FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

   ⁽¹⁾   Class B shares will automatically convert to Class A shares after the eighth anniversary of your purchase of Class B shares.

   ⁽²⁾   You may be able to reduce or eliminate the sales charge. See "Your Investment – Sales Charges – Class A Share Front-End Sales Charges" for more information.

   ⁽³⁾   The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value ("NAV") at the time of the redemption or the NAV when the shares were originally purchased.

   ⁽⁴⁾   A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made without a sales charge. See "Your Investment – Sales Charges – Class A Share CDSC" for more information.

   ⁽⁵⁾   A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.

   ⁽⁶⁾   "Management Fees" are payable to Lord Abbett for the Fund's investment management.

   ⁽⁷⁾   "12b-1 Fees" are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.

  ⁽⁸⁾   These amounts have been restated from fiscal year amounts to reflect current fees and expenses.

   ⁽⁹⁾   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.

   ⁽¹⁰⁾   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 Fund's net asset values 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 Operating Expenses in the table above and the Example below. See "Additional Investment Information – Residual Interest Bonds."

   ⁽¹¹⁾   "Other Expenses" include fees paid for miscellaneous items such as shareholder services, professional services, administrative services provided by Lord Abbett, and fees to certain Financial Intermediaries (as defined below) for providing recordkeeping or other administrative services in connection with investments in the Fund.

   ⁽¹²⁾   For the period from February 1, 2008 through January 31, 2009, Lord Abbett has contractually agreed to reimburse a portion of the Fund's expenses (excluding interest expense) so that the Fund's net expenses (excluding interest expense) do not exceed an aggregate annualized rate of 0.95% of average daily net assets for Class A shares, 1.60% of average daily net assets for Class B and Class C shares, 0.70% of average daily net assets for Class F shares, and 1.05% of average daily net assets for Class P shares.

THE FUNDS
10

NATIONAL TAX FREE FUND

Example

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at 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. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable CDSC) would be:

You would pay the following expenses if you did not redeem your shares:

THE FUNDS
11

CALIFORNIA TAX FREE FUND

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

   ⁽¹⁾   You may be able to reduce or eliminate the sales charge. See "Your Investment – Sales Charges – Class A Share Front-End Sales Charges" for more information.

   ⁽²⁾   The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value ("NAV") at the time of the redemption or the NAV when the shares were originally purchased.

   ⁽³⁾   A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made without a sales charge. See "Your Investment – Sales Charges – Class A Share CDSC" for more information.

   ⁽⁴⁾   A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.

   ⁽⁵⁾   "Management Fees" are payable to Lord Abbett for the Fund's investment management.

   ⁽⁶⁾   "12b-1 Fees" are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.

   ⁽⁷⁾   These amounts have been restated from fiscal year amounts to reflect current fees and expenses.

   ⁽⁸⁾   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.

   ⁽⁹⁾   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 Fund's net asset values 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 Operating Expenses in the table above and the Example below. See "Additional Investment Information – Residual Interest Bonds."

   ⁽¹⁰⁾   "Other Expenses" include fees paid for miscellaneous items such as shareholder services, professional services, administrative services provided by Lord Abbett, and fees to certain Financial Intermediaries (as defined below) for providing recordkeeping or other administrative services in connection with investments in the Fund.

   ⁽¹¹⁾   For the period from February 1, 2008 through January 31, 2009, Lord Abbett has contractually agreed to reimburse a portion of the Fund's expenses (excluding interest expense) so that the Fund's net expenses (excluding interest expense) do not exceed an aggregate annualized rate of 0.95% of average daily net assets for Class A shares, 1.60% of average daily net assets for Class C shares, 0.70% of average daily net assets for Class F shares, and 1.05% of average daily net assets for Class P shares.

THE FUNDS
14

CALIFORNIA TAX FREE FUND

Example

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at 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. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable CDSC) would be:

You would pay the following expenses if you did not redeem your shares:

THE FUNDS
15

CONNECTICUT TAX FREE FUND

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

   ⁽¹⁾   You may be able to reduce or eliminate the sales charge. See "Your Investment – Sales Charges – Class A Share Front-End Sales Charges" for more information.

   ⁽²⁾   The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value ("NAV") at the time of the redemption or the NAV when the shares were originally purchased.

