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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number 811-03942
LORD ABBETT TAX-FREE INCOME FUND, INC.
--------------------------------------------------
(Exact name of Registrant as specified in charter)
90 Hudson Street, Jersey City, NJ 07302
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(Address of principal executive offices) (zip code)
Christina T. Simmons, Vice President & Assistant Secretary
90 Hudson Street, Jersey City, NJ 07302
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(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 201-6984
--------------
Date of fiscal year end: 9/30/2004
Date of reporting period: 9/30/2004
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ITEM 1: REPORT TO SHAREHOLDERS.
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[LORD ABBETT LOGO]
2004
ANNUAL
REPORT
LORD ABBETT
TAX-FREE INCOME FUND
TAX-FREE INCOME TRUST
NATIONAL TAX-FREE FUND
CALIFORNIA TAX-FREE FUND
CONNECTICUT TAX-FREE FUND
HAWAII TAX-FREE FUND
MINNESOTA TAX-FREE FUND
MISSOURI TAX-FREE FUND
NEW JERSEY TAX-FREE FUND
NEW YORK TAX-FREE FUND
TEXAS TAX-FREE FUND
WASHINGTON TAX-FREE FUND
INSURED INTERMEDIATE TAX-FREE FUND
FLORIDA TAX-FREE TRUST
GEORGIA TAX-FREE TRUST
MICHIGAN TAX-FREE TRUST
PENNSYLVANIA TAX-FREE TRUST
FOR THE YEAR ENDED SEPTEMBER 30, 2004
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LORD ABBETT TAX-FREE INCOME FUND AND LORD ABBETT TAX-FREE INCOME TRUST
ANNUAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2004
DEAR SHAREHOLDERS: We are pleased to provide you with this overview of the
strategies and performance of each Fund of the Lord Abbett Tax-Free Income Fund
and Lord Abbett Tax-Free Income Trust for the fiscal year ended September 30,
2004. On this and the following pages, we discuss the major factors that
influenced performance.
Thank you for investing in Lord Abbett Mutual Funds. We value the trust that
you place in us and look forward to serving your investment needs in the years
to come.
BEST REGARDS,
/s/ Robert S. Dow
ROBERT S. DOW
CHAIRMAN
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Q: WHAT WERE THE OVERALL MARKET CONDITIONS DURING THE REPORTING PERIOD?
A: Despite occasional disappointments in job reports, the overall trend in the
U.S. economy was positive in the first half of the fiscal year, providing more
fuel to speculation that the Federal Reserve Board (the Fed) would start raising
interest rates again in 2004. Indeed, the Fed took action on June 30, raising
its fed funds rate to 1.25% from 1%. (The fed funds rate is the rate at which
banks lend to each other overnight). Two additional rate hikes occurred in the
final quarter of the fiscal year, bringing the fed funds rate to 1.75%.
Concerns about inflation roiled bond markets in the months before the Fed
initiated a rate hike. Municipal bonds experienced broad, albeit modest,
declines in the period between April and June, reflecting the trends in the bond
market as a whole. During the final quarter, however, domestic fixed-income
markets, including municipal bonds, rallied as lower-than-expected job gains,
higher oil prices, geopolitical concerns and uncertainties surrounding the U.S.
presidential election encouraged inflows into the bond market.
State tax revenues continued to grow, strengthening the general obligations
(GO) sector of the municipal bond market. Demand from retail investors was
intermittent throughout the year and particularly weak on those occasions when
municipal bond yields dipped below 5%, an unattractive level for most individual
investors. Institutional investors continued to find value relative to
Treasuries. Overall, intermediate- to longer-term maturities outperformed
short-term maturities during the fiscal year. Investors showed a preference
through much of the year for the higher yield of lower-rated credits.
Issuance was strong going into the second half of the year (although down
from last year's levels), as municipalities
1
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rushed to access the market before the Fed began to raise rates from
historically low levels. New issuance showed signs of dropping off by June as
market rates rose. Except for modest issuance in August, municipal bond supply
remained relatively tight throughout the final quarter, supporting rising bond
prices, particularly at the long end.
Q: HOW DID EACH FUND PERFORM OVER THE FISCAL YEAR ENDED SEPTEMBER 30, 2004?
Each Fund's Class A shares underperformed its long-only benchmark, the
Lehman Municipal Long Current Coupon Bond Index,(1) while exhibiting, for the
most part, more favorable performance against its peer groups, as represented in
the Lipper Funds Average.(2)
<Table>
<Caption>
CLASS A SHARES LEHMAN MUNICIPAL
12 MONTH RETURN LONG CURRENT LEHMAN
9/30/2003 TO LIPPER FUNDS COUPON MUNICIPAL
9/30/2004 AVERAGE BOND INDEX BOND INDEX(3)
--------------- ------------ ---------------- -------------
NATIONAL TAX-FREE FUND 4.10% 3.95% 6.06% 4.60%
CALIFORNIA TAX-FREE FUND 4.73% 4.64% 6.06% 4.60%
CONNECTICUT TAX-FREE FUND 4.92% 3.64% 6.06% 4.60%
HAWAII TAX-FREE FUND 4.18% 3.76% 6.06% 4.60%
MINNESOTA TAX-FREE FUND 4.24% 4.13% 6.06% 4.60%
MISSOURI TAX-FREE FUND 3.77% 3.70% 6.06% 4.60%
NEW JERSEY TAX-FREE FUND 3.89% 3.87% 6.06% 4.60%
NEW YORK TAX-FREE FUND 4.33% 3.94% 6.06% 4.60%
TEXAS TAX-FREE FUND 3.62% 3.42% 6.06% 4.60%
WASHINGTON TAX-FREE FUND 3.75% 3.40% 6.06% 4.60%
INSURED INTERMEDIATE TAX-FREE FUND 2.84% 3.41% 3.21%+ 4.60%
FLORIDA TAX-FREE TRUST 3.13% 3.72% 6.06% 4.60%
GEORGIA TAX-FREE TRUST 4.54% 3.20% 6.06% 4.60%
MICHIGAN TAX-FREE TRUST 3.48% 3.40% 6.06% 4.60%
PENNSYLVANIA TAX-FREE TRUST 4.48% 3.71% 6.06% 4.60%
</Table>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS*
<Table>
<Caption>
10 YEARS/
1 YEAR 5 YEARS SINCE INCEPTION
------ ------- ---------------
NATIONAL TAX-FREE FUND 0.68% 5.43% 5.76%
CALIFORNIA TAX-FREE FUND 1.35% 5.46% 5.40%
CONNECTICUT TAX-FREE FUND 1.55% 5.59% 5.74%
HAWAII TAX-FREE FUND 0.80% 5.01% 5.43%
MINNESOTA TAX-FREE FUND** 0.91% 5.72% 5.85%
MISSOURI TAX-FREE FUND 0.40% 5.33% 5.58%
NEW JERSEY TAX-FREE FUND 0.60% 5.02% 5.46%
NEW YORK TAX-FREE FUND 0.97% 5.93% 5.69%
TEXAS TAX-FREE FUND 0.23% 5.64% 5.81%
WASHINGTON TAX-FREE FUND 0.28% 5.49% 5.89%
INSURED INTERMEDIATE TAX-FREE FUND*** -0.46% N/A -0.30%
FLORIDA TAX-FREE TRUST -0.14% 5.03% 5.16%
GEORGIA TAX-FREE TRUST** 1.13% 6.52% 6.91%
</Table>
2
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<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
MICHIGAN TAX-FREE TRUST 0.12% 6.19% 6.18%
PENNSYLVANIA TAX-FREE TRUST 1.03% 5.63% 5.91%
</Table>
PERFORMANCE DATA QUOTED REFLECT PAST PERFORMANCE AND ARE NO GUARANTEE OF FUTURE
RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE QUOTED.
THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN EACH FUND WILL
FLUCTUATE SO THAT SHARES, ON ANY GIVEN DAY OR WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. YOU CAN OBTAIN PERFORMANCE DATA CURRENT TO THE
MOST RECENT MONTH END BY CALLING LORD ABBETT AT 800-821-5129 OR REFERRING TO OUR
WEBSITE AT www.LordAbbett.com.
+Lehman 3-10 Year Insured Tax-Exempt Bond Index
*Standardized Average Annual Total Returns, which reflect performance at the
maximum 3.25% sales charge applicable to Class A share investments and include
the reinvestment of all distributions as of September 30, 2004.
**Inception date December 27, 1994.
***Inception date June 30, 2003.
Class A shares purchased subject to a front-end sales charge have no contingent
deferred sales charge (CDSC). However, certain purchases of Class A shares made
without a front-end sales charge may be subject to a CDSC of 1% if the shares
are redeemed within 12 months of the purchase (24 months if shares were
purchased prior to November 1, 2004).
The Lipper Funds Average for each Fund consists of "Municipal Debt Funds" for
the particular state involved, except for the National Tax-Free Fund, Washington
Tax-Free Fund and Insured Intermediate Tax-Free Fund. In the case of those
Funds, the applicable Lipper Funds Averages are "General Municipal Debt Funds,"
"Other States Municipal Debt Funds" and "Insured Municipal Debt Funds",
respectively.
Q: WHAT WERE THE MOST SIGNIFICANT FACTORS AFFECTING PERFORMANCE?
A: Contributing to performance during the fiscal year were each Fund's positions
in longer-maturity, high-quality, high-coupon municipal bonds - a sector that we
believe is consistent with a long-term investment perspective. In general,
longer-maturity bonds outperformed intermediate bonds and intermediate bonds
outperformed shorter maturities. In general, we tended to avoid short-term
paper, preferring instead to build a defensive component in each portfolio
through more marketable paper such as pre-refunded bonds(4), when available,
which are generally of high credit quality and offer high coupons.
Reflecting improvements in state and municipal budgets, the holdings of each
of the Funds in tax-based general obligation bonds also were a positive factor
in performance as were revenue bonds later in the year. Revenue bonds are bonds
that depend on specific revenues collected - such as tolls and electric rates -
for repayment, not on the full faith and credit or taxing power of the
municipality.
Detracting from performance overall was each Fund's lack of participation
within the higher-yielding, lower-quality area of the municipal bond market - a
sector which realized considerable price appreciation as investor demand
remained strong.
EACH FUND'S PORTFOLIO IS ACTIVELY MANAGED AND, THEREFORE, ITS HOLDINGS AND
THE WEIGHTINGS OF A PARTICULAR ISSUER OR PARTICULAR SECTOR AS A PERCENTAGE OF
PORTFOLIO ASSETS ARE SUBJECT TO CHANGE.
3
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THE PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT EACH FUND, INCLUDING EACH
FUND'S INVESTMENT OBJECTIVES, RISKS, CHARGES AND ONGOING EXPENSES, THAT AN
INVESTOR SHOULD CAREFULLY CONSIDER BEFORE INVESTING. TO OBTAIN A PROSPECTUS OF
ANY OF THE FUNDS OR ANY LORD ABBETT MUTUAL FUND, PLEASE CONTACT YOUR INVESTMENT
PROFESSIONAL OR LORD ABBETT DISTRIBUTOR LLC AT 800-874-3733 OR VISIT
www.LordAbbett.com. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
(1) Lehman Municipal Long Current Coupon Bond Index is a total return benchmark
designed for long-term municipal assets. The Index includes bonds with a minimum
credit rating of BAA3, bonds issued as part of a deal of at least $50 million,
with an amount outstanding of at least $5 million, a maturity of twenty-two
years or greater and have been issued after December 31, 1990. Indices are
unmanaged, do not reflect the deduction of fees or expenses and are not
available for direct investment.
(2) Lipper Funds Average: Lipper, Inc. is a nationally recognized organization
that reports on mutual fund total return performance and calculates fund
rankings. Peer group averages are based on universes of funds with similar
investment objectives. Peer group averages include reinvested dividends and
capital gains, if any, and exclude sales charges.(C)2004 REUTERS. All rights
reserved. Any copying, republication or redistribution of Lipper content is
expressly prohibited without the prior written consent of Lipper. An investor
cannot invest directly in an average or index.
(3) Lehman Municipal Bond Index is a broad measure of the municipal bond market
with maturities of at least one year. To be included in this index, bonds must
have a minimum credit rating of Baa, an outstanding par value of at least $3
million and be issued as part of a transaction of at least $50 million. This
Index includes both zero coupon bonds and bonds subject to the Alternative
Minimum Tax. Indices are unmanaged, do not reflect the deduction of fees or
expenses and are not available for direct investment.
(4) Pre-refunded bonds are older, tax-free bonds that typically pay coupons
higher than current market rates and that have been refinanced or "prepaid" by
the proceeds of a second bond issue. The proceeds of this second issuance are
used to "call" or pay off the original issue at its first call date. Until that
time, the monies are held in escrow and are usually invested in U.S. Treasuries.
As a result, pre-refunded bonds are generally deemed to have virtually no
default risk. Typically, when a bond becomes pre-refunded, it appreciates in
value because of its higher credit quality and improved marketability.
IMPORTANT PERFORMANCE AND OTHER INFORMATION
THE VIEWS OF EACH FUND'S MANAGEMENT AND THE PORTFOLIO HOLDINGS DESCRIBED IN THIS
REPORT ARE AS OF SEPTEMBER 30, 2004; THESE VIEWS AND HOLDINGS MAY HAVE CHANGED
SUBSEQUENT TO THIS DATE AND THEY DO NOT GUARANTEE THE FUTURE PERFORMANCE OF THE
MARKETS OR THE FUNDS. INFORMATION PROVIDED IN THIS REPORT SHOULD NOT BE
CONSIDERED A RECOMMENDATION TO PURCHASE OR SELL SECURITIES.
A NOTE ABOUT RISK: See Notes to Financial Statements for a discussion of
investment risks. For a more detailed discussion of the risks associated with
each Fund, please see the Prospectus.
PERFORMANCE: PERFORMANCE DATA QUOTED ABOVE IS HISTORICAL. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE DATA QUOTED. Because of ongoing market volatility, each Fund's
performance may be subject to substantial fluctuation. Except where noted,
comparative performance does not account for the deduction of sales charges and
would be different if sales charges were included. Each Fund offers additional
classes of shares with distinct pricing options. For a full description of the
differences in pricing alternatives, please see the Prospectus.
MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS
OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
4
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NATIONAL TAX-FREE FUND
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INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of General Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The performance of
other classes will be greater than or less than the performance shown in the
graph below due to different sales loads and expenses applicable to such
classes. The graph and performance table below do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption of
fund shares. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF GENERAL MUNICIPAL DEBT
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 10,984 $ 10,627 $ 11,118 $ 10,824 $ 10,977
1996 $ 11,677 $ 11,298 $ 11,790 $ 11,569 $ 11,598
1997 $ 12,763 $ 12,348 $ 12,853 $ 12,607 $ 12,605
1998 $ 13,987 $ 13,532 $ 13,972 $ 13,885 $ 13,641
1999 $ 13,449 $ 13,011 $ 13,875 $ 13,408 $ 13,225
2000 $ 14,124 $ 13,665 $ 14,731 $ 14,071 $ 13,847
2001 $ 15,629 $ 15,121 $ 16,263 $ 15,459 $ 15,173
2002 $ 16,969 $ 16,417 $ 17,715 $ 16,824 $ 16,325
2003 $ 17,389 $ 16,824 $ 18,404 $ 17,218 $ 16,798
2004 $ 18,102 $ 17,514 $ 19,251 $ 18,261 $ 17,462
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS LIFE OF CLASS
CLASS A(4) 0.68% 5.43% 5.76% --
CLASS B(5) -0.60% 5.28% -- 5.06%
CLASS C(6) 3.32% 5.43% -- 5.15%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
(5) The Class B shares were first offered on 8/1/96. Performance reflects the
deduction of a CDSC of 4% for 1 year, 1% for 5 years and 0% for the life of the
Class.
(6) The Class C shares were first offered on 7/15/96. The 1% CDSC for Class C
shares normally applies before the first anniversary of the purchase date.
Performance is at net asset value.
5
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CALIFORNIA TAX-FREE FUND
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INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of California Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The performance of
the other class will be greater than or less than the performance shown in the
graph below due to different sales loads and expenses applicable to such class.
The graph and performance table below do not reflect the deduction of taxes that
a shareholder would pay on fund distributions or the redemption of fund shares.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF CALIFORNIA
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 10,863 $ 10,510 $ 11,118 $ 10,824 $ 10,961
1996 $ 11,457 $ 11,085 $ 11,790 $ 11,569 $ 11,700
1997 $ 12,418 $ 12,015 $ 12,853 $ 12,607 $ 12,749
1998 $ 13,519 $ 13,079 $ 13,972 $ 13,885 $ 13,879
1999 $ 12,964 $ 12,543 $ 13,875 $ 13,408 $ 13,472
2000 $ 13,823 $ 13,373 $ 14,731 $ 14,071 $ 14,316
2001 $ 15,358 $ 14,859 $ 16,263 $ 15,459 $ 15,641
2002 $ 16,533 $ 15,996 $ 17,715 $ 16,824 $ 16,825
2003 $ 16,689 $ 16,146 $ 18,404 $ 17,218 $ 17,094
2004 $ 17,478 $ 16,910 $ 19,251 $ 18,261 $ 17,888
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS LIFE OF CLASS
CLASS A(4) 1.35% 5.46% 5.40% --
CLASS C(5) 4.14% 5.53% -- 4.95%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
(5) The Class C shares were first offered on 7/15/96. The 1% CDSC for Class C
shares normally applies before the first anniversary of the purchase date.
Performance is at net asset value.
6
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CONNECTICUT TAX-FREE FUND
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INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Connecticut Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The graph and
performance table below do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF CONNECTICUT
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 11,052 $ 10,693 $ 11,118 $ 10,824 $ 10,977
1996 $ 11,682 $ 11,302 $ 11,790 $ 11,569 $ 11,568
1997 $ 12,682 $ 12,270 $ 12,853 $ 12,607 $ 12,532
1998 $ 13,737 $ 13,291 $ 13,972 $ 13,885 $ 13,537
1999 $ 13,319 $ 12,887 $ 13,875 $ 13,408 $ 13,269
2000 $ 13,895 $ 13,443 $ 14,731 $ 14,071 $ 13,898
2001 $ 15,377 $ 14,878 $ 16,263 $ 15,459 $ 15,260
2002 $ 16,729 $ 16,185 $ 17,715 $ 16,824 $ 16,486
2003 $ 17,223 $ 16,663 $ 18,404 $ 17,218 $ 16,942
2004 $ 18,070 $ 17,483 $ 19,251 $ 18,261 $ 17,559
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
CLASS A(4) 1.55% 5.59% 5.74%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
7
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HAWAII TAX-FREE FUND
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INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Hawaii Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The graph and
performance table below do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF HAWAII
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 11,029 $ 10,671 $ 11,118 $ 10,824 $ 10,862
1996 $ 11,683 $ 11,303 $ 11,790 $ 11,569 $ 11,493
1997 $ 12,667 $ 12,255 $ 12,853 $ 12,607 $ 12,418
1998 $ 13,755 $ 13,308 $ 13,972 $ 13,885 $ 13,391
1999 $ 13,300 $ 12,867 $ 13,875 $ 13,408 $ 13,077
2000 $ 13,957 $ 13,503 $ 14,731 $ 14,071 $ 13,710
2001 $ 15,199 $ 14,705 $ 16,263 $ 15,459 $ 15,039
2002 $ 16,533 $ 15,996 $ 17,715 $ 16,824 $ 16,258
2003 $ 16,841 $ 16,293 $ 18,404 $ 17,218 $ 16,790
2004 $ 17,545 $ 16,974 $ 19,251 $ 18,261 $ 17,421
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
CLASS A(4) 0.80% 5.01% 5.43%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
8
<Page>
MINNESOTA TAX-FREE FUND
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Minnesota Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The graph and
performance table below do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF MINNESOTA
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
December
27, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
Sept 1995 $ 11,023 $ 10,665 $ 11,280 $ 11,139 $ 11,073
1996 $ 11,512 $ 11,138 $ 11,961 $ 11,905 $ 11,645
1997 $ 12,545 $ 12,137 $ 13,040 $ 12,974 $ 12,563
1998 $ 13,564 $ 13,123 $ 14,176 $ 14,289 $ 13,546
1999 $ 13,195 $ 12,766 $ 14,077 $ 13,798 $ 13,248
2000 $ 13,897 $ 13,445 $ 14,945 $ 14,480 $ 13,796
2001 $ 15,367 $ 14,868 $ 16,500 $ 15,908 $ 15,040
2002 $ 16,682 $ 16,140 $ 17,973 $ 17,314 $ 16,161
2003 $ 17,278 $ 16,717 $ 18,672 $ 17,719 $ 16,701
2004 $ 18,011 $ 17,425 $ 19,531 $ 18,793 $ 17,390
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS LIFE OF FUND
CLASS A(4) 0.91% 5.72% 5.85%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses
and is calculated from December 31, 1994. The performance of the indices is not
necessarily representative of the Fund's performance. Each index is composed of
municipal bonds from many states while the Fund is a single-state municipal bond
portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc. Calculated from December 31, 1994.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return. The Class A share inception date is 12/27/94.
9
<Page>
MISSOURI TAX-FREE FUND
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Missouri Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The graph and
performance table below do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF MISSOURI
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 11,020 $ 10,662 $ 11,118 $ 10,824 $ 11,030
1996 $ 11,631 $ 11,253 $ 11,790 $ 11,569 $ 11,654
1997 $ 12,587 $ 12,177 $ 12,853 $ 12,607 $ 12,619
1998 $ 13,563 $ 13,122 $ 13,972 $ 13,885 $ 13,614
1999 $ 13,258 $ 12,827 $ 13,875 $ 13,408 $ 13,276
2000 $ 13,871 $ 13,420 $ 14,731 $ 14,071 $ 13,891
2001 $ 15,414 $ 14,913 $ 16,263 $ 15,459 $ 15,278
2002 $ 16,597 $ 16,057 $ 17,715 $ 16,824 $ 16,472
2003 $ 17,124 $ 16,568 $ 18,404 $ 17,218 $ 16,963
2004 $ 17,770 $ 17,193 $ 19,251 $ 18,261 $ 17,590
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
CLASS A(4) 0.40% 5.33% 5.58%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
10
<Page>
NEW JERSEY TAX-FREE FUND
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of New Jersey Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The graph and
performance table below do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF NEW JERSEY
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 10,998 $ 10,641 $ 11,118 $ 10,824 $ 10,976
1996 $ 11,690 $ 11,310 $ 11,790 $ 11,569 $ 11,573
1997 $ 12,654 $ 12,243 $ 12,853 $ 12,607 $ 12,521
1998 $ 13,835 $ 13,385 $ 13,972 $ 13,885 $ 13,534
1999 $ 13,319 $ 12,886 $ 13,875 $ 13,408 $ 13,205
2000 $ 14,026 $ 13,570 $ 14,731 $ 14,071 $ 13,793
2001 $ 15,488 $ 14,984 $ 16,263 $ 15,459 $ 15,092
2002 $ 16,720 $ 16,177 $ 17,715 $ 16,824 $ 16,192
2003 $ 16,939 $ 16,389 $ 18,404 $ 17,218 $ 16,667
2004 $ 17,598 $ 17,026 $ 19,251 $ 18,261 $ 17,312
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
CLASS A(4) 0.60% 5.02% 5.46%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
11
<Page>
NEW YORK TAX-FREE FUND
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of New York Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The performance of
the other class will be greater than or less than the performance shown in the
graph below due to different sales loads and expenses applicable to such class.
The graph and performance table below do not reflect the deduction of taxes that
a shareholder would pay on fund distributions or the redemption of fund shares.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF NEW YORK
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 10,912 $ 10,557 $ 11,118 $ 10,824 $ 10,951
1996 $ 11,445 $ 11,073 $ 11,790 $ 11,569 $ 11,575
1997 $ 12,360 $ 11,958 $ 12,853 $ 12,607 $ 12,565
1998 $ 13,476 $ 13,038 $ 13,972 $ 13,885 $ 13,623
1999 $ 13,041 $ 12,617 $ 13,875 $ 13,408 $ 13,206
2000 $ 13,778 $ 13,330 $ 14,731 $ 14,071 $ 13,886
2001 $ 15,343 $ 14,844 $ 16,263 $ 15,459 $ 15,262
2002 $ 16,800 $ 16,254 $ 17,715 $ 16,824 $ 16,508
2003 $ 17,229 $ 16,669 $ 18,404 $ 17,218 $ 16,962
2004 $ 17,975 $ 17,391 $ 19,251 $ 18,261 $ 17,630
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE SALES
CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS LIFE OF CLASS
CLASS A(4) 0.97% 5.93% 5.69% --
CLASS C(5) 3.57% 5.98% -- 5.29%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
(5) The Class C shares were first offered on 7/15/96. The 1% CDSC for Class C
shares normally applies before the first anniversary of the purchase date.
Performance is at net asset value.
12
<Page>
TEXAS TAX-FREE FUND
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Texas Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The graph and
performance table below do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF TEXAS
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 11,114 $ 10,753 $ 11,118 $ 10,824 $ 11,075
1996 $ 11,792 $ 11,409 $ 11,790 $ 11,569 $ 11,771
1997 $ 12,883 $ 12,464 $ 12,853 $ 12,607 $ 12,795
1998 $ 14,073 $ 13,616 $ 13,972 $ 13,885 $ 13,864
1999 $ 13,375 $ 12,940 $ 13,875 $ 13,408 $ 13,373
2000 $ 13,929 $ 13,476 $ 14,731 $ 14,071 $ 13,843
2001 $ 15,504 $ 15,000 $ 16,263 $ 15,459 $ 15,170
2002 $ 16,985 $ 16,433 $ 17,715 $ 16,824 $ 16,344
2003 $ 17,549 $ 16,978 $ 18,404 $ 17,218 $ 16,908
2004 $ 18,184 $ 17,593 $ 19,251 $ 18,261 $ 17,487
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
CLASS A(4) 0.23% 5.64% 5.81%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
13
<Page>
WASHINGTON TAX-FREE FUND
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Other State Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The graph and
performance table below do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF OTHER STATE
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 11,047 $ 10,688 $ 11,118 $ 10,824 $ 10,894
1996 $ 11,798 $ 11,415 $ 11,790 $ 11,569 $ 11,521
1997 $ 12,957 $ 12,536 $ 12,853 $ 12,607 $ 12,442
1998 $ 14,185 $ 13,724 $ 13,972 $ 13,885 $ 13,410
1999 $ 13,594 $ 13,152 $ 13,875 $ 13,408 $ 13,103
2000 $ 14,260 $ 13,796 $ 14,731 $ 14,071 $ 13,707
2001 $ 15,818 $ 15,304 $ 16,263 $ 15,459 $ 14,961
2002 $ 17,196 $ 16,637 $ 17,715 $ 16,824 $ 16,058
2003 $ 17,669 $ 17,095 $ 18,404 $ 17,218 $ 16,442
2004 $ 18,331 $ 17,736 $ 19,251 $ 18,261 $ 17,001
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
CLASS A(4) 0.28% 5.49% 5.89%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
14
<Page>
INSURED INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Insured Municipal Debt Funds and the Lehman
3-10 Year Insured Tax-Exempt Bond Index, assuming reinvestment of all dividends
and distributions.(1) The performance of other classes will be greater than or
less than the performance shown in the graph below due to different sales loads
and expenses applicable to such classes. The graph and performance table below
do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN 3-10 YEAR LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) INSURED TAX-EXEMPT OF INSURED
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
June 30, 2003 $ 10,000 $ 9,675 $ 10,000 $ 10,000
Jul-2003 $ 9,640 $ 9,327 $ 9,696 $ 9,586
Aug-2003 $ 9,723 $ 9,407 $ 9,774 $ 9,683
Sep-2003 $ 10,017 $ 9,691 $ 10,055 $ 9,978
Oct-2003 $ 9,958 $ 9,635 $ 9,993 $ 9,911
Nov-2003 $ 10,021 $ 9,695 $ 10,058 $ 10,018
Dec-2003 $ 10,115 $ 9,787 $ 10,134 $ 10,094
Jan-2004 $ 10,158 $ 9,828 $ 10,184 $ 10,129
Feb-2004 $ 10,301 $ 9,966 $ 10,330 $ 10,296
Mar-2004 $ 10,231 $ 9,899 $ 10,263 $ 10,219
Apr-2004 $ 9,987 $ 9,662 $ 10,028 $ 9,948
May-2004 $ 9,978 $ 9,653 $ 10,006 $ 9,921
Jun-2004 $ 10,002 $ 9,677 $ 10,038 $ 9,949
Jul-2004 $ 10,109 $ 9,780 $ 10,144 $ 10,077
Aug-2004 $ 10,276 $ 9,942 $ 10,350 $ 10,271
Sep-2004 $ 10,299 $ 9,964 $ 10,377 $ 10,319
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR LIFE OF CLASS
CLASS A(4) -0.46% -0.30%
CLASS B(5) -1.91% -1.48%
CLASS C(6) 2.05% 1.60%
CLASS P(7) 2.65% 2.20%
</Table>
(1) Performance for the unmanaged index does not reflect any fees or expenses.
The performance of the index is not necessarily representative of the Fund's
performance.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for period shown ended
September 30, 2004 using the SEC required uniform method to compute total
return. The Class A share inception date is 6/30/03.
(5) The Class B shares were first offered on 6/30/03. Performance reflects the
deduction of a CDSC of 4% for 1 year and the life of the Class.
(6) The Class C shares were first offered on 6/30/03. The 1% CDSC for Class C
shares normally applies before the first anniversary of the purchase date.
(7) The Class P shares were first offered on 6/30/03. Performance is at net
asset value.
15
<Page>
FLORIDA TAX-FREE TRUST
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Florida Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The performance of
the other class will be greater than or less than the performance shown in the
graph below due to different sales loads and expenses applicable to such class.
The graph and performance table below do not reflect the deduction of taxes that
a shareholder would pay on fund distributions or the redemption of fund shares.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF FLORIDA
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 10,991 $ 10,634 $ 11,118 $ 10,824 $ 11,072
1996 $ 11,536 $ 11,161 $ 11,790 $ 11,569 $ 11,709
1997 $ 12,413 $ 12,009 $ 12,853 $ 12,607 $ 12,656
1998 $ 13,430 $ 12,993 $ 13,972 $ 13,885 $ 13,701
1999 $ 12,941 $ 12,520 $ 13,875 $ 13,408 $ 13,313
2000 $ 13,488 $ 13,050 $ 14,731 $ 14,071 $ 13,943
2001 $ 14,930 $ 14,445 $ 16,263 $ 15,459 $ 15,276
2002 $ 16,139 $ 15,615 $ 17,715 $ 16,824 $ 16,401
2003 $ 16,562 $ 16,024 $ 18,404 $ 17,218 $ 16,855
2004 $ 17,081 $ 16,525 $ 19,251 $ 18,261 $ 17,482
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS LIFE OF CLASS
CLASS A(4) -0.14% 5.03% 5.16% --
CLASS C(5) 2.44% 5.01% -- 4.53%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
(5) The Class C shares were first offered on 7/15/96. The 1% CDSC for Class C
shares normally applies before the first anniversary of the purchase date.
Performance is at net asset value.
16
<Page>
GEORGIA TAX-FREE TRUST
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Georgia Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The graph and
performance table below do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF GEORGIA
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
December
27, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
Sept 1995 $ 11,127 $ 10,765 $ 11,280 $ 11,139 $ 11,193
1996 $ 11,944 $ 11,556 $ 11,961 $ 11,905 $ 11,858
1997 $ 13,107 $ 12,681 $ 13,040 $ 12,974 $ 12,920
1998 $ 14,475 $ 14,005 $ 14,176 $ 14,289 $ 14,007
1999 $ 13,995 $ 13,540 $ 14,077 $ 13,798 $ 13,567
2000 $ 14,932 $ 14,447 $ 14,945 $ 14,480 $ 14,270
2001 $ 16,830 $ 16,283 $ 16,500 $ 15,908 $ 15,650
2002 $ 18,391 $ 17,793 $ 17,973 $ 17,314 $ 16,896
2003 $ 18,981 $ 18,364 $ 18,672 $ 17,719 $ 17,391
2004 $ 19,843 $ 19,198 $ 19,531 $ 18,793 $ 17,947
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS LIFE OF CLASS
CLASS A(4) 1.13% 6.52% 6.91%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses
and is calculated from December 31, 1994. The performance of the indices is not
necessarily representative of the Fund's performance. Each index is composed of
municipal bonds from many states while the Fund is a single-state municipal bond
portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc. Calculated from December 31, 1994.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return. The Class A share inception date is 12/27/94.
