VC shares will be offered at their NAV without an initial sales charge.

(b) Service and Distribution Fees . As to the shares of Class A, Class B, Class C, Class F, Class P, Class R2, and Class R3, each Fund will pay service and/or distribution fees under the Plan from time to time in effect adopted for such classes pursuant to Rule 12b-1 under

the 1940 Act (the “Joint 12b-1 Plan”), at such rates as are set by its Board.

Pursuant to the Joint 12b-1 Plan as to the Class A shares, if effective, each Fund will generally pay distribution fees at an aggregate fee at the annual rate of 0.35% of the average daily NAV of the Class A share accounts, or such other rate as set by the Board from time to time. The Board has the authority to increase the total fees payable under the Joint 12b-1 Plan by a vote of the Board, including a majority of the independent members thereof, up to an aggregate fee at the annual rate of 0.50% of the average daily NAV of the Class A shares. The effective dates of the Joint 12b-1 Plan for the Class A shares are based on achievement by the Funds of specified total net assets for the Class A shares of such Funds.

Pursuant to the Joint 12b-1 Plan as to the Class B shares, if effective, each Fund will generally pay an aggregate fee at the annual rate of up to 1.00% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time.

Pursuant to the Joint 12b-1 Plan as to the Class C shares, if effective, each Fund will generally pay an aggregate fee at an annual rate of up to 1.00% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time.

Pursuant to the Joint 12b-1 Plan as to the Class F shares, if effective, each Fund will generally pay an aggregate fee at an annual rate of up to 0.10% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time. The Board has the authority to increase the distribution fees payable under such 12b-1 Plan by a vote of the Board, including a majority of the independent members thereof, up to an aggregate fee at the annual rate of 1.00% of the average daily NAV of the Class F shares.

Pursuant to the Joint 12b-1 plan as to the Class P shares, if operational, each Fund will generally pay an aggregate fee at an annual rate of up to 0.45% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time. The Board has the authority to increase the distribution fees payable under such 12b-1 Plan by a vote of the Board, including a majority of the independent members thereof, up to an annual rate of 0.75% of the average daily NAV of the Class P shares.

Pursuant to the Joint 12b-1 Plan as to the Class R2 shares, if effective, each Fund will generally pay an aggregate fee at an annual rate of up to 0.60% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time. The Board has the authority to increase the distribution fees payable under such 12b-1 Plan by a vote of the Board, including a majority of the independent members thereof, up to an annual rate of 1.00% of the average daily NAV of the Class R2 shares.

Pursuant to the Joint 12b-1 Plan as to the Class R3 shares, if effective, each Fund will generally pay an aggregate fee at an annual rate of up to 0.50% of the average daily NAV of such shares then outstanding, or such other rate as set by the Board from time to time. The Board has the authority to increase the distribution fees payable under such 12b-1 Plan by a vote of the Board, including a majority of the independent members thereof, up to an annual rate of 1.00% of the average daily NAV of the Class R3 shares.

The Class VC shares do not have a Rule 12b-1 Plan. However, pursuant to a separate

Services Agreement for the Class VC shares, each Fund will generally pay an aggregate fee at an annual rate of up to 0.25% of the average daily NAV of such shares then outstanding to certain insurance companies for the service and maintenance of shareholder accounts, or such other rate as set by the Board from time to time.

The Class I shares do not have a Rule 12b-1 Plan.

(c) Contingent Deferred Sales Charges (“CDSC”) . Subject to some waiver exceptions, Class A shares purchased in amounts of $1 million or more will be subject to a CDSC equal to 1.00% of the lower of the cost or the NAV of such shares if the shares are redeemed for cash on or before the first day of the month in which the one-year anniversary of the original purchase falls.

Class B shares will be subject to a CDSC ranging from 5.00% to 1.00% of the lower of the cost or the NAV of the shares, if the shares are redeemed for cash before the sixth anniversary of their purchase. The CDSC for the Class B shares may be waived for certain transactions. Class C shares will be subject to a CDSC equal to 1.00% of the lower of the cost or the NAV of the shares if the shares are redeemed for cash before the first anniversary of their purchase.

The Class F, Class P, Class R2, Class R3, and Class I shares will not be subject to a CDSC.

3. CLASS-SPECIFIC EXPENSES .

The following expenses shall be allocated, to the extent such expenses can reasonably be identified as relating to a particular class and consistent with Revenue Procedure 96-47, on a class-specific basis: (a) fees under the Joint 12b-1 Plan applicable to a specific class (net of any CDSC paid with respect to shares of such class and retained by the Fund) and any other costs relating to implementing or amending such Plan, including obtaining shareholder approval of such Plan or any amendment thereto; (b) transfer and shareholder servicing agent fees and shareholder servicing costs identifiable as being attributable to the particular provisions of a specific class; (c) stationery, printing, postage and delivery expenses related to preparing and distributing materials such as shareholder reports, prospectuses and proxy statements to current share holders of a specific class; (d) Securities and Exchange Commission registration fees incurred by a specific class; (e) Board fees or expenses identifiable as being attributable to a specific class; (f) fees for outside accountants and related expenses relating solely to a specific class; (g) litigation expenses and legal fees and expense relating solely to a specific class; (h) expenses incurred in connection with shareholders meetings as a result of issues relating solely to a specific class and (i) other expenses relating solely to a specific class, provided, that advisory fees and other expenses related to the management of a Fund’s assets (including custodial fees and tax-return preparation fees) shall be allocated to all shares of such Fund on the basis of NAV, regardless of whether they can be specifically attributed to a particular class. All common expenses shall be allocated to shares of each class at the same time they are allocated to the shares of all other classes. All such expenses incurred by a class of shares will be charged directly to the net assets of the particular class and thus will be borne on a pro rata basis by the outstanding shares of such class. For all Funds, with the exception of Series Fund, each Fund’s

Blue Sky expenses will be treated as common expenses. In the case of Series Fund, Blue Sky expenses will be allocated entirely to Class P, as the Class VC of Series Fund has no Blue Sky expenses.