   ⁽³⁾   A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made without a sales charge. See "Your Investment – Sales Charges – Class A Share CDSC" for more information.

   ⁽⁴⁾   "Management Fees" are payable to Lord Abbett for the Fund's investment management.

   ⁽⁵⁾   "12b-1 Fees" are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.

   ⁽⁶⁾   These amounts have been restated from fiscal year amounts to reflect current fees and expenses.

   ⁽⁷⁾   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 Fund's net asset values 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 Operating Expenses in the table above and the Example below. See "Additional Investment Information – Residual Interest Bonds."

   ⁽⁸⁾   "Other Expenses" include fees paid for miscellaneous items such as shareholder services, professional services, administrative services provided by Lord Abbett, and fees to certain Financial Intermediaries (as defined below) for providing recordkeeping or other administrative services in connection with investments in the Fund.

   ⁽⁹⁾   For the period from February 1, 2008 through January 31, 2009, Lord Abbett has contractually agreed to reimburse a portion of the Fund's expenses (excluding interest expense) so that the Fund's net expenses (excluding interest expense) do not exceed an aggregate annualized rate of 0.95% of average daily net assets for Class A shares, 0.70% of average daily net assets for Class F shares, and 1.05% of average daily net assets for Class P shares. In addition, Lord Abbett expects to voluntarily reimburse approximately $181,000 of expenses, or approximately 0.13% of the Fund's net assets, for the fiscal year ending September 30, 2008. Accordingly, the estimated expense ratios (net of both contractual and voluntary expense reimbursements and excluding interest expense) are 0.67%, 0.57%, and 0.92% for Class A, Class F, and Class P shares, respectively. Lord Abbett may stop the voluntarily reimbursement at any time.

THE FUNDS
18

CONNECTICUT TAX FREE FUND

Example

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at 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. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable CDSC) would be:

You would pay the following expenses if you did not redeem your shares:

THE FUNDS
19

HAWAII TAX FREE FUND

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

   ⁽¹⁾   You may be able to reduce or eliminate the sales charge. See "Your Investment – Sales Charges – Class A Share Front-End Sales Charges" for more information.

   ⁽²⁾   The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value ("NAV") at the time of the redemption or the NAV when the shares were originally purchased.

   ⁽³⁾   A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made without a sales charge. See "Your Investment – Sales Charges – Class A Share CDSC" for more information.

   ⁽⁴⁾   "Management Fees" are payable to Lord Abbett for the Fund's investment management.

   ⁽⁵⁾   "12b-1 Fees" are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.

   ⁽⁶⁾   These amounts have been restated from fiscal year amounts to reflect current fees and expenses.

   ⁽⁷⁾   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 Fund's net asset values 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 Operating Expenses in the table above and the Example below. See "Additional Investment Information – Residual Interest Bonds."

   ⁽⁸⁾   "Other Expenses" include fees paid for miscellaneous items such as shareholder services, professional services, administrative services provided by Lord Abbett, and fees to certain Financial Intermediaries (as defined below) for providing recordkeeping or other administrative services in connection with investments in the Fund.

   ⁽⁹⁾   For the period from February 1, 2008 through January 31, 2009, Lord Abbett has contractually agreed to reimburse a portion of the Fund's expenses (excluding interest expense) so that the Fund's net expenses (excluding interest expense) do not exceed an aggregate annualized rate of 0.95% of average daily net assets for Class A shares, 0.70% of average daily net assets for Class F shares, and 1.05% of average daily net assets for Class P shares. In addition, Lord Abbett expects to voluntarily reimburse approximately $102,000 of expenses, or approximately 0.10% of the Fund's net assets, for the fiscal year ending September 30, 2008. Accordingly, the estimated expense ratios (net of both contractual and voluntary expense reimbursements and excluding interest expense) are 0.72%, 0.60%, and 0.95% for Class A, Class F, and Class P shares, respectively. Lord Abbett may stop the voluntarily reimbursement at any time.

THE FUNDS
22

HAWAII TAX FREE FUND

Example

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at 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. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable CDSC) would be:

You would pay the following expenses if you did not redeem your shares:

THE FUNDS
23

MISSOURI TAX FREE FUND

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

   ⁽¹⁾   You may be able to reduce or eliminate the sales charge. See "Your Investment – Sales Charges – Class A Share Front-End Sales Charges" for more information.