17
<Page>
MICHIGAN TAX-FREE TRUST
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Michigan Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The graph and
performance table below do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF MICHIGAN
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 11,109 $ 10,748 $ 11,118 $ 10,824 $ 10,998
1996 $ 11,748 $ 11,366 $ 11,790 $ 11,569 $ 11,627
1997 $ 12,796 $ 12,380 $ 12,853 $ 12,607 $ 12,579
1998 $ 13,905 $ 13,453 $ 13,972 $ 13,885 $ 13,596
1999 $ 13,502 $ 13,063 $ 13,875 $ 13,408 $ 13,253
2000 $ 14,347 $ 13,881 $ 14,731 $ 14,071 $ 13,895
2001 $ 16,100 $ 15,577 $ 16,263 $ 15,459 $ 15,235
2002 $ 17,641 $ 17,068 $ 17,715 $ 16,824 $ 16,427
2003 $ 18,198 $ 17,607 $ 18,404 $ 17,218 $ 16,895
2004 $ 18,832 $ 18,220 $ 19,251 $ 18,261 $ 17,469
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
CLASS A(4) 0.12% 6.19% 6.18%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
18
<Page>
PENNSYLVANIA TAX-FREE TRUST
- --------------------------------------------------------------------------------
INVESTMENT COMPARISON
Below is a comparison of a $10,000 investment in Class A shares to the same
investment in Lipper's Average of Pennsylvania Municipal Debt Funds, the Lehman
Municipal Bond Index and the Lehman Municipal Long Current Coupon Bond Index,
assuming reinvestment of all dividends and distributions.(1) The graph and
performance table below do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
[CHART]
<Table>
<Caption>
THE FUND THE FUND LEHMAN MUNICIPAL LIPPER AVERAGE
(CLASS A SHARES) (CLASS A SHARES) LEHMAN MUNICIPAL LONG CURRENT OF PENNSYLVANIA
AT NET ASSET VALUE AT MAXIMUM OFFERING PRICE(2) BOND INDEX(1) COUPON BOND INDEX(1) MUNICIPAL DEBT FUNDS(3)
September
30, 1994 $ 10,000 $ 9,675 $ 10,000 $ 10,000 $ 10,000
1995 $ 11,056 $ 10,697 $ 11,118 $ 10,824 $ 10,967
1996 $ 11,708 $ 11,328 $ 11,790 $ 11,569 $ 11,610
1997 $ 12,743 $ 12,329 $ 12,853 $ 12,607 $ 12,577
1998 $ 13,914 $ 13,462 $ 13,972 $ 13,885 $ 13,563
1999 $ 13,512 $ 13,073 $ 13,875 $ 13,408 $ 13,182
2000 $ 14,204 $ 13,742 $ 14,731 $ 14,071 $ 13,759
2001 $ 15,777 $ 15,264 $ 16,263 $ 15,459 $ 15,070
2002 $ 17,129 $ 16,572 $ 17,715 $ 16,824 $ 16,231
2003 $ 17,560 $ 16,990 $ 18,404 $ 17,218 $ 16,722
2004 $ 18,347 $ 17,751 $ 19,251 $ 18,261 $ 17,343
</Table>
FISCAL YEAR-END 9/30
AVERAGE ANNUAL TOTAL RETURNS AT MAXIMUM APPLICABLE
SALES CHARGE FOR THE PERIOD ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
CLASS A(4) 1.03% 5.63% 5.91%
</Table>
(1) Performance for each unmanaged index does not reflect any fees or expenses.
The performance of the indices is not necessarily representative of the Fund's
performance. Each index is composed of municipal bonds from many states while
the Fund is a single-state municipal bond portfolio.
(2) Reflects the deduction of the maximum initial sales charge of 3.25%.
(3) Source: Lipper, Inc.
(4) This shows total return, which is the percent change in value, after
deduction of the maximum initial sales charge of 3.25% applicable to Class A
shares, with all dividends and distributions reinvested for periods shown ended
September 30, 2004 using the SEC required uniform method to compute total
return.
19
<Page>
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
As a shareholder of a Fund, you incur two types of costs: (1) transaction
costs, including sales charges on purchase payments (these charges vary among
the share classes); and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees (these charges vary among the share
classes; also, certain Funds do not yet have effective Rule 12b-1 plans under
which distribution and service fees are paid); and other Fund expenses. This
Example is intended to help you understand your ongoing costs (in dollars) of
investing in each Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period (April 1, 2004 through September 30,
2004).
ACTUAL EXPENSES
For each class of each Fund, the first line of the applicable table on the
following pages provides information about actual account values and actual
expenses. You may use the information in this line, together with the amount you
invested, to estimate the expenses that you paid over the period. Simply divide
your account value by $1,000 (for example, an $8,600 account value divided by
$1,000 = 8.6), then multiply the result by the number in the first line under
the heading entitled "Expenses Paid During the Period 4/1/04 - 9/30/04" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
For each class of each Fund, the second line of the applicable table on the
following pages provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to estimate
the actual ending account balance or expenses you paid for the period. You may
use this information to compare the ongoing costs of investing in each Fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
20
<Page>
NATIONAL TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,006.70 $ 4.52
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.50 $ 4.55
CLASS B
Actual $ 1,000.00 $ 1,003.20 $ 7.87
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,017.15 $ 7.92
CLASS C
Actual $ 1,000.00 $ 1,002.40 $ 7.91
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,017.10 $ 7.97
</Table>
+ For each class of the Fund, expenses are equal to the annualized expense ratio
for such class multiplied by the average account value over the period,
multiplied by 183/366 (to reflect one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 60.87%
AA+ 16.65%
Aa1 0.20%
AA 4.20%
Aa2 1.23%
Aa3 0.79%
AA- 2.62%
A+ 0.55%
A 6.22%
A- 1.89%
A3 0.94%
BBB+ 0.73%
Baa1 0.69%
BBB 1.52%
Short-Term Investments 0.90%
Total 100.00%
</Table>
* Represents percent of total investments.
21
<Page>
CALIFORNIA TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----------- ----------- ------------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,009.40 $ 4.98
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.05 $ 5.00
CLASS C
Actual $ 1,000.00 $ 1,006.90 $ 8.33
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,016.70 $ 8.37
</Table>
+ For each class of the Fund, expenses are equal to the annualized expense ratio
for such class multiplied by the average account value over the period,
multiplied by 183/366 (to reflect one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 85.12%
AA+ 1.63%
Aa2 0.90%
Aa3 0.90%
A+ 0.60%
A1 2.13%
A 4.82%
A- 0.82%
A3 0.29%
BBB+ 0.83%
Baa3 1.96%
Total 100.00%
</Table>
* Represents percent of total investments.
22
<Page>
CONNECTICUT TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,016.10 $ 5.14
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,019.90 $ 5.15
</Table>
+ Expenses are equal to the annualized expense ratio for the class multiplied by
the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 63.04%
AA+ 1.16%
Aa1 0.13%
AA 10.17%
AA- 0.52%
Aa3 5.50%
A+ 3.88%
A 3.19%
A2 3.26%
A- 6.32%
BBB+ 1.26%
BBB- 1.23%
Short-Term Investments 0.34%
Total 100.00%
</Table>
* Represents percent of total investments.
23
<Page>
HAWAII TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,009.20 $ 5.08
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,019.95 $ 5.10
</Table>
+ Expenses are equal to the annualized expense ratio for the class multiplied by
the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 76.45%
AA 1.59%
AA- 1.72%
A+ 1.75%
A 7.85%
A- 5.29%
BBB+ 5.35%
Total 100.00%
</Table>
* Represents percent of total investments.
24
<Page>
MINNESOTA TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,010.60 $ 3.42
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,021.60 $ 3.44
</Table>
+ Expenses are equal to the annualized expense ratio for the class multiplied by
the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 73.93%
AA+ 10.33%
AA 2.14%
Aa2 0.27%
Aa3 0.73%
A+ 0.54%
A 1.06%
A2 1.39%
A- 5.29%
A3 1.50%
BBB+ 1.43%
Baa1 1.39%
Total 100.00%
</Table>
* Represents percent of total investments.
25
<Page>
MISSOURI TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,007.90 $ 5.02
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.00 $ 5.05
</Table>
+ Expenses are equal to the annualized expense ratio for the class multiplied by
the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 69.69%
AA+ 6.46%
AA 9.74%
AA- 0.94%
A+ 0.69%
A 2.36%
A2 0.78%
A- 7.64%
MIG1 1.70%
Total 100.00%
</Table>
* Represents percent of total investments.
26
<Page>
NEW JERSEY TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,007.30 $ 5.02
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.00 $ 5.05
</Table>
+ Expenses are equal to the annualized expense ratio for the class multiplied by
the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 78.28%
Aa1 2.50%
AA 1.70%
AA- 2.68%
A+ 3.87%
A 5.80%
A- 3.16%
A2 0.33%
Baa1 1.46%
Short-Term Investments 0.22%
Total 100.00%
</Table>
* Represents percent of total investments.
27
<Page>
NEW YORK TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,012.20 $ 5.03
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.00 $ 5.05
CLASS C
Actual $ 1,000.00 $ 1,008.00 $ 8.29
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,016.75 $ 8.32
</Table>
+ Expenses are equal to the annualized expense ratio for such class multiplied
by the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 43.17%
AA+ 8.59%
Aa1 0.03%
AA 3.56%
Aa2 0.52%
AA- 12.27%
A+ 1.90%
A 16.07%
A- 9.06%
A3 0.53%
BBB+ 3.06%
NR 1.24%
Total 100.00%
</Table>
* Represents percent of total investments.
28
<Page>
TEXAS TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,003.00 $ 5.61
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,019.40 $ 5.66
</Table>
+ Expenses are equal to the annualized expense ratio for the class multiplied by
the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 57.92%
AA+ 10.72%
Aa1 9.83%
AA 1.35%
AA- 1.36%
A+ 5.49%
A 7.09%
A- 2.01%
BBB+ 1.49%
BBB 1.36%
Short-Term Investments 1.38%
Total 100.00%
</Table>
* Represents percent of total investments.
29
<Page>
WASHINGTON TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,008.50 $ 3.47
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,021.55 $ 3.49
</Table>
+ Expenses are equal to the annualized expense ratio for the class multiplied by
the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 77.67%
AA+ 2.30%
AA 3.15%
A1 2.07%
A 6.40%
A- 7.56%
A3 0.85%
Total 100.00%
</Table>
* Represents percent of total investments.
30
<Page>
INSURED INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,006.80 $ 1.23
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,023.78 $ 1.24
CLASS B
Actual $ 1,000.00 $ 1,003.20 $ 4.99
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.03 $ 5.03
CLASS C
Actual $ 1,000.00 $ 1,003.00 $ 4.98
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.03 $ 5.03
CLASS P
Actual $ 1,000.00 $ 1,005.90 $ 2.26
Hypothetical $ 1,000.00 $ 1,022.75 $ 2.28
</Table>
+ For each class of the Fund, expenses are equal to the annualized expense ratio
for such class multiplied by the average account value over the period,
multiplied by 183/366 (to reflect one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 96.39%
Short-Term Investments 3.61%
Total 100.00%
</Table>
* Represents percent of total investments.
31
<Page>
FLORIDA TAX-FREE TRUST
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,003.70 $ 5.21
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,019.80 $ 5.25
CLASS C
Actual $ 1,000.00 $ 1,000.20 $ 8.30
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,016.70 $ 8.37
</Table>
+ Expenses are equal to the annualized expense ratio for such class multiplied
by the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 70.51%
AA+ 11.35%
AA 0.61%
A+ 0.99%
A- 4.44%
A 11.75%
Short-Term Investments 0.35%
Total 100.00%
</Table>
* Represents percent of total investments.
32
<Page>
GEORGIA TAX-FREE TRUST
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,010.40 $ 3.27
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,021.75 $ 3.29
</Table>
+ Expenses are equal to the annualized expense ratio for the class multiplied by
the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 53.57%
AA+ 2.53%
AA 10.66%
AA- 0.71%
Aa3 1.66%
A 13.29%
A2 1.17%
A- 10.12%
A3 1.90%
BBB+ 3.80%
Baa1 0.59%
Total 100.00%
</Table>
* Represents percent of total investments.
33
<Page>
MICHIGAN TAX-FREE TRUST
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,006.50 $ 3.41
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,021.60 $ 3.44
</Table>
+ Expenses are equal to the annualized expense ratio for the class multiplied by
the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 88.63%
AA+ 7.46%
A 2.51%
A- 1.40%
Total 100.00%
</Table>
* Represents percent of total investments.
34
<Page>
PENNSYLVANIA TAX-FREE TRUST
- --------------------------------------------------------------------------------
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE THE PERIOD+
----- ----- -----------
4/1/04 -
4/1/04 9/30/04 9/30/04
------ ------- -------
CLASS A
Actual $ 1,000.00 $ 1,008.30 $ 4.87
Hypothetical (5% Return Before Expenses) $ 1,000.00 $ 1,020.15 $ 4.90
</Table>
+ Expenses are equal to the annualized expense ratio for the class multiplied by
the average account value over the period, multiplied by 183/366 (to reflect
one-half year period).
- --------------------------------------------------------------------------------
PORTFOLIO HOLDINGS PRESENTED BY RATING
SEPTEMBER 30, 2004
RATING:
<Table>
<Caption>
S&P OR MOODY'S %*
AAA 69.44%
AA 5.01%
AA- 1.69%
Aa3 1.39%
A 14.04%
A- 5.94%
BBB 1.37%
BBB+ 1.12%
Total 100.00%
</Table>
* Represents percent of total investments.
35
<Page>
SCHEDULE OF INVESTMENTS
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 99.01%
EDUCATION 15.25%
CA Ed Fac Auth Rev USC Ser A 5.00% 10/1/2033 AA+ $ 15,000 $ 15,248,850
CT St Hlth & Ed Fac Auth Rev
Kent Sch Ser D(d)(15) 5.00% 7/1/2021 Aaa 1,000 1,062,530
DE St Econ Dev Auth Rev
DE Tech Pk Univ De Pj(2) 6.00% 2/1/2021 AAA 900 1,033,785
District of Columbia Rev
James F Oyster Elem Sch Pilot(1) 6.25% 11/1/2021 A 450 486,387
Glendale AZ Ind Dev Auth
Midwestern Univ Ser A 5.75% 5/15/2021 A- 1,000 1,091,980
Glendale AZ Ind Dev Auth
Midwestern Univ Ser A 5.875% 5/15/2031 A- 1,000 1,056,710
LA St Univ & Agric &
Mech Clg Hlth Sciences Ctr Pj(15) 6.375% 5/1/2031 AAA 2,290 2,650,835
MA St Dev Fin Agy Rev Boston
Univ Ser P 5.375% 5/15/2039 A3 1,000 1,026,230
MA St Dev Fin Agy Rev Boston
Univ Ser P 6.00% 5/15/2059 A3 1,000 1,118,500
MA St Hlth & Ed Fac
Auth Rev Boston College(14)(15) 5.125% 6/1/2033 AAA 3,810 3,926,548
Maricopa Cnty AZ Sch Dist No 69
Paradise Vly Ref Second Ser(10) 5.00% 7/1/2013 AAA 2,150 2,396,024
Milledgeville-Baldwin Cnty GA
GA State College & St. Univ Fndtn 6.00% 9/1/2033 BBB 3,000 3,142,440
NY St Dorm Auth Rev
Fashion Inst Tech(11) 5.50% 7/1/2030 AAA 400 429,396
OR St Hlth Hsg Ed & Cul
Fac Auth Reed College Pj Ser A 5.75% 7/1/2032 AA- 3,800 4,125,242
TN St Sch Brd Auth Higher Ed
Fac Ser A(11) 5.125% 5/1/2021 AAA 615 654,016
TN St Sch Brd Auth Higher Ed
Fac Ser A 5.625% 5/1/2030 AA- 150 160,593
Tulsa OK Ind Auth Rev Ser A(15) 5.375% 10/1/2020 Aaa 3,170 3,501,233
Univ CA Revs Multiple Purpose
Pj Ser Q(11) 5.00% 9/1/2031 AAA 4,935 5,041,497
Univ Central AR Rev Hsg Sys(11) 6.50% 1/1/2031 AAA 2,425 2,817,098
Univ NC Univ Rev Gen 5.00% 12/1/2028 AA+ 2,015 2,071,521
Univ VT & St Agric College Univ VT(2) 5.125% 10/1/2037 AAA 1,150 1,186,099
Univ Mass Bldg Auth
Sen Comwlth Ser 4-A GTD(15) 5.125% 11/1/2034 AAA 5,000 5,180,950
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
36
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Univ NC Sys Pool Rev Ser A(2) 5.00% 4/1/2027 AAA $ 1,800 $ 1,857,384
Univ VA Univ Rev Gen Ser B 5.00% 6/1/2033 AAA 6,475 6,653,192
Univ VA Univ Rev
Residuals Ser 856 RIBs 8.04% 6/1/2019 Aaa 1,925 2,236,311
Univ VA Univ Rev
Residuals Ser 856 RIBs 8.04% 6/1/2020 Aaa 2,022 2,321,911
Univ VA Univ Rev
Residuals Ser 856 RIBs 8.04% 6/1/2021 Aaa 2,122 2,407,849
VA St Pub Sch Auth Sch Edl
Tech Nts-IV 5.00% 4/15/2007 AA+ 11,145 11,973,631
WV Univ Rev Univ
Sys WV Pj Ser A(2) Zero Coupon 4/1/2024 AAA 2,880 1,079,309
WV Univ Rev Univ
Sys WV Pj Ser A(2) Zero Coupon 4/1/2026 AAA 800 262,696
---------------
TOTAL 88,200,747
---------------
GENERAL OBLIGATION 14.83%
Akron OH Impt 5.80% 11/1/2020 AA- 575 651,423
Athens OH City Sch Dist Fac
Constr & Impt(11) 6.00% 12/1/2024 AAA 500 570,605
Bessemer AL School Warrants(2) 5.60% 2/1/2030 Aaa 2,000 2,150,080
Birmingham MI Sch Dist Sch
Bldg & Site(11) 5.00% 11/1/2033 AAA 4,700 4,808,147
CA St 5.25% 4/1/2034 A 7,500 7,766,325
CA St Rep 5.25% 2/1/2029 A 10,000 10,312,000
Campbell CA Un Sch Dist
Election 2002 Ser B(10) 5.50% 8/1/2033 AAA 5,000 5,409,600
Canton OH Sch Dist Ser A(15) 5.625% 12/1/2023 AAA 2,900 3,219,812
Dallas TX 5.75% 2/15/2020 AA+ 1,615 1,803,697
Delaware Vly PA Regl Fin
Auth Loc Govt Rev Ser C(2) 7.75% 7/1/2027 AAA 1,000 1,393,250
Fairfield OH City Sch Dist
Ref Sch Impt(10) 5.375% 12/1/2020 AAA 1,410 1,567,511
Foothill De Anza CA Cmnty
College Dist Cap Apprec(15) Zero Coupon 8/1/2030 AAA 4,505 1,120,979
Georgetown Cnty SC Sch Dist(11) 5.25% 3/1/2020 AAA 2,485 2,688,074
Jefferson Cnty AL Sch Warrants(11) 5.50% 2/15/2020 AAA 1,000 1,091,840
Lake Orion MI Cmnty Sch Dist
Ser B 5.25% 5/1/2025 Aaa 4,900 5,147,646
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
37
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Linn Cnty OR Sch Dist No 55
Sweet Home(11) 5.50% 6/15/2020 AAA $ 1,000 $ 1,105,190
Linn Cnty OR Sch Dist No 55
Sweet Home(11) 5.50% 6/15/2025 AAA 2,245 2,429,966
Marion OH City Sch Dist Sch
Fac Constr & Impt(11) 5.625% 12/1/2022 AAA 500 554,475
New York NY Unrefunded
Balance Ser A 6.00% 5/15/2030 A 395 437,289
OR St Alternate Energy Pj
Ser A AMT 5.00% 1/1/2015 AA- 1,415 1,481,944
OR St Alternate Energy Pj
Ser A AMT 5.05% 1/1/2016 AA- 1,795 1,880,550
OR St Alternate Energy Pj
Ser A AMT 5.10% 1/1/2017 AA- 980 1,025,090
Paw Paw MI Pub Sch Dist Sch
Bldg & Site 6.00% 5/1/2030 AA+ 550 620,235
Powell OH(10) 5.50% 12/1/2032 AAA 1,280 1,369,190
Richland Cnty SC 5.375% 3/1/2030 AA 1,140 1,213,222
Richland Cnty SC 5.375% 3/1/2031 AA 1,195 1,270,894
Richland Cnty SC 5.375% 3/1/2032 AA 1,255 1,332,898
Richland Cnty SC 5.375% 3/1/2033 AA 1,320 1,400,982
Richmond VA(11) 5.50% 1/15/2018 AAA 500 559,915
South Wash Cnty MN Indpt Sch
Dist No 833 Ser A(15) 5.50% 2/1/2018 AAA 5,065 5,586,391
South Wash Cnty MN Indpt Sch
Dist No 833 Ser A(15) 5.50% 2/1/2019 AAA 2,990 3,284,037
Sunman Dearborn IN Inter Sch
Bldg Corp First Mtg(10) 5.00% 1/15/2021 AAA 1,105 1,159,874
Teays Vly OH Loc Sch Dist
Sch Fac Constr 2 Impt(10) 5.375% 12/1/2020 Aaa 500 550,415
Washtenaw Cnty MI Multi Lake
San Swr Sys Sylvan Twp Wtr(15) 4.75% 5/1/2021 AAA 700 717,857
Whitehall MI Dist Sch 5.50% 5/1/2019 AA+ 1,400 1,553,678
Wood Cnty OH Pub Libr Impt(15) 5.875% 12/1/2022 Aaa 1,000 1,153,380
WV St Ser D(10) 6.50% 11/1/2026 AAA 2,000 2,407,380
WV St St Road(15) 5.75% 6/1/2025 AAA 1,800 1,977,102
Wyandotte Cnty KS Sch 204
Bonner Springs Ser A(11) 5.60% 9/1/2020 Aaa 855 945,211
---------------
TOTAL 85,718,154
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
38
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE 13.71%
Abag Fin Auth for Nonprofit
Corp CA Woods Oblig COP(1) 6.20% 11/1/2029 A $ 1,000 $ 1,059,530
AZ Hlth Fac Auth Rev AZ
Hlthcare Pooled Fin C(10) 5.50% 6/1/2014 Aaa 1,130 1,293,827
Chatham Cnty GA Hosp Auth Rev
Hosp Impt Mem Health Univ A 5.50% 1/1/2034 A- 2,740 2,803,486
Clackamas Cnty OR Hosp Fac
Legacy Hlth Sys(14)(15) 5.00% 2/15/2015 AAA 1,600 1,722,848
Clackamas Cnty OR Hosp Fac
Legacy Hlth Sys(14)(15) 5.00% 2/15/2016 AAA 1,000 1,069,830
CO Hlth Fac Auth Rev
Catholic Hlth 5.25% 9/1/2024 AA 5,065 5,221,407
CO Hlth Fac Auth Rev
Portercare Adventis Hlth 6.625% 11/15/2026 A 2,000 2,208,960
CT St Hlth & Ed Fac Auth Rev
Kent Sch Ser D(d)(15) 4.375% 7/1/2023 Aaa 450 443,462
Erie Cnty OH Hosp Facs Rev
Firelands Regl Med Ctr Ser A 5.50% 8/15/2022 A 1,000 1,031,760
Fargo ND Hlth Sys Rev
Meritcare Obligated Group A(15) 5.375% 6/1/2027 AAA 1,000 1,033,880
Hamilton Cnty OH Hosp Facs
Cincinnati Childrens Hosp J(10) 5.25% 5/15/2034 AAA 3,395 3,529,917
Harris Cnty TX Hlth Fac Mem
Hermann Hlthcare Ser A 6.375% 6/1/2029 A 2,500 2,749,100
Highlands Cnty FL Fac Auth Rev
Hosp Adventist/Sunbelt Ser A 6.00% 11/15/2031 A 2,750 2,945,690
IL Fin Auth Rev
Northwestern Mem Hosp Ser A 5.25% 8/15/2034 AA+ 10,000 10,176,500
Jackson OH Hosp Fac Rev Cons
Hlth Sys Jackson Hosp(16) 6.125% 10/1/2023 AA 680 754,902
KY Eco Dev Fin Auth
Norton Hlthcare Inc Ser A(15) Zero Coupon 10/1/2025 AAA 4,300 1,454,991
Knox Cnty TN Hlth Edl & Hsg
Facs Brd Hosp Facs Rev Ref(11) Zero Coupon 1/1/2023 AAA 925 337,819
Lauderdale Cnty & Florence AL
Hlthcare Rev Coffee Hlth Ser A(15) 6.00% 7/1/2029 AAA 1,000 1,109,880
Lubbock TX Hlth Fac Dev Corp
Rev Sears Plains Pj(12) 5.70% 1/20/2041 AAA 2,490 2,624,585
MD St Hlth & Higher Ed Fac
Auth Rev North Arundel Hosp 6.50% 7/1/2026 A 1,000 1,108,360
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
39
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MD St Hlth & Higher Ed Fac
Catholic Hlth Initiative Ser A 6.00% 12/1/2024 AA $ 100 $ 112,012
MD St Hlth & Higher Ed Fac
Univ MD Med Sys 6.75% 7/1/2030 A3 1,950 2,208,979
Mesa AZ Ind Dev Auth
Discovery Hlth Sys Ser A(15) 5.75% 1/1/2025 AAA 750 811,980
Minneapolis & St Paul MN Hsg
Healthpartners Oblig Group Pj 5.875% 12/1/2029 BBB+ 2,100 2,154,348
MO St Hlth & Ed Fac
Auth Rites PA-1049 RIBs(2) 15.13% 6/1/2010 AAA(b) 855 1,073,726
MS Hosp Equip & Fac
Forrest Cnty Auth Gen Hosp Pj(11) 6.00% 1/1/2030 Aaa 615 682,047
NH Hlth & Ed Fac Auth Rev 6.00% 10/1/2024 A+ 250 269,738
NH Hlth & Ed Fac
Dartmouth-Hitchcock Oblig Gr(11) 5.50% 8/1/2027 AAA 3,500 3,747,450
NH Hlth & Ed Fac Exeter Pj 5.75% 10/1/2031 A+ 1,550 1,620,432
NH St Hlth & Ed Concord Hosp(11) 5.50% 10/1/2021 Aaa 710 781,121
NJ Hlthcare Fac Fin Auth Rev
Robert Wood Johnson Univ Hosp 5.75% 7/1/2031 A+ 700 748,510
NM St Hosp Equip Ln Council
Presbyterian Hlthcare Ser A 5.50% 8/1/2025 Aa3 2,000 2,086,280
OR St Hlth Hsg Ed & Cultural
Fac Auth Rev(2) 5.25% 11/15/2019 AAA 2,000 2,178,780
Orange Cnty FL Hlth Fac Auth
Rev Hosp Orlando Regl 5.75% 12/1/2027 A 1,000 1,055,820