4. INCOME AND EXPENSE ALLOCATIONS .

Income, realized and unrealized capital gains and losses and expenses not allocated to a class as provided above shall be allocated to each class on the basis of the net assets of that class in relation to the net assets of the Fund, except that, in the case of each daily dividend Fund, income and expenses shall be allocated on the basis of relative net assets (settled shares).

5. DIVIDENDS AND DISTRIBUTIONS .

Dividends and distributions paid by a Fund on each class of its shares, to the extent paid, will be calculated in the same manner, will be paid at the same time, and will be in the same amount, except that the amount of the dividends declared and paid by a particular class may be different from that paid by another class because of expenses borne exclusively by that class.

6. NET ASSET VALUES .

The NAV of each share of a class of a Fund shall be determined in accordance with the Articles of Incorporation or Declaration of Trust of such Fund with appropriate adjustments to reflect the allocations of expenses, income and realized and unrealized capital gains and losses of such Fund between or among its classes as provided above.

7. CONVERSION FEATURES .

The Class B shares will automatically convert to Class A shares 8 years after the date of purchase. Such conversion will occur at the relative NAV per share of each Class without the imposition of any sales charge, fee or other charge. When Class B shares convert, any other Class B shares that were acquired by the shareholder by the reinvestment of dividends and distributions will also convert to Class A shares on a pro rata basis. The conversion of Class B shares to Class A shares after 8 years is subject to the continuing availability of a private letter ruling from the Internal Revenue Service or an opinion of counsel to the effect that the conversion does not constitute a taxable event for the Class B shareholder 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.

Subject to amendment by the Board, none of the other classes of shares shall be subject to any automatic conversion feature.

8. EXCHANGE PRIVILEGES .

Except as set forth in a Fund’s prospectus as from time to time in effect, shares of any class of such Fund may be exchanged, at the holder’s option, for shares of the same class of

another Fund, or other Lord Abbett-sponsored fund or series thereof, without the imposition of any sales charge, fee or other charge. In addition, shares of Classes F, P, R2, and R3 may be exchanged for Class A shares, but such an exchange will be subject to the imposition of a sales charge to the same extent as any purchase of Class A shares for cash.

* * *

This Plan is qualified by and subject to the terms of the then current prospectus for the applicable Fund; provided, however, that none of the terms set forth in any such prospectus shall be inconsistent with the terms contained herein. The prospectus for each Fund contains additional information about that Fund’s classes and its multiple-class structure.

This Plan has been adopted for each Fund with the approval of, and all material amendments thereto must be approved by, a majority of the members of the Board of such Fund, including a majority of the Board members who are not interested persons of the Fund.

SCHEDULE A

As of November 28, 2012

The Lord Abbett Family of Funds


FUNDS		CLASSES

Lord Abbett Affiliated Fund, Inc.		A, B, C, F, I, P, R2, R3

Lord Abbett Bond-Debenture Fund, Inc.		A, B, C, F, I, P, R2, R3

Lord Abbett Developing Growth Fund, Inc.		A, B, C, F, I, P, R2, R3

Lord Abbett Equity Trust
	Lord Abbett Calibrated Large Cap Value Fund	A, C, F, I, R2, R3
	Lord Abbett Calibrated Mid Cap Value Fund	A, C, F, I, R2, R3
	Lord Abbett Small-Cap Blend Fund	A, B, C, F, I, P, R2, R3

Lord Abbett Global Fund, Inc.
	Lord Abbett Emerging Markets Currency Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Global Allocation Fund	A, B, C, F, I, P, R2, R3

Lord Abbett Investment Trust
	Lord Abbett Balanced Strategy Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Convertible Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Core Fixed Income Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Diversified Equity Strategy Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Diversified Income Strategy Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Floating Rate Fund	A, B, C, F, I, R2, R3
	Lord Abbett Growth & Income Strategy Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett High Yield Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Income Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Inflation Focused Fund	A, C, F, I, R2, R3
	Lord Abbett Short Duration Income Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Total Return Fund	A, B, C, F, I, P, R2, R3

Lord Abbett Mid Cap Stock Fund, Inc.		A, B, C, F, I, P, R2, R3

Lord Abbett Municipal Income Fund, Inc.
	Lord Abbett AMT Free Municipal Bond Fund	A, C, F, I
	Lord Abbett California Tax-Free Income Fund	A, C, F, I, P
	Lord Abbett High Yield Municipal Bond Fund	A, B, C, F, I, P
	Lord Abbett Intermediate Tax Free Fund	A, B, C, F, I, P
	Lord Abbett National Tax-Free Income Fund	A, B, C, F, I, P

	Lord Abbett New Jersey Tax-Free Income Fund	A, F, I, P
	Lord Abbett New York Tax-Free Income Fund	A, C, F, I, P
	Lord Abbett Short Duration Tax Free Fund	A, B, C, F, I

Lord Abbett Research Fund, Inc.
	Lord Abbett Calibrated Dividend Growth Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Classic Stock Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Growth Opportunities Fund	A, B, C, F, I, P, R2, R3
	Small-Cap Value Series	A, B, C, F, I, P, R2, R3

Lord Abbett Securities Trust
	Lord Abbett Alpha Strategy Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Fundamental Equity Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Growth Leaders Fund	A, B, C, F, I, R2, R3
	Lord Abbett International Core Equity Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett International Dividend Income Fund	A, B, C, F, I, R2, R3
	Lord Abbett International Opportunities Fund	A, B, C, F, I, P, R2, R3
	Lord Abbett Micro-Cap Growth Fund	A, I
	Lord Abbett Micro-Cap Value Fund	A, I
	Lord Abbett Value Opportunities Fund	A, B, C, F, I, P, R2, R3