   ⁽²⁾   The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value ("NAV") at the time of the redemption or the NAV when the shares were originally purchased.

   ⁽³⁾   A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made without a sales charge. See "Your Investment – Sales Charges – Class A Share CDSC" for more information.

   ⁽⁴⁾   "Management Fees" are payable to Lord Abbett for the Fund's investment management.

   ⁽⁵⁾   "12b-1 Fees" are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.

   ⁽⁶⁾   These amounts have been restated from fiscal year amounts to reflect current fees and expenses.

  ⁽⁷⁾   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 Fund's net asset values 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 Operating Expenses in the table above and the Example below. See "Additional Investment Information – Residual Interest Bonds."

  ⁽⁸⁾   "Other Expenses" include fees paid for miscellaneous items such as shareholder services, professional services, administrative services provided by Lord Abbett, and fees to certain Financial Intermediaries (as defined below) for providing recordkeeping or other administrative services in connection with investments in the Fund.

  ⁽⁹⁾   For the period from February 1, 2008 through January 31, 2009, Lord Abbett has contractually agreed to reimburse a portion of the Fund's expenses (excluding interest expense) so that the Fund's net expenses (excluding interest expense) do not exceed an aggregate annualized rate of 0.95% of average daily net assets for Class A shares, 0.70% of average daily net assets for Class F shares, and 1.05% of average daily net assets for Class P shares. In addition, Lord Abbett expects to voluntarily reimburse approximately $48,000 of expenses, or approximately 0.03% of the Fund's net assets, for the fiscal year ending September 30, 2008. Accordingly, the estimated expense ratios (net of both contractual and voluntary expense reimbursements and excluding interest expense) are 0.78%, 0.67%, and 1.02% for Class A, Class F, and Class P shares, respectively. Lord Abbett may stop the voluntarily reimbursement at any time.

THE FUNDS
26

MISSOURI TAX FREE FUND

Example

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at 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. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable CDSC) would be:

You would pay the following expenses if you did not redeem your shares:

THE FUNDS
27

NEW JERSEY TAX FREE FUND

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

  ⁽¹⁾   You may be able to reduce or eliminate the sales charge. See "Your Investment – Sales Charges – Class A Share Front-End Sales Charges" 'for more information.

  ⁽²⁾   The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value ("NAV") at the time of the redemption or the NAV when the shares were originally purchased.

  ⁽³⁾   A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made without a sales charge. See "Your Investment – Sales Charges – Class A Share CDSC" for more information.

  ⁽⁴⁾   "Management Fees" are payable to Lord Abbett for the Fund's investment management.

  ⁽⁵⁾   "12b-1 Fees" are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.

  ⁽⁶⁾   These amounts have been restated from fiscal year amounts to reflect current fees and expenses.

  ⁽⁷⁾   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 Fund's net asset values 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 Operating Expenses in the table above and the Example below. See "Additional Investment Information – Residual Interest Bonds."

   ⁽⁸⁾   "Other Expenses" include fees paid for miscellaneous items such as shareholder services, professional services, administrative services provided by Lord Abbett, and fees to certain Financial Intermediaries (as defined below) for providing recordkeeping or other administrative services in connection with investments in the Fund.

   ⁽⁹⁾   For the period from February 1, 2008 through January 31, 2009, Lord Abbett has contractually agreed to reimburse a portion of the Fund's expenses (excluding interest expense) so that the Fund's net expenses (excluding interest expense) do not exceed an aggregate annualized rate of 0.95% of average daily net assets for Class A shares, 0.70% of average daily net assets for Class F shares, and 1.05% of average daily net assets for Class P shares.

THE FUNDS
30

NEW JERSEY TAX FREE FUND

Example

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at 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. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable CDSC) would be:

You would pay the following expenses if you did not redeem your shares:

THE FUNDS
31

NEW YORK TAX FREE FUND

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

  ⁽¹⁾   You may be able to reduce or eliminate the sales charge. See "Your Investment – Sales Charges – Class A Share Front-End Sales Charges" for more information.