Plymouth MN Hlth Fac Rev West
Hlth Pj Ser A(11) 6.125% 6/1/2024 AAA 2,990 3,069,265
RI St Hlth & Ed Bldg RI Hlth 6.50% 8/15/2032 BBB 1,000 1,059,120
RI St Hlth & Ed Bldg Roger
Williams Rlty(8) 6.50% 8/1/2029 AAA 1,240 1,352,431
SC Jobs Eco Dev Auth Hosp
Facs Rev 6.375% 8/1/2034 BBB 2,000 2,103,700
St Cloud MN Hlthcare Rev
Hosp Oblig Group Ser A(11) 6.25% 5/1/2018 Aaa 3,320 3,844,195
Sullivan Cnty TN Hlth Ed & Hsg
Fac Brd Rev Hosp 6.25% 9/1/2022 BBB+ 2,000 2,061,780
Tyler TX Hlth Fac Dev Corp
Hosp Rev Mother Frances Hosp 6.00% 7/1/2027 Baa1 1,500 1,552,335
---------------
TOTAL 79,254,783
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
40
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSING 5.22%
CO Hsg Fin Auth Multi
Fam Hsg Ser A AMT 6.80% 10/1/2037 AA+ $ 2,325 $ 2,392,030
ID Hsg & Fin Assn SF Mtg AMT 5.25% 7/1/2033 Aaa 890 907,951
ID Hsg Agy Sing Fam Mtg
Ser F AMT(8)(18) 7.45% 7/1/2015 Aaa 195 199,385
IL Hsg Dev Auth Multi Fam Hsg
Lawndale AMT(6)(8) 6.80% 12/1/2016 AAA 1,000 1,044,070
IL Hsg Dev Auth Multi Fam Hsg
Lawndale AMT(6)(8) 7.10% 12/1/2034 AAA 1,500 1,565,730
Kansas City MO Ind Dev Auth North
Oak Crossing Sr Ser A-1 AMT(2) 5.30% 12/1/2020 AAA 1,170 1,208,575
KY Hsg Corp Hsg Rev Ser D AMT 5.25% 7/1/2022 AAA 500 513,890
MA St Hsg Fin Agy Hsg Rev
Rental Mtg Ser A AMT(2)(6)(8) 7.35% 1/1/2035 AAA 1,355 1,388,794
MA St Hsg Fin Agy Hsg Rev
Sing Fam Ser 29 AMT 6.75% 6/1/2026 AA 430 439,426
MD St Cmnty Dev Admin Dept
Hsg & Cmnty Dev Ser B AMT 5.375% 9/1/2022 Aa2 4,160 4,253,642
MD St Cmnty Dev Admin
Residential Ser F AMT 5.50% 9/1/2022 Aa2 2,500 2,580,100
Minneapolis St Paul MN Hsg Fin
Rev Sing Fam Mtg Ser AB AMT(13) 6.25% 11/1/2030 AAA 400 424,676
MN St Hsg Fin Agy Sing Fam
Mtg Ser G-1 AMT 5.60% 7/1/2022 AA+ 280 289,492
MO St Hsg Dev Cmnty Mtg Rev
Sing Fam Hmownr Ln Ser B-1 AMT(13) 6.25% 3/1/2031 AAA 225 233,210
MO St Hsg Dev Cmnty Mtg Rev
Sing Fam Ser E-1 AMT(13) Zero Coupon 3/1/2029 AAA 695 179,692
MT St Brd Hsg Sing Fam Mtg
Ser A-1(8)(18) 6.05% 12/1/2037 AA+ 4,255 4,401,117
NC Hsg Fin Agy Sing Fam Rev
Ser BB AMT 6.25% 3/1/2012 AA 560 573,961
New Orleans LA Fin Auth Mtg
Rev Ser B-2 AMT(13) 6.00% 12/1/2018 Aaa 360 375,671
OK Hsg Fin Agy Sing Fam Mtg
Ser B-1(13) 5.30% 9/1/2026 Aaa 90 92,799
OK Hsg Fin Agy Sing Fam Rev
Cap Apprec Ser D-1(13) Zero Coupon 3/1/2029 Aaa 3,425 919,612
OK Hsg Fin Agy Sing Fam Rev
Mtg Hmownr Ser B-1 Zero Coupon 3/1/2029 Aaa 1,805 481,935
OK Hsg Fin Agy Sing Fam Rev
Mtg Hmownr Ser D-2 AMT(13) Zero Coupon 9/1/2030 Aaa 1,815 366,866
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
41
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Prince Georges Cnty MD Hsg
Sing Fam Ser A AMT(7)(13) 6.15% 8/1/2019 AAA $ 20 $ 21,065
VT Hsg Fin Agy Sing Fam Hsg
Ser 16-A AMT(11) 5.50% 11/1/2021 AAA 2,845 2,928,558
WV St Hsg Dev Fd Hsg Fin
Ser B AMT 5.25% 11/1/2018 AAA 2,345 2,398,278
---------------
TOTAL 30,180,525
---------------
INDUSTRIAL 1.87%
Clark Cnty NV Ind Dev Rev
Ser C AMT(2) 5.95% 12/1/2038 AAA 3,320 3,693,201
CT St Dev Auth Solid Wst Dsp
Fac Rev Pfizer Inc AMT 7.00% 7/1/2025 AAA 2,500 2,648,300
Jacksonville FL Swr & Solid
Wst Disp Fac Rev Anheuser AMT 5.875% 2/1/2036 A+ 500 516,675
Moraine OH Solid Waste Disp
General Motors Corp Pj AMT 5.65% 7/1/2024 Baa1 450 456,395
RI St Eco Dev Providence
Place Mall(16) 6.125% 7/1/2020 AA 550 629,849
Texas City TX Ind Dev Corp
Marine Term Rev Arco Pipe Line 7.375% 10/1/2020 AA+ 650 859,644
Wyandotte Cnty Kansas City KS
Univ Govt Ref GM Corp Pj 6.00% 6/1/2025 Baa1 1,900 1,986,545
---------------
TOTAL 10,790,609
---------------
LEASE 4.51%
AZ St Ser A COP(15) 5.00% 11/1/2020 AAA 200 212,412
Bemidji MN Lease Rev MN St
Bureau Criminal Appreh(15) 5.75% 12/1/2018 Aaa 555 618,553
Bemidji MN Lease Rev MN St
Bureau Criminal Appreh(15) 5.75% 12/1/2019 Aaa 315 351,071
Boise City ID Lease Rev Urban
Renewal ADA Cnty Courts(2) 6.25% 8/15/2019 AAA 7,385 8,515,865
Charlotte NC Govt
Fac Pj-Ser G COP 5.375% 6/1/2026 AA+ 2,250 2,416,410
Grand Rapids MI Pub Sch(15) 5.00% 11/1/2021 AAA 250 263,915
Greenville Cnty SC Sch Dist
Installment Pur Ref Bldg 5.50% 12/1/2028 AA- 5,500 5,794,305
Henrico Cnty VA Eco Dev Auth
Pub Fac Lease Rev Jail Pj 6.125% 11/1/2019 Aa1 1,000 1,169,390
Murray City UT Muni Bldg Auth
Ser A(2) 5.30% 12/1/2021 Aaa 2,925 3,134,986
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
42
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Providence RI Redev Agy Rev
Pub Safety & Muni Bldgs Ser A(2) 5.75% 4/1/2029 Aaa $ 415 $ 454,238
Spartanburg Cnty SC Sch Dist
McCarthy Teszler Pj(19) 5.00% 3/1/2022 AAA 1,000 1,049,640
St Paul MN Port Auth Lease
Rev Office Bldg 5.00% 12/1/2022 AA+ 1,000 1,050,480
West Vly City UT Muni Bldg(2) 5.50% 8/1/2027 AAA 1,000 1,070,700
---------------
TOTAL 26,101,965
---------------
MISCELLANEOUS 10.51%
AZ Tourism & Sports Auth Tax Rev
Multipurpose Stadium Fac Ser A(15) 5.00% 7/1/2031 Aaa 670 686,636
George L Smith II GA World
Congress Ctr Auth Rev AMT(15) 5.75% 7/1/2015 AAA 1,500 1,655,010
George L Smith II GA World
Congress Ctr Rev AMT(15) 5.50% 7/1/2020 AAA 700 761,152
LA Loc Govt Env Fac Pkg Fac
Garage Pj Ser A(2) 5.375% 10/1/2026 AAA 1,500 1,588,095
Larimer Cnty CO Sales & Use
Tax Rev Fairgrounds & Events(15) 5.00% 12/15/2019 AAA 750 804,090
MA St Wtr Pollutn Abatement
Tr Rites PA 1221 RIBs 8.572% 8/1/2011 AAA(c) 4,500 4,939,650
Memphis-Shelby Cnty TN Sports
Memphis Arena Pj(2) 5.25% 11/1/2023 AAA 1,765 1,896,969
MI Muni Bd Auth Rev Loc Govt
Ln Prog Ser C 5.00% 5/1/2008 AA+ 10,000 10,892,000
Miami-Dade Cnty FL Spl Oblig
Fltg Rate Cap Asset Acq Ser A RIBs(10) 2.40%# 4/1/2014 AAA 3,300 3,293,961
New Jersey Eco Dev Auth Rev
Motor Vehicle Sur Rev Ser A(15) 5.00% 7/1/2034 AAA 15,000 15,465,750
Omaha Convention Hotel Corp
Rites PA-1078 RIBs(2) 8.283% 4/1/2010 AAA(b) 5,000 5,252,900
Portland OR Urb Ren & Redev
Downtown Waterfront Ref Ser A(2) 5.50% 6/15/2020 Aaa 650 718,341
Portland OR Urb Ren & Redev
Downtown Waterfront Ref Ser A(2) 5.75% 6/15/2019 Aaa 1,500 1,698,390
Puerto Rico Pub Bldg Auth Rev Ref
Govt Facs Ser I GTD 5.25% 7/1/2033 A- 5,000 5,173,000
University FL Resh Fndtn
Inc Cap Impt Rev(2) 5.125% 9/1/2033 Aaa 4,000 4,082,320
VA St Pub Bldg Auth Pub
Fac Rev Ser A 5.75% 8/1/2020 AA+ 600 677,256
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
43
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Westminister CO Sales & Use
Tax Ref Rev(2) 5.25% 12/1/2022 AAA $ 1,090 $ 1,179,227
---------------
TOTAL 60,764,747
---------------
POWER 1.83%
Grant Cnty WA Pub Util Dist
No 2 Pr Rap Hydro 2nd Ser B AMT(15) 5.375% 1/1/2018 AAA 300 320,568
HI St Dept Bdg & Fin Spl Purp
Mtg Rev HI Elec Co Ser A AMT(15) 6.60% 1/1/2025 AAA 135 137,783
Los Angeles CA Wtr & Pwr Rev
Pwr Sys Ser A-A1(11) 5.25% 7/1/2020 AAA 2,600 2,817,308
NC Muni Pwr Agy No 1 Catawba
Elec Rev(1)(3) 5.00% 1/1/2015 A 1,125 1,127,981
Sacramento CA Muni Util Dist
Ref Ser T(10) 5.00% 5/15/2030 AAA 5,000 5,118,550
SC St Pub Svc(11) 5.25% 1/1/2019 AAA 950 1,042,378
---------------
TOTAL 10,564,568
---------------
PRE-REFUNDED 12.93%
Baltimore MD Rev Water Pj Ser A(11) 6.00% 7/1/2018 AAA 285 331,221
Baltimore MD Rev Water Pj Ser A(11) 6.00% 7/1/2020 AAA 275 319,600
Cobb Cnty GA Kennestone Hosp
Auth Rev Ctfs Ser 86 A ETM(15) Zero Coupon 8/1/2015 AAA 1,000 542,780
Culpeper Cnty VA Sch(11) 6.00% 1/15/2021 AAA 690 802,084
Cumberland Cnty NC
Civic Ctr Pj Ser A COP(2) 6.40% 12/1/2019 AAA 2,800 2,878,624
Dallas TX Indpt Sch Dist PSF GTD 5.50% 2/15/2017 AAA 8,700 10,002,738
DE Transn Auth Trans Sys Rev Sr 6.00% 7/1/2020 AA 6,215 7,222,949
Detroit MI Wtr Supply Sys Sr
Lien Ser A(10) 5.75% 7/1/2028 AAA 1,500 1,757,175
Fayette Cnty GA Pub Fac Auth
Criminal Justice Center Pj 6.00% 6/1/2030 AA 3,500 4,089,785
Glendale AZ Dev Auth Ed Fac
Rev Amer Graduate Sch Intl(4) 7.125% 7/1/2020 AAA 1,000 1,050,880
Houston TX Wtr & Swr Sys Rev
Ser D(15) 6.125% 12/1/2029 AAA 1,400 1,410,766
IA Fin Auth Rev ETM 5.25% 8/15/2021 Aa2 235 250,075
IN Bd Bk Rev St Revolving
Fund Prog Ser A 6.75% 2/1/2017 AAA 500 518,560
Lane Cnty OR Sch Dist No 052 5.625% 6/15/2020 Aa3 800 913,184
Lauderdale Cnty & Florence AL
Hlthcare Auth Rev(15) 5.75% 7/1/2019 AAA 2,000 2,248,820
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
44
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Linn Cnty OR Cmnty Sch Dist
No 9 Lebanon(15) 6.125% 6/15/2025 AAA $ 5,000 $ 5,837,700
New York NY City Muni Wtr Fin
Auth Wtr & Swr Sys Rev Ser A 5.50% 6/15/2023 AA+ 1,050 1,079,106
New York NY Ser A 6.00% 5/15/2030 A 1,780 2,077,919
NJ St Transn Tr Fd Auth
Transn Sys Ser B 6.00% 6/15/2019 AAA 2,550 2,960,626
North Providence RI Ser A(15) 6.125% 7/1/2016 AAA 1,410 1,588,478
OH St 6.20% 8/1/2013 AA+ 750 793,365
Philadelphia PA Sch Dist Ser A(11) 5.75% 2/1/2030 AAA 1,200 1,381,248
Phoenix AZ Civic Impt Corp(10) 6.00% 7/1/2024 AAA 2,400 2,809,560
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser B 6.00% 7/1/2026 A 1,500 1,563,975
Puerto Rico Comwlth
Rites PA 650 RIBs 9.964% 7/1/2029 A- 750 812,835
RI St Hlth & Ed Bldg Corp Rev
Hgh Ed Fac Brown Univ 6.00% 9/1/2025 AA+ 7,070 7,493,139
SC Jobs Economic Dev Auth
Hosp Fac Rev 7.375% 12/15/2021 BBB 2,000 2,478,100
Weber Cnty UT Muni Bldg Auth
Lease Rev(16) 7.50% 12/15/2019 Aaa 2,250 2,322,495
West Deptford Twp NJ(10) 5.625% 9/1/2030 Aaa 5,225 5,989,470
White Hsg Util Dist TN
Robertson/Sumner Cntys Wtr/Swr(11) 6.00% 1/1/2026 Aaa 1,090 1,256,519
---------------
TOTAL 74,783,776
---------------
RESOURCE RECOVERY 0.38%
Cobb Cnty GA Solid Waste Mgmt
Auth Rev AMT 6.40% 1/1/2015 AAA 900 923,643
MO St Envr Impt & Enrg
Unrefunded Bal St Revolving B 7.20% 7/1/2016 Aaa 1,245 1,278,353
---------------
TOTAL 2,201,996
---------------
SPECIAL TAX 1.09%
Ernest N Morial New Orleans
LA Exhibit Hall Auth Spl Tax RIBs 8.688% 7/15/2028 AAA 5,000 5,516,000
Salida CA Area Pub Fac Fin
Agy Cmnty Fac Dist Spl
Tax B No 1998-1(11) 5.25% 9/1/2028 AAA 355 369,757
San Juan Cnty NM Tax/Motor
Ref & Impt(14)(15) 5.25% 5/15/2022 AAA 390 420,323
---------------
TOTAL 6,306,080
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
45
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION 5.55%
Billings MT Arpt Rev AMT(15) 6.10% 7/1/2016 AAA $ 190 $ 216,875
Billings MT Arpt Rev AMT(15) 6.20% 7/1/2020 AAA 2,775 3,173,990
DE Transn Auth Trans Sys
Rev Ref Ser B(2) 5.25% 7/1/2005 AAA 6,270 6,436,782
Houston TX Arpt Sys Rev Sub
Lien Ser A AMT(10) 5.50% 7/1/2012 AAA 1,610 1,788,147
Houston TX Arpt Sys Rev Sub
Lien Ser A AMT(11) 5.70% 7/1/2030 AAA 2,615 2,665,103
Municipal Secs Trust Ctfs RIBs+(2) 8.582% 1/1/2031 Aaa 6,250 6,760,125
North TX Thruway Auth Dallas
North Twy Sys Rev Ref Ser C(11) 3.00% 1/1/2006 AAA 900 913,158
PA St Tpk Comm Tpk Rev Ser A(2) 5.25% 12/1/2032 AAA 5,000 5,273,500
Port Kalama WA Rev Ser B AMT 5.625% 12/1/2015 A3 1,025 1,062,228
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser RIBs(5)(11) 9.94% 7/1/2026 Aaa 500 543,030
RI St Eco Corp
Arpt Rev Ser B(10) 6.00% 7/1/2020 AAA 1,210 1,385,389
RI St Eco Corp
Arpt Rev Ser B(10) 6.00% 7/1/2028 AAA 1,200 1,346,544
San Francisco CA City & Cnty
Arpt Lease SFO Fuel Ser A AMT(11) 6.125% 1/1/2027 AAA 500 543,610
---------------
TOTAL 32,108,481
---------------
WATER/SEWER 11.33%
Brighton Township MI San Sew
Drainage Dist(11) 5.25% 10/1/2018 AAA 1,615 1,728,680
Broad River NC Wtr Auth(15) 5.375% 6/1/2026 Aaa 400 425,748
Chisholm Creek Util Auth KS
Bel Aire & Park City KS Pj(15) 5.25% 9/1/2020 Aaa 320 348,454
Chisholm Creek Util Auth KS
Bel Aire & Park City KS Pj(15) 5.25% 9/1/2021 Aaa 1,025 1,109,624
Gainesville GA Wtr & Sew Rev(11) 5.375% 11/15/2020 AAA 2,900 3,170,831
Gautier MI Util Dist Util Sys
Rev Ref(10) 5.125% 3/1/2019 Aaa 425 453,403
Grand Forks ND Wtr Rev Ser D(15) 5.375% 9/1/2020 Aaa 1,150 1,248,762
Iowa City IA Swr Rev(11) 5.375% 7/1/2020 Aaa 620 679,973
Kansas St Dev Fin Auth Rev
Pub Wtr Supply Revolving Ln-2 4.75% 4/1/2018 Aa3 1,180 1,212,025
Los Angeles CA Dept Wtr & Pwr
Wtrwks Rev Ser A(10) 5.00% 7/1/2036 AAA 3,625 3,670,022
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
46
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
NATIONAL TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Miami-Dade Cnty FL Wtr Swr
Rev Ref(15) 5.00% 10/1/2007 AAA $ 2,800 $ 3,028,116
Midlothian TX Wtr Dist(11) Zero Coupon 9/1/2022 AAA 2,000 834,740
New York City NY Muni Wtr Fin 5.125% 6/15/2031 AA+ 5,000 5,132,050
New York City NY Muni Wtr Fin
Ref Fiscal 2004 Ser C 5.00% 6/15/2035 AA+ 15,000 15,252,600
OH St Wtr Dev Auth Rev
Fresh Wtr Impt 5.00% 12/1/2022 AAA 3,000 3,178,950
OR St Brd Bk Rev OR Econ
Cmnty Dev Dept Ser A(15) 5.50% 1/1/2017 AAA 570 629,229
Paragould AR Wtr Swr & Elec Rev(2) 5.65% 12/1/2025 AAA 615 669,846
Raleigh NC Comb Entrprse 5.00% 3/1/2031 AAA 11,980 12,305,137
Rockingham NC COP(2) 5.00% 4/1/2020 AAA 1,205 1,294,507
SD Conservancy Dist(2) 5.00% 8/1/2022 Aaa 2,700 2,821,932
SD Conservancy Dist
Rev Clean Wtr St Revolving Fd(2) 5.00% 8/1/2022 Aaa 500 520,175
UT Wtr Fin Agy Rev Pooled LN
Fin Prog(2) 5.125% 7/1/2023 Aaa 1,000 1,047,050
WV St Wtr Dev Auth Rev Loan
Prog III Ser A AMT(2) 6.25% 7/1/2030 AAA 1,470 1,656,161
WV Wtr Dev Auth Infra Rev Ser A(2) 5.50% 10/1/2023 AAA 900 993,033
WV Wtr Dev Auth Infra Rev Ser A(11) 5.625% 10/1/2026 AAA 1,555 1,697,889
York Cnty VA Swr Rev 5.875% 6/1/2024 Aa3 330 369,666
---------------
TOTAL 65,478,603
---------------
TOTAL MUNICIPAL BONDS (Cost $539,257,078) 572,455,034
===============
<Caption>
SHARES
(000)
------
SHORT-TERM INVESTMENTS 0.90%
MONEY MARKET MUTUAL FUNDS 0.90%
Dreyfus Municipal Cash Management Plus 5,212 5,212,496
SSgA Tax Free Money Market Fund 5 5,462
---------------
TOTAL SHORT-TERM INVESTMENTS (Cost $5,217,958) 5,217,958
===============
TOTAL INVESTMENTS IN SECURITIES 99.91% (Cost $544,475,036) 577,672,992
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 0.09% 517,551
---------------
NET ASSETS 100.00% $ 578,190,543
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
47
<Page>
SCHEDULE OF INVESTMENTS
CALIFORNIA TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 99.40%
EDUCATION 13.07%
Abag Fin Auth For Nonprofit
Corp CA Rev Sch of Mech Arts 5.25% 10/1/2026 A3 $ 500 $ 514,480
CA Ed Fac Auth Rev Pepperdine Univ 5.75% 9/15/2030 A1 2,000 2,164,160
CA Ed Fac Auth Rev Res Ctfs
Ser 113 RIBs 8.405% 12/1/2027 AAA 2,525 2,690,135
CA Ed Fac Auth Rev Scripps College 5.25% 8/1/2021 A1 425 449,399
CA Ed Fac Auth Rev Scripps College 5.25% 8/1/2026 A1 1,145 1,189,437
CA Ed Fac Auth Rev
Univ of San Diego(2) 5.00% 10/1/2028 Aaa 1,250 1,279,588
CA Ed Fac Auth Rev
Univ of San Francisco(15) 6.00% 10/1/2016 AAA 75 82,169
CA Ed Fac Auth Rev
Univ of San Francisco(15) 6.00% 10/1/2026 AAA 2,565 2,800,647
CA Ed Fac Auth Rev
Univ of Southern CA 5.50% 10/1/2027 AA+ 1,160 1,245,875
CA St Univ Fndtn Rev
Monterey Bay(15) 5.30% 6/1/2022 AAA 250 268,663
CA St Univ Fndtn Rev
Sacramento Auxiliary Ser A(15) 5.50% 10/1/2027 AAA 400 429,924
CA St Univ Rev & Colleges
Hsg Sys(10) 5.90% 11/1/2021 AAA 1,045 1,115,569
CA Statewide Cmntys Dev
Auth Aux Fndtn CA St Univ(15) 5.20% 6/1/2024 AAA 525 551,544
Golden Vly Unif Sch Dist Fin Pj(2) 5.35% 7/1/2027 AAA 2,250 2,355,952
Los Angeles CA Unif Sch
Dist Ser A(11) 5.00% 7/1/2022 AAA 1,500 1,580,190
Los Angeles CA Unif Sch Dist
Ser D(10) 5.375% 7/1/2025 AAA 1,000 1,061,920
Univ CA Rev Multi Purp Ser K 5.25% 9/1/2024 Aa2 1,545 1,611,404
Univ CA Revs Research
Facs Ser E(2) 5.00% 9/1/2031 AAA 2,000 2,040,860
---------------
TOTAL 23,431,916
---------------
GENERAL OBLIGATION 24.58%
Anaheim CA Unif High Sch
Dist Ser A(11) 5.00% 8/1/2025 AAA 785 810,591
Antelope Vly CA Unif High Sch(15) 5.00% 8/1/2022 AAA 2,180 2,297,480
Barstow CA Unif Sch Dist Ser A(10) 5.00% 8/1/2026 Aaa 2,500 2,568,225
Berryessa CA Unif Sch Dist
Election of 1999 Ser B(11) 5.25% 8/1/2019 AAA 1,015 1,114,369
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
48
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
CALIFORNIA TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
CA St(10) 5.25% 9/1/2030 AAA $ 890 $ 924,238
CA St Ref(15) 5.00% 2/1/2022 AAA 2,700 2,820,933
CA St Ser B AMT 5.70% 12/1/2032 A 640 652,621
Capistrano CA Unif Sch Dist
Fac Impt Dist No 001 Ser A(10) 6.00% 8/1/2024 AAA 2,500 2,832,800
El Monte CA City Sch Dist
Ser A(11) 6.25% 5/1/2025 AAA 1,230 1,403,282
Escondido CA Unif Sch Dist
Ser A(11) 5.25% 8/1/2022 AAA 2,000 2,158,020
Franklin-McKinley CA Sch Dist
Ser B(11) 5.00% 8/1/2027 AAA 675 692,874
Fremont CA Unif High Sch
Dist Santa Clara Cnty Ser B(10) 5.25% 9/1/2025 AAA 1,000 1,054,370
Los Angeles CA Cmnty College
Ser A(15) 5.00% 6/1/2026 AAA 2,375 2,432,736
Mojave CA Unif Sch Dist
Sch Fac Impt Dist No. 001(10) 5.00% 8/1/2024 AAA 1,060 1,099,506
Mojave CA Unif Sch Dist
Sch Facs Impt Dist No 001(10) 5.25% 8/1/2022 AAA 1,230 1,327,182
Montebello CA Unif Sch Dist(11) 5.00% 8/1/2020 AAA 350 371,361
Mount Pleasant CA Elem Sch
Dist 1998 Election Ser C(11) 5.50% 3/1/2026 AAA 465 502,730
Oxnard CA Unif High Sch
Dist Ref Ser A(15) 6.00% 2/1/2020 AAA 650 769,360
Oxnard CA Unif High Sch
Dist Ref Ser A(15) 6.20% 8/1/2030 AAA 3,000 3,450,390
Pittsburg CA Redev Agcy
Los Medanos Cmnty Dev Pj(2) Zero Coupon 8/1/2026 AAA 3,500 1,087,205
Pittsburg CA Unif Sch Dist
Ser E(11) 6.00% 8/1/2024 AAA 1,380 1,519,642
Pomona CA Unif Sch Dist(15) 6.15% 8/1/2030 AAA 1,000 1,171,890
Pomona CA Unif Sch Dist Ser A(15) 6.55% 8/1/2029 AAA 1,000 1,255,430
Puerto Rico Comwlth Pub Impt
Ser A Unrefunded Bal 5.375% 7/1/2028 A- 995 1,031,009
Riverside CA Cmnty College
Ser A(15) 5.50% 8/1/2029 AAA 1,355 1,464,877
San Gabriel CA Unif Sch Dist
Ser A(11) 5.00% 8/1/2024 AAA 2,725 2,826,561
Santa Cruz CA City Elem Sch
Dist Ser B(10) 6.00% 8/1/2029 AAA 2,500 2,817,275
Southwestern Cmnty College(2) 5.375% 8/1/2025 AAA 1,500 1,605,600
---------------
TOTAL 44,062,557
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
49
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
CALIFORNIA TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE 2.62%
CA Infra & Econ Dev
Bk Rev Kaiser Hosp Ser A 5.50% 8/1/2031 A $ 1,300 $ 1,343,004
CA Infra & Econ Dev
Bk Rev Kaiser Hosp Ser B 5.55% 8/1/2031 A 650 673,797
CA Infra & Econ Scripps Research
Inst Ser A 5.75% 7/1/2030 Aa3 1,500 1,607,475
Torrance CA Hosp Rev Torrance
Memorial Med Ctr Ser A 5.50% 6/1/2031 A+ 500 512,955
Torrance CA Hosp Rev Torrance
Memorial Med Ctr Ser A 6.00% 6/1/2022 A+ 500 551,260
---------------
TOTAL 4,688,491
---------------
HOUSING 3.11%
CA Hsg Fin Agy Rev
Home Mtg Ser K AMT**(8)(15)(18) 0.00%/5.70% 2/1/2012 & 2015 AAA 5,295 3,672,506
CA Hsg Fin Agy Rev
Home Mtg Ser K AMT(8)(15)(18) Zero Coupon 2/1/2022 AAA 5,000 1,898,250
---------------
TOTAL 5,570,756
---------------
INDUSTRIAL 5.87%
CA Poll Ctrl Fin Auth Rev
Southern CA Ser B AMT(2)(17) 6.40% 12/1/2024 AAA 10,435 10,518,793
---------------
LEASE 11.22%
CA St Pub Wk Brd Lease Rev
Dept Gen Svcs Teale Data(2) 5.25% 3/1/2020 AAA 1,000 1,079,400
Inglewood CA Pub Fin Auth
Rev Ser A(2) 5.25% 8/1/2021 AAA 600 646,050
Orange Cnty CA Recovery
Partn Residual Ser 128 COP RIBs(15) 9.755% 7/1/2019 AAA 2,500 2,954,050
Orange Cnty CA Recovery COP
Ser A COP(15) 6.00% 7/1/2026 AAA 750 811,148
Palm Springs CA Fin Auth
Convention Ctr Pj Ser A(15) 5.50% 11/1/2035 AAA 1,000 1,086,490
Plumas Cnty CA Cap
Impt Prog Ser A COP(2) 5.25% 6/1/2023 AAA 1,365 1,460,932
Sacramento CA City Fin Auth
Rev Cap Impt Ser A(2) 5.00% 12/1/2020 AAA 2,000 2,106,200
Sacramento CA City Fin Auth
Rev Cap Impt Ser A(2) 5.00% 12/1/2026 AAA 900 921,420
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
50
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
CALIFORNIA TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
San Buenaventura CA
Ser C COP(2) 5.25% 2/1/2031 AAA $ 2,575 $ 2,692,266
San Francisco CA City & Cnty
San Bruno Jail No 3(2) 5.25% 10/1/2033 AAA 5,000 5,192,250
Santa Ana CA Unif Sch Dist
Fin Pj COP(11) Zero Coupon 4/1/2019 AAA 2,295 1,165,768
---------------
TOTAL 20,115,974
---------------
MISCELLANEOUS 2.23%
CA Infra & Econ Bk Rev Asian
Museum Fdtn(15) 5.25% 6/1/2030 AAA 115 119,646
CA Infra & Econ Bk Rev YMCA
Metropolitan LA Pj(2) 5.25% 2/1/2026 AAA 2,000 2,115,980
Fontana CA Pub Fin Auth Tax
North Fontana Redev Pj Ser A(2) 5.50% 9/1/2032 AAA 1,000 1,068,560
Oakland CA JT Pwrs Fin Auth
Reassmt Rev 5.50% 9/2/2024 A- 405 430,183
Puerto Rico Pub Fin Corp
Unrefunded Bal Comwlth Ser E 5.50% 8/1/2029 BBB+ 250 262,095
---------------
TOTAL 3,996,464
---------------
POWER 2.96%
CA St Dept Wtr Res Pwr Supply
Rev Insured Series(19) 5.375% 5/1/2017 AAA 500 555,490
Los Angeles CA Wtr & Pwr Rev
Pwr Sys Ser A(14)(15) 5.00% 7/1/2024 AAA 850 877,786
Puerto Rico Elec Pwr Auth Pwr
Rev Ser NN(15) 5.00% 7/1/2032 AAA 1,500 1,549,215
Puerto Rico Elec Pwr Auth Rev
Ser II(11) 5.125% 7/1/2026 AAA 500 526,030
Sacramento CA Muni Util Dist
Ref Ser Q(11) 5.25% 8/15/2022 AAA 1,000 1,075,870
Shasta CA Jt Pwrs Fin Auth
Cnty Admin Bldg Pj Ser A(15) 5.25% 4/1/2023 AAA 675 720,198
---------------
TOTAL 5,304,589
---------------
PRE-REFUNDED 5.39%
CA Ed Fac Auth Rev Pooled
College/Univ Ser C ETM 6.50% 6/1/2020 Baa3 3,000 3,524,850
CA St Pub Wks Brd Lease Rev
Dept Corrections(2) 5.80% 1/1/2013 AAA 1,090 1,166,714
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
51
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
CALIFORNIA TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Centinela Vly CA Unif High Sch
Election 2000 Ser D ETM(10) 5.25% 8/1/2024 AAA $ 1,145 $ 1,239,966
M-S-R Pub Pwr Agcy CA San Juan
Pj Rev Ser D ETM(15) 6.75% 7/1/2020 AAA 950 1,162,278
Puerto Rico Comwlth
Impt Ser A 5.375% 7/1/2028 AAA 505 577,664
Puerto Rico Pub Fin Corp
Approp E 5.50% 8/1/2029 BBB+ 750 856,515
Santa Cruz CA City High Sch Ser B(10) 6.00% 8/1/2029 AAA 1,000 1,126,910
---------------
TOTAL 9,654,897
---------------
RESOURCE RECOVERY 1.21%
CA Poll Ctrl Fin Auth Rev
Pacific Gas/Elec Ser A AMT(15) 5.35% 12/1/2016 AAA 2,000 2,169,520
---------------
SPECIAL TAX 7.33%
CSUCI Fin Auth Rev CA East
Campus Cmnty Ser A(15) 5.25% 9/1/2026 AAA 5,500 5,748,930
Riverside Cnty CA Redev Agy
Tax Alloc Jupura Valley Pj(2) 5.25% 10/1/2035 AAA 2,000 2,093,320
RNR Sch Fin Auth CA Spl Tax
Cmnty Fac Dist #92-1 Ser A(2) 5.625% 9/1/2030 AAA 3,985 4,354,609
Salida CA Area Pub Fac Fin Agcy
Cmnty Fac Dist Spl Tax #1998-1(11) 5.25% 9/1/2028 AAA 900 937,413
---------------
TOTAL 13,134,272
---------------
TRANSPORTATION 11.90%
Bay Area Govt Assn CA Rev
Bart SFO Extn Arpt Premium A(2) 5.00% 8/1/2026 AAA 2,000 2,054,580
Fresno CA Arpt Rev Ser A(11) 5.50% 7/1/2030 AAA 1,500 1,599,165
Port Oakland CA Port Rev Ser J(15) 5.50% 11/1/2026 AAA 5,000 5,343,750
Puerto Rico Comwlth Hwy &
Transn Auth Rev Ser D 5.75% 7/1/2041 A 5,400 5,917,860
Puerto Rico Comwlth Hwy &
Transn Auth Ser G(10) 5.25% 7/1/2021 AAA 1,000 1,089,820
San Francisco CA City & Cnty
Aprt Commn Ser 2 Issue 15A AMT(11) 5.00% 5/1/2017 AAA 2,000 2,096,460
San Francisco CA City & Cnty
Arpt Lease SFO Fuel Ser A AMT(11) 6.125% 1/1/2027 AAA 500 543,610
San Francisco CA City & Cnty
Commn Intl Arpt Rev AMT(11) 5.75% 1/1/2014 AAA 500 552,505
San Francisco CA City & Cnty
Ref Second Ser 28B(15) 5.25% 5/1/2023 AAA 2,000 2,128,280
---------------
TOTAL 21,326,030
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
52
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
CALIFORNIA TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
WATER/SEWER 7.91%
CA Statewide Cmntys
Pooled Fin Pg Ser C(11) 5.25% 10/1/2034 AAA $ 500 $ 521,460
El Monte CA Wtr Auth Rev(2) 5.60% 9/1/2029 AAA 2,000 2,179,600
Imperial CA Ref Wtr Fac COP(10) 5.00% 10/15/2020 AAA 3,250 3,461,250
Orange Cnty CA Santn Dist COP(10) 5.25% 2/1/2027 AAA 4,265 4,470,189
Palo Alto CA Util Rev Ser A 6.25% 6/1/2020 AA+ 1,610 1,653,148
San Luis Opispo Cnty CA Ser A(15) 5.375% 8/1/2030 AAA 1,800 1,885,392
---------------
TOTAL 14,171,039
---------------
Total Municipal Bonds (Cost $168,798,489) 178,145,298
===============
<Caption>
SHARES
(000)
------
SHORT-TERM INVESTMENT 0.00%
MONEY MARKET MUTUAL FUND 0.00%
Dreyfus General CA Fund Class A (Cost $998) 1 998
===============
TOTAL INVESTMENTS IN SECURITIES 99.40% (Cost $168,799,487) 178,146,296
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 0.60% 1,077,119
---------------
NET ASSETS 100.00% $ 179,223,415
===============
</Table>
SCHEDULE OF INVESTMENTS
CONNECTICUT TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
PRINCIPAL
AMOUNT
(000)
---------
MUNICIPAL BONDS 98.20%
EDUCATION 20.28%
CT St Hlth & Ed Fac Auth Rev
CT College Ser E(15) 5.25% 7/1/2022 AAA $ 400 436,476
CT St Hlth & Ed Fac Auth Rev
Fairfield Univ Ser I(15) 5.25% 7/1/2019 AAA 600 649,446
CT St Hlth & Ed Fac Auth Rev
Fairfield Univ Ser I(15) 5.50% 7/1/2029 AAA 1,235 1,326,069
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
53
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
CONNECTICUT TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
CT St Hlth & Ed Fac Auth Rev
Gunnery Sch(16) 5.35% 7/1/2031 AA $ 695 $ 723,224
CT St Hlth & Ed Fac Auth Rev
Kent Sch Ser D(d)(15) 4.125% 7/1/2022 Aaa 250 241,283
CT St Hlth & Ed Fac Auth Rev
Loomis Chaffee Sch Ser D 5.25% 7/1/2031 A2 2,750 2,894,348
CT St Hlth & Ed Fac Auth Rev
Miss Porters Sch Ser A 5.75% 7/1/2029 A+ 3,200 3,442,368
CT St Hlth & Ed Fac Auth Rev
Norwich Free Academy Ser A(2) 5.00% 7/1/2034 AAA 1,250 1,288,812
CT St Hlth & Ed Fac Auth Rev
Suffield Academy Ser A(15) 5.40% 7/1/2027 AAA 1,350 1,432,255
CT St Hlth & Ed Fac Auth Rev
Trinity College Ser G(2) 5.00% 7/1/2021 AAA 1,000 1,057,650
CT St Hlth & Ed Fac Auth Rev
Univ CT Fndtn Ser A 5.25% 7/1/2019 Aa3 200 217,336
CT St Hlth & Ed Fac Auth Rev
Univ CT Fndtn Ser A 5.375% 7/1/2029 Aa3 210 218,749
CT St Hlth & Ed Fac Auth Rev
Univ Hartford Ser E(16) 5.25% 7/1/2032 AA 2,900 2,988,972
CT St Hlth & Ed Fac Auth Rev
Univ New Haven Issue D(1)(3) 6.70% 7/1/2026 A 1,000 1,044,860
CT St Hlth & Ed Fac Auth Rev
Unrefunded Bal Sacrd Hrt Ser C 6.50% 7/1/2016 BBB- 275 290,449
---------------
TOTAL 18,252,297
---------------
GENERAL OBLIGATION 15.33%
Bridgeport CT Ser C(10) 4.75% 8/15/2021 AAA 1,000 1,025,840
Bridgeport CT Ser C(10) 5.00% 8/15/2020 AAA 500 525,735
Hartford CT 6.50% 12/15/2005 A 730 770,340
Montville CT 6.70% 6/15/2009 Aa3 550 646,894
Montville CT 6.70% 6/15/2010 Aa3 575 686,240
New Haven CT(10) 5.00% 11/1/2019 AAA 560 605,987
New Haven CT Ser A(2) 5.00% 11/1/2021 AAA 1,000 1,060,590
Puerto Rico Comwlth Pub Impt Zero Coupon 7/1/2018 A- 2,035 1,116,116
Puerto Rico Comwlth
Pub Impt Ser A 5.25% 7/1/2023 A- 2,300 2,425,051
Puerto Rico Comwlth
Unrefunded Bal Pub Impt(11) 5.125% 7/1/2030 AAA 945 977,829
Redding CT 6.60% 4/15/2010 Aa1 100 118,715
Waterbury CT(11) 5.125% 4/1/2022 AAA 2,250 2,386,980
Waterbury CT Ser A(11) 5.00% 4/1/2019 AAA 1,250 1,337,712
West Haven CT(15) 6.50% 6/15/2006 AAA 100 107,788
---------------
TOTAL 13,791,817
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
54
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
CONNECTICUT TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE 8.18%
CT St Dev Auth Rev Duncaster Inc Pj(16) 5.125% 8/1/2022 AA $ 235 $ 246,715
CT St Hlth & Ed Fac Auth Rev
Bridgeport Hosp Ser A(15) 6.625% 7/1/2018 AAA 1,250 1,255,150
CT St Hlth & Ed Fac Auth Rev
Bristol Hosp Ser B(16) 5.50% 7/1/2021 AA 1,000 1,102,770
CT St Hlth & Ed Fac Auth Rev
Catholic Hlth East Ser F(15) 5.625% 11/15/2020 AAA 325 359,453
CT St Hlth & Ed Fac Auth Rev
Child Care Fac Prog Ser C(2) 5.625% 7/1/2029 AAA 1,000 1,081,510
CT St Hlth & Ed Fac Auth Rev
CT College Ser E(15) 5.00% 7/1/2032 AAA 1,050 1,079,872
CT St Hlth & Ed Fac Auth Rev
Kent Sch Ser D(d)(15) 4.375% 7/1/2023 Aaa 500 492,735
CT St Hlth & Ed Fac Auth Rev
St. Francis Hosp & Med(16) 5.00% 7/1/2022 AA 1,000 1,047,510
CT St Hlth & Ed Fac Auth Rev
Waterbury Hosp Issue Ser C(16) 5.75% 7/1/2029 AA 650 690,684
---------------
TOTAL 7,356,399
---------------
HOUSING 1.22%
CT St Hsg Fin Auth Hsg Mtg
Fin Prog Ser D 2 AMT 5.15% 11/15/2022 AAA 555 566,039
CT St Hsg Fin Auth Spl
Oblig Grp Home Mtg G5(2) 5.85% 6/15/2030 AAA 500 532,610
---------------
TOTAL 1,098,649
---------------
INDUSTRIAL 3.51%
CT St Dev Auth Govt Lease Rev(15) 6.60% 6/15/2014 AAA 500 512,915
CT St Dev Auth Solid Wst Dsp
Fac Rev Pfizer Inc AMT 7.00% 7/1/2025 AAA 2,500 2,648,300
---------------
TOTAL 3,161,215
---------------
MISCELLANEOUS 2.61%
CT St Hlth & Ed Fac Auth Rev
Trinity College Ser H(15) 4.75% 7/1/2023 AAA 1,030 1,059,067
Puerto Rico Pub Bldg Auth Rev
Unrefunded Bal Govt Facs Ser D 5.25% 7/1/2036 A- 1,000 1,028,730
Puerto Rico Pub Fin Corp
Unrefunded Bal Comwlth Ser E 5.50% 8/1/2029 BBB+ 250 262,095
---------------
TOTAL 2,349,892
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
55
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
CONNECTICUT TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
POWER 7.46%
Puerto Rico Elec Pwr Auth Pwr
Rev Ser NN(15) 5.00% 7/1/2032 AAA $ 1,500 $ 1,549,215
Puerto Rico Elec Pwr Auth Rev
Ser II(11) 5.125% 7/1/2026 AAA 2,925 3,077,275
Puerto Rico Elec Pwr Auth Rev
Ser II 5.25% 7/1/2031 A- 1,000 1,036,070
Puerto Rico Elec Pwr Auth Ser HH(11) 5.25% 7/1/2029 AAA 1,000 1,046,070
---------------
TOTAL 6,708,630
---------------
PRE-REFUNDED 28.41%
CT St Hlth & Ed Fac Auth Rev
Auth Rev Sacred Heart Ser C 6.50% 7/1/2016 BBB- 725 795,912
CT St Hlth & Ed Fac Auth Rev
Trinity College Ser E(15) 5.875% 7/1/2026 AAA 1,090 1,187,991
CT St Ser A 5.625% 4/15/2020 Aa3 1,000 1,150,090
CT St Ser A 6.00% 4/15/2015 AA 1,000 1,169,150
CT St Ser B 5.375% 10/1/2011 AA 1,000 1,047,540
CT St Ser B 5.60% 6/15/2020 Aa3 250 282,942
CT St Ser D 5.125% 11/15/2018 Aa3 1,500 1,674,210
CT St Spl Tax Oblig Rev
Transn Infra Ser A(10) 6.00% 12/1/2018 AAA 1,000 1,167,020
Municipal Secs Trust Ctfs Ser
7005 Cl B RIBs ETM+ 9.121% 10/1/2040 Aaa 1,000 1,158,600
New Haven CT(10) 5.375% 2/15/2011 AAA 1,500 1,602,300
New Haven CT Ser B(11) 6.00% 11/1/2015 AAA 450 524,102
New Haven CT Ser C(11) 6.00% 11/1/2019 AAA 665 774,506
Puerto Rico Comwlth 6.00% 7/1/2026 AAA 1,000 1,119,970
Puerto Rico Comwlth Pub Impt(11) 5.125% 7/1/2030 AAA 1,505 1,688,986
Puerto Rico Comwlth Pub Impt Ser A 5.00% 7/1/2027 AAA 1,170 1,317,572
Puerto Rico Comwlth Pub Impt Ser A(10) 5.00% 7/1/2032 AAA 4,285 4,825,467
Puerto Rico Elec Pwr Auth Rev Ser X 6.125% 7/1/2021 Aaa 750 790,380
Puerto Rico Pub Fin Corp
Comwlth Approp E 5.50% 8/1/2029 BBB+ 750 856,515
University CT Rev Student Fee Ser A(10) 5.75% 11/15/2020 AAA 205 238,464
University CT Rev Student Fee Ser A 6.00% 11/15/2021 AA- 390 459,081
University CT Rev Student Fee Ser A(10) 6.00% 11/15/2025 AAA 500 588,565
University CT Ser A(10) 5.625% 3/1/2020 AAA 1,000 1,147,210
---------------
TOTAL 25,566,573
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
56
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
CONNECTICUT TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
RESOURCE RECOVERY 1.14%
Stamford CT Wtr Poll Ctl
Sys & Fac Rev Ser A 5.00% 11/15/2032 AA+ $ 1,000 $ 1,027,950
---------------
TRANSPORTATION 6.81%
CT St Spl Tax Oblig Rev Rite
PA 1039 R-A RIBs(11) 8.822% 1/1/2010 AAA 500 612,480
CT St Spl Tax Oblig Rev Rite
PA 1039 R-B RIBs(11) 8.822% 1/1/2010 AAA 785 953,791
CT St Spl Tax Oblig Rev Rite
PA 1039 R-C RIBs(11) 8.072% 7/1/2017 AAA 2,250 2,519,055
Puerto Rico Comwlth Hwy &
Trans Auth Rev Ser D(11) 5.00% 7/1/2032 AAA 1,000 1,029,670
Puerto Rico Comwlth Hwy &
Transn Auth Rev Ser G 5.00% 7/1/2033 A 1,000 1,008,380
---------------
TOTAL 6,123,376
---------------
WATER/SEWER 3.25%
CT St Dev Auth Wtr
Bridgeport AMT(2)(17) 6.15% 4/1/2035 AAA 500 541,115
CT St Dev Auth Wtr Fac Rev CT
Wtr Co Ser A AMT(2) 5.75% 7/1/2028 AAA 250 250,062
South Cent CT Regl Wtr Auth
16th Ser(2) 5.375% 8/1/2030 AAA 1,000 1,065,250
South Cent CT Regl Wtr Auth
Sys Rev 16th Ser(2) 5.375% 8/1/2025 AAA 1,000 1,070,600
---------------
TOTAL 2,927,027
---------------
TOTAL MUNICIPAL BONDS (Cost $82,627,975) 88,363,825
===============
<Caption>
SHARES
(000)
-------
SHORT-TERM INVESTMENT 0.33%
MONEY MARKET MUTUAL FUND 0.33%
Dreyfus CT Muni Cash Management (Cost $301,464) 301 301,464
===============
TOTAL INVESTMENTS IN SECURITIES 98.53% (Cost $82,929,439) 88,665,289
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 1.47% 1,319,650
---------------
NET ASSETS 100.00% $ 89,984,939
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
57
<Page>
SCHEDULE OF INVESTMENTS
HAWAII TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 97.77%
EDUCATION 7.39%
HI St Hsg Fin & Dev Corp Rev
Univ of HI Faculty Hsg Pj(2) 5.65% 10/1/2016 AAA $ 1,000 $ 1,045,670
HI St Hsg Fin & Dev Corp Rev
Univ of HI Faculty Hsg Pj(2) 5.70% 10/1/2025 AAA 380 397,541
Univ HI Univ Sys Rev(10) 5.125% 7/15/2032 AAA 1,000 1,029,320
Univ HI Univ Sys Rev Ser A(10) 5.50% 7/15/2029 AAA 2,500 2,674,200
---------------
TOTAL 5,146,731
---------------
GENERAL OBLIGATION 23.94%
HI Cnty HI Ser A(11) 5.00% 7/15/2023 AAA 1,000 1,047,690
HI Cnty HI Ser A(15) 5.00% 7/15/2024 AAA 1,000 1,044,770
HI Cnty HI Ser A(15) 5.25% 7/15/2023 AAA 595 645,135
HI Cnty HI Ser A(10) 5.50% 7/15/2017 AAA 1,045 1,165,405
HI Cnty HI Ser A(10) 5.60% 5/1/2013 AAA 1,780 2,053,301
HI Cnty HI Ser A(11) 5.625% 5/15/2019 AAA 545 606,427
HI St Ser BZ 6.00% 10/1/2010 AA- 500 581,965
HI St Ser BZ 6.00% 10/1/2012 AA- 500 589,895
HI St Ser CA(10) 8.00% 1/1/2013 AAA 2,000 2,620,740
HI St Ser CP(10) 5.00% 10/1/2016 AAA 900 966,285
HI St Ser CZ(11) 5.25% 7/1/2018 AAA 1,000 1,099,190
Kauai Cnty HI Pub Impt Ser B(15) 5.25% 8/1/2017 AAA 95 103,121
Kauai Cnty HI Ser A(15) 5.50% 8/1/2021 AAA 2,495 2,760,293
Puerto Rico Comwlth
Unrefunded Bal Pub Impt Ser A 5.375% 7/1/2028 A- 1,330 1,378,133
---------------
TOTAL 16,662,350
---------------
HEALTHCARE 7.91%
HI St Dept Bdg & Fin Spl Purp
Mtg Rev St Francis Med Ctrs(11) 6.50% 7/1/2022 AAA 1,200 1,206,600
HI St Dept Bdg & Fin Spl Purp
Rev Kapiolani Hlth 6.20% 7/1/2016 BBB+ 1,000 1,039,540
HI St Dept Bdg & Fin Spl Purp
Rev Kapiolani Hlth 6.25% 7/1/2021 BBB+ 2,000 2,058,700
HI St Dept Bdg & Fin Spl Purp
Rev The Queens Hlth Sys Ser B(15) 5.25% 7/1/2023 AAA 1,000 1,045,210
Puerto Rico Ind Tourist Ed Med
Hosp Mutuo Oblig Grp Ser A(15) 6.25% 7/1/2024 AAA 150 154,482
---------------
TOTAL 5,504,532
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
58
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
HAWAII TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSING 4.46%
HI St Hsg Fin & Dev Corp Sing
Fam Mtg Purp Rev Ser A AMT(9) 7.10% 7/1/2024 AAA $ 690 $ 690,821
HI St Hsg Fin & Dev Corp Sing
Fam Mtg Purp Rev Ser B(9) 5.30% 7/1/2028 AAA 850 867,187
HI St Hsg Fin & Dev Corp Sing
Fam Mtg Purp Rev Ser B(9) 5.45% 7/1/2017 AAA 1,000 1,042,100
Honolulu HI City & Cnty Mtg
Rev Smith Beretania 8A(6)(8)(15) 5.45% 1/1/2025 Aaa 500 500,710
---------------
TOTAL 3,100,818
---------------
MISCELLANEOUS 2.31%
HI St Cap Dist
Kapolei St Office Ser A COP(2) 5.00% 5/1/2018 AAA 475 509,409
HI St Cap Dist St Office COP(15) 5.50% 5/1/2020 AAA 500 548,885
Puerto Rico Pub Bldg Auth Rev
Unrefunded Bal Govt Facs Ser D 5.25% 7/1/2036 A- 535 550,371
---------------
TOTAL 1,608,665
---------------
POWER 5.68%
HI St Dept Bdg & Fin Spl Purp
Mtg Rev HI Elec Co Ser A AMT(15) 6.60% 1/1/2025 AAA 2,500 2,551,525
Puerto Rico Elec Pwr Auth Rev
Ser II(11) 5.125% 7/1/2026 AAA 1,330 1,399,240
---------------
TOTAL 3,950,765
---------------
PRE-REFUNDED 34.41%
HI St Dept Bdg & Fin Spl Purp
Rev Kaiser Permanente Ser A ETM 5.15% 3/1/2015 AAA 1,250 1,353,812
HI St Ser CT(11) 5.875% 9/1/2019 AAA 1,175 1,360,885
HI St Ser CU(15) 5.25% 10/1/2020 AAA 1,700 1,917,192
Honolulu HI City & Cnty Brd
Wtr Supply Wtr Sys Rev 5.80% 7/1/2021 AA 1,000 1,078,920
Honolulu HI City & Cnty Ser A(15) 5.00% 11/1/2015 AAA 405 439,510
Honolulu HI City & Cnty Ser A(15) 5.00% 11/1/2015 AAA 1,095 1,144,330
Honolulu HI City & Cnty Ser A(11) 5.125% 9/1/2021 AAA 600 676,980
Honolulu HI City & Cnty Ser A(10) 5.50% 9/1/2016 AAA 440 478,861
Honolulu HI City & Cnty Ser A(10) 5.50% 9/1/2016 AAA 5 5,442
Honolulu HI City & Cnty Ser A(10) 5.50% 9/1/2016 AAA 555 619,863
Honolulu HI City & Cnty Ser B(10) 5.00% 11/1/2016 AAA 235 257,226
Honolulu HI City & Cnty Ser B(10) 5.00% 11/1/2016 AAA 265 290,064
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
59
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
HAWAII TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Honolulu HI City & Cnty Wtr
ETM(10)(17) 6.00% 12/1/2015 AAA $ 1,000 $ 1,216,790
Kauai Cnty HI(10) 6.125% 8/1/2024 AAA 580 679,180
Maui Cnty HI Ser A(15) 5.00% 3/1/2022 AAA 750 785,385
Maui Cnty HI Ser A(15) 5.75% 6/1/2016 AAA 1,035 1,112,470
Maui Cnty HI Ser A(10) 6.10% 3/1/2020 AAA 500 585,425
Municipal Secs Trust Ctfs Ser
7005 Cl B RIBs ETM+ 9.121% 10/1/2040 Aaa 1,250 1,448,250
Puerto Rico Comwlth 6.00% 7/1/2026 AAA 1,000 1,119,970
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser B 6.00% 7/1/2026 A 1,000 1,042,650
Puerto Rico Comwlth Infra Fin
Auth Spl Ser A ETM 5.375% 10/1/2024 AAA 300 325,308
Puerto Rico Comwlth Infra Fin
Auth Spl Ser A ETM 5.50% 10/1/2032 AAA 200 216,636
Puerto Rico Comwlth
Pub Impt Ser A 5.375% 7/1/2028 AAA 670 766,406
Puerto Rico Comwlth Pub Impt Ser A 5.00% 7/1/2027 AAA 500 563,065
Puerto Rico Ind Med & Envr
Poll Ctrl St. Luke Hosp Ser A 6.25% 6/1/2010 AAA(b) 1,105 1,171,952
Puerto Rico Pub Bldg Auth Rev
Govt Fac Ser B(2) 5.00% 7/1/2027 AAA 1,000 1,093,460
Puerto Rico Pub Bldg Auth Rev
Govt Facs Ser D 5.25% 7/1/2036 A- 1,465 1,653,296
Puerto Rico Pub Fin Corp
Comwlth Approp Ser E 5.75% 8/1/2030 BBB+ 500 542,205
---------------
TOTAL 23,945,533
---------------
TRANSPORTATION 10.05%
HI St Hwy Rev(11) 5.50% 7/1/2020 AAA 1,100 1,210,418
Puerto Rico Comwlth Hwy &
Transn Auth Hwy Rev Ser Y 5.50% 7/1/2036 A 3,000 3,200,460
Puerto Rico Comwlth Hwy &
Transn Auth Hwy Rev Ser Y(14)(15) 5.50% 7/1/2036 AAA 250 276,193
Puerto Rico Comwlth Hwy
Transn Auth Rev Rites RIBs 9.277% 1/1/2010 A(b) 1,000 1,191,800
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser D 5.75% 7/1/2041 A 1,000 1,095,900
Puerto Rico Comwlth Hwy
Transn Auth Transn Sub PR Rev 5.00% 7/1/2022 A- 20 20,543
---------------
TOTAL 6,995,314
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
60
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
HAWAII TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
WATER/SEWER 1.62%
Honolulu HI City & Cnty Brd
Wtr Supply Wtr Sys Rev(11) 5.25% 7/1/2031 AAA $ 100 $ 103,664
Honolulu HI City & Cnty Brd
Wtr Supply Wtr Sys Rev Ser A(10) 5.00% 7/1/2033 AAA 1,000 1,024,730
---------------
TOTAL 1,128,394
---------------
TOTAL MUNICIPAL BONDS 97.77% (Cost $63,038,754) 68,043,102
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 2.23% 1,554,578
---------------
NET ASSETS 100.00% $ 69,597,680
===============
</Table>
SCHEDULE OF INVESTMENTS
MINNESOTA TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
MUNICIPAL BONDS 98.64%
EDUCATION 15.36%
Bloomington MN Indpt Sch Dist Ser A(11) 5.125% 2/1/2024 Aaa 1,000 1,048,090
MN St Higher Ed Fac Auth Rev
Hamline Univ Ser 5-B 6.00% 10/1/2029 Baa1 500 527,015
MN St Higher Ed Fac Auth Rev
Macalester College Ser 4-J 5.55% 3/1/2017 Aa3 260 278,522
MN St Higher Ed Fac Auth Rev
Univ of St Thomas Ser 4-A1 5.625% 10/1/2016 A2 250 264,515
MN St Higher Ed Fac Auth Rev
Univ of St Thomas Ser 4-M 5.35% 4/1/2017 A2 250 263,925
Pequot Lakes MN Indpt Sch
Dist No 186(10) 5.25% 2/1/2022 AAA 1,550 1,662,685
Prior Lake MN Indpt Sch Dist
No 719 Ser A(10) 5.25% 2/1/2023 Aaa 1,470 1,568,255
University MN Ser A 5.75% 7/1/2018 AA 250 299,113
---------------
TOTAL 5,912,120
---------------
GENERAL OBLIGATION 17.76%
Elk River MN Sch Dist(15) 5.50% 2/1/2021 Aaa 500 552,665
Lake Superior MN Indpt Sch
Dist No 381 Ser A(11) 5.00% 4/1/2023 Aaa 500 523,585
Medford MN Indpt Sch Dist
No 763 Ser A(11) 5.50% 2/1/2031 Aaa 500 534,870
Minneapolis MN Ser E 5.00% 3/1/2026 AAA 500 510,870
MN St 5.25% 8/1/2014 AAA 265 272,224
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
61
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
MINNESOTA TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Morris MN Indp Sch Dist No 769 Bldg(15) 5.00% 2/1/2028 AAA $ 1,000 $ 1,021,780
North St Paul Maplewood MN
Indpt Sch Dist No 622 5.125% 2/1/2025 AAA 400 408,524
North St Paul Maplewood MN
Indpt Sch Dist No 622 Ser A 5.125% 2/1/2020 AAA 100 103,544
Princeton MN Indpt Sch Dist No 477(11) 5.125% 2/1/2024 Aaa 1,000 1,025,770
Puerto Rico Comwlth
Unrefunded Pub Impt(14)(15) 5.00% 7/1/2028 AAA 175 179,459
Ramsey Cnty MN Cap Impt Ser A 6.25% 2/1/2006 AAA 650 688,402
Ramsey Cnty MN St Aid Str Ser C 5.00% 2/1/2024 AAA 500 520,685
Virginia MN Ref Gov't Hsg Ser A(15) 4.50% 2/1/2026 Aaa 500 493,225
---------------
TOTAL 6,835,603
---------------
HEALTHCARE 10.43%
Bemidji MN Hlthcare Fac North
Country Hlth Svcs(16) 5.00% 9/1/2024 AA 500 512,440
Duluth MN Economic Dev
Benedictine Hlth Sys St Marys 5.25% 2/15/2028 A- 1,000 1,005,810
Duluth MN Economic Dev
Benedictine Hlth Sys St Marys 5.25% 2/15/2033 A- 1,000 1,002,870
Hastings MN Hlthcare Fac Rev
Regina Med Ctr(1) 5.30% 9/15/2028 A 400 401,256
Minneapolis MN Hlthcare Sys Rev(15) 5.00% 5/15/2021 AAA 250 264,390
MN Agric & Econ Dev Bd Rev
Hlthcare Fairview Hosp Ser A(15) 5.50% 11/15/2017 AAA 220 241,886
Rochester MN Hlthcare Fac Rev(14)(15) 5.50% 11/15/2027 AAA 500 534,000
St Paul MN Hsg & Redev Auth
Franciscan Hlth Pj(8)(12) 5.30% 11/20/2022 AAA 50 52,100
---------------
TOTAL 4,014,752
---------------
HOUSING 15.28%
Crow Wing Cnty MN Hsg Ser A GTD(15) 4.90% 1/1/2034 Aaa 490 495,047
Dakota Cnty MN Hsg & Redev
Auth Sing Fam Mtg Rev AMT(13) 5.85% 10/1/2030 AAA 131 135,104
Fairbault MN Hsg & Redev Auth
Govt Trails Edge Apts Ser A 5.25% 2/1/2028 A3 300 302,607
Minneapolis MN Multi Fam Hsg
Rev Mtg East Village South(8)(12) 6.10% 7/20/2020 Aaa 1,000 1,076,570
Minneapolis MN Multi Fam Rev
Hsg East Phillips AMT(12) 5.25% 8/20/2044 Aaa 300 304,230
MN St Hsg Fin Agy Residential
Hsg Fin Ser F AMT 5.40% 7/1/2030 AA+ 1,475 1,505,739
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
62
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
MINNESOTA TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MN St Hsg Fin Agy Sing Fam
Mtg Ser D AMT 5.85% 7/1/2019 AA+ $ 90 $ 91,429
MN St Hsg Fin Agy Sing Fam
Mtg Ser D AMT 6.40% 7/1/2015 AA+ 70 71,607
MN St Hsg Fin Agy Sing Fam
Mtg Ser E 5.90% 7/1/2025 AA+ 130 132,742
MN St Hsg Fin Agy Sing Fam
Mtg Ser G AMT 6.25% 7/1/2026 AA+ 45 46,252
Robbinsdale MN Hsg Dev Sr Hsg
Pj Ser B(10) 5.75% 1/1/2023 Aaa 250 260,983
Scott Cnty MN Hsg & Redev
Savage City Hamilton Apts Pj(2) 5.60% 2/1/2019 Aaa 80 83,243
St Louis Park MN Multi Fam
Hsg Mtg Cmnty Hsg(8) 6.15% 12/1/2016 Aa2 100 103,857
St Paul MN Hsg & Redev Auth
Multi Fam Hsg Rev Selby AMT(8)(12) 5.50% 9/20/2044 Aaa 750 765,930
St Paul MN Port Auth Hsg
Burlington Apt(12) 5.35% 5/1/2031 AAA 500 503,570
---------------
TOTAL 5,878,910
---------------
LEASE 3.70%
Olmsted Cnty MN Hsg & Redev 5.00% 2/1/2023 AAA 275 284,441
Rochester MN Indpt Sch Dist
No 535 COP(11) 5.125% 2/1/2020 AAA 85 90,486
St Paul MN Port Auth Lease
Rev Office Bldg 5.25% 12/1/2027 AA+ 1,000 1,049,270
---------------
TOTAL 1,424,197
---------------
MISCELLANEOUS 4.13%
Bemidji MN Lease Rev MN
St Bureau Crim Appreh(15) 5.80% 12/1/2021 Aaa 460 511,851
Douglas Cnty MN Hsg & Redev
Governmental Hsg Ser A(15) 5.50% 1/1/2032 Aaa 560 587,177
MN St Retirement Sys Bldg Rev 6.00% 6/1/2030 AAA 250 283,037
St Cloud MN COP 5.90% 12/1/2017 A+ 200 205,586
---------------
TOTAL 1,587,651
---------------
POWER 9.50%
Chaska MN Elec Rev Ser A 6.00% 10/1/2025 A3 250 267,600
Puerto Rico Elec Pwr Auth Rev
Ser DD(11) 4.50% 7/1/2019 AAA 95 97,703
Rochester MN Elec Util Rev(2)(17) 5.25% 12/1/2030 AAA 1,000 1,034,980
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
63
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
MINNESOTA TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
South MN Mun Agy Supply Sys
Rev Ser A(15) 5.00% 1/1/2013 AAA $ 1,000 $ 1,112,560
Western MN Mun Pwr Agy(15) 5.00% 1/1/2026 Aaa 500 514,590
Western MN Mun Pwr Agy Pj Ser A(2) 5.50% 1/1/2016 Aaa 565 630,156
---------------
TOTAL 3,657,589
---------------
PRE-REFUNDED 6.54%
Minneapolis & St Paul MN Hsg
Redev Auth Hlthcare Sys Ser A(11) 5.70% 8/15/2016 AAA 150 158,301
Minneapolis MN Spl Sch Dist
No 001 COP 5.75% 2/1/2015 AAA 100 111,106
Minneapolis MN Spl Sch Dist
No 001 COP 5.75% 2/1/2017 AAA 1,120 1,244,387
MN Pub Fac Auth Wtr
Poll Ctrl Rev Ser A 6.25% 3/1/2016 AAA 100 101,965
Puerto Rico Comwlth Pub Impt(14)(15) 5.00% 7/1/2028 AAA 325 360,350
Puerto Rico Pub Fin Corp
Comwlth Approp Ser E 5.75% 8/1/2030 BBB+ 500 542,205
---------------
TOTAL 2,518,314
---------------
TRANSPORTATION 10.79%
Minneapolis & St Paul MN Met
Comm Arpt Rev Sub Ser C(10) 5.25% 1/1/2026 AAA 2,000 2,083,980
Minneapolis & St Paul MN Met
Sub Ser A(15) 5.00% 1/1/2023 AAA 1,000 1,045,240
St Paul MN Port Auth Lease
Rev Office Bldg at Robnert St 3-11 5.00% 12/1/2027 AA+ 1,000 1,024,300
---------------
TOTAL 4,153,520
---------------
WATER/SEWER 5.15%
MN Pub Facs Auth Ser A 4.40% 3/1/2024 AAA 2,000 1,981,880
---------------
TOTAL MUNICIPAL BONDS 98.64% (Cost $36,372,712) 37,964,536
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 1.36% 523,373
---------------
NET ASSETS 100.00% $ 38,487,909
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
64
<Page>
SCHEDULE OF INVESTMENTS
MISSOURI TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 95.42%
EDUCATION 6.97%
Bowling Green MO Sch Dist R-I
Bldg Corp Leasehold Rev(15) 5.85% 3/1/2020 Aaa $ 1,000 $ 1,130,550
Kansas Cnty MO Met Cmnty
Colleges Bldg Corp Rev Ref(10) 5.00% 7/1/2021 Aaa 1,000 1,053,670
Mehville MO Sch Dist No R9
MO Cap Impt COP(11) 5.25% 9/1/2013 AAA 1,000 1,129,490
MO St Hlth & Ed Fac Auth Ref
Washington Univ Ser B 5.00% 3/1/2030 AA+ 1,800 1,832,490
MO St Hlth & Ed Fac Auth
Washington Univ Ser A 4.75% 11/15/2037 AA+ 2,050 2,032,985
MO St Hlth & Ed Fac Auth
Webster Univ(15) 5.25% 4/1/2021 Aaa 2,000 2,144,000
University MO Univ Rev
Ref Sys Facs Ser B(14)(15) 5.00% 11/1/2027 AAA 1,500 1,538,550
---------------
TOTAL 10,861,735
---------------
GENERAL OBLIGATION 21.69%
Belton MO Sch Dist No 124 MO
Direct Deposit Prog(11) 6.00% 3/1/2020 AAA 1,770 2,022,650
Franklin Cnty MO Reorg Sch
Dist No. R-XV 6.00% 3/1/2020 AA+ 390 444,627
Hazelwood MO Sch Dist Impt MO
Direct Deposit PG 5.25% 3/1/2020 AA+ 630 693,277
Missouri St Ref State Wtr
Pollution Ctl-A 5.00% 8/1/2007 AAA 5,000 5,408,050
Puerto Rico Comwlth Pub Impt
Pub Impt Ser A(14)(15) 5.50% 7/1/2029 AAA 1,000 1,156,450
Puerto Rico Comwlth Pub Impt
Pub Impt Ser B(10) 5.50% 7/1/2011 AAA 3,985 4,591,198
Puerto Rico Comwlth Pub Impt Ref(10) 5.50% 7/1/2013 AAA 2,285 2,661,934
Puerto Rico Comwlth Pub Impt
Ref Pub Impt Ser C(11) 5.00% 7/1/2021 AAA 3,000 3,259,290
Puerto Rico Comwlth
Unrefunded Bal Pub Impt Ser A 5.125% 7/1/2031 A- 2,385 2,423,518
Puerto Rico Pub Fin Corp
Comwlth Approp Ser A(2) 5.25% 8/1/2030 AAA 1,500 1,673,310
Springfield MO Sch Dist No R12
Direct Deposit Prog 5.85% 3/1/2020 AA+ 500 565,275
St Louis MO Gen Fd Rev Tax &
Rev Antic Nts 3.00% 6/28/2005 MIG1 2,500 2,523,375
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
65
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
MISSOURI TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
St Louis Cnty MO Pkwy Sch Ser A 5.00% 3/1/2024 AA+ $ 3,320 $ 3,477,169
St Louis Cnty MO Sch Dist
No R-8 Lindbergh(15) Zero Coupon 3/1/2018 AAA 2,080 1,168,211
St Louis MO Pub Safety(10) 5.125% 2/15/2018 AAA 270 291,873
University City MO Sch Dist(15) 10.00% 2/15/2008 AAA 1,175 1,454,321
---------------
TOTAL 33,814,528
---------------
HEALTHCARE 9.83%
Cape Girardeau Cnty MO Ind
Dev Auth Hlth Care Facs Rev 5.75% 6/1/2032 A-(c) 1,600 1,643,680
Hannibal MO Ind Dev Auth Hlth
Fac Rev Regl Hosp Ser A(11) 5.625% 3/1/2012 AAA 2,170 2,308,077
MO St Hlth & Ed Fac
Auth BJC Hlth 5.25% 5/15/2032 AA 5,000 5,125,000
MO St Hlth & Ed Fac Auth Rev(2) 5.25% 6/1/2028 AAA 5,000 5,184,550
MO St Hlth & Ed Fac Auth
Rites PA 1049 RIBs(2) 15.13% 6/1/2010 AAA(b) 855 1,073,726
---------------
TOTAL 15,335,033
---------------
HOUSING 4.33%
MO St Dev Fin Brd Multi Fam
Rev Quality Hill Pj Ser A(16) 5.60% 9/15/2028 AA 2,115 2,158,400
MO St Dev Fin Brd Solid Waste
Disp Rev P & G Paper Pj AMT 5.20% 3/15/2029 AA- 1,000 1,054,200
MO St Hsg Dev Cmnty Mtg Rev
Sing Fam Mtg AMT(8)(12)(18) 6.22% 3/1/2026 AAA 1,860 1,905,905
MO St Hsg Dev Cmnty Mtg Rev
Sing Fam Mtg Rev AMT(13) 5.375% 9/1/2022 AAA 1,245 1,279,349
MO St Hsg Dev Cmnty Mtg Rev
Sing Fam Ser E-1 AMT(13) Zero Coupon 3/1/2029 AAA 1,355 350,335
---------------
TOTAL 6,748,189
---------------
LEASE 6.57%
Gladstone MO Ser A COP(2) 5.35% 6/15/2016 Aaa 1,095 1,198,116
Grandview MO COP(10) 5.00% 1/1/2027 Aaa 1,700 1,749,606
Kansas City MO Sch Dist Bldg
Ref Elem Sch Pj Ser B(10) 5.00% 2/1/2012 Aaa 1,090 1,211,110
MO St Regl Convtn & Sports
Complex Auth Ref Convtn(2) 5.25% 8/15/2016 AAA 2,405 2,701,729
MO Dev Fin Brd Cultural Facs
Nelson Gallery Fndtn Ser A(15) 5.00% 12/1/2030 AAA 3,300 3,379,497
---------------
TOTAL 10,240,058
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
66
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
MISSOURI TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS 13.34%
BI State Dev Agy MO Met Dist
Metrolink Cross Cnty Pj B(11) 5.00% 10/1/2032 AAA $ 2,500 $ 2,559,975
Kansas City MO Muni Assistance
Corp Rev Leasehold Ser 2001A(2) 5.00% 3/1/2019 AAA 1,500 1,598,235
Kansas City MO Muni
Assistance Corp Rev Ser A 5.125% 3/1/2019 A2 1,100 1,163,756
Kansas City MO Muni
Assistance Leasehold Bartle(15) 5.00% 4/15/2020 AAA 1,500 1,540,395
MO Dev Fin Brd Cultural Facs
Nelson Gallery(15) 5.25% 12/1/2013 AAA 2,305 2,586,164
MO St Bonne Terre
Prison Pj Ser A COP(2) 5.15% 6/1/2018 AAA 1,015 1,101,153
MO St Dev Fin Brd Infra Fac
Rev Hartman Hrtge Ctr Ser A(2) 5.875% 4/1/2020 Aaa 1,000 1,119,450
Puerto Rico Comwlth Hwy Ser G 5.00% 7/1/2042 A 2,000 2,002,660
Puerto Rico Pub Bldg Auth Rev
Govt Facs Ser I GTD 5.25% 7/1/2033 A- 2,500 2,586,500
Puerto Rico Pub Bldg Auth Rev
Ref Govt Facs Ser C GTD 5.75% 7/1/2018 A- 1,000 1,163,910
St Louis MO Mun Fin Corp
Lease Carnahan Courthouse-Ser A(10) 5.125% 2/15/2027 Aaa 1,500 1,551,465
St Louis MO Mun Fin Corp
Lease Impt City Justice Ctr Ser A(2) 6.00% 2/15/2020 Aaa 760 872,070
St Louis MO Ind Dev Auth Rev
Convtn Ctr Hotel(2) Zero Coupon 7/15/2020 AAA 2,000 953,580
---------------
TOTAL 20,799,313
---------------
POWER 1.72%
Puerto Rico Elec Pwr Auth Pwr
Rev Ser NN 5.125% 7/1/2029 A- 1,500 1,544,070
Puerto Rico Elec Pwr Auth
Ref Ser KK(11) 5.25% 7/1/2012 AAA 1,000 1,138,760
---------------
TOTAL 2,682,830
---------------
PRE-REFUNDED 14.75%
Boone Cnty MO Reorg Sch Dist No R-6 6.00% 3/1/2020 AA+ 500 567,910
Kansas City MO Indl Dev Auth
Ewing Marion Kauffman 5.70% 4/1/2027 AAA 2,200 2,398,924
MO Sch Brds Assoc Lease
Partn NIXA Reorg Sch Dist R-2(16) 5.40% 3/1/2020 AA 850 951,074
MO St Envr Impt & Enrg St
Revolving FD-D 5.90% 1/1/2019 Aaa 1,860 1,972,567
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
67
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
MISSOURI TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MO St Envr Impt & Enrg St
Revolving FD-E 5.625% 7/1/2016 Aaa $ 630 $ 683,953
MO St Hlth & Ed Fac Auth
Washington Univ Ser A 6.00% 3/1/2030 Aaa 850 988,669
Municipal Secs Trust Ctfs
Ser 7005 Cl B RIBs ETM+ 9.121% 10/1/2040 Aaa 3,050 3,533,730
Puerto Rico Comwlth Pub Impt Ser A 5.125% 7/1/2031 AAA 1,210 1,365,776
Puerto Rico Comwlth Ser A ETM 5.50% 10/1/2040 AAA 2,700 2,914,110
St Louis MO Mun Fin Corp
Lease Rev City Justice Ctr Ser A(2) 6.00% 2/15/2019 AAA 3,500 3,767,995
St Louis Cnty MO Pattonville
No R-3 Sch Dist(10) 6.00% 3/1/2019 AAA 845 982,853
St Louis MO Pkg Fac Rev ETM(15) 5.375% 12/15/2021 AAA 10 10,599
St Louis MO Sch Dist(10) 6.00% 4/1/2012 AAA 645 646,909
University MO Univ Rev Sys Facs 5.80% 11/1/2027 AA 1,975 2,205,404
---------------
TOTAL 22,990,473
---------------
RESOURCE RECOVERY 1.69%
MO St Envr Impt & Enrg
Unrefunded Bal St Revolving B 7.20% 7/1/2016 Aaa 1,085 1,114,067
MO St Envr Impt & Enrg
Unrefunded Bal St Revolving D 5.625% 7/1/2016 Aaa 220 235,404
MO St Envr Impt & Enrg
Unrefunded Bal St Revolving E 5.90% 1/1/2019 Aaa 240 253,699
St Louis MO Ind Dev Auth
Anheuser-Busch Pj AMT 5.875% 11/1/2026 A+ 1,005 1,030,005
---------------
TOTAL 2,633,175
---------------
TRANSPORTATION 9.98%
Columbia MO Spl Oblig Cap Impt 5.50% 2/1/2016 AA- 330 344,721
MO St Hwy & Trans Comm
St Rd Rev Ser A 5.00% 2/1/2022 AA 1,970 2,067,082
MO St Hwy & Trans Comm
St Rd Rev Ser A 5.25% 2/1/2020 AA 1,830 1,985,275
Puerto Rico Comwlth Hwy Ser G(10) 5.25% 7/1/2014 AAA 2,500 2,842,950
Puerto Rico Comwlth Hwy &
Transn Auth Hwy Rev Ser Y 5.50% 7/1/2036 A(b) 500 533,410
Puerto Rico Comwlth Hwy
Transn Auth Rev Rites RIBs 9.277% 1/1/2010 A(b) 2,500 2,979,500
St Louis MO Arpt Rev Airport
Dev Prog Ser A(15) 5.25% 7/1/2031 AAA 2,000 2,075,620
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
68
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
MISSOURI TAX-FREE FUND September 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
St Louis MO Arpt Rev Airport Ser A(15) 5.125% 7/1/2022 AAA $ 2,000 $ 2,094,320
St Louis MO Arpt Rev Lambert
Int'l Ser B AMT(10) 5.25% 7/1/2027 AAA 625 638,869
---------------
TOTAL 15,561,747
---------------
WATER/SEWER 4.55%
Metropolitan St Louis MO Swr
Dist Wastewtr Sys Rev Ser A(15) 5.00% 5/1/2034 AAA 3,900 3,995,277
St Charles Cnty MO Pub Wtr
Supply Dist No 2 COP(15) 5.125% 12/1/2027 Aaa 3,000 3,100,470
---------------
TOTAL 7,095,747
---------------
TOTAL MUNICIPAL BONDS 95.42% (Cost $141,120,966) 148,762,828
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 4.58% 7,143,378
---------------
NET ASSETS 100.00% $ 155,906,206
===============
</Table>
SCHEDULE OF INVESTMENTS
NEW JERSEY TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
MUNICIPAL BONDS 98.92%
EDUCATION 15.89%
Higher Ed Stud Assist Auth
NJ Stud Loan Rev Ser A AMT(15) 6.15% 6/1/2019 AAA 735 743,753
NJ St Ed Fac Auth Rev Princeton Ser H 5.25% 7/1/2022 AAA 2,560 2,753,741
NJ St Ed Fac Auth Rev Princeton Ser H 5.25% 7/1/2026 AAA 2,350 2,476,971
NJ St Ed Fac Auth Rev Princeton Ser H 5.375% 7/1/2024 AAA 2,550 2,733,447
NJ St Ed Fac Auth Rev Rowan
Univ Ser C(10) 5.25% 7/1/2009 AAA 1,215 1,352,477
NJ St Ed Fac Auth Rev
William Paterson Ser E(19) 5.00% 7/1/2027 AAA 2,500 2,574,175
NJ St Ed Facs Auth Rev Kean
Univ Ser D(10) 5.00% 7/1/2033 AAA 2,500 2,571,125
NJ St Ed Facs Auth Rev
Princeton Theological Seminary 5.00% 7/1/2026 AAA 2,500 2,592,975
NJ St Ed Facs Auth Rev Ser I Rowan(10) 5.125% 7/1/2030 AAA 2,650 2,752,873
Rutgers St Univ NJ COP(2) 5.00% 1/1/2024 AAA 800 837,304
Rutgers St Univ NJ Ser A 5.20% 5/1/2027 AA 750 772,080
---------------
TOTAL 22,160,921
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
69
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NEW JERSEY TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
GENERAL OBLIGATION 16.03%
Chathams Dist NJ Brd Ed(15) 5.00% 1/15/2019 Aaa $ 1,020 $ 1,081,883
Chathams Dist NJ Brd Ed(15) 5.125% 1/15/2024 Aaa 595 623,048
Chathams Dist NJ Brd Ed(15) 5.25% 1/15/2026 Aaa 1,500 1,583,490
Millburn Twp NJ Sch Dist 5.35% 7/15/2018 Aa1 1,050 1,229,424
Millburn Twp NJ Sch Dist 5.35% 7/15/2019 Aa1 250 293,805
Montville Twp NJ Fire Dist No 23 5.25% 7/15/2016 A2 410 455,375
Morristown NJ(11) 6.50% 8/1/2019 AAA 3,440 3,636,390
NJ St Var Purp Ref Ser J(14)(15) 5.00% 7/15/2009 AAA 2,200 2,424,268
Ocean Cnty NJ Gen Impt 5.125% 9/1/2020 Aa1 1,800 1,932,534
Passaic Cnty NJ Ref(15) 5.00% 9/1/2008 Aaa 2,000 2,195,840
Pohatcong Twp NJ Sch Dist(11) 5.25% 7/15/2026 AAA 1,335 1,476,924
Puerto Rico Comwlth Pub Impt(5)(11) 4.50% 7/1/2023 AAA 1,000 1,013,060
Puerto Rico Comwlth
Unrefunded Bal Pub Impt Ser A 5.125% 7/1/2031 A- 1,220 1,239,703
Puerto Rico Pub Fin Corp
Comwlth Approp Ser A(2) 5.25%# 8/1/2030 AAA 1,000 1,115,540
Washington Twp NJ Brd Ed(10) 5.00% 1/1/2027 Aaa 2,000 2,059,820
---------------
TOTAL 22,361,104
---------------
HEALTHCARE 9.52%
NJ Econ Dev Auth Rev Masonic
Charity Fndtn Pj 6.00% 6/1/2025 A+ 1,000 1,110,030
NJ Hlthcare Fac Fin Auth Rev
Bayonne Hosp(11) 6.25% 7/1/2012 AAA 1,370 1,405,606
NJ Hlthcare Fac Fin Auth Rev
Mtg Englewood Hosp(8)(15) 5.25% 8/1/2013 AAA 1,445 1,622,966
NJ Hlthcare Fac Fin Auth Rev
Robert Wood Johnson Univ Hosp 5.75% 7/1/2031 A+ 3,500 3,742,550
NJ Hlthcare Fac Fin Auth Rev
Spectrum For Living Ser B(8) 6.50% 2/1/2022 AAA 765 768,672
NJ Hlthcare Facs Cap Hlth
Sys Oblig Grp Ser A 5.375% 7/1/2033 Baa1 2,000 2,021,360
Puerto Rico Ind Tourist Ed
Envr Ctrl Fac Hosp Ser A 6.125% 11/15/2025 AA 415 465,871
Puerto Rico Ind Tourist Ed &
Envr Ctrl Fac Hosp Ser A 6.125% 11/15/2030 AA 1,000 1,116,810
Puerto Rico Ind Tourist Ed
Mutuo Oblig Grp Ser A(15) 6.25% 7/1/2024 AAA 1,000 1,029,880
---------------
TOTAL 13,283,745
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
70
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NEW JERSEY TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSING 0.12%
Virgin Islands Hsg Fin Auth
Sing Fam Rev Ser A AMT(12) 6.50% 3/1/2025 AAA $ 165 $ 168,995
---------------
INDUSTRIAL 5.56%
NJ Eco Dev Auth Amer
Wtr Co Inc Ser B AMT(10) 5.375% 5/1/2032 AAA 5,000 5,175,950
NJ Eco Dev Auth
Middlesex Wtr Co Pj AMT(15) 5.35% 2/1/2038 AAA 2,500 2,576,750
---------------
TOTAL 7,752,700
---------------
LEASE 1.47%
Rutgers St Univ NJ COP(2) 5.00% 1/1/2038 AAA 2,000 2,044,400
---------------
MISCELLANEOUS 7.61%
Carteret NJ Brd Ed COP(15) 5.75% 1/15/2030 Aaa 80 88,007
Carteret NJ Brd Ed COP(15) 6.00% 1/15/2024 Aaa 430 491,202
Casino Reinvestment Dev Ath
NJ Ser A(11) 5.25% 10/1/2015 AAA 100 107,932
Hudson Cnty NJ Impt Auth
Hudson Regl Fire/Rescue Ser A(2) 5.625% 9/1/2019 Aaa 100 111,155
Middlesex Cnty NJ Impt Auth
Cnty Gtd Open Space Tr Fd GTD 5.25% 9/15/2022 AAA 1,910 2,087,993
Monmouth Cnty NJ Impt Auth
Rev Unrefunded Bal Govtl Ln(15) 6.40% 12/1/2009 AAA 195 200,321
New Jersey Eco Dev Auth Rev
Motor Vehicle Sur Rev Ser A(15) 5.00% 7/1/2034 AAA 1,085 1,118,689
New Jersey Eco Dev Auth Rev
Mun Rehab(2) 5.00% 4/1/2028 AAA 1,130 1,165,471
NJ Envr Infra Ser 2004 A 5.25% 9/1/2020 AAA 2,000 2,159,240
North Bergen Twp NJ Brd Ed COP(11) 6.125% 12/15/2022 Aaa 1,185 1,388,761
Puerto Rico Pub Bldg Auth Rev
Govt Facs Ser I GTD 5.25% 7/1/2033 A- 1,250 1,293,250
Rahway NJ COP(15) 5.625% 2/15/2020 Aaa 365 405,628
---------------
TOTAL 10,617,649
---------------
POWER 4.46%
Brick Twp NJ Mun Util Auth(10) 5.00% 12/1/2025 Aaa 2,000 2,085,560
Puerto Rico Elec Pwr Auth Pwr
Rev Ser NN(15) 5.00% 7/1/2032 AAA 3,000 3,098,430
Puerto Rico Elec Pwr Auth Pwr
Rev Ser NN 5.125% 7/1/2029 A- 1,000 1,029,380
---------------
TOTAL 6,213,370
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
71
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NEW JERSEY TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
PRE-REFUNDED 19.97%
Cape May Cnty NJ Ind Poll
Ctrl Fin Auth Rev Atlan City Ser B(15) 7.00% 11/1/2029 AAA $ 500 $ 512,090
Essex Cnty NJ Impt Auth Rev
Orange Mun Util & Lease(15) 6.80% 7/1/2014 AAA 1,710 1,809,847
LaFayette Yard NJ Cmnty Dev GTD(15) 5.625% 4/1/2021 Aaa 200 229,838
Monmouth Cnty NJ Impt Auth
Rev Govtl Ln(15) 6.40% 12/1/2009 AAA 880 904,710
Mun Secs Trust Ctfs Ser
7005 Cl B RIBs ETM+ 9.121% 10/1/2040 Aaa 1,000 1,158,600
New Jersey St Hwy Auth Garden
St Pkwy Gen Rev(10) 5.75% 1/1/2015 AAA 200 229,860
NJ Bldg Auth St Bldg Rev 5.375% 6/15/2019 A+ 450 503,563
NJ Bldg Auth St Bldg Ser A(11) 5.25% 12/15/2019 AAA 1,000 1,140,500
NJ St 5.50% 7/15/2011 AA- 2,960 3,186,529
NJ St Ed Fac Auth Rev Princeton Ser B 5.125% 7/1/2019 AAA 355 394,540
NJ St Ed Fac Auth Rev Princeton Ser H 5.25% 7/1/2017 AAA 700 785,967
NJ St Transn Tr Fd Auth Transn Sys Ser B 6.00% 6/15/2019 AAA 6,500 7,546,695
NJ St Transn Tr Fd Transn Sys B(15) 6.00% 12/15/2014 AAA 1,000 1,183,550
Pohatcong Twp NJ Sch Dist(11) 5.95% 7/15/2023 AAA 650 709,559
Pohatcong Twp NJ Sch Dist(11) 5.95% 7/15/2026 AAA 250 272,908
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser B 6.00% 7/1/2026 A 1,000 1,042,650
Puerto Rico Comwlth Hwy
Transn Auth Ser B(14)(15) 6.00% 7/1/2026 AAA 3,015 3,144,736
Puerto Rico Comwlth
Pub Impt Ser A 5.125% 7/1/2031 AAA 620 699,819
Puerto Rico Comwlth Rites PA 650 RIBs 9.964% 7/1/2029 A- 750 812,835
South Brunswick Twp NJ(10) 5.625% 12/1/2023 AAA 45 51,317
Summit NJ 5.70% 6/1/2020 AAA 325 368,745
Trenton NJ Pkg Auth Pkg Rev GTD(10) 6.00% 4/1/2017 Aaa 1,000 1,159,560
---------------
TOTAL 27,848,418
---------------
TRANSPORTATION 17.39%
Delaware River Port Auth PA &
NJ Ref Port Dist Pj Ser B(11) 5.10% 1/1/2021 AAA 1,435 1,544,491
Delaware River Port Auth PA &
NJ Ref Port Dist Pj Ser B(11) 5.20% 1/1/2025 AAA 1,700 1,798,532
Delaware River Port Auth PA & NJ Rev(10) 5.50% 1/1/2026 AAA 1,000 1,063,250
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
72
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
NEW JERSEY TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
New Jersey St Tpk Auth Rev Ser A 5.50% 1/1/2027 A $ 3,000 $ 3,172,800
New Jersey St Tpk Auth Rev Ser A(15) 5.50% 1/1/2030 AAA 1,500 1,608,960
Port Auth NY & NJ(11) 5.00% 4/15/2032 AAA 4,725 4,851,063
Port Auth NY & NJ Cons 109th Ser 5.375% 1/15/2032 AA- 500 518,585
Port Auth NY & NJ Cons 119th Ser AMT(10) 5.50% 9/15/2019 AAA 150 158,620
Port Auth NY & NJ Cons 125th Ser(11) 5.00% 10/15/2027 AAA 5,000 5,176,250
Puerto Rico Comwlth Hwy &
Transn Auth Hwy Rev Ser Y 5.50% 7/1/2036 A 500 533,410
Puerto Rico Comwlth Hwy &
Transn Auth Rev Rites RIBs 9.277% 1/1/2010 A(b) 2,750 3,277,450
Puerto Rico Comwlth Hwy &
Transn Auth Rev Ser 9 RIBs(5)(11) 9.94% 7/1/2026 Aaa 500 543,030
---------------
TOTAL 24,246,441
---------------
WATER/SEWER 0.90%
North Hudson Swr Auth NJ Rev Ser C(15) 5.00% 8/1/2022 Aaa 1,025 1,070,049
Ocean Twp NJ Swr Auth Ref Ser B(10) 5.25% 12/1/2011 Aaa 170 191,891
---------------
TOTAL 1,261,940
---------------
TOTAL MUNICIPAL BONDS (Cost $129,213,436) 137,959,683
===============
<Caption>
SHARES
(000)
-------
SHORT-TERM INVESTMENT 0.22%
MONEY MARKET MUTUAL FUND 0.22%
DREYFUS NJ MUNI CASH MANAGEMENT (Cost $302,963) 303 302,963
===============
TOTAL INVESTMENTS IN SECURITIES 99.14% (Cost $129,516,399) 138,262,646
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 0.86% 1,199,202
---------------
NET ASSETS 100.00% $ 139,461,848
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
73
<Page>
SCHEDULE OF INVESTMENTS
NEW YORK TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 99.28%
EDUCATION 9.04%
Hempstead Town NY Ind Dev Agy
Civic Fac Rev Hofstra Univ Pj(15) 5.80% 7/1/2015 AAA $ 750 $ 812,527
New York NY City Ind Dev Agy
NY Institute of Tech(15) 5.25% 3/1/2023 AAA 100 107,294
NY St Dorm Auth Lease
Rev Court Fac Zero Coupon 8/1/2021 AA+ 3,600 1,697,292
NY St Dorm Auth Rev 4201
Schools Program 6.25% 7/1/2020 AA- 1,685 1,960,649
NY St Dorm Auth Rev Colgate Univ(15) 6.00% 7/1/2016 AAA 1,000 1,215,200
NY St Dorm Auth Rev New York
Univ Ser A(2) 5.75% 7/1/2015 AAA 2,000 2,376,140
NY St Dorm Auth Rev
New York Univ A(10) 5.00% 7/1/2034 AAA 3,125 3,199,813
NY St Dorm Auth Rev
Pace Univ(15) 6.00% 7/1/2029 AAA 1,610 1,818,173
NY St Dorm Auth Rev
Pratt Institute(16) 6.00% 7/1/2024 AA 1,000 1,113,100
NY St Dorm Auth Rev
Pratt Institute(16) 6.00% 7/1/2028 AA 2,000 2,205,040
NY St Dorm Auth Rev Sp
Act Sch Dist Pj(15) 6.00% 7/1/2016 AAA 1,400 1,470,224
NY St Dorm Auth Rev Upstate
Cmnty Colleges 5.125% 7/1/2021 AA- 1,000 1,066,660
NY St Dorm Auth Rev Upstate
Cmnty Colleges 5.125% 7/1/2022 AA- 1,000 1,059,300
NY St Dorm Auth Rev Upstate
Cmnty Colleges Ser A(11) 6.00% 7/1/2015 AAA 300 346,545
Rensselaer Cnty NY Ind Dev
Polytech Inst Ser B(2)(17) 5.50% 8/1/2022 AAA 200 218,544
Schenectady NY Ind Dev Agy
Civic Fac Rev Union College(2) 5.625% 7/1/2031 Aaa 1,500 1,640,400
St Lawrence Cnty NY Ind Civic
Fac Rev Clarkson Univ Pj 5.125% 7/1/2021 A3 250 260,810
---------------
TOTAL 22,567,711
---------------
GENERAL OBLIGATION 12.21%
Erie Cnty NY Indl Dev Agy Sch
Fac Rev City of Buffalo Pj(11) 5.75% 5/1/2023 AAA 1,250 1,408,175
New York NY 5.25% 8/15/2026 A 2,500 2,615,400
New York NY 5.625% 3/15/2020 A 1,000 1,092,940
New York NY Ref Ser B 5.75% 8/1/2016 A 1,000 1,123,630
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
74
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NEW YORK TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
New York NY Ser C(11) 5.75% 3/15/2027 AAA $ 5,000 $ 5,531,300
New York NY Ser E 5.25% 8/1/2014 A 1,000 1,106,980
New York NY Ser J 5.50% 6/1/2022 A 5,095 5,525,018
New York City Transitional Fin
Auth Future Tax Secd Ser D(15) 5.00% 2/1/2022 AAA 5,000 5,271,000
Puerto Rico Comwlth Pub Impt 5.25% 7/1/2018 A- 2,000 2,224,040
Puerto Rico Comwlth Pub Impt
Pub Impt Ser A 5.25% 7/1/2024 A- 1,500 1,573,800
Puerto Rico Comwlth Pub Impt Ser A(d) 5.00% 7/1/2034 A- 1,250 1,261,425
Puerto Rico Comwlth Pub Impt
Unrefunded Pub Impt(14)(15) 5.00% 7/1/2028 AAA 605 620,416
Puerto Rico Comwlth
Unrefunded Bal Pub Impt Ser A 5.375% 7/1/2028 A- 1,090 1,129,447
---------------
TOTAL 30,483,571
---------------
HEALTHCARE 5.87%
Cortland Cnty NY Ind Dev Agcy
Cortland Mem Hosp Pj(16) 5.625% 7/1/2024 AA 1,750 1,893,307
New York NY City Hlth & Hosp
Corp Rev Hlth Sys Ser A(2) 5.25% 2/15/2022 AAA 3,000 3,215,640
New York NY City Ind Dev Agcy
Rev Harbor House Pj A(12) 5.875% 5/20/2044 AA+ 610 677,930
NY St Dorm Auth Rev Insd NY
St Rehab Assn Ser A(2) 5.50% 7/1/2016 AAA 935 1,053,306
NY St Dorm Auth Rev Lenox
Hill Hosp Oblig Group 5.375% 7/1/2020 A3 1,000 1,048,580
NY St Dorm Auth Rev Mental
Hlth Svc Fac(14)(15) 6.00% 8/15/2012 AAA 1,460 1,720,960
NY St Dorm Auth Rev Mtg
Nursing Home A(8)(15) 5.40% 2/1/2031 AAA 300 313,464
NY St Dorm Auth Rev Mtg
Nursing Home A(8)(15) 5.50% 8/1/2030 AAA 1,000 1,064,180
NY St Dorm Auth Rev Mtg
Nursing Home A(8)(15) 5.50% 8/1/2038 AAA 1,000 1,063,120
NY St Dorm Auth Rev Ref NY St
Dept of Hlth 5.25% 7/1/2023 AA- 1,000 1,052,090
NY St Dorm Auth Rev
Unrefunded Mental D(14)(15) 6.00% 8/15/2021 AAA 150 164,971
NY St Dorm Auth Rev
Unrefunded Mental Hlth Svcs(15) 6.00% 2/15/2025 AAA 115 128,164
NY St Dorm Auth Rev
Unrefunded Mental Hlth Svcs B(15) 6.00% 2/15/2030 AAA 115 127,220
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
75
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NEW YORK TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
NY St Dorm Auth Rev Utd
Cerebral Palsy Aff No 1-A(2) 5.75% 7/1/2018 AAA $ 1,000 $ 1,144,330
---------------
TOTAL 14,667,262
---------------
HOUSING 3.61%
New York City Hsg Dev Corp.
Multi Fam Hsg Rev Ser A AMT 5.50% 11/1/2034 AA 1,500 1,545,780
New York City Hsg Dev Corp.
Ser B-2 AMT 5.30% 5/1/2036 AA 2,000 2,063,560
NY St Dorm Auth Lease
Rev Court Fac Zero Coupon 8/1/2022 AA+ 260 115,401
NY St Dorm Auth Lease Rev
Court Facs Ser A 5.50% 5/15/2020 A 1,180 1,290,720
NY St Dorm Auth Rev Insd
Jewish Brd Fam & Children(2) 5.00% 7/1/2023 AAA 500 523,755
NY St Dorm Auth Rev Ref Dept of Hlth 5.00% 7/1/2022 AA- 1,000 1,041,410
NY St Dorm Auth Rev Ref Dept of Hlth 5.00% 7/1/2023 AA- 1,000 1,035,020
NY St Dorm Auth Rev Upstate
Cmnty Colleges Ser B 5.25% 7/1/2021 AA- 1,000 1,076,520
NY St Mtg Agy Rev Hmownr Mtg Ser 70 5.40% 4/1/2022 Aa1 70 72,008
NY St Mtg Agy Rev Hmownr
Mtg Ser 111 AMT(15) 4.55% 4/1/2023 AAA 250 249,380
---------------
TOTAL 9,013,554
---------------
INDUSTRIAL 1.35%
Broome Cnty NY Indl Dev Agy
Univ Plaza Phase II Pj Ser B(1) 5.10% 8/1/2036 A 500 501,115
Broome Cnty NY Indl Dev Agy
Univ Plaza Phase III C(1) 4.75% 8/1/2025 A 500 485,165
New York NY City Indl Dev Agy
United Jewish Appeal Fed Pj A 5.00% 7/1/2027 Aa2 1,250 1,289,800
NY Ind Dev Agy Pkg Royal
Charter Properties Inc(11) 5.75% 12/15/2029 AAA 1,000 1,102,910
---------------
TOTAL 3,378,990
---------------
LEASE 1.93%
NY St Urban Dev Corp Rev St Fac 5.70% 4/1/2020 AA- 4,150 4,832,882
---------------
MISCELLANEOUS 2.63%
Broome Cnty NY Indl Dev Agy
Univ Plaza LLC Phase 1 Pj A(1) 5.20% 8/1/2030 A 750 759,150
Broome Cnty NY Indl Dev Agy
Univ Plaza LLC Phase 1 Pj A(1) 5.20% 8/1/2036 A 1,000 1,009,890
New York City Transitional
Fin Auth Rev Ser A 5.00% 11/15/2026 AA+ 730 750,542
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
76
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NEW YORK TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
New York NY City Tr Cultr Res
Rev Museum of American Art(1) 6.00% 7/1/2022 A $ 500 $ 532,260
New York NY City Transitional Fin
Auth Unrefunded Bal Fut Tax 5.50% 5/1/2025 AA+ 550 590,882
Puerto Rico Pub Bldg Auth Rev
Govt Fac GTD 5.00% 7/1/2026 A- 2,000 2,031,920
Puerto Rico Pub Bldg Auth Rev
Unrefunded Bal Govt Facs Ser D 5.25% 7/1/2027 A- 265 275,216
Puerto Rico Pub Fin Corp
Unrefunded Bal Comwlth Ser E 5.50% 8/1/2029 BBB+ 585 613,302
---------------
TOTAL 6,563,162
---------------
POWER 5.88%
NY St Enrg Res & Dev Auth Fac
Rev Con Edison Inc Ser A AMT(14)(15) 7.125% 12/1/2029 AAA 2,500 2,570,600
NY St Enrg Res & Dev Auth Gas
Fac Rev Bklyn Ser B RIBs AMT 12.048% 7/1/2026 A+ 4,000 4,699,080
Puerto Rico Elec Pwr Auth Pwr
Rev Ser NN(15) 5.00% 7/1/2032 AAA 1,500 1,549,215
Puerto Rico Elec Pwr Auth Ref Ser PP(10) 5.00% 7/1/2025 AAA 2,000 2,105,420
Puerto Rico Elec Pwr Auth Rev Ser II 5.25% 7/1/2031 A- 3,625 3,755,754
---------------
TOTAL 14,680,069
---------------
PRE-REFUNDED 37.88%
Albany NY Muni Wtr Fin Auth
Wtr & Swr Sys Rev Ser A(10) 6.375% 12/1/2017 AAA 650 771,953
Bethlehem NY AMT(15) 7.20% 3/1/2022 AAA 1,080 1,123,643
Metropolitan Transn Auth NY
Commuter Fac Rev Ser A(10) 6.00% 7/1/2016 AAA 2,000 2,270,500
Metropolitan Transn Auth NY
Commuter Fac Rev Ser A(10) 6.00% 7/1/2021 AAA 5,000 5,464,700
Metropolitan Transn Auth NY
Commuter Fac Rev Ser A(10) 6.10% 7/1/2026 AAA 2,000 2,189,300
Metropolitan Transn Auth NY
Dedicated Tax Fd Ser A(10) 4.75% 4/1/2028 AAA 2,500 2,766,200
Metropolitan Transn Auth NY
Dedicated Tax Fd Ser A(10) 6.00% 4/1/2030 AAA 3,800 4,416,816
Metropolitan Transn Auth NY
Svc Cntrct Trans Fac Ser O ETM 5.75% 7/1/2008 AAA 1,000 1,126,330
Metropolitan Transn Auth NY
Tran Fac Rev Svc Cntrct Ser R 5.50% 7/1/2017 AAA 1,000 1,170,850
Municipal Secs Trust Ctfs
Ser 7005 Cl B RIBs ETM+ 9.121% 10/1/2040 Aaa 2,000 2,317,200
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
77
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NEW YORK TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
New York City Muni Wtr Fin
Unrefunded Balance Ser B 6.00% 6/15/2033 AA+ $ 1,470 $ 1,696,571
New York City Muni Wtr Fin
Wtr & Sew Sys Rev Ser B 6.00% 6/15/2033 AA+ 3,360 3,939,197
New York City Transitional
Fin Auth Rev Fut Tax 2nd Ser A 6.00% 8/15/2029 AA+ 200 233,020
New York City Transitional
Fin Auth Rev Fut Tax 2nd Ser B 6.00% 11/15/2024 AA+ 950 1,111,699
New York City Transitional
Fin Auth Rev Fut Tax 2nd Ser B 6.00% 11/15/2029 AA+ 2,000 2,340,420
New York City Transitional
Fin Future Tax Secd C 5.50% 5/1/2025 AA+ 445 506,722
New York NY Ser A(10)(17) 6.00% 5/15/2030 AAA 5,000 5,645,500
New York NY City Transitional Fin
Auth Fut Tax-2004 Ser C 5.50% 5/1/2025 AA+ 5 5,694
NY St Dorm Auth Lease Rev St
Univ Dorm Facs Ser A 5.50% 5/15/2026 AA- 75 80,981
NY St Dorm Auth Lease St Univ 5.375% 7/1/2022 AA- 1,000 1,148,000
NY St Dorm Auth Lease St Univ
Dorm Facs Ser A 6.00% 7/1/2030 AA- 3,500 4,107,425
NY St Dorm Auth Lease St Univ
Dorm Facs Ser A 6.25% 7/1/2020 AA- 1,250 1,479,712
NY St Dorm Auth Rev City Univ
Sys Cons 4th Gen A 5.50% 7/1/2023 AA- 1,215 1,399,024
NY St Dorm Auth Rev Mental Hlth Svcs B(15) 6.00% 2/15/2030 AAA 885 1,025,511
NY St Dorm Auth Rev Mental D(14)(15) 6.00% 8/15/2021 AAA 850 946,118
NY St Dorm Auth Rev Mental Hlth Svcs(15) 6.00% 2/15/2025 AAA 885 1,025,511
NY St Dorm Auth Rev Ser B(11) 5.75% 5/15/2017 AAA 395 457,145
NY St Dorm Auth Rev St Univ Edl Facs(10) 5.75% 5/15/2013 AAA 1,230 1,423,516
NY St Dorm Auth Rev Upstate
Cmnty Colleges Ser A 6.20% 7/1/2015 AAA 1,000 1,054,390
NY St Envr Fac Corp St Clean
Wtr & Drinking 6.00% 6/15/2019 AAA 80 92,097
NY St Urban Dev Corp Rev
Corrctl Facs Svc Contract C(2) 6.00% 1/1/2029 AAA 2,500 2,874,425
Puerto Rico Comwlth 5.375% 7/1/2025 A- 1,640 1,784,008
Puerto Rico Comwlth Aqueduct
& Swr Auth Rev ETM 10.25% 7/1/2009 AAA 625 756,981
Puerto Rico Comwlth Hwy &
Transn Auth Hwy Rev Ser Y 5.50% 7/1/2026 A 1,000 1,078,650
Puerto Rico Comwlth Hwy Ser B(15) 5.875% 7/1/2035 AAA 265 309,250
Puerto Rico Comwlth Hwy &
Transn Auth Rev Ser B 6.00% 7/1/2026 A 6,000 6,255,900
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
78
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
NEW YORK TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Comwlth Hwy &
Transn Auth Rev Ser B 6.50% 7/1/2027 A $ 2,000 $ 2,393,800
Puerto Rico Comwlth Pub Impt(15) 5.00% 7/1/2024 AAA 1,000 1,108,770
Puerto Rico Comwlth Pub Impt(14)(15) 5.00% 7/1/2028 AAA 1,130 1,252,910
Puerto Rico Comwlth Pub Impt(15) 5.75% 7/1/2026 AAA 3,000 3,430,110
Puerto Rico Comwlth Rites PA 650 RIBs 9.964% 7/1/2029 A- 1,000 1,083,780
Puerto Rico Comwlth Pub Impt Ser A 5.00% 7/1/2027 AAA 1,500 1,689,195
Puerto Rico Comwlth Pub Impt Ser A(10) 5.00% 7/1/2032 AAA 1,250 1,407,663
Puerto Rico Comwlth Pub Impt Ser A 5.375% 7/1/2028 AAA 555 634,859
Puerto Rico Elec Pwr Auth Rev Ser X 5.50% 7/1/2025 A- 2,915 2,999,856
Puerto Rico Elec Pwr Auth Rev Ser X 6.00% 7/1/2015 A- 2,375 2,500,709
Puerto Rico Pub Bldg Auth Rev
Govt Facs Ser D 5.25% 7/1/2027 A- 735 829,470
Puerto Rico Pub Fin Corp
Comwlth Approp-E 5.50% 8/1/2029 BBB+ 1,735 1,981,405
Puerto Rico Pub Fin Corp
Comwlth Approp Ser E 5.70% 8/1/2025 BBB+ 2,000 2,275,320
Puerto Rico Pub Fin Corp
Comwlth Approp Ser E 5.75% 8/1/2030 BBB+ 2,500 2,711,025
Tompkins Cnty NY Ind Dev Agy
Civic Fac Cornell Univ Lake 5.625% 7/1/2020 AA+ 115 132,690
Tompkins Cnty NY Ind Dev Agy
Civic Fac Cornell Univ Lake 5.75% 7/1/2030 AA+ 1,500 1,740,615
---------------
TOTAL 94,567,136
---------------
RESOURCE RECOVERY 1.13%
NY St Envr Fac Poll Ctrl Rev
St Wtr Revolving Fd Ser A 7.50% 6/15/2012 AAA 780 785,070
NY St Envr Fac Poll Ctrl Rev
St Wtr Ser E 6.875% 6/15/2014 AAA 1,985 2,026,725
---------------
TOTAL 2,811,795
---------------
SPECIAL TAX 0.77%
New York City Transitional
Fin Unrefunded Future Tax Secd C 5.00% 5/1/2029 AA+ 1,905 1,933,689
---------------
TRANSPORTATION 14.06%
New York NY City Transn Auth RIBs(2) 9.69% 1/1/2030 Aaa 5,000 6,580,000
Niagara NY Frontier Auth Arpt
Buffalo Niagara Intl Ser B(15) 5.50% 4/1/2019 AAA 690 757,296
Port Auth NY & NJ Cons 106th Ser AMT 6.00% 7/1/2015 AA- 350 373,744
Port Auth NY & NJ Cons 93rd Ser 6.125% 6/1/2094 AA- 7,500 8,691,900
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
79
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
NEW YORK TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Port Auth NY & NJ Sp Oblig
Rev 5th Instllmnt Spl Pj Ser 4 AMT 6.75% 10/1/2019 NR $ 2,970 $ 3,081,999
Puerto Rico Comwlth Hwy & Transn
Auth Transn Hwy Rev Ser Y 5.50% 7/1/2036 A 3,500 3,733,870
Puerto Rico Comwlth Hwy & Transn
Auth Transn Rev Ref Ser D 5.25% 7/1/2038 A 5,000 5,133,900
Puerto Rico Comwlth Hwy & Transn
Auth Transn Rev Ser D 5.75% 7/1/2041 A 2,000 2,191,800
Puerto Rico Comwlth Hwy & Transn
Auth Transn Rev Ref Rites PA 1052 RIBs 9.277% 1/1/2010 A(b) 2,000 2,383,600
Puerto Rico Comwlth Hwy & Transn
Auth Transn Sub P R St Infra 5.00% 7/1/2028 A- 1,000 1,007,860
Puerto Rico Comwlth Hwy & Transn
Auth Transn Rev Ser G 5.00% 7/1/2033 A 605 610,070
Puerto Rico Comwlth Hwy
Unrefunded Balance Ser B(15) 5.875% 7/1/2035 AAA 485 547,283
---------------
TOTAL 35,093,322
---------------
WATER/SEWER 2.92%
Buffalo NY Muni Wtr Fin Auth
Wtr Sys Rev(10) 5.75% 7/1/2021 AAA 500 540,810
Buffalo NY Muni Wtr Fin Auth
Wtr Sys Rev(11) 6.00% 7/1/2029 AAA 500 561,390
New York City Muni Wtr Fin 5.50% 6/15/2033 AA+ 3,585 3,829,999
NY St Envr Fac Corp St Clean
Wtr & Drinking 6.00% 6/15/2019 AAA 1,420 1,615,846
Upper Mohawk NY Regl Wtr Fin
Auth NY Wtr Sys Rev(2) 5.75% 4/1/2020 Aaa 650 734,786
---------------
TOTAL 7,282,831
---------------
TOTAL MUNICIPAL BONDS (Cost $230,178,944) 247,875,974
===============
<Caption>
SHARES
(000)
-------
SHORT-TERM INVESTMENT 0.00%
MONEY MARKET MUTUAL FUND 0.00%
Dreyfus New York Muni Cash Management (Cost $1,312) 1 1,312
===============
TOTAL INVESTMENTS IN SECURITIES 99.28% (Cost $230,180,256) 247,877,286
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 0.72% 1,788,645
---------------
NET ASSETS 100.00% $ 249,665,931
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
80
<Page>
SCHEDULE OF INVESTMENTS
TEXAS TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 98.44%
EDUCATION 7.60%
Fort Bend TX Indpt Sch Dist
Ref-Ser A PSF GTD 5.25% 8/15/2027 AAA $ 500 $ 525,100
Houston TX Higher Ed Fin Corp
Rice Univ 5.375% 11/15/2029 AAA 1,000 1,052,790
Raven Hills TX Higher Ed Corp
Cardinal Vlg LLC Lamar Univ(15) 5.50% 8/1/2028 Aaa 1,000 1,070,580
Rockwall TX Indpt Sch Dist
Sch Bldg PSF GTD 5.25% 2/15/2029 AAA 2,000 2,080,820
University TX Univ Rev Fin
Sys Ser B 5.00% 8/15/2033 AAA 1,000 1,016,400
---------------
TOTAL 5,745,690
---------------
GENERAL OBLIGATION 30.83%
Azle TX Indpt Sch Dist Ser A PSF GTD 6.00% 2/15/2022 Aaa 250 250,870
Blanco TX COP(19) 5.50% 8/15/2027 AAA 665 705,871
Dallas Cnty TX Ref & Impt Ser A 5.00% 8/15/2020 AAA 250 264,397
Dallas TX Indpt Sch Dist Ref PSF GTD 5.00% 2/15/2021 AAA 300 313,887
Gregory Portland TX Indpt Sch
Dist PSF GTD 5.50% 8/15/2020 AAA 1,075 1,182,016
Katy TX Indpt Sch Dist Ltd Tax PSF GTD 6.125% 2/15/2032 AAA 1,000 1,121,160
Laredo TX Indpt Sch Dist PSF GTD 5.25% 8/1/2024 AAA 1,000 1,042,680
Mansfield TX Indpt Sch Dist PSF GTD 5.25% 2/15/2023 AAA 1,000 1,050,060
Pearland TX Indpt Sch Dist Bd
Ser A PSF GTD 5.875% 2/15/2019 AAA 1,000 1,137,400
Pearland TX Indpt Sch Dist PSF GTD 5.125% 2/15/2022 AAA 1,500 1,557,720
Pflugerville TX Indpt Sch Dist PSF GTD 5.00% 8/15/2026 AAA 1,000 1,016,780
Puerto Rico Comwlth Pub Impt Ser A(d) 5.00% 7/1/2034 A- 750 756,855
Puerto Rico Comwlth
Unrefunded Bal Pub Impt Ser A 5.125% 7/1/2031 A- 745 757,032
San Antonio TX Indpt Sch Dist PSF GTD 5.50% 8/15/2024 AAA 1,000 1,072,010
Socorro TX Indpt Sch Dist Ref PSF GTD 6.00% 2/15/2015 AAA 920 996,875
TX St Ser B RIBs 11.051% 9/30/2011 Aa1 5,500 7,415,980
United Indpt Sch Dist TX PSF GTD 5.125% 8/15/2026 AAA 1,000 1,030,260
Webster TX Ctfs Oblig Ser A(11) 6.00% 3/1/2017 AAA 1,440 1,634,818
---------------
TOTAL 23,306,671
---------------
HEALTHCARE 5.25%
Harris Cnty TX Hlth Fac Dev
St. Lukes Episcopal Hosp Ser A 5.375% 2/15/2026 AA- 1,000 1,023,820
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
81
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
TEXAS TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Harris Cnty TX Hlth Fac Mem
Hermann Hlthcare Ser A 6.375% 6/1/2029 A $ 1,750 $ 1,924,370
Puerto Rico Ind Tourist Ed
Envr Ctrl Fac Hosp Ser A 6.125% 11/15/2025 AA 910 1,021,548
---------------
TOTAL 3,969,738
---------------
INDUSTRIAL 14.36%
Cass Cnty TX Ind Dev Corp.
Envr Impt Rev Ser A AMT 6.00% 9/1/2025 BBB 1,000 1,022,650
Orange Cnty TX Nav & Port Dist
Ind Dev Rev North Star Steel Pj 6.375% 2/1/2017 A+ 2,400 2,554,488
Texas City TX Ind Dev Corp.
Marine Term Rev Arco Pipe Line 7.375% 10/1/2020 AA+ 5,500 7,273,915
---------------
TOTAL 10,851,053
---------------
LEASE 1.42%
Harris Cnty Houston TX Sports
Auth Rev Sr Lien Ser G(15) 5.25% 11/15/2021 AAA 1,000 1,071,540
---------------
POWER 3.16%
Fort Bend Cnty TX Muni Util
Dist No 25(15) 6.00% 10/1/2028 AAA 2,170 2,388,736
---------------
PRE-REFUNDED 15.45%
Austin TX Arpt Sys Rev
2003 Prior Lien AMT(15) 6.125% 11/15/2025 AAA 415 442,689
Austin TX Indpt Sch Dist PSF GTD 5.75% 8/1/2015 AAA 500 535,235
Burleson TX Indpt Sch Dist PSF GTD 6.75% 8/1/2024 AAA 2,000 2,176,620
Municipal Secs Trust Ctfs
Ser 7005 Cl B RIBs ETM+ 9.121% 10/1/2040 Aaa 500 579,300
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser B 6.00% 7/1/2031 A 1,980 2,317,887
Puerto Rico Comwlth Pub Impt Ser A 5.125% 7/1/2031 AAA 380 428,921
Puerto Rico Comwlth Pub Impt RIBs(15) 9.44% 7/1/2026 Aaa 500 643,370
San Antonio TX Indpt Sch Dist PSF GTD 5.75% 8/15/2015 AAA 1,000 1,142,450
University TX Univ Rev Fin Sys Ser A 5.375% 8/15/2017 AAA 3,030 3,410,053
---------------
TOTAL 11,676,525
---------------
RESOURCE RECOVERY 3.59%
Gulf Coast Waste Disp Auth TX
Sew & Solid Waste Disp Rev AMT 5.90% 4/1/2036 A+ 1,500 1,588,260
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
82
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
TEXAS TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Harris Cnty TX Ind Dev Corp
Marine Term & Wtr Poll Ctrl 6.625% 2/1/2024 BBB+ $ 1,100 $ 1,123,782
---------------
TOTAL 2,712,042
---------------
TRANSPORTATION 8.47%
Austin TX Arpt Sys Rev
Unrefunded Bal 2003 Prior A AMT(15) 6.125% 11/15/2025 AAA 2,085 2,212,101
Dallas Fort Worth TX Intl
Arpt Impt Jt Ser B AMT(11) 5.00% 11/1/2035 AAA 1,000 998,390
Houston TX Arpt Sys Rev Sub
Lien Ser B(11) 5.50% 7/1/2030 AAA 1,000 1,059,340
Puerto Rico Comwlth Hwy &
Transn Auth Rev Ser C 6.00% 7/1/2029 A 1,000 1,103,590
Puerto Rico Comwlth Hwy &
Transn Auth Rev Ser 9 RIBs(5)(11) 9.94% 7/1/2026 Aaa 950 1,031,757
---------------
TOTAL 6,405,178
---------------
WATER/SEWER 8.31%
Dallas TX Wtr Wks & Swr Sys Rev Ref 5.00% 10/1/2012 AA+ 750 815,760
El Paso TX Wtr & Swr Rev Ref &
Impt Ser A(11) 5.25% 3/1/2027 AAA 1,000 1,042,270
San Antonio TX Wtr Rev Ref Sys(11) 5.00% 5/15/2028 AAA 1,000 1,017,680
Upper Trinity Regl Wtr Dist
TX Wtr Rev Sys Ser 4(10) 6.00% 8/1/2026 AAA 3,025 3,403,095
---------------
TOTAL 6,278,805
---------------
TOTAL MUNICIPAL BONDS (Cost $67,209,296) 74,405,978
===============
<Caption>
SHARES
(000)
-------
SHORT-TERM INVESTMENT 1.37%
MONEY MARKET MUTUAL FUND 1.37%
Dreyfus Municipal Cash Management Plus (Cost $1,038,986) 1,039 1,038,986
===============
TOTAL INVESTMENTS IN SECURITIES 99.81% (Cost $68,248,282) 75,444,964
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 0.19% 141,326
---------------
NET ASSETS 100.00% $ 75,586,290
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
83
<Page>
SCHEDULE OF INVESTMENTS
WASHINGTON TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 99.43%
EDUCATION 15.36%
Central WA Univ Sys Rev(10) 5.00% 5/1/2034 Aaa $ 1,000 $ 1,018,240
Univ WA Ed Resh Rev Roosevelt Pj(14)(15) 5.375% 6/1/2029 AAA 1,100 1,145,254
Univ WA Rev Student Fac Fee(11) 5.50% 6/1/2019 AAA 810 891,202
WA St Economic Dev Fin Auth
Biomedical Resh Pptys I-Ser A(10) 5.00% 6/1/2034 AAA 650 658,405
WA St Higher Ed Fac Auth Rev
Gonzaga Univ Pj(15) 4.75% 4/1/2022 AAA 1,000 1,012,490
WA St Higher Ed Fac Gonzaga Univ Pj(15) 5.125% 4/1/2034 AAA 2,080 2,134,226
Western WA Univ Rev
Unrefunded Bal Student Rec Fee(15) 5.00% 5/1/2033 AAA 630 638,694
---------------
TOTAL 7,498,511
---------------
GENERAL OBLIGATION 15.65%
Bremerton WA(2) 5.25% 12/1/2027 Aaa 1,440 1,505,952
King Cnty WA Pub Transn Sales Tax(15) 5.375% 6/1/2029 AAA 1,000 1,061,410
King Cnty WA Sch Dist No 405 Bellevue(10) 5.00% 12/1/2020 AAA 2,000 2,115,080
King Cnty WA Ser B 4.50% 1/1/2024 AA+ 320 317,539
King Cnty WA Ser B(15) 5.00% 1/1/2030 AAA 1,000 1,008,520
Port Seattle WA Ser B AMT 5.75% 12/1/2025 AA+ 750 799,035
Puerto Rico Pub Fin Corp
Comwlth App Ser A(2) 5.125% 6/1/2024 AAA 750 835,740
---------------
TOTAL 7,643,276
---------------
HEALTHCARE 2.29%
Puerto Rico Ind Tourist Ed &
Envr Ctrl Fac Hosp Ser A 6.125% 11/15/2030 AA 1,000 1,116,810
---------------
HOUSING 1.59%
Skagit Cnty WA Hsg Auth Low
Income Hsg Assist Rev Mtg Ln(12) 7.00% 6/20/2035 AAA 744 775,895
---------------
MISCELLANEOUS 5.47%
Bellevue WA Convtn Ctr
Auth Sp Oblig Rev(15) Zero Coupon 2/1/2024 AAA 1,400 521,178
Puerto Rico Pub Bldg Auth Rev
Govt Facs Ser I GTD 5.375% 7/1/2034 A- 1,000 1,044,240
Spokane WA Pub Fac Dist Hotel
Motel & Sales Use Tax(15) 5.75% 12/1/2028 AAA 1,000 1,104,740
---------------
TOTAL 2,670,158
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
84
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
WASHINGTON TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
POWER 15.80%
Chelan Cnty WA Pub Util Dist
No 1 Cons Rev Ser A AMT(15) 6.40% 7/1/2017 AAA $ 1,000 $ 1,114,170
Clark Cnty WA Pub Util Dist No 1 Rev(11) 5.125% 1/1/2020 AAA 400 420,992
Cowlitz Cnty WA Pub Util(10) 5.00% 9/1/2034 AAA 1,000 1,009,290
Douglas Cnty WA Pub Util Dist
No 1 Wells Hydro 8.75% 9/1/2018 AA 350 412,388
Douglas Cnty WA Pub Util Dist
No 1 Wells Hydro 2 Tier Ser B(2) 8.75% 9/1/2006 AAA 1,315 1,420,318
Grant Cnty WA Pub Util Dist
No 002 Elec Rev Ser H(11) 5.00% 1/1/2022 AAA 1,000 1,037,230
Puerto Rico Elec Pwr Auth Pwr
Rev Ser NN 5.125% 7/1/2029 A- 1,500 1,544,070
Seattle WA Mun Lt & Pwr Rev Ser A(15) 5.625% 9/1/2015 AAA 720 757,771
---------------
TOTAL 7,716,229
---------------
PRE-REFUNDED 26.38%
Douglas Cnty WA Pub Util Dist
No 1 Wells Hydro 8.75% 9/1/2018 Aaa 150 177,976
King Cnty WA Sch Dist No 414
Lake Washington(5)(11) 5.50% 12/1/2019 AAA 1,000 1,141,940
Mount Vernon WA(2) 6.85% 12/1/2014 AAA 1,285 1,296,321
Municipal Secs Trust Ctfs
Ser 7005 Cl B RIBs ETM+ 9.121% 10/1/2040 Aaa 1,000 1,158,600
Ocean Shores WA Wtr & Swr(11) 5.50% 12/1/2021 Aaa 1,000 1,146,530
Port Seattle WA Spl Fac Rev
Ser C AMT(15) 6.00% 9/1/2029 AAA 915 1,059,296
Puerto Rico Comwlth Hwy
Transn Auth Rev PMD Ser B 6.00% 7/1/2026 A 1,000 1,042,650
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser B 6.00% 7/1/2031 A 1,000 1,170,650
Puerto Rico Comwlth Pub Impt 9.964% 7/1/2029 A- 1,000 1,083,780
Renton WA Wtr & Swr Rev 6.55% 11/1/2013 A1 1,000 1,003,870
Vancouver WA Ltd Tax(2) 5.50% 12/1/2025 AAA 1,255 1,433,135
Vancouver WA Wtr & Swr Rev(10) 6.00% 6/1/2020 AAA 1,000 1,147,670
Western WA Univ Rev Student Rec Fee(15) 5.00% 5/1/2033 AAA 20 22,403
---------------
TOTAL 12,884,821
---------------
TRANSPORTATION 14.54%
Central Puget Sound WA Regl
Transit Auth Sales Tax & Motor(10) 5.25% 2/1/2021 AAA 1,750 1,969,835
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
85
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
WASHINGTON TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Port Kalama WA Rev Ser B AMT 5.625% 12/1/2015 A3 $ 400 $ 414,528
Port Seattle WA Spl Fac Rev
Unrefunded Balance Ser C AMT(15) 6.00% 9/1/2029 AAA 1,085 1,186,090
Port Tacoma WA Ser A(2) 5.25% 12/1/2034 AAA 2,000 2,091,180
Puerto Rico Comwlth Hwy
Transn Auth Rev Rites RIBs 9.277% 1/1/2010 A(b) 750 893,850
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser RIBs(5)(11) 9.94% 7/1/2026 Aaa 500 543,030
---------------
TOTAL 7,098,513
---------------
WATER/SEWER 2.35%
Pierce Cnty WA Swr Rev(2) 5.00% 8/1/2021 AAA 1,100 1,149,676
---------------
TOTAL MUNICIPAL BONDS (Cost $45,134,600) 48,553,889
===============
<Caption>
SHARES
(000)
-------
SHORT-TERM INVESTMENT 0.00%
MONEY MARKET MUTUAL FUND 0.00%
Dreyfus Municipal Cash Management Plus (Cost $1,499) 1 1,499
===============
TOTAL INVESTMENTS IN SECURITIES 99.43% (Cost $45,136,099) 48,555,388
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 0.57% 279,095
---------------
NET ASSETS 100.00% $ 48,834,483
===============
</Table>
SCHEDULE OF INVESTMENTS
INSURED INTERMEDIATE TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
PRINCIPAL
AMOUNT
(000)
----------
MUNICIPAL BONDS 96.96%
EDUCATION 12.68%
Allegheny Cnty PA Higher Ed
Duquesne Univ Ser A(10) 5.00% 3/1/2013 AAA $ 150 167,183
Appalachian St Univ NC Rev
Ref Util Sys(15) 5.00% 5/15/2010 AAA 100 110,909
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
86
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
INSURED INTERMEDIATE TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Delaware Cnty PA Auth Univ
Rev Ref Villanova Univ(10) 5.00% 8/1/2010 AAA $ 200 $ 221,440
Maricopa Cnty AZ Sch Dist No 69
Paradise Vly Ref Second Ser(10) 5.00% 7/1/2013 AAA 100 111,443
NJ St Ed Fac Auth Rev Ref Rowan
Univ Ser C(10) 5.25% 7/1/2009 AAA 150 166,972
NY St Dorm Auth Lease Rev Master
Boces Prog Ser A GTD(11) 5.00% 8/15/2008 AAA 150 164,121
NY St Dorm Auth Rev
Insured Fordham Univ(10) 5.00% 7/1/2011 AAA 100 111,664
Pickens Cnty SC Sch Dist Ref Ser B(10) 2.25% 3/1/2005 AAA 100 100,289
Univ CO Univ Rev Enterprise Sys Ser A(15) 5.00% 6/1/2011 AAA 100 111,026
---------------
TOTAL 1,265,047
---------------
GENERAL OBLIGATION 27.95%
Austin TX Indpt Sch Dist Ref PSF GTD 5.25% 8/1/2015 AAA 250 283,330
Davie Cnty NC Sch(2) 4.00% 5/1/2012 AAA 200 210,268
Detroit MI City Sch Dist Sch
Bldg & Site Impt Ser A(10) 5.00% 5/1/2008 AAA 150 163,111
Hemet CA Univ Sch Dist 2002
Election Ser C(15) 5.00% 8/1/2011 AAA 200 222,546
HI St Ref Ser CY(11) 5.50% 2/1/2011 AAA 150 169,874
HI St Ref Ser DB(15) 5.25% 9/1/2013 AAA 100 113,206
LA Crosse WI Ref Ser A(11) 5.00% 12/1/2007 AAA 200 216,340
MC Henry Cnty IL Cmnty Cons
Sch Dist No 047 Crystal Lake Ref(11) 5.25% 2/1/2009 Aaa 170 188,153
NC St Ref Ser A 5.00% 6/1/2010 AAA 150 166,482
OK St Ref Bldg Ser A(10) 5.00% 7/15/2014 AAA 200 223,968
Pasadena CA Univ Sch Dist Ser A Ref(d)(10) 5.00% 11/1/2015 AAA 250 280,022
Salem Keizer OR Sch Dist No 24J Ref GTD(11) 5.00% 6/15/2011 AAA 200 223,446
TN St Ser A(11) 5.00% 8/1/2009 AAA 100 110,426
Wayne Cnty MI Cmnty College
Cmnty College Impt(10) 5.25% 7/1/2010 Aaa 100 112,169
West Windsor Plainsboro NJ
Regl Sch Dist Ref(11) 4.00% 12/1/2007 AAA 100 105,581
---------------
TOTAL 2,788,922
---------------
HEALTHCARE 2.01%
North Cent TX Hlth Fac Dev(15) 1.66%# 12/1/2015 AAA 100 100,000
Wayne Cnty PA Hosp & Hlth
Facs Wayne Mem Hosp Pj(15) 2.00% 7/1/2005 AAA 100 100,248
---------------
TOTAL 200,248
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
87
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
INSURED INTERMEDIATE TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
LEASE 3.50%
Kansas City MO Sch Dist Bldg
Ref Elem Sch Pj Ser B(10) 5.00% 2/1/2012 Aaa $ 100 $ 111,111
OH St Bldg Auth Ref St
Facs Adult Correction A(11) 5.50% 10/1/2010 AAA 210 238,214
---------------
TOTAL 349,325
---------------
MISCELLANEOUS 22.43%
CA St Economic Recovery Ser A(10) 5.25% 7/1/2014 AAA 200 227,424
DE River & Bay Auth Ref(2) 5.00% 1/1/2008 AAA 250 271,432
IL St Sales Tax Rev First Ser(11) 5.25% 6/15/2013 AAA 100 112,856
IN Bd Bk Rev Spl Prog South
Bend Tif Ser E(15) 5.00% 9/1/2014 AAA 100 108,908
KY Asset/Liability Comm Ref Pj Nts Ser A(2) 5.00% 7/15/2006 AAA 250 263,478
Mercer Cnty NJ Impt Auth Ref
Regl Sludge Pj(10) 5.00% 12/15/2014 AAA 200 222,404
MI St Envr Ref(14)(15) 5.50% 12/1/2013 AAA 100 116,228
Miami-Dade Cnty FL Spl Oblig
Fltg Rate Cap Asset Acq Ser A(10) 2.40%# 4/1/2014 AAA 200 199,634
MO Dev Fin Bd Cultural Facs
Nelson Gallery(15) 5.25% 12/1/2013 AAA 100 112,198
OR St Dept Admin Svcs(11) 5.00% 9/1/2012 AAA 100 111,889
Phoenix AZ Str & Hwy User Rev
Ref Jr Lien(10) 5.00% 7/1/2008 AAA 100 109,429
SC Transn Infrastr Ser A(2) 5.00% 10/1/2008 Aaa 250 273,785
WI St Petroleum Inspect Fee Rev Ref Ser 1(11) 5.00% 7/1/2008 AAA 100 108,942
---------------
TOTAL 2,238,607
---------------
POWER 3.91%
Puerto Rico Elec Pwr Auth Ref Ser JJ(15) 5.25% 7/1/2013 AAA 100 114,612
South MN Muni Pwr Agy Pwr
Supply Rev Ref Ser A(15) 5.00% 1/1/2010 AAA 250 275,720
---------------
TOTAL 390,332
---------------
PRE-REFUNDED 3.40%
Muhlenberg PA Sch Dist(10) 5.40% 9/1/2012 AAA 100 113,418
NY St Dorm Auth Rev Mental D(14)(15) 5.25% 8/15/2024 AAA 200 226,206
---------------
TOTAL 339,624
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
88
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
INSURED INTERMEDIATE TAX-FREE FUND SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION 7.82%
DE Transn Auth Transn Sys
Rev Ref Sr Ser B(2) 5.25% 7/1/2005 AAA $ 200 $ 205,320
New Haven CT Air Rights Pkg Ref(2) 5.375% 12/1/2012 AAA 100 114,189
North TX Thruway Auth Dallas
North Twy Sys Rev Ref Ser C(11) 3.00% 1/1/2006 AAA 100 101,462
PA St Tpk Comm Oil Sr Ser A(15) 5.25% 12/1/2012 AAA 100 113,609
Washington DC Met Area Transn
Auth Gross Rev Ref(15) 5.00% 1/1/2007 AAA 230 245,341
---------------
TOTAL 779,921
---------------
WATER/SEWER 13.26%
Anacortes WA Swr Rev Ref(11) 4.00% 11/1/2007 Aaa 100 105,013
Columbus GA Wtr & Sew Rev Ref(11) 5.25% 5/1/2013 AAA 100 112,940
Houston TX Util Sys Rev
Ref Comb First Lien Ser A(15) 5.00% 5/15/2009 AAA 200 219,722
Lansing MI Disp Sys Ref(10) 5.00% 5/1/2014 AAA 150 167,646
Miami-Dade Cnty FL Wtr & Swr Rev Ref(15) 5.00% 10/1/2007 AAA 200 216,294
Pima Cnty AZ Swr Rev Ref(11) 5.00% 7/1/2014 AAA 200 222,820
Shreveport LA Wtr & Swr Rev Ref Ser A(10) 5.00% 12/1/2012 AAA 100 111,007
Upper Occoquan Sew Auth VA(11) 5.00% 7/1/2011 AAA 150 167,689
---------------
TOTAL 1,323,131
---------------
TOTAL MUNICIPAL BONDS (Cost $9,495,496) 9,675,157
===============
<Caption>
SHARES
(000)
-------
SHORT-TERM INVESTMENT 3.63%
MONEY MARKET MUTUAL FUND 3.63%
Dreyfus Municipal Cash Management Plus (Cost $362,189) 362 362,189
===============
TOTAL INVESTMENTS IN SECURITIES 100.59% (Cost $9,857,685) 10,037,346
===============
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS (0.59%) (59,087)
---------------
NET ASSETS 100.00% $ 9,978,259
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
89
<Page>
SCHEDULE OF INVESTMENTS
FLORIDA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 98.32%
EDUCATION 2.91%
Miami-Dade Cnty FL Ed Fac
Auth Rev Ser A(2) 6.00% 4/1/2023 AAA $ 2,000 $ 2,294,460
---------------
GENERAL OBLIGATION 19.54%
Boca Raton FL Ref 5.25% 7/1/2016 AAA 1,615 1,764,371
Boca Raton FL Ref 5.25% 7/1/2017 AAA 1,000 1,090,650
FL St Bd of Ed Cap Outlay
Pub Ed Ser E 5.625% 6/1/2025 AA+ 1,000 1,089,460
FL St Bd of Ed Cap Outlay
Pub Ed Ser A 5.25% 6/1/2024 AA+ 2,000 2,137,100
FL St Bd of Ed Cap Outlay
Pub Ed Ref Ser D 5.00% 6/1/2007 AA+ 2,250 2,416,410
Florida St Dept Trans Right
of Way Ser A 5.25% 7/1/2008 AA+ 2,900 3,191,595
Hillsborough Cnty FL Sch Bd COP(15) 5.00% 7/1/2029 AAA 1,000 1,024,110
Miami FL Ref(15) 4.00% 7/1/2006 AAA 1,000 1,035,730
Puerto Rico Pub Fin Corp
Comwlth Approp Ref Ser(2) 5.25% 8/1/2030 AAA 1,500 1,673,310
---------------
TOTAL 15,422,736
---------------
HEALTHCARE 12.01%
Highlands Cnty FL Fac Auth
Rev Hosp Adventist Hlth Sys D 5.875% 11/15/2029 A 2,000 2,143,320
Highlands Cnty FL Fac Auth
Rev Hosp Adventist/Sunbelt Ser A 6.00% 11/15/2031 A 2,000 2,142,320
Miami FL Hlth Facs Auth
Catholic Hlth East Ser B 5.25% 11/15/2033 A 475 477,019
Orange Cnty FL Hlth Fac Auth
Rev Hosp Orlando Regl 5.75% 12/1/2032 A 1,000 1,051,020
Puerto Rico Ind Tourist Ed
Med Envr Ctrl Fac Hosp 6.50% 11/15/2020 AA 410 474,558
Sarasota Cnty FL Pub Hosp Bd
Rev Sarasota Mem Hosp Ser B(15) 5.50% 7/1/2028 AAA 2,875 3,192,889
---------------
TOTAL 9,481,126
---------------
HOUSING 1.13%
Lee Cnty FL Hsg Fin Auth Sing
Fam Mtg Rev AMT(7)(13) 6.40% 3/1/2029 Aaa 720 731,822
Orange Cnty FL Hsg Fin Auth
Ser A1 AMT(13) Zero Coupon 3/1/2028 Aaa 575 161,857
---------------
TOTAL 893,679
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
90
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
FLORIDA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL 1.69%
Lee Cnty FL Ind Dev Auth Ref
Bonita Springs Util Pj AMT(2) 5.125% 11/1/2019 AAA $ 1,250 $ 1,331,088
---------------
MISCELLANEOUS 16.63%
Jacksonville FL Excise Taxes
Ref Ser C AMT(15) 5.25% 10/1/2020 AAA 1,000 1,084,950
Jacksonville FL Sales Tax Rev
Ref & Impt Loc Govt(10) 5.375% 10/1/2018 AAA 1,000 1,118,600
Miami-Dade Cnty FL Spl Oblig
Fltg Rate Cap Asset Acq Ser A RIBs(10) 2.40%# 4/1/2014 AAA 1,500 1,497,255
Miami-Dade Cnty FL Spl Oblig
Sub Ser A(15) Zero Coupon 10/1/2024 AAA 3,000 1,030,890
Miami-Dade Cnty FL Spl Oblig
Sub Ser B(15) 5.00% 10/1/2037 AAA 1,000 1,015,330
Orange Cnty FL Sales Tax Rev
Ref Ser B(10) 5.125% 1/1/2032 AAA 1,425 1,470,785
Orange Cnty FL Tourist Dev Sub(2) 5.125% 10/1/2025 AAA 1,445 1,515,921
Osceola Cnty FL Tourist Dev Tax
Rev Ser A(10) 5.00% 10/1/2032 AAA 1,400 1,432,382
Polk Cnty FL Cap Impt Rev Ref(11) 5.50% 12/1/2021 Aaa 1,000 1,119,240
Puerto Rico Pub Bldgs Auth Rev Ref
Govt Facs Ser I GTD 5.25% 7/1/2033 A- 1,250 1,293,250
Tampa FL Sports Auth Rev
Tampa Bay Arena Pj(15) 6.00% 10/1/2015 AAA 450 544,117
---------------
TOTAL 13,122,720
---------------
PRE-REFUNDED 25.80%
Miami-Dade Cnty FL Expwy Auth
Toll Sys Rev(10) 6.375% 7/1/2029 AAA 1,250 1,480,638
Municipal Secs Trust Ctfs Ser
7005 Cl B ETM RIBs+ 9.121% 10/1/2040 Aaa 1,250 1,448,250
Orange Cnty FL Tourist Dev
Tax Rev ETM(2) 6.00% 10/1/2016 AAA 710 722,517
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser B 6.00% 7/1/2031 A 1,000 1,170,650
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser B 6.50% 7/1/2027 A 1,000 1,196,900
Puerto Rico Comwlth Rites
PA 650 RIBs 9.964% 7/1/2029 A- 2,000 2,167,560
Puerto Rico Comwlth Ser 8 RIBs(15) 9.44% 7/1/2026 Aaa 3,500 4,503,590
Tampa Bay Wtr FL Util Sys Rev(10) 6.00% 10/1/2024 AAA 3,000 3,553,260
Tampa FL Rev Allegany Hlth
Sys St Joseph(15) 6.70% 12/1/2018 AAA 4,000 4,114,160
---------------
TOTAL 20,357,525
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
91
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
FLORIDA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
RESOURCE RECOVERY 0.97%
Jacksonville FL Pollution Rev
Anheuser-Busch Pj 5.70% 8/1/2031 A+ $ 750 $ 767,805
---------------
TRANSPORTATION 7.72%
FL Ports Fin Commn Rev St
Transn TR FD Intermodal Pg AMT(10) 5.50% 10/1/2029 AAA 1,295 1,358,520
Jacksonville FL Port Auth
Arpt Rev Ser A AMT(10) 6.25% 10/1/2024 AAA 1,000 1,054,700
Miami-Dade Cnty FL Expwy Auth
Toll Sys Rev Ref(10) 5.125% 7/1/2025 Aaa 750 787,800
Pensacola FL Arpt Rev Ser A AMT(15) 6.125% 10/1/2018 AAA 1,250 1,379,613
Puerto Rico Comwlth Hwy &
Transn Auth Rev Ser C 6.00% 7/1/2029 A 880 971,159
Puerto Rico Comwlth Hwy &
Transn Auth Rev Ser RIBs(5)(11) 9.94% 7/1/2026 Aaa 500 543,030
---------------
TOTAL 6,094,822
---------------
WATER/SEWER 9.92%
Melbourne FL Wtr & Swr Rev
Ref & Impt Ser A(10) 5.00% 10/1/2032 AAA 1,000 1,023,130
Miami Beach FL Stormwater Rev(10) 5.25% 9/1/2020 AAA 1,000 1,087,900
Miami Beach FL Wtr & Swr Rev(2) 5.25% 9/1/2020 AAA 1,000 1,086,240
Miami Beach FL Wtr & Swr Rev(2) 5.50% 9/1/2027 AAA 1,000 1,072,440
Miami-Dade Cnty FL Wtr & Swr Rev Ref(15) 5.00% 10/1/2007 AAA 2,000 2,162,940
Ocala FL Wtr & Swr Rev(10) 5.25% 10/1/2027 Aaa 800 848,704
Sebring FL Wtr & Wastewtr Rev Ref(10) 5.25% 1/1/2020 AAA 500 547,510
---------------
TOTAL 7,828,864
---------------
TOTAL MUNICIPAL BONDS (Cost $71,592,961) 77,594,825
===============
<Caption>
SHARES
(000)
-------
SHORT-TERM INVESTMENT 0.35%
MONEY MARKET MUTUAL FUND 0.35%
Dreyfus FL Muni Cash Management (Cost $272,458) 272 272,458
===============
TOTAL INVESTMENTS IN SECURITIES 98.67% (Cost $71,865,419) 77,867,283
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 1.33% 1,051,888
---------------
NET ASSETS 100.00% $ 78,919,171
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
92
<Page>
SCHEDULE OF INVESTMENTS
GEORGIA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 98.68%
EDUCATION 20.72%
Athens-Clarke Cnty GA Univ
Govt UGA Rev Ref CCRC Bldg LLC Pj(2) 5.00% 12/15/2032 AAA $ 1,050 $ 1,068,291
Athens GA Hsg Auth Student
Hsg Univ of GA East Campus(2) 5.00% 12/1/2027 Aaa 2,000 2,049,660
Athens GA Hsg Auth Student
Hsg Univ of GA East Campus(2) 5.25% 12/1/2023 Aaa 500 536,625
Bulloch Cnty GA Dev Auth GA
South Univ Pj(2) 5.00% 8/1/2021 Aaa 500 527,770
Fulton Cnty GA Dev Auth Rev
GA Tech Athletic Assoc(2) 5.50% 10/1/2017 AAA 1,000 1,130,750
Fulton Cnty GA Dev Auth Rev
GA Tech Fndtn Fdg Ser A 5.00% 11/1/2031 AA+ 1,400 1,428,238
Fulton Cnty GA Dev Auth Rev
GA Tech Fndtn Sac II Pj Ser A 5.125% 11/1/2021 AA+ 750 804,847
Fulton Cnty GA Dev Auth Rev
Molecular Science Bldg Pj(15) 5.00% 5/1/2034 AAA 2,000 2,039,580
Fulton Cnty GA Dev Auth Rev
Morehouse College Pj(2) 5.875% 12/1/2030 AAA 1,850 2,070,261
Fulton Cnty GA Dev Auth Rev
Tuff Morehouse Pj Ser A(2) 5.50% 2/1/2022 AAA 1,000 1,102,340
Marietta GA Dev Auth Rev Ser
Student Hsg SPSU Student Hsg I 5.125% 9/15/2023 A2 1,000 1,035,170
Private Colleges & Univ Auth
GA Emory Univ Pj Ser A 5.50% 11/1/2020 AA 1,000 1,106,790
Private Colleges & Univ Auth
GA Emory Univ Pj Ser A 5.50% 11/1/2025 AA 1,000 1,081,180
Private Colleges & Univ Auth
GA Rev Emory Univ Pj Ser A 5.75% 11/1/2018 AA 500 570,995
Private Colleges & Univ Auth
GA Rev Mercer Univ Pj 5.75% 10/1/2031 Baa1 500 520,270
Private Colleges & Univ Auth
Spelman College 5.25% 6/1/2021 Aa3 1,340 1,463,508
---------------
TOTAL 18,536,275
---------------
GENERAL OBLIGATION 9.72%
Barnesville-Lamar Cnty GA Student
Hsg Rev Gordon College PPTYS A 5.00% 8/1/2030 A3 1,700 1,678,036
GA St Ser C 7.25% 7/1/2005 AAA 1,500 1,561,500
GA St Ser D 5.00% 12/1/2006 AAA 550 585,948
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
93
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
GEORGIA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
GA St Ser F 5.00% 11/1/2018 AAA $ 1,000 $ 1,084,170
Puerto Rico Comwlth Pub Impt Ser A(d) 5.00% 7/1/2034 A- 1,375 1,387,568
Puerto Rico Comwlth Pub Impt Ser A 5.25% 7/1/2024 A- 500 524,600
Puerto Rico Comwlth
Unrefunded Bal Pub Impt Ser A 5.125% 7/1/2031 A- 665 675,740
Puerto Rico Comwlth
Unrefunded Bal Pub Impt Ser A 5.375% 7/1/2028 A- 1,155 1,196,799
---------------
TOTAL 8,694,361
---------------
HEALTHCARE 4.55%
Athens Clarke Cnty GA Uni
Govt Catholic Hlth East Issue 5.50% 11/15/2032 A 1,000 1,024,910
Clarke Cnty GA Hosp Auth Rev
Ctfs Athens Regl Med Ctr Pj(15) 5.125% 1/1/2032 AAA 500 514,685
Cobb Cnty GA Hosp Auth Rev
Ref & Impt Rev Antic Ctfs(2) 5.25% 4/1/2024 AAA 1,000 1,079,170
Glynn Brunswick GA Mem Hosp
Auth Rev Southeast GA Hlth(15) 6.00% 8/1/2016 AAA 400 432,868
Puerto Rico Ind Tourist Ed
Med Envr Ctrl Fac Hosp 6.50% 11/15/2020 AA 410 474,559
Ware Cnty GA Hosp Auth Rev
Antic Ctfs GTD(15) 5.50% 3/1/2021 Aaa 500 545,590
---------------
TOTAL 4,071,782
---------------
HOUSING 3.49%
Clayton Cnty GA Hsg Auth
Multi Fam Hsg Rev(12) 5.60% 12/20/2024 Aaa 495 535,654
DeKalb Cnty GA Hsg Auth Multi
Fam Lakes At Indian Creek AMT(11) 7.15% 1/1/2025 AAA 500 512,800
GA St Hsg & Fin Auth Rev Sing
Fam Sub Ser D-2 AMT 5.75% 12/1/2031 AAA 930 959,537
GA St Hsg & Fin Auth Rev
Sub Ser A-2 AMT 4.875% 12/1/2024 AAA 600 603,006
Savannah GA Econ Dev Auth
Multi Fam Hsg Rev AMT(12) 5.15% 11/20/2022 AAA 500 513,070
---------------
TOTAL 3,124,067
---------------
INDUSTRIAL 0.83%
Albany Dougherty GA Payroll
Dev Auth Procter & Gamble AMT 5.20% 5/15/2028 AA- 500 528,775
Monroe Cnty GA Dev Auth Poll
GA Pwr Co Plant(2) 5.25% 7/1/2031 AAA 205 211,267
---------------
TOTAL 740,042
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
94
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
GEORGIA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
LEASE 1.44%
College Park GA Business
Civic Ctr Pj(2) 5.75% 9/1/2026 AAA $ 450 $ 495,909
GA Muni Assn Inc Ctfs City
Court Atlanta Pj(2) 5.25% 12/1/2026 AAA 750 793,770
---------------
TOTAL 1,289,679
---------------
MISCELLANEOUS 3.87%
Assoc Cnty GA Leasing
Pj Rockdale Cnty GA Pub Purp Pj(2) 5.625% 7/1/2020 AAA 25 27,875
Cobb Marietta GA Coliseum &
Exhibit Hall Auth Rev(15) 5.625% 10/1/2026 AAA 1,000 1,134,670
Fayette Cnty GA Pub Fac Auth
Rev Criminal Justice Ctr Pj 5.00% 6/1/2026 AA 750 771,570
George L Smith II GA World
Congress Ctr Auth Rev AMT(15) 5.75% 7/1/2015 AAA 500 551,670
Puerto Rico Pub Bldgs Auth Rev
Unrefunded Bal Govt Facs Ser D GTD 5.25% 7/1/2036 A- 335 344,624
Puerto Rico Pub Bldgs Auth Rev
Unrefunded Bal Govt Facs Ser D GTD 5.375% 7/1/2033 A- 615 637,589
---------------
TOTAL 3,467,998
---------------
POWER 4.33%
Muni Elec Auth GA Combustion
Cycle Pj Ser A 5.00% 11/1/2023 A 1,000 1,016,150
Muni Elec Auth GA
Combustion Turbine Pj Ser A(15) 5.25% 11/1/2022 AAA 1,445 1,560,239
Puerto Rico Elec Pwr Auth Ref Ser FF(15) 5.25% 7/1/2005 AAA 250 256,687
Puerto Rico Elec Pwr Auth Ser HH(11) 5.25% 7/1/2029 AAA 1,000 1,046,070
---------------
TOTAL 3,879,146
---------------
PRE-REFUNDED 28.57%
Atlanta GA Arpt Fac Rev
Ref Gen Ser A(10) 5.50% 1/1/2026 AAA 1,645 1,870,727
Atlanta GA Arpt Fac Rev Ser A(10) 5.60% 1/1/2030 AAA 1,500 1,713,075
Atlanta GA ETM 5.60% 12/1/2015 AA- 95 97,397
Cobb Cnty GA Kennestone Hosp
Auth Rev Ctfs Ser 86 A ETM(15) Zero Coupon 8/1/2015 AAA 395 214,398
Fayette Cnty GA Pub Fac Auth
Criminal Justice Ctr Pj 6.00% 6/1/2030 AA 1,000 1,168,510
Forsyth Cnty GA Sch Dist 6.00% 2/1/2016 AA 2,000 2,339,040
Forsyth Cnty GA Wtr & Swr Auth Rev 6.25% 4/1/2021 AA 750 883,463
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
95
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
GEORGIA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Muni Secs Trust Ctfs Ser
7005 Cl B ETM RIBs+ 9.121% 10/1/2040 Aaa $ 1,000 $ 1,158,600
Puerto Rico Comwlth Hwy &
Transn Auth Hwy Rev Ser Y 5.50% 7/1/2026 A 2,000 2,157,300
Puerto Rico Comwlth
Pub Impt Ser A 5.125% 7/1/2031 AAA 335 378,128
Puerto Rico Comwlth Pub Impt Ser A 5.375% 7/1/2028 AAA 580 663,456
Puerto Rico Comwlth Pub Impt(5)(11) 5.50% 7/1/2017 AAA 500 539,780
Puerto Rico Comwlth Pub Impt(15) 5.75% 7/1/2026 AAA 1,990 2,275,306
Puerto Rico Comwlth Pub
Impt Rites PA 650 RIBs 9.964% 7/1/2029 A- 1,125 1,219,253
Puerto Rico Comwlth Pub Impt Ser A 5.00% 7/1/2027 AAA 370 416,668
Puerto Rico Pub Bldg Auth Rev
Govt Facs Ser D GTD 5.25% 7/1/2036 A- 915 1,032,605
Puerto Rico Pub Bldg Auth Rev
Govt Facs Ser D GTD 5.375% 7/1/2033 A- 1,685 1,915,828
Puerto Rico Pub Fin Corp
Comwlth Approp Ser A(15) 5.50% 8/1/2020 AAA 1,500 1,729,725
Puerto Rico Pub Fin Corp
Comwlth Approp Ser E 5.70% 8/1/2025 BBB+ 2,000 2,275,320
Puerto Rico Pub Fin Corp
Comwlth Approp Ser E 5.75% 8/1/2030 BBB+ 1,000 1,084,410
Savannah GA Econ Dev Auth Rev
Sub Ser C ETM Zero Coupon 12/1/2021 Aaa 1,000 432,200
---------------
TOTAL 25,565,189
---------------
RESOURCE RECOVERY 2.48%
Atlanta GA Wtr & Wastewater
Rev Ser A Unrefunded Balance(10) 5.00% 11/1/2029 AAA 2,090 2,116,877
Cobb Cnty GA Solid Waste Mgmt
Auth Rev AMT 6.40% 1/1/2015 AAA 100 102,627
---------------
TOTAL 2,219,504
---------------
TRANSPORTATION 12.21%
Atlanta GA Arpt Fac Rev AMT(15) Zero Coupon 1/1/2010 AAA 1,235 942,095
Macon Bibb Cnty GA Indl Auth
Arpt Impt Rev Ref Atlantic AMT(2) 5.00% 4/1/2018 AAA 500 523,835
Puerto Rico Comwlth Hwy Ser D(11) 5.00% 7/1/2032 AAA 225 231,676
Puerto Rico Comwlth Hwy
Transn Auth Hwy Rev Ser Y 5.50% 7/1/2036 A 500 533,410
Puerto Rico Comwlth Hwy & Transn Auth
Transn Rev Ref Rites PA 1052 RIBs 9.277% 1/1/2010 A(b) 1,750 2,085,650
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
96
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
GEORGIA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Comwlth Hwy &
Transn Auth Transn Rev Ref Ser C 6.00% 7/1/2029 A $ 250 $ 275,897
Puerto Rico Comwlth Hwy &
Transn Auth Transn Rev Ref Ser D 5.25% 7/1/2038 A 500 513,390
Puerto Rico Comwlth Hwy &
Transn Auth Transn Rev Ref Ser D 5.375% 7/1/2036 A 405 419,876
Puerto Rico Comwlth Hwy &
Transn Auth Transn Rev Ref Ser D 5.75% 7/1/2041 A 3,385 3,709,621
Puerto Rico Comwlth Hwy &
Transn Auth Transn Rev Ser B(15) 5.875% 7/1/2020 AAA 1,000 1,144,680
Puerto Rico Comwlth Hwy &
Transn Auth Transn Rev Ser RIBs(5)(11) 9.94% 7/1/2026 Aaa 500 543,030
---------------
TOTAL 10,923,160
---------------
WATER/SEWER 6.47%
Augusta GA Wtr & Swr Rev(11) 5.25% 10/1/2022 AAA 500 541,310
Augusta GA Wtr & Swr Rev(11) 5.25% 10/1/2030 AAA 1,110 1,150,104
Carroll Cnty GA Wtr Auth Wtr & Swr Rev(2) 5.25% 7/1/2021 Aaa 500 546,290
DeKalb Cnty GA Wtr & Swr 5.00% 10/1/2028 AA 1,000 1,019,150
Elberton GA Combined Util Sys
Rev Ref & Impt(2) 5.50% 1/1/2019 Aaa 550 614,185
Glynn Cnty GA Wtr & Swr Rev
Ref & Impt(2) 5.00% 4/1/2023 Aaa 750 785,378
Henry Cnty GA Wtr & Swr Auth Rev(10) 5.625% 2/1/2030 AAA 1,050 1,132,509
---------------
TOTAL 5,788,926
---------------
TOTAL INVESTMENTS IN MUNICIPAL BONDS 98.68% (Cost $84,080,180) 88,300,129
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 1.32% 1,180,117
---------------
NET ASSETS 100.00% $ 89,480,246
===============
</Table>
SCHEDULE OF INVESTMENTS
MICHIGAN TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
MUNICIPAL BONDS 97.36%
EDUCATION 8.08%
Eastern MI Univ Rev Gen Ser B(10) 5.60% 6/1/2025 AAA 1,430 1,552,236
Forest Hills MI Pub Schs(10) 5.25% 5/1/2020 Aaa 2,000 2,158,920
Grand Vly MI St Univ Rev(10) 5.50% 2/1/2018 AAA 1,150 1,314,140
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
97
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
MICHIGAN TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Univ MI Univ Rev Student Fee Ser A 6.00% 4/1/2007 Aaa $ 250 $ 273,905
Wayne Cnty MI Cmnty College Impt(2) 5.50% 7/1/2019 AAA 565 621,833
---------------
TOTAL 5,921,034
---------------
GENERAL OBLIGATION 33.92%
Adrian MI City Sch Dist(11) 5.00% 5/1/2034 AAA 1,500 1,530,840
Anchor Bay MI Sch Dist Sch Bldg & Site 5.00% 5/1/2033 AA+ 1,000 1,018,220
Belding MI Area Sch(2) 5.00% 5/1/2026 AAA 400 405,332
Birmingham City MI Sch Dist
Sch Bldg & Site(11) 5.00% 11/1/2033 AAA 1,000 1,023,010
Bloomingdale MI Pub Sch Dist No 16 5.50% 5/1/2021 AA+ 450 494,384
Caledonia MI Cmnty Schs Ref(5)(11) 5.25% 5/1/2022 AAA 1,025 1,104,837
Carman-Ainsworth MI Cmnty Sch(10) 5.00% 5/1/2027 AAA 1,000 1,024,010
Central Montcalm MI Pub Sch(15) 5.90% 5/1/2019 AAA 1,000 1,126,660
Crawford Ausable MI Sch Dist
Sch Bldg & Site 5.00% 5/1/2021 AA+ 350 367,770
Detroit MI City Sch Dist
Sch Bldg & Site Impt Ser A(10) 5.25% 5/1/2028 AAA 1,000 1,049,190
Elkton Pigeon Bay Port MI Sch Dist 5.375% 5/1/2025 AA+ 700 744,394
Grand Blanc MI Cmnty Schs
Sch Bldg & Site(11) 5.00% 5/1/2021 AAA 500 532,055
Grand Rapids MI Smartzone
Loc Dev Auth(2) 5.375% 6/1/2028 AAA 1,125 1,199,520
Huron MI Sch Dist(11) 5.25% 5/1/2021 AAA 250 267,450
Kaleva Norman ETC MI Sch Dist
Bldg & Site Ref(10) 6.00% 5/1/2025 Aaa 600 689,346
Kent Cnty MI Cap Impt Ser A(d) 5.00% 12/1/2022 AAA 1,030 1,087,896
Kent Cnty MI Cap Impt Ser A(d) 5.00% 12/1/2024 AAA 1,000 1,042,000
Laingsburg MI Cmnty Sch Dist
Sch Bldg & Site Bd 5.25% 5/1/2026 AA+ 450 469,782
Lake Orion MI Cmnty Sch Dist Ref 5.125% 5/1/2022 AA+ 550 583,423
Memphis MI Cmnty Sch(10) 5.25% 5/1/2029 Aaa 150 156,422
Paw Paw MI Pub Sch Dist Sch
Bldg & Site 6.00% 5/1/2030 AA+ 1,325 1,494,202
Puerto Rico Pub Fin Corp
Comwlth Approp Ref Ser A(2) 5.25%# 8/1/2030 AAA 1,000 1,115,540
South Lyon MI Cmnty Schs(11) 5.50% 5/1/2023 AAA 1,425 1,548,562
South Lyon MI Cmnty Schs
Sch Bldg & Site(10) 5.25% 5/1/2022 AAA 1,000 1,077,610
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
98
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
MICHIGAN TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Southfield MI Pub Schs
Sch Bldg & Site Ser A(10) 5.25% 5/1/2021 AAA $ 1,025 $ 1,124,978
Southfield MI Pub Schs
Sch Bldg & Site Ser B(11) 5.00% 5/1/2029 AAA 1,000 1,024,430
Warren MI Cons Sch Dist
Sch Bldg & Site(10) 5.00% 5/1/2027 AAA 1,000 1,026,610
Wayne Cnty MI Bldg Auth Cap
Impt Ser A(15) 5.25% 6/1/2016 AAA 500 535,570
---------------
TOTAL 24,864,043
---------------
HEALTHCARE 1.52%
MI St Hosp Fin Auth Rev
Ref Trinity Hlth Ser A(2)(17) 6.00% 12/1/2027 AAA 1,000 1,113,630
---------------
HOUSING 0.21%
MI St Hsg Dev Auth Ser D 5.95% 12/1/2016 AA+ 145 151,165
---------------
LEASE 4.87%
Grand Rapids MI Pub Sch(15) 5.00% 11/1/2021 AAA 250 263,915
MI St Bldg Auth Rev Ref Facs
Prog Ser I(11) 5.00% 10/15/2007 AAA 1,000 1,080,050
MI St COP(2) Zero Coupon 6/1/2022 AAA 2,000 870,100
MI St Hse Reps Cap Apprec COP(2) Zero Coupon 8/15/2024 AAA 3,565 1,352,490
---------------
TOTAL 3,566,555
---------------
MISCELLANEOUS 6.49%
MI Muni Bd Auth Rev(2) 6.75% 11/1/2014 AAA 295 301,983
MI Muni Bd Auth Rev Ref
Sch Ln Ser A(14)(15) 5.25% 6/1/2010 AAA 2,500 2,800,175
MI St Bldg Auth Rev Ref Facs
Prog Ser I(11) 5.00% 10/15/2009 AAA 1,500 1,656,720
---------------
TOTAL 4,758,878
---------------
POWER 2.16%
MI St Strategic Fd Ltd Oblig(2) 7.00% 5/1/2021 AAA 500 660,225
MI St Strategic Fd Ltd Oblig
Rev Detroit Fd Ser BB(15) 7.00% 7/15/2008 AAA 350 405,324
Puerto Rico Elec Pwr Auth Pwr
Rev Ser NN(15) 5.00% 7/1/2032 AAA 500 516,405
---------------
TOTAL 1,581,954
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
99
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
MICHIGAN TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
PRE-REFUNDED 25.44%
Alpena MI Pub Sch(15) 5.625% 5/1/2022 AAA $ 300 $ 327,444
Alpena MI Pub Sch(15) 5.625% 5/1/2022 AAA 200 218,296
Anchor Bay MI Sch Dist
Sch Bldg & Site Ser I(10) 6.00% 5/1/2023 AAA 1,100 1,263,801
Eastern MI Univ Rev(10) 5.50% 6/1/2027 AAA 500 542,625
Greenville MI Pub Sch Ref(11) 6.00% 5/1/2025 AAA 1,000 1,148,910
Hartland MI Cons Sch Dist(10) 6.00% 5/1/2021 AAA 1,950 2,257,827
Howell MI Pub Sch(15) 6.00% 5/1/2025 AAA 1,100 1,210,924
Huron Valley MI Sch Dist(10) 5.75% 5/1/2022 AAA 250 273,650
Kalamazoo MI Hosp Fin Auth
Fac Rev Hosp Rev ETM RIBs(10) 8.708% 6/1/2011 AAA 2,000 2,095,640
Lake Orion MI Cmnty Sch Dist(2) 7.00% 5/1/2020 AAA 1,050 1,093,050
Lake Orion MI Cmnty Sch Dist Ser A(10) 6.00% 5/1/2017 AAA 1,335 1,545,743
Lakeview MI Cmnty Sch(10) 5.60% 5/1/2022 AAA 210 229,081
MI Muni Bd Auth Rev Ser G(2) 6.75% 11/1/2014 AAA 1,205 1,233,920
Potterville MI Pub Sch(11) 6.00% 5/1/2029 AAA 1,000 1,148,910
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser B 6.50% 7/1/2027 A 1,000 1,196,900
Puerto Rico Comwlth Pub Impt RIBs 9.964% 7/1/2029 A- 925 1,002,497
Puerto Rico Comwlth Ser A ETM 5.50% 10/1/2040 AAA 1,000 1,079,300
Saline MI Area Schs(10) 5.50% 5/1/2015 AAA 750 774,367
---------------
TOTAL 18,642,885
---------------
TRANSPORTATION 4.29%
Kent Cnty MI Arpt Fac Rev Ref
Kent Cnty Intl Arpt 5.00% 1/1/2020 AAA 700 725,046
MI St Comprehensive Ser B(11) 5.25% 5/15/2020 AAA 1,000 1,087,440
MI St Comprehensive Transn Ref Ser A(11) 5.00% 11/1/2021 AAA 700 734,811
Puerto Rico Comwlth Hwy &
Transn Auth Rev Rites RIBs 9.277% 1/1/2010 A(b) 500 595,900
---------------
TOTAL 3,143,197
---------------
WATER/SEWER 10.38%
Detroit MI Disp Rev Ref Ser B(15) 5.25% 7/1/2021 AAA 805 832,789
Detroit MI Disp Rev Ref Sr
Lien Ser A(11) 5.00% 7/1/2028 AAA 1,000 1,024,830
Detroit MI Wtr Supply Sys
Sr Lien Ser A(15) 5.00% 7/1/2034 AAA 1,000 1,020,510
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
100
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
MICHIGAN TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Grand Rapids MI Santn Swr Sys
Rev Ref & Impt Ser A(10) 4.75% 1/1/2028 AAA $ 1,050 $ 1,046,997
Lansing MI Bd Wtr & Lt Wtr
Supply Steam & Elec Util Sys(11) 5.00% 7/1/2022 AAA 1,865 1,964,703
MI Muni Bd Auth Rev
Drinking Wtr St Revolving Fd 5.00% 10/1/2024 AAA 1,000 1,038,000
Muskegon Heights MI Wtr Sys Ser A(15) 5.625% 11/1/2020 Aaa 300 334,593
Muskegon Heights MI Wtr Sys Ser A(15) 5.625% 11/1/2025 Aaa 320 348,678
---------------
TOTAL 7,611,100
---------------
TOTAL MUNICIPAL BONDS 97.36% (Cost $66,639,082) 71,354,441
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 2.64% 1,935,620
---------------
NET ASSETS 100.00% $ 73,290,061
===============
</Table>
SCHEDULE OF INVESTMENTS
PENNSYLVANIA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
MUNICIPAL BONDS 98.39%
EDUCATION 18.52%
Lehigh Cnty PA Gen Purp Auth
Rev Desales Univ Pj(16) 5.125% 12/15/2023 AA 1,000 1,042,370
PA St Higher Ed Fac Auth
Drexel Univ 6.00% 5/1/2029 A 800 861,720
PA St Higher Ed Fac Auth
Moravian College Pj 5.375% 7/1/2031 AA 1,000 1,035,020
PA St Higher Ed Fac Auth Univ
of the Arts(16) 5.625% 3/15/2025 AA 1,000 1,048,350
PA St Higher Ed Fac Auth Univ
of the Arts(16) 5.75% 3/15/2030 AA 500 530,860
PA St Higher Ed Facs Auth Rev
Lafayette College Pj 6.00% 5/1/2030 AA- 1,425 1,596,997
PA St Higher Ed Facs Auth Rev
Univ Sciences Phil(15) 5.25% 11/1/2025 AAA 1,000 1,044,220
PA St Higher Ed Facs Auth Rev
Drexel Univ Ser A 5.20% 5/1/2032 A 600 619,122
PA St Higher Ed Facs Auth Rev
Univ of Scranton(2) 5.75% 11/1/2017 AAA 1,000 1,132,310
PA St Higher Ed Facs Auth Rev
Ursinus College(16) 5.50% 1/1/2024 AA 1,000 1,069,290
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
101
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
PENNSYLVANIA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Philadelphia PA Auth Ind Dev
Rev Ed Cmnty Fgn Med Grads(15) 5.00% 6/1/2015 AAA $ 250 $ 264,865
Philadelphia PA Sch Dist(10) 5.25% 6/1/2034 AAA 3,000 3,119,610
Quaker Vly PA Sch Dist(11) 5.50% 4/1/2025 Aaa 800 876,760
State Pub Sch Bldg Auth PA
College Rev(2) Zero Coupon 7/15/2014 AAA 295 198,942
State Pub Sch Bldg Auth PA
College Rev(2) Zero Coupon 7/15/2015 AAA 295 189,880
State Pub Sch Bldg Auth PA
College Rev(2) Zero Coupon 7/15/2016 AAA 295 179,974
State Pub Sch Bldg Auth PA
Jefferson Cnty Dubois Tech Sch(10) 5.00% 2/1/2029 AAA 1,000 1,024,900
State Pub Sch Bldg Auth PA
Rev Del Cnty Cmnty College Pj(15) 5.50% 10/1/2020 AAA 800 883,496
State Pub Sch Bldg Auth PA
Sch Rev Lease Phil Sch(11) 5.25% 6/1/2027 AAA 1,000 1,051,750
---------------
TOTAL 17,770,436
---------------
GENERAL OBLIGATION 14.21%
Delaware Vly PA Regl Fin
Auth Loc Govt Rev Ser C(2) 7.75% 7/1/2027 AAA 1,000 1,393,250
Mifflin Cnty PA(10) 5.625% 9/1/2031 AAA 2,500 2,720,900
Montgomery Cnty PA 5.00% 9/15/2022 Aaa 625 655,600
Pennsbury PA Sch Dist(10) 5.50% 1/15/2020 Aaa 1,000 1,107,100
Philadelphia PA Sch Dist Ser B(10) 5.625% 8/1/2021 AAA 1,000 1,099,000
Philadelphia PA Sch Dist Ser B(10) 5.625% 8/1/2022 AAA 1,000 1,094,110
Plum Boro PA Sch Dist(10) 5.25% 9/15/2030 AAA 1,000 1,035,230
Puerto Rico Comwlth Pub Impt Ser A(d) 5.00% 7/1/2034 A- 500 504,570
Puerto Rico Comwlth
Unrefunded Bal Pub Impt Ser A 5.375% 7/1/2028 A- 1,825 1,891,047
Tredyffrin Easttown PA Sch Dist 5.50% 2/15/2017 Aaa 1,000 1,108,460
West Middlesex Area Sch Dist PA(10) 5.15% 12/15/2030 AAA 1,000 1,027,130
---------------
TOTAL 13,636,397
---------------
HEALTHCARE 4.71%
Allegheny Cnty PA Hosp Dev
Catholic Hlth East Issue 5.50% 11/15/2032 A 1,500 1,533,360
Delaware Cnty PA Auth Hosp
Rev Crozer Chester Med Ctr(1)(3) 5.375% 12/1/2018 A 1,000 1,038,900
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
102
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
PENNSYLVANIA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico Ind Tourist Ed
Mutuo Oblig Grp Ser A(15) 6.25% 7/1/2024 AAA $ 850 $ 875,398
York Cnty PA Hosp Auth Rev
York Hosp(2) 5.25% 7/1/2017 AAA 1,000 1,073,930
---------------
TOTAL 4,521,588
---------------
INDUSTRIAL 5.10%
Allegheny Cnty PA Indl Dev
Auth Rev Envr Impt USX Pj 6.10% 7/15/2020 BBB+ 1,000 1,053,380
Bradford Cnty PA Ind Dev Auth
Intl Paper Co Pj Ser A AMT 6.60% 3/1/2019 BBB 1,250 1,290,400
Philadelphia PA Auth For Indl
Dev Lease Rev Ser B(11) 5.125% 10/1/2026 AAA 1,000 1,035,440
York Cnty PA Ind Dev Auth
Poll Ctrl Rev Svc Elec & Gas Ser A(15) 6.45% 10/1/2019 AAA 1,475 1,511,934
---------------
TOTAL 4,891,154
---------------
LEASE 1.94%
West Middlesex Area Sch Dist
PA Cap Apprec Ser A(11) Zero Coupon 6/15/2032 AAA 935 217,257
York PA Gen Auth Gtd Rev
York City Recreation Corp(2) 5.50% 5/1/2018 AAA 1,475 1,642,235
---------------
TOTAL 1,859,492
---------------
MISCELLANEOUS 6.37%
Allegheny Cnty PA Redev Auth
Tax Inc Rev Wtrfrt Pj Ser A 6.30% 12/15/2018 A-(c) 1,000 1,115,940
Montgomery Cnty PA Ind Dev
Auth Rev Hill Sch Pj(15) 5.35% 8/15/2027 Aaa 2,250 2,354,782
Puerto Rico Pub Bldg Auth Rev
Govt Facs Ser I GTD 5.375% 7/1/2034 A- 1,000 1,044,240
Washington Cnty PA Auth Rev
Cap Fdg Rev Pj & Equip Prog(2) 6.15% 12/1/2029 AAA 1,525 1,594,830
---------------
TOTAL 6,109,792
---------------
PRE-REFUNDED 23.82%
Allegheny Cnty PA Port Auth
Spl Rev Transn(15) 6.00% 3/1/2013 AAA 2,000 2,305,460
Allegheny Cnty PA Port Auth
Spl Rev Transn(15) 6.125% 3/1/2029 AAA 500 578,955
Bethlehem PA Area Sch Dist(15) 6.00% 3/1/2016 AAA 1,000 1,058,880
Childrens Trst FD PR Tob Set Rev 6.00% 7/1/2026 AAA 750 869,483
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
103
<Page>
SCHEDULE OF INVESTMENTS (CONTINUED)
PENNSYLVANIA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
PA Conv Ctr Auth Rev Ser A ETM(10) 6.70% 9/1/2016 AAA $ 855 $ 1,046,511
PA Intergovt Coop Auth Spl
Tax Rev Funding Prog(10) 6.75% 6/15/2021 AAA 2,000 2,071,920
Philadelphia PA Gas Wks Rev
Twelfth Ser B ETM(15) 7.00% 5/15/2020 AAA 2,220 2,805,303
Philadelphia PA Sch Dist Ser A(11) 5.50% 2/1/2031 AAA 500 572,760
Philadelphia PA Sch Dist Ser A(11) 5.75% 2/1/2019 AAA 450 517,968
Philadelphia PA Sch Dist Ser A(11) 5.75% 2/1/2020 AAA 250 287,760
Philadelphia PA Sch Dist Ser A(11) 5.75% 2/1/2021 AAA 500 575,520
Philadelphia PA Sch Dist Ser A(11) 5.75% 2/1/2030 AAA 1,250 1,438,800
Puerto Rico Comwlth Hwy &
Transn Auth Hwy Rev Ser Y 5.50% 7/1/2026 A 1,000 1,078,650
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser B 6.00% 7/1/2026 A 500 521,325
Puerto Rico Comwlth Pub Impt Ser A 5.375% 7/1/2028 AAA 925 1,058,098
Puerto Rico Elec Pwr Auth Rev Ser X 6.00% 7/1/2015 A- 1,000 1,052,930
Puerto Rico Elec Pwr Auth Rev Ser X 6.125% 7/1/2021 Aaa 500 526,920
Radnor Twp PA Sch Dist 5.75% 3/15/2026 Aa3 1,200 1,308,024
Riverside PA Sch Dist(10) 5.50% 10/15/2020 AAA 1,000 1,136,320
State Pub Sch Bldg Auth PA
Northhampton Area Cmnty College(2) 5.75% 3/1/2020 AAA 1,775 2,046,664
---------------
TOTAL 22,858,251
---------------
TRANSPORTATION 17.95%
Allegheny Cnty PA Arpt Rev(15) 5.00% 1/1/2017 AAA 1,000 1,044,420
Delaware River Port Auth PA &
NJ Ref Port Dist Pj Ser A(11) 5.20% 1/1/2027 AAA 1,000 1,044,650
Delaware River Port Auth PA &
NJ Rev(11) 6.00% 1/1/2019 AAA 1,000 1,140,740
PA St Tpk Comm(2) 5.50% 7/15/2033 AAA 3,000 3,235,650
PA St Tpk Comm Tpk Ser A(2) 5.25% 12/1/2032 AAA 1,000 1,054,700
Puerto Rico Comwlth Hwy Ser G(10) 5.25% 7/1/2020 AAA 1,000 1,096,000
Puerto Rico Comwlth Hwy &
Transn Auth Hwy Rev Ser Y 5.50% 7/1/2036 A 2,000 2,133,640
Puerto Rico Comwlth Hwy
Transn Auth Rev Rites RIBs 9.277% 1/1/2010 A(b) 2,750 3,277,450
Puerto Rico Comwlth Hwy
Transn Auth Rev Ser D 5.75% 7/1/2041 A 2,000 2,191,800
Puerto Rico Port Auth Rev Ser D AMT(10) 7.00% 7/1/2014 AAA 1,000 1,004,290
---------------
TOTAL 17,223,340
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
104
<Page>
SCHEDULE OF INVESTMENTS (CONCLUDED)
PENNSYLVANIA TAX-FREE TRUST SEPTEMBER 30, 2004
<Table>
<Caption>
RATING: PRINCIPAL
INTEREST MATURITY S&P OR AMOUNT
INVESTMENTS RATE DATE MOODY'S(a) (000) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
WATER/SEWER 5.77%
Allegheny Cnty PA San Auth Swr Rev(15) 5.375% 12/1/2024 AAA $ 2,000 $ 2,152,740
Bucks Cnty PA Wtr & Swr Auth
Neshaminy Interceptor Swr Sys(2) 5.50% 6/1/2017 Aaa 465 510,477
Bucks Cnty PA Wtr & Swr Auth
Rev Ser A(2) 5.00% 6/1/2024 AAA 1,000 1,036,610
Luzerne Cnty PA Indl Dev Auth
PA Amern Wtr Co Ser A AMT(2) 5.10% 9/1/2034 AAA 1,000 1,006,930
North Huntingdon Twp PA GTD(2) 5.25% 4/1/2019 AAA 760 834,290
---------------
TOTAL 5,541,047
---------------
TOTAL MUNICIPAL BONDS 98.39% (Cost $88,169,820) 94,411,497
===============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES 1.61% 1,542,332
---------------
NET ASSETS 100.00% $ 95,953,829
===============
</Table>
(a) Unaudited.
(b) This investment has not been rated by an independent ratings service but
is, in Lord, Abbett & Co. LLC's opinion, of comparable quality to the
rating shown.
(c) This investment has been rated by Fitch IBCA.
(d) Security purchased on a when-issued basis.
** Deferred-interest municipals pay no interest for a stipulated number of
years, after which they pay a predetermined interest rate.
# Variable rate security. This interest rate represents the rate at September
30, 2004.
+ Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
AMT-Income from this security may be subject to Alternative Minimum Tax.
COP-Certificates of Participation.
ETM-Escrow to Maturity.
GTD-Guaranteed.
Pre-Refunded Bonds-A second bond has been issued in order to pay off the first
bond issue. Proceeds from the sale of the second bond are held in an
"escrow fund" consisting of U.S. Government debt until the first bond issue
reaches maturity.
PSF-Permanent School Fund.
RITES-Residual Interest Tax-Exempt Security.
RIBs-Residual Interest Bond. The interest rate is subject to change
periodically and inversely to the prevailing market rate. The interest rate
shown is the rate in effect at September 30, 2004.
NR-Not Rated.
Insured or guaranteed by the indicated municipal bond insurance corporation or
Federal agency:
(1) American Capital Access Holdings Ltd.
(2) AMBAC Assurance Corporation
(3) Certified Bond Insurance
(4) College Construction Loan Insurance Association
(5) Custodian Receipt
(6) Department of Housing and Urban Development
(7) Federal Home Loan Mortgage Corporation
(8) Federal Housing Administration
(9) Federal National Mortgage Association
(10) Financial Guaranty Insurance Company
(11) Financial Security Assurance Inc.
(12) Government National Mortgage Association
(13) Government National Mortgage Association/Federal National Mortgage
Association
(14) Insurance Bond Certificate
(15) Municipal Bond Investors Assurance Corporation
(16) Radian Asset Assurance Inc.
(17) Temporary Custodial Receipts
(18) Department of Veterans Affairs
(19) XL Capital Assurance Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
105
<Page>
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2004
<Table>
<Caption>
NATIONAL CALIFORNIA
ASSETS:
Investment in securities, at cost $ 544,475,036 $ 168,799,487
- --------------------------------------------------------------------------------------
Investment in securities, at value $ 577,672,992 $ 178,146,296
Cash 47,728 -
Receivables:
Interest and dividends 8,304,644 2,260,470
Investment securities sold 10,708,828 -
Capital shares sold 332,759 3,740
From advisor 166,632 -
Prepaid expenses and other assets 38,814 17,210
- --------------------------------------------------------------------------------------
TOTAL ASSETS 597,272,397 180,427,716
- --------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 15,870,601 -
Capital shares reacquired 385,142 48,784
Management fees 234,759 72,340
12b-1 distribution fees 270,669 85,660
Fund administration 20,076 6,252
Directors' fees 296,431 174,609
To bank - 135,667
Dividends payable 1,805,817 558,136
Accrued expenses and other liabilities 198,359 122,853
- --------------------------------------------------------------------------------------
TOTAL LIABILITIES 19,081,854 1,204,301
======================================================================================
NET ASSETS $ 578,190,543 $ 179,223,415
======================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 564,991,786 $ 174,328,022
Distributions in excess of net investment income (1,980,040) (356,004)
Accumulated net realized loss on investments (18,019,159) (4,095,412)
Net unrealized appreciation on investments 33,197,956 9,346,809
- --------------------------------------------------------------------------------------
NET ASSETS $ 578,190,543 $ 179,223,415
======================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 500,519,055 $ 165,270,535
Class B Shares $ 34,262,960 -
Class C Shares $ 43,408,528 $ 13,952,880
OUTSTANDING SHARES BY CLASS*:
Class A Shares 43,567,626 15,215,599
Class B Shares 2,975,080 -
Class C Shares 3,773,342 1,283,665
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE (NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 11.49 $ 10.86
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 3.25%) $ 11.88 $ 11.22
Class B Shares-Net asset value $ 11.52 -
Class C Shares-Net asset value $ 11.50 $ 10.87
======================================================================================
</Table>
*LORD ABBETT TAX-FREE INCOME FUND, INC. HAS 1,000,000,000 AUTHORIZED SHARES OF
CAPITAL STOCK (PAR VALUE $.001) OF WHICH 900,000,000 ARE ISSUED AND ALLOCATED
AS FOLLOWS: 150,000,000 TO NATIONAL, 110,000,000 TO EACH OF CALIFORNIA, NEW
JERSEY, AND NEW YORK, AND 70,000,000 TO EACH OF CONNECTICUT, HAWAII, MINNESOTA,
MISSOURI, TEXAS, AND WASHINGTON. LORD ABBETT TAX-FREE INCOME TRUST HAS AN
UNLIMITED NUMBER OF SHARES OF BENEFICAL INTEREST AUTHORIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
106
<Page>
<Table>
<Caption>
CONNECTICUT HAWAII MINNESOTA MISSOURI NEW JERSEY
ASSETS:
Investment in securities, at cost $ 82,929,439 $ 63,038,754 $ 36,372,712 $ 141,120,966 $ 129,516,399
- ----------------------------------------------------------------------------------------------------------------------------------
Investment in securities, at value $ 88,665,289 $ 68,043,102 $ 37,964,536 $ 148,762,828 $ 138,262,646
Cash 157,084 664,423 170,934 3,815,710 23,999
Receivables:
Interest and dividends 1,313,437 981,087 423,277 2,046,906 1,938,817
Investment securities sold 1,010,000 - 65,000 1,792,612 56,128
Capital shares sold 44,618 281,158 67,123 234,926 49,530
From advisor - - - - -
Prepaid expenses and other assets 2,486 1,939 469 18,603 14,600
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 91,192,914 69,971,709 38,691,339 156,671,585 140,345,720
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 740,175 - - - -
Capital shares reacquired 15,483 40,005 39,540 42,038 206,035
Management fees 36,540 22,600 15,427 63,067 57,032
12b-1 distribution fees 39,822 33,344 - 54,022 65,825
Fund administration 2,713 2,431 1,316 5,383 4,898
Directors' fees 26,451 19,280 1,507 29,807 44,760
To bank - - - - -
Dividends payable 302,696 226,522 121,133 506,552 450,646
Accrued expenses and other liabilities 44,095 29,847 24,507 64,510 54,676
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,207,975 374,029 203,430 765,379 883,872
==================================================================================================================================
NET ASSETS $ 89,984,939 $ 69,597,680 $ 38,487,909 $ 155,906,206 $ 139,461,848
==================================================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 86,198,972 $ 67,295,153 $ 37,682,202 $ 149,153,738 $ 136,793,740
Distributions in excess of net investment income (291,576) (218,057) (102,188) (509,947) (458,689)
Accumulated net realized loss on investments (1,658,307) (2,483,764) (683,929) (379,447) (5,619,450)
Net unrealized appreciation on investments 5,735,850 5,004,348 1,591,824 7,641,862 8,746,247
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 89,984,939 $ 69,597,680 $ 38,487,909 $ 155,906,206 $ 139,461,848
==================================================================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 89,984,939 $ 69,597,680 $ 38,487,909 $ 155,906,206 $ 139,461,848
Class B Shares - - - - -
Class C Shares - - - - -
OUTSTANDING SHARES BY CLASS*:
Class A Shares 8,477,769 13,688,781 7,468,652 29,215,375 26,917,574
Class B Shares - - - - -
Class C Shares - - - - -
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE (NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 10.61 $ 5.08 $ 5.15 $ 5.34 $ 5.18
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 3.25%) $ 10.97 $ 5.25 $ 5.32 $ 5.52 $ 5.35
Class B Shares-Net asset value - - - - -
Class C Shares-Net asset value - - - - -
==================================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
107
<Page>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
SEPTEMBER 30, 2004
<Table>
<Caption>
NEW YORK TEXAS
ASSETS:
Investment in securities, at cost $ 230,180,256 $ 68,248,282
- -------------------------------------------------------------------------------------------------
Investment in securities, at value $ 247,877,286 $ 75,444,964
Cash - 100,510
Receivables:
Interest and dividends 3,461,816 1,210,713
Investment securities sold 4,823,998 -
Capital shares sold 22,600 9,570
From advisor 107,241 -
Prepaid expenses and other assets 5,107 12,414
- -------------------------------------------------------------------------------------------------
TOTAL ASSETS 256,298,048 76,778,171
- -------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 3,801,638 760,428
Capital shares reacquired 272,872 -
Management fees 101,243 30,717
12b-1 distribution fees 120,942 66,252
Fund administration 8,667 2,725
Directors'/Trustees' fees 145,272 32,261
To bank 1,249,261 -
Dividends payable 839,702 262,891
Accrued expenses and other liabilities 92,520 36,607
- -------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 6,632,117 1,191,881
=================================================================================================
NET ASSETS $ 249,665,931 $ 75,586,290
=================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 235,567,466 $ 72,468,291
Undistributed (distributions in excess of)
net investment income (974,204) (221,234)
Accumulated net realized loss on investments (2,624,361) (3,857,449)
Net unrealized appreciation on investments 17,697,030 7,196,682
- -------------------------------------------------------------------------------------------------
NET ASSETS $ 249,665,931 $ 75,586,290
=================================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 237,348,756 $ 75,586,290
Class B Shares - -
Class C Shares $ 12,317,175 -
Class P Shares - -
OUTSTANDING SHARES BY CLASS*:
Class A Shares 20,810,390 7,353,784
Class B Shares - -
Class C Shares 1,080,066 -
Class P Shares - -
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 11.41 $ 10.28
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 3.25%) $ 11.79 $ 10.63
Class B Shares-Net asset value - -
Class C Shares-Net asset value $ 11.40 -
Class P Shares-Net asset value - -
=================================================================================================
</Table>
*LORD ABBETT TAX-FREE INCOME FUND, INC. HAS 1,000,000,000 AUTHORIZED SHARES OF
CAPITAL STOCK (PAR VALUE $.001) OF WHICH 900,000,000 ARE ISSUED AND ALLOCATED
AS FOLLOWS: 150,000,000 TO NATIONAL, 110,000,000 TO EACH OF CALIFORNIA, NEW
JERSEY, AND NEW YORK, AND 70,000,000 TO EACH OF CONNECTICUT, HAWAII, MINNESOTA,
MISSOURI, TEXAS, AND WASHINGTON. LORD ABBETT TAX-FREE INCOME TRUST HAS AN
UNLIMITED NUMBER OF SHARES OF BENEFICAL INTEREST AUTHORIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
108
<Page>
<Table>
<Caption>
INSURED
WASHINGTON INTERMEDIATE FLORIDA
ASSETS:
Investment in securities, at cost $ 45,136,099 $ 9,857,685 $ 71,865,419
- --------------------------------------------------------------------------------------------------------------------
Investment in securities, at value $ 48,555,388 $ 10,037,346 $ 77,867,283
Cash - 84,208 -
Receivables:
Interest and dividends 754,451 108,749 1,404,015
Investment securities sold 250,000 - 246,307
Capital shares sold 68,765 79,796 38,012
From advisor - 27,856 -
Prepaid expenses and other assets 641 76 44,881
- --------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 49,629,245 10,338,031 79,600,498
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased - 280,508 -
Capital shares reacquired 190,037 27,362 222,875
Management fees 20,751 3,555 32,622
12b-1 distribution fees - 5,427 44,916
Fund administration 1,684 316 2,766
Directors'/Trustees' fees 16,410 2,917 39,600
To bank 350,480 - 16,576
Dividends payable 182,347 18,161 272,158
Accrued expenses and other liabilities 33,053 21,526 49,814
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 794,762 359,772 681,327
====================================================================================================================
NET ASSETS $ 48,834,483 $ 9,978,259 $ 78,919,171
====================================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 47,623,168 $ 9,936,239 $ 79,546,941
Undistributed (distributions in excess of)
net investment income 308,094 2,489 (200,992)
Accumulated net realized loss on investments (2,516,068) (140,130) (6,428,642)
Net unrealized appreciation on investments 3,419,289 179,661 6,001,864
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 48,834,483 $ 9,978,259 $ 78,919,171
====================================================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 48,834,483 $ 6,359,746 $ 72,994,723
Class B Shares - $ 311,100 -
Class C Shares - $ 3,297,167 $ 5,924,448
Class P Shares - $ 10,246 -
OUTSTANDING SHARES BY CLASS*:
Class A Shares 9,456,786 639,156 15,156,880
Class B Shares - 31,298 -
Class C Shares - 331,761 1,227,819
Class P Shares - 1,030 -
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 5.16 $ 9.95 $ 4.82
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 3.25%) $ 5.33 $ 10.28 $ 4.98
Class B Shares-Net asset value - $ 9.94 -
Class C Shares-Net asset value - $ 9.94 $ 4.83
Class P Shares-Net asset value - $ 9.95 -
====================================================================================================================
<Caption>
GEORGIA MICHIGAN PENNSYLVANIA
ASSETS:
Investment in securities, at cost $ 84,080,180 $ 66,639,082 $ 88,169,820
- --------------------------------------------------------------------------------------------------------------------
Investment in securities, at value $ 88,300,129 $ 71,354,441 $ 94,411,497
Cash - 3,267,268 1,311,029
Receivables:
Interest and dividends 1,338,228 1,236,979 1,245,842
Investment securities sold 2,054,722 - -
Capital shares sold 256,320 7,664 41,831
From advisor - - -
Prepaid expenses and other assets 1,094 893 3,015
- --------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 91,950,493 75,867,245 97,013,214
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 1,916,710 2,137,212 506,885
Capital shares reacquired 38,404 107,452 69,516
Management fees 35,974 29,674 38,729
12b-1 distribution fees - - 47,203
Fund administration 3,078 2,518 3,312
Directors'/Trustees' fees 1,283 9,850 20,913
To bank 136,070 - -
Dividends payable 290,010 244,358 319,734
Accrued expenses and other liabilities 48,718 46,120 53,093
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 2,470,247 2,577,184 1,059,385
====================================================================================================================
NET ASSETS $ 89,480,246 $ 73,290,061 $ 95,953,829
====================================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $ 85,455,261 $ 70,808,460 $ 91,034,083
Undistributed (distributions in excess of)
net investment income 81,301 (216,216) (331,017)
Accumulated net realized loss on investments (276,265) (