Lord Abbett Series Fund, Inc.
	Bond-Debenture Portfolio	VC
	Calibrated Dividend Growth Portfolio	VC
	Classic Stock Portfolio	VC
	Developing Growth Portfolio	VC
	Fundamental Equity Portfolio	VC
	Growth and Income Portfolio	VC, P
	Growth Opportunities Portfolio	VC
	International Core Equity Portfolio	VC
	International Opportunities Portfolio	VC
	Mid Cap Stock Portfolio	VC
	Total Return Portfolio	VC
	Value Opportunities Portfolio	VC

Lord Abbett Stock Appreciation Fund		A, B, C, F, I, P, R2, R3

Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund, Inc.		A, B, C, I

EX-99 (p)


		Code of Ethics dated October, 2012

LORD, ABBETT & CO. LLC

LORD ABBETT DISTRIBUTOR LLC

(together, “Lord Abbett”)

AND

LORD ABBETT FAMILY OF FUNDS (the “Funds”)

CODE OF ETHICS


I.	Standards of Business Conduct and Ethical Principles

	Lord Abbett’s focus on honesty and integrity has been a critical part of its culture since the firm’s founding in 1929. Lord Abbett is a fiduciary to the Funds and to its other clients. In recognition of these fiduciary obligations, the personal investment activities of any officer, director, trustee or employee of the Funds, any partner or employee of Lord Abbett, and, in certain circumstances set forth below, non-Lord-Abbett employees and consultants to Lord Abbett will be governed by the following general principles: (1) Covered Persons ¹ have a duty at all times to place first the interests of Fund shareholders and, in the case of employees and partners of Lord Abbett, beneficiaries of managed accounts; (2) all securities transactions by Covered Persons shall be conducted consistent with this Code and in such a manner as to avoid any actual or potential conflict of interest or any abuse of an individual’s position of trust and responsibility; (3) Covered Persons should not take inappropriate advantage of their positions with Lord Abbett or the Funds; (4) Covered Persons must comply with the Federal Securities Laws; and (5) Covered Persons are required to maintain all internally distributed and/or proprietary information as confidential; this information should not be disclosed or discussed with people outside Lord Abbett.

II.	Specific Requirements, Prohibitions and Limits

	Except as set forth below, no Covered Person shall purchase or sell a security, except an Excepted Security, if there has been a determination to purchase or sell such security for a Fund (or, in the case of any employee or partner of Lord Abbett, for another client of Lord Abbett), or if such a purchase or sale is under consideration for a Fund (or, in the case of an employee or partner of Lord Abbett, for another client of Lord Abbett). Also, no Covered Person may have any dealing in any such security in any account in which the Covered Person has Beneficial Ownership, nor may a Covered Person disclose the information to anyone on other than a need-to-know basis, until such purchase, sale or contemplated action has either been completed or abandoned. Lord Abbett partners and employees that participate in non-public investor meetings (i.e., earnings meetings / calls, analysts’ group meetings, and the like) ² with the management of an issuer or that otherwise “cover” or “follow” an issuer in their role as a Lord

¹ See Definitions in Section IX

² Participation in web events and other broad forums for company management open to buy- and sell-side firms will not be treated as a non-public investor meeting with company management for purposes of this restriction.

Lord, Abbett & Co. LLC Code of Ethics

Updated October 2012


	Abbett partner or employee are prohibited from requesting approval to purchase or sell the issuer’s securities for a period of six (6) months following the later of the most recent investor meeting and/or termination of coverage of that issuer.

	Except as set forth below, no Covered Person shall submit more than 20 requests to purchase or sell a security (typically, by utilizing Personal Trade Assistant (PTA) - “PreClearance Entry”, an automated application for employee personal trading compliance accessed through Lord Abbett’s intranet) in any single calendar year, nor shall any such person cause the execution of more than 10 covered transactions during any one calendar year. ³

	Temporary employees and consultants must comply with the reporting and personal securities transaction requirements of the Code if they work at Lord Abbett for more than six (6) months; they must comply with the requirements related to permitted brokerage firms if they work at Lord Abbett for more than 12 months. For purposes of calculating the relevant time period for these requirements, any period of service following a break in service of six (6) months or more will be treated as the only relevant service period.

III.	Obtaining Advance Approval

	Except as provided in Sections V and VI of this Code, all proposed transactions in securities (privately or publicly held and/or traded) by Covered Persons, or with respect to which a Covered Person is a Beneficial Owner, except transactions in Excepted Securities and Excepted Transactions, should be approved consistent with the provisions of this Code. Except as directed otherwise, in order to obtain approval, the Covered Person must electronically submit their request to the Compliance Group within the Legal Department (“Compliance”) utilizing PTA. After approval has been obtained, the Covered Person may act on it within the two business days following the date of approval, unless he sooner learns of a contemplated action by Lord Abbett. After the two business days, or upon hearing of such contemplated action, a new approval must be obtained.

	Furthermore, in addition to the above requirements, partners and employees directly involved must disclose information they may have concerning securities they may want to purchase or sell to any portfolio manager who might be interested in the securities for the portfolios they manage.

	Lord Abbett will suspend the ability of all Covered Persons to engage in proposed investment transactions that require pre-approval during any business interruption that makes it impracticable for the Compliance Group to follow its normal practices in seeking Investment Department approvals for such transactions.

³ As set forth below, Transactions in Excepted Securities, Fully Discretionary Accounts, and Excepted Transactions do not require pre-approval and do not count against the maximum annual request and transaction allowances. The “20 request” limit applies to the cumulative total of all transaction requests for all of an employee’s covered accounts.


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	2


IV.	Reporting and Certification Requirements; Brokerage Confirmations

	(1)	Except as provided in Sections V and VI of this Code, within 30 days following the end of each calendar quarter each Covered Person must electronically file with Compliance a Personal Securities Transaction Reporting Form utilizing PTA. The form must be submitted whether or not any security transaction has been effected. If any transaction has been effected during the quarter for the Covered Person’s account or for any account in which he has a direct or indirect Beneficial Ownership, it must be reported. Excepted from this reporting requirement are transactions effected in any accounts over which the Covered Person has no direct or indirect influence or control (a “Fully Discretionary Account,” as defined in Section VI) and transactions in Excepted Securities. Securities acquired in an Excepted Transaction should be reported, except that securities acquired through an automatic investment plan do not need to be reported, unless any transaction is outside the pre-set schedule or a pre-existing allocation. Lord Abbett’s Chief Compliance Officer (“CCO”) and/or persons under his direction are responsible for reviewing these transactions and must bring any apparent violation to the attention of Lord Abbett’s General Counsel (“GC”). The Personal Securities Transaction Reporting Form of the CCO shall be reviewed by the GC.

	(2)	Each employee and partner of Lord Abbett will upon commencement of employment (within 10 business days) (the “Initial Report”) and annually thereafter (the “Annual Report”) disclose all personal securities holdings and annually certify that: (i) they have read and understand this Code and recognize they are subject hereto; and (ii) they have complied with the requirements of this Code and disclosed or reported all securities transactions required to be disclosed or reported pursuant to the requirements of this Code. Security holdings information for the Initial Report and the Annual Report must be current as of a date not more than 45 days prior to the date of that Report. Securities holdings of Lord Abbett Mutual Funds purchased directly from the Fund or purchased through the Lord Abbett 401(k) Retirement Plan are not required to be disclosed. Lord Abbett employees and partners must disclose holdings of Lord Abbett Mutual Funds purchased through a broker/dealer other than Lord Abbett Distributor LLC.

	(3)	Each employee, partner, and any temporary employee or consultant that works at Lord Abbett for more than 12 months must maintain all securities brokerage accounts of which they are a beneficial owner only at brokerage firms that appear on a list of approved brokerage firms available from Compliance.

	(4)	Each employee and partner of Lord Abbett will direct his brokerage firms to send copies or electronic transmissions of all trade confirmations and all monthly and/or quarterly statements directly to Compliance.

	(5)	Each employee and partner of Lord Abbett who has a Fully-Discretionary Account shall disclose all pertinent facts regarding such Account to Lord Abbett’s CCO upon commencement of employment. Each such employee or partner shall thereafter annually certify on the prescribed form that he or she has not and will not exercise any direct or indirect influence or control over such Account, and has not discussed any


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	3


	potential investment decisions with such independent fiduciary in advance of any such transactions. Such independent fiduciary shall confirm initially, and annually thereafter, the accuracy of the facts as stated by the Lord Abbett employee or partner.


V.	Special Provisions Applicable to Outside Directors and Trustees of the Funds

	The primary function of the Outside Directors and Trustees of the Funds is to set policy and monitor the management performance of the Funds’ officers and employees and the partners and employees of Lord Abbett involved in the management of the Funds. Although they receive information after the fact as to portfolio transactions by the Funds, Outside Directors and Trustees are not given advance information as to the Funds’ contemplated investment transactions.

	An Outside Director or Trustee wishing to purchase or sell any security will therefore generally not be required to obtain advance approval of his security transactions. If, however, during discussions at Board meetings or otherwise an Outside Director or Trustee should learn in advance of the Funds’ current or contemplated investment transactions, then advance approval of transactions in the securities of such company(ies) shall be required for a period of 30 days from the date of such Board meeting. In addition, an Outside Director or Trustee can voluntarily obtain advance approval of any security transaction or transactions at any time.

	No report described in Section IV (1) will be required of an Outside Director or Trustee unless he knew, or in the ordinary course of fulfilling his official duties as a director or trustee should have known, at the time of his transaction, that during the 15-day period immediately before or after the date of the transaction (i.e., a total of 30 days) by the Outside Director or Trustee such security was or was to be purchased or sold by any of the Funds or such a purchase or sale was or was to be considered by a Fund. If he makes any transaction requiring such a report, he must report all securities transactions effected during the quarter for his account or for any account in which he has a direct or indirect Beneficial Ownership interest and over which he has any direct or indirect influence or control. Each Outside Director and Trustee will direct his brokerage firm to send copies of all confirmations of securities transactions to Compliance, and annually make the certification required under Section IV(2)(i) and (ii). Outside Directors’ and Trustees’ transactions in Excepted Securities are excepted from the provisions of this Code.

	It shall be prohibited for an Outside Director or Trustee to trade on material non-public information. Prior to accepting an appointment as a director of any public company, an Outside Director or Trustee will advise Lord Abbett and discuss with Lord Abbett’s Managing Partner whether accepting such appointment creates any conflict of interest or other issues.

	If an Outside Director or Trustee, who is a director or an employee of, or consultant to, a company, receives a grant of options to purchase securities in that company (or an affiliate), neither the receipt of such options, nor the exercise of those options and the receipt of the underlying security, requires advance approval from Lord Abbett. Further, neither the receipt


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	4


	nor the exercise of such options and receipt of the underlying security is reportable by such Outside Director or Trustee.

VI.	Additional Requirements and Exceptions relating to Partners and Employees of Lord Abbett

	A. It shall be prohibited for any partner or employee of Lord Abbett:

	(1)	To give or accept favors or preferential treatment of any kind or gift or other thing (other than an occasional meal or ticket to a sporting event or theatre, or comparable entertainment, which is neither so frequent nor so extensive as to raise any question of propriety) having a value of more than $100 from any person or entity that does business with or on behalf of the Funds; provided, however, that a partner or employee, acting on behalf of Lord Abbett, may give one or more gifts individually or collectively valued at more than $100 to an investment advisory client or intermediary not subject to regulation as a broker-dealer in the U.S. (but in no event to an investor in shares of the Funds), if such gift(s) are approved by Lord Abbett’s Managing Partner or the partner responsible for the Institutional Marketing Department and by Lord Abbett’s GC. For additional information on gifts and entertainment, please refer to Lord Abbett’s Gifts and Entertainment Policy and Procedures;

	(2)	to trade on material non-public information or otherwise fail to comply with the Firm’s Insider Trading and Receipt of Material Non Public Information Policy and Procedure (“Insider Trading policy”) adopted pursuant to Section 15(f) of the Securities Exchange Act of 1934 and Section 204A of the Investment Advisers Act of 1940. For additional information regarding these policies and procedures, please refer to Lord Abbett’s Insider Trading policy;

	(3)	to trade in options, for other than a Lord Abbett - managed account, with respect to securities covered under this Code;

	(4)	to profit in the purchase and sale, or sale and purchase, of the same (or equivalent) securities, for other than a Lord Abbett - managed account, within 60 calendar days (holding periods will be calculated based on a “first-in, first-out” methodology) (any profits realized on such short-term trades shall be disgorged to the appropriate Fund or as otherwise determined);

	(5)	to trade in futures or options on commodities, currencies or other financial instruments, although the Firm reserves the right to make rare exceptions in unusual circumstances which have been approved by the Firm in advance;

	(6)	to engage in short sales or purchase securities on margin;

	(7)	to buy or sell any security within seven business days before or after any Fund (or other Lord Abbett client) trades in that security (any profits realized on trades within the proscribed periods shall be disgorged to the Fund (or the other client) or as otherwise determined.) The GC or CCO has the authority to exempt a transaction or series of transactions from this requirement if they do not appear to present a conflict of interest based on the facts provided;


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	5


	(8)	to subscribe to new or secondary public offerings, for other than a Lord Abbett-managed account, even though the offering is not one in which the Funds or Lord Abbett’s advisory accounts are interested;

	(9)	to become a director of any company without Lord Abbett’s prior consent and implementation of appropriate safeguards against conflicts of interest;

	(10)	to engage in market timing activities with respect to the Funds;

	(11)	to purchase any security of a company that has a market capitalization at the time of purchase below $3 billion, for other than a Lord Abbett-managed account ⁴ ;

	(12)	to participate in an outside business activity without Lord Abbett’s prior consent;

	(13)	to purchase interests issued in a private placement (i.e., a security that has not been registered with the SEC or other relevant regulatory agency) (other than (a) interests in any employee’s stock bonus, pension, or profit sharing trust which meets the requirements for qualification under section 401 of the Internal Revenue Code of 1986, (b) any government plan, (c) any collective trust fund consisting solely of retirement assets, or (d) privately placed interests purchased through a Fully Discretionary Account) including, but not limited to privately offered funds that are commonly referred to as “hedge funds”; or

	(14)	to own 5% or more of the outstanding shares of an open-end, registered investment company other than one or more Lord Abbett Funds ⁵ .

	B. Required Minimum Holding Periods – Lord Abbett Funds:
	Any purchase of a Fund (other than Lord Abbett U.S. Government & Government Sponsored Enterprises Money Market Fund) by a partner or employee of Lord Abbett (whether with respect to the Lord Abbett 401(k) Retirement Plan or in any other account) must be held for a minimum of 30 days, except as provided herein ⁶ . This 30-day minimum holding period also applies to any other mutual fund advised or sub-advised by Lord Abbett. Holding periods will be calculated based on a “first-in, first-out” methodology. Notwithstanding the foregoing, for a period of up to 90 calendar days beginning on (and counting) the first business day on which a newly-offered Fund accepts investments from Lord Abbett partners and/or employees, no minimum holding period applies to exchanges of Fund shares for shares of the newly offered Fund. Any request for an exception to this requirement must be approved in writing in advance

⁴ Purchases of exchange traded funds (ETF) or closed-end funds are not subject to the $3 billion market capitalization requirement.

⁵ Ownership of 5% or more of the outstanding shares of an open-end registered investment company will not result in a penalty as set forth in Section VII of this Code, provided that the employee reduces his/her ownership of such fund below 5% within 60 days from the date the employee knows or should have known that his/her ownership of such fund was equal to or exceeded 5%.

⁶ The sale or re-allocation of shares of the Lord Abbett Fund that is the default investment for automatically enrolled participants in Lord Abbett’s retirement plan held less than 30 days will not be considered a violation of this policy.


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	6


	by Lord Abbett’s Managing Partner and by its GC or CCO (or by their respective designees). Lord Abbett shall promptly report to the Funds’ Boards any approved exception request to this minimum holding period.

	C. Exceptions:

	(1)	Exception - Private Placements:

	Investments in private placements will be permitted only in Fully Discretionary Accounts, in certain employee’s retirement plan securities, and by exception approved by the GC or CCO, in each case as more fully described elsewhere in this Code. Privately placed securities that are prohibited under the Code, but were owned by a covered person prior to employment by Lord Abbett, or that may be received through an inheritance or other gift, may be retained provided that no further discretionary investments may be made into such private placement.

	(2)	Exception – Spouse’s Receipt of Certain Options:
	If a spouse of a partner or employee of Lord Abbett who is a director or an employee of, or a consultant to, a company, receives a grant of options to purchase securities in that company (or an affiliate), neither the receipt nor the exercise of those options requires advance approval from Lord Abbett or reporting. Any subsequent sale of the security acquired by the option exercise by that spouse would require advance approval and is a reportable transaction.

	(3)	Exception - Fully Discretionary Accounts:
	Advance approval is not required for transactions in any account of a Covered Person if the Covered Person has no direct or indirect influence or control with respect to transactions in the account (a “Fully-Discretionary Account”). A Covered Person will be deemed to have “no direct or indirect influence or control” over an account only if: (i) investment discretion for the account has been delegated to an independent fiduciary and such investment discretion is not shared with the employee; (ii) the Covered Person certifies in writing that he or she has not and will not discuss any potential investment decisions with such independent fiduciary before any transaction; (iii) the independent fiduciary confirms in writing the representations by the Covered Person regarding the Covered Person’s having no direct or indirect influence or control over the account; ⁷ and (iv) the CCO of Lord Abbett has determined that the account satisfies these requirements. Annually thereafter, the Covered Person and the independent fiduciary shall certify in writing that the representations of subparagraphs (ii) and (iii) of this paragraph remain correct. Transactions in Fully-Discretionary Accounts by an employee or partner of Lord Abbett are not subject to the post-trade reporting requirements of this Code.

⁷ Certain accounts managed by third parties that are registered investment advisers, such as separately managed accounts in programs sponsored by broker-dealers (SMAs), will not be subject to the requirement of a written verification by the independent fiduciary. For such accounts, the Covered Person will continue to be required to certify annually in writing that he or she has not and will not discuss potential investment decisions with the independent fiduciary.


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	7


	(4)	Exception – New Employee’s Liquidation of Securities:
	Within 30 calendar days of the first day of employment with Lord Abbett, newly-hired Partners and/or Employees ⁸ may seek an exemption from the limit on the number of executed trades allowable in each calendar year to permit the sale (but not the purchase) of securities owned by the Partner / Employee. Any such exemption must be written and approved by the GC or the CCO. The Partner / Employee must comply with any conditions set forth in the exemption.

VII.	Enforcement and Reporting of Violations

	The GC for Lord Abbett and Lord Abbett’s CCO are charged with the responsibility of enforcing this Code, and may appoint one or more employees to aid them in carrying out their enforcement responsibilities. The CCO shall implement a procedure to monitor compliance with this Code through an ongoing review of personal trading records provided under this Code against transactions in the Funds and managed portfolios. Any violation of this Code of Ethics must be reported promptly to Lord Abbett’s CCO, or, in his absence, to Lord Abbett’s GC. The CCO shall bring to the attention of the Funds’ Audit Committees any apparent violations of this Code, and the action which has been taken by Lord Abbett as a result of such violation, and the Funds’ Audit Committees shall consider what additional action, if any, is appropriate. The record of any violation of this Code and any action taken as a result thereof, which may include suspension or removal of the violator from his position, shall be made a part of the permanent records of the Audit Committees of the Funds. Lord Abbett shall provide each employee and partner with a copy of this Code, and of any amendments to the Code, and each employee and partner shall acknowledge, in writing, his or her receipt of the Code and any amendment, which may be provided electronically. Lord Abbett’s GC shall prepare an Annual Issues and Certification Report to the directors or trustees of the Funds that (a) summarizes Lord Abbett’s procedures concerning personal investing, including the procedures followed by Lord Abbett in determining whether to give approvals under Section III and the procedures followed by Compliance in determining whether any Funds have determined to purchase or sell a security or are considering such a purchase or sale, and any changes in those procedures during the past year, and certifies to the directors or trustees that the procedures are reasonably necessary to prevent violations, and (b) identifies any recommended changes in the restrictions imposed by this Code or in such procedures with respect to the Code and any changes to the Code based upon experience with the Code, evolving industry practices or developments in the regulatory environment, and (c) summarizes any apparent violations of this Code over the past year and any sanctions imposed by Lord Abbett in response to those violations, including any additional action taken by the Audit Committee of each of the Funds with respect to any such violation.

	The Audit Committee of each of the Funds, or Lord Abbett’s Managing Partner, GC or CCO may determine in particular cases that a proposed transaction or proposed series of transactions does not conflict with the policy of this Code and exempt such transaction or series of transactions from one or more provisions of this Code.

8 Temporary employees and consultants that become subject to the personal securities transaction requirements of this Code also may request such an exemption.


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	8


VIII.	Whistleblower Policy and Procedures

	Lord Abbett expects its employees to report complaints or concerns regarding corporate fraud, internal controls, violations of law or unethical business conduct. More information concerning this policy and the related procedures is contained in Lord Abbett’s “Whistleblower Policy and Procedures.”

IX.	Definitions

	“Covered Person” means any officer, trustee, director or employee of any of the Funds and any partner or employee of Lord Abbett. (See also definition of “Beneficial Ownership.”)

	“Excepted Securities” are bankers’ acceptances, bank certificates of deposit, commercial paper, and other high quality short-term debt instruments, including repurchase agreements, shares of money market funds, shares of other U.S. registered open-end investment companies (other than the Lord Abbett Funds or other funds for which Lord Abbett acts as the investment adviser or sub-adviser) and direct obligations of the U.S. Government. Transactions in Excepted Securities do not require prior approval or reporting. Please note that shares of closed-end investment companies, exchange traded unit-investment trusts (“UITs”) and exchange traded funds (“ETFs”) are all treated as common stock under the Code. Also please note that the exception for other mutual funds includes only open-end funds registered in the U.S., and that transactions and holdings in offshore funds are reportable. In addition, equity securities issued by U.S. Government agencies, authorities or instrumentalities are not considered “Excepted Securities.”

	“Excepted Transactions” means transactions in the shares of the Lord Abbett Funds or other mutual funds for which Lord Abbett acts as the investment adviser or sub-adviser; transactions in debt securities issued by U.S. Government agencies, authorities or instrumentalities; securities acquired through tender offers or spin-offs; securities received due to a merger or acquisition; the sale of 300 shares or less of a S&P 500 stock; and any securities purchased through an automatic investment plan, such as Dividend Reinvestment Programs (“DRIPs”) and/or Employee Stock Ownership Plans (“ESOPs”). Please note that any sales made from DRIPs and/or ESOPs require pre-approval as described in Section III of this Code. ⁹

	“Outside Directors and Trustees” are directors and trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended.

⁹ Excepted Transactions do not require prior approval, but all Excepted Transactions are subject to the reporting requirements of Section IV and VI. No report, however, is required with respect to transactions effected pursuant to an automatic investment plan, such as DRIPs and ESOPs, except that any transaction that overrides the pre-set schedule or a pre-existing allocation of the automatic investment plan must be included in the next Personal Securities Transaction Reporting Form filed following that transaction.


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	9

“Security” means any stock, bond, debenture or in general any instrument commonly known as a security and includes a warrant or right to subscribe to or purchase any of the foregoing and also includes the writing of an option on any of the foregoing.

“Beneficial Ownership” is interpreted in the same manner as it would be under Section 16 of the Securities Exchange Act of 1934 and Rule 16a-1 thereunder. Accordingly, “Beneficial Owner” includes any Covered Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest ( i.e., the ability to share in profits derived from such security) in any equity security, including:


	(i)	securities held by a person’s immediate family sharing the same house (with certain exceptions);

	(ii)	a general partner’s interest in portfolio securities held by a general or limited partnership;

	(iii)	a person’s interest in securities held in trust as trustee, beneficiary or settlor, as provided in Rule 16a-8(b); and

	(iv)	a person’s right to acquire securities through options, rights or other derivative securities.

“Federal Securities Laws” include the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Investment Company Act of 1940, the Investment Advisers Act of 1940, Title V of the Gramm-Leach Bliley Act, and any rules adopted by the SEC under any of those statutes, the Bank Secrecy Act as it applies to mutual funds and investment advisers, and any rules adopted thereunder by the SEC or the Department of the Treasury. A brief summary of the requirements of those laws as they apply to mutual funds and investment advisers is attached to this Code as Exhibit 1.

“Gender/Number” whenever the masculine gender is used in this Code, it includes the feminine gender as well, and the singular includes the plural and the plural includes the singular, unless in each case the context clearly indicates otherwise.


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	10

Exhibit 1

To Code of Ethics


The Code of Ethics requires that all Covered Persons must comply with the Federal Securities Laws. Brief summaries of these laws are set forth below.

	I.	The Securities Act of 1933 (“1933 Act”)
The 1933 Act governs the public offering of securities of mutual funds and other issuers, and establishes civil liability for false or misleading activities during such offerings. This law was enacted “to provide full and fair disclosure of the character of securities sold in interstate and foreign commerce” and to prevent related frauds. Thus, the 1933 Act requires mutual funds and other public issuers to register their securities with the SEC. This process requires disclosures to the SEC and investors of information relating to the issuer, the securities and other matters. The 1933 Act provides a specific civil remedy for purchasers of securities offered by a materially false or misleading registration statement. A registration statement is false or misleading if it contains “an untrue statement of material fact or omit[s] to state a material fact required to be stated therein, or necessary to make the statements therein not misleading.”

	II.	The Securities Exchange Act of 1934 (“1934 Act”)
The 1934 Act regulates various organizations involved in the offer, sale and trading of securities. It regulates, among others, broker-dealers such as Lord Abbett Distributor. The 1934 Act accomplishes its goals in large part by requiring that these regulated organizations register with the SEC and subjects them to regular reporting requirements and examinations by the SEC. The 1934 Act includes anti-fraud provisions that make it unlawful for any person, among other actions, to directly or indirectly: (1) employ any device, scheme, or artifice to defraud; (2) make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (3) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.

	III.	The Investment Company Act of 1940 (“1940 Act”)
The 1940 Act regulates mutual funds as well as their investment advisers and principal underwriters. The 1940 Act was designed “to mitigate and, so far as is feasible, to eliminate” various abuses involving mutual funds, including: (1) inadequate, inaccurate or unclear disclosure with respect to a mutual fund and its securities; (2) self-dealing by insiders; (3) the issuance of securities with inequitable terms that fail to protect the privileges and preferences of outstanding security holders; (4) inequitable methods of control and irresponsible management; and (5) unsound or misleading accounting methods. The 1940 Act seeks to accomplish the foregoing goals by, among other things: (1) establishing registration and reporting requirements; (2) prohibiting various affiliated transactions; (3) regulating the sale and redemption of mutual fund shares; (4) establishing special corporate governance standards relating to the composition and activities of mutual fund boards of directors; and (5) providing the SEC with extensive inspection and enforcement powers.


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	11


	IV.	The Investment Advisers Act of 1940 (“Advisers Act”)
The Advisers Act regulates investment advisers. Lord Abbett is registered as an investment adviser. Among other matters, the Advisers Act regulates the fee arrangements and certain other contract terms of an investment advisory agreement. The Act also prohibits advisers from engaging in any conduct that would defraud their clients. Lord Abbett has a fiduciary duty to act in the best interests of its clients. The SEC has construed this fiduciary duty broadly and applies the Act’s anti-fraud prohibition aggressively to protect clients.

	V.	The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”)
The Sarbanes-Oxley Act implemented new corporate disclosure and financial reporting requirements by, among other actions, creating a new oversight board for the accounting profession, mandating new measures to promote auditor independence, adding new disclosure requirements for investment companies and other public companies, and strengthening criminal penalties for securities fraud. This statute was adopted in direct response to widespread corporate scandals at public corporations that manifested a lack of adequate internal controls and oversight.

	VI.	The Gramm-Leach-Bliley Act (the “Act”)
In relevant part, the Act requires financial institutions to comply with certain privacy requirements regarding personal information relating to their customers. The Act requires the SEC to establish for financial institutions (including investment companies, investment advisers and broker-dealers) appropriate standards to protect customer information. The Act and the SEC’s privacy rules have three primary purposes: (1) to require financial institutions to notify consumers of their privacy policies and practices; (2) to describe the circumstances under which financial institutions may disclose non-public personal information regarding customers to unaffiliated third parties; and (3) to provide a method for customers to opt out of such disclosures, subject to certain exceptions. Lord Abbett has implemented policies, procedures and training to protect the integrity and privacy of its clients’ information.

	VII.	The Bank Secrecy Act
The USA PATRIOT Act of 2001 (the “Act”) amended the Bank Secrecy Act to include mutual funds among the types of financial institutions that are required to establish anti-money laundering compliance programs. The Act requires all such institutions to develop and institute anti-money laundering programs that, at a minimum: (1) include internal policies, procedures, and controls; (2) designate a compliance officer to administer and oversee the program; (3) provide for ongoing employee training; and (4) include an independent audit function to test the program. The Lord Abbett Funds and Lord Abbett have adopted an anti-money laundering compliance program designed to meet these requirements.


Lord, Abbett & Co. LLC Code of Ethics
Updated October 2012	12


WHAT YOU SHOULD KNOW ABOUT THE FUNDS
	Short Duration Tax Free Fund	3
	Intermediate Tax Free Fund	13
	AMT Free Municipal Bond Fund	23
	National Tax Free Fund	33
	High Yield Municipal Bond Fund	42
	California Tax Free Fund	52
	New Jersey Tax Free Fund	61
	New York Tax Free Fund	70


MORE INFORMATION ABOUT THE FUNDS
	Investment Objective	80
	Principal Investment Strategies	80
	Principal Risks	87
	Disclosure of Portfolio Holdings	94
	Management and Organization of the Funds	94


INFORMATION FOR MANAGING YOUR FUND ACCOUNT
	Choosing a Share Class	97
	Sales Charges	103
	Sales Charge Reductions and Waivers	104
	Financial Intermediary Compensation	108
	Purchases	112
	Exchanges	114
	Redemptions	115
	Account Services and Policies	116
	Distributions and Taxes	123


FINANCIAL INFORMATION
	Short Duration Tax Free Fund	128
	Intermediate Tax Free Fund	132
	AMT Free Municipal Bond Fund	138
	National Tax Free Fund	142
	High Yield Municipal Bond Fund	147
	California Tax Free Fund	153
	New Jersey Tax Free Fund	157
	New York Tax Free Fund	160


Class A Shares

Availability				Available through financial intermediaries to individual investors

Front-End Sales Charge				Up to 2.25%; reduced or waived for large purchases and certain investors; eliminated for purchases of $500,000 or more

CDSC				1.00% on redemptions made within one year following purchases of $500,000 or more; waived under certain circumstances

Distribution and Service (12b-1) Fee ⁽¹⁾				0.20% of the Fund’s average daily net assets, comprised of: Service Fee: 0.15% Distribution Fee: 0.05%

Conversion				None

Exchange Privilege ⁽²⁾				Class A shares of most Lord Abbett Funds

Class B Shares

Availability				Class B shares no longer are available for purchase by new or existing investors and only will be issued in connection with (i) an exchange of Class B shares from another Lord Abbett Fund or (ii) a reinvestment of a dividend and/or capital gain distribution.

Front-End Sales Charge				None

CDSC				Up to 5.00% on redemptions; reduced over time and eliminated after sixth anniversary of purchase; waived under certain circumstances

Distribution and Service (12b-1) Fee ⁽¹⁾				1.00% of the Fund’s average daily net assets, comprised of: Service Fee: 0.25% Distribution Fee: 0.75%

Conversion				Automatic conversion to Class A shares after approximately the eighth anniversary of purchase ⁽³⁾

Exchange Privilege ⁽²⁾				Class B shares of most Lord Abbett Funds

Class C Shares

Availability				Available through financial intermediaries to individual investors; purchases generally must be under $500,000

Front-End Sales Charge				None

CDSC				1.00% on redemptions made before the first anniversary of purchase; waived under certain circumstances

Distribution and Service (12b-1) Fee ⁽¹⁾				Each Fund is subject to Class C service and distribution fees at a blended rate calculated based on (i) a service fee of 0.25% and a distribution fee of 0.75% of the Fund’s average daily net assets attributable to shares held for less than one year and (ii) a service fee of 0.25% and a distribution fee of 0.55% of the Fund’s average daily net assets attributable to shares held for one year or more. All Class C shareholders of the Fund will bear service and distribution fees at the same rate.

Conversion				None

Exchange Privilege ⁽²⁾				Class C shares of most Lord Abbett Funds


Class F Shares

Availability		Available only to eligible fee-based advisory programs and certain registered investment advisers

Front-End Sales Charge		None

CDSC		None

Distribution and Service (12b-1) Fee ⁽¹⁾		0.10% of the Fund’s average daily net assets, comprised of: Service Fee: None Distribution Fee: 0.10%

Conversion		None

Exchange Privilege ⁽²⁾		Class F shares of most Lord Abbett Funds

Class I Shares

Availability		Available only to eligible investors

Front-End Sales Charge		None

CDSC		None

Distribution and Service (12b-1) Fee ⁽¹⁾		None

Conversion		None

Exchange Privilege ⁽²⁾		Class I shares of most Lord Abbett Funds

Class P Shares

Availability		Available on a limited basis through certain financial intermediaries ⁽⁴⁾

Front-End Sales Charge		None

CDSC		None

Distribution and Service (12b-1) Fee ⁽¹⁾		0.45% of the Fund’s average daily net assets, comprised of: Service Fee: 0.25% Distribution Fee: 0.20%

Conversion		None

Exchange Privilege ⁽²⁾		Class P shares of most Lord Abbett Funds

⁽¹⁾	The 12b-1 plan provides that the maximum payments that may be authorized by the Board are: for Class A shares, 0.50%; for Class P shares, 0.75%; and for Class B, C, and F shares, 1.00%. The rates shown in the table above are the 12b-1 rates currently authorized by the Board for each share class and may be changed only upon authorization of the Board. The 12b-1 plan does not permit any payments for Class I shares.
⁽²⁾	Ask your financial intermediary about the Lord Abbett Funds available for exchange.
⁽³⁾	Class B shares automatically will convert to Class A shares on the 25th day of the month (or, if the 25th is not a business day, the next business day thereafter) following the eighth anniversary of the day on which the purchase order was accepted.
⁽⁴⁾	Class P shares are closed to substantially all new investors.