  ⁽²⁾   The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value ("NAV") at the time of the redemption or the NAV when the shares were originally purchased.

  ⁽³⁾   A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made without a sales charge. See "Your Investment – Sales Charges – Class A Share" for more information.

  ⁽⁴⁾   A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.

  ⁽⁵⁾   "Management Fees" are payable to Lord Abbett for the Fund's investment management.

  ⁽⁶⁾   "12b-1 Fees" are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.

  ⁽⁷⁾   These amounts have been restated from fiscal year amounts to reflect current fees and expenses.

  ⁽⁸⁾   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.

  ⁽⁹⁾   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 Fund's net asset values 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 Operating Expenses in the table above and the Example below. See "Additional Investment Information – Residual Interest Bonds."

  ⁽¹⁰⁾   "Other Expenses" include fees paid for miscellaneous items such as shareholder services, professional services, administrative services provided by Lord Abbett, and fees to certain Financial Intermediaries (as defined below) for providing recordkeeping or other administrative services in connection with investments in the Fund.

  ⁽¹¹⁾   For the period from February 1, 2008 through January 31, 2009, Lord Abbett has contractually agreed to reimburse a portion of the Fund's expenses (excluding interest expense) so that the Fund's net expenses (excluding interest expense) do not exceed an aggregate annualized rate of 0.95% of average daily net assets for Class A shares, 1.60% of average daily net assets for Class C shares, 0.70% of average daily net assets for Class F shares, and 1.05% of average daily net assets for Class P shares.

THE FUNDS
34

NEW YORK TAX FREE FUND

Example

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at 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. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable CDSC) would be:

You would pay the following expenses if you did not redeem your shares:

THE FUNDS
35

INTERMEDIATE TAX FREE FUND

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

  ⁽¹⁾   Class B shares will automatically convert to Class A shares after the eighth anniversary of your purchase of Class B shares.

  ⁽²⁾   Effective April 1, 2008, the maximum sales charge on Class A purchases of the Fund will be reduced from 3.25% to 2.25%. You may be able to reduce or eliminate the sales charge. See "Your Investment – Sales Charges – Class A Share Front-End Sales Charges" for more information.

  ⁽³⁾   The maximum contingent deferred sales charge ("CDSC") is a percentage of the lesser of the net asset value ("NAV") at the time of the redemption or the NAV when the shares were originally purchased.

  ⁽⁴⁾   A CDSC of 1.00% may be assessed on certain redemptions of Class A shares made without a sales charge. See "Your Investment – Sales Charges – Class A Share CDSC" for more information.

  ⁽⁵⁾   A CDSC of 1.00% may be assessed on Class C shares if they are redeemed before the first anniversary of their purchase.

  ⁽⁶⁾   "Management Fees" are payable to Lord Abbett for the Fund's investment management.

  ⁽⁷⁾   "12b-1 Fees" are fees incurred for activities that are primarily intended to result in the sale of Fund shares and service fees for shareholder account service and maintenance. Because 12b-1 fees are paid out on an ongoing basis, over time they will increase the cost of your investment and may cost you more than paying other types of sales charges.

  ⁽⁸⁾   These amounts have been restated from fiscal year amounts to reflect current fees and expenses.

  ⁽⁹⁾   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.

  ⁽¹⁰⁾   "Other Expenses" include fees paid for miscellaneous items such as shareholder services, professional services, administrative services provided by Lord Abbett, and fees to certain Financial Intermediaries (as defined below) for providing recordkeeping or other administrative services in connection with investments in the Fund.

  ⁽¹¹⁾   For the period from February 1, 2008 through January 31, 2009, Lord Abbett has contractually agreed to reimburse a portion of the Fund's expenses so that the Fund's net expenses do not exceed an aggregate annualized rate of 0.25% of average daily net assets for Class A shares, 1.00% of average daily net assets for Class B and C shares, 0.10% of average daily net assets for Class F shares, and 0.45% of average daily net assets for Class P shares.

THE FUNDS
38

INTERMEDIATE TAX FREE FUND

Example

This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. This example, like that in other funds' prospectuses, assumes that you invest $10,000 in the Fund at 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. Although your actual costs may be higher or lower, based on these assumptions your costs (including any applicable CDSC) would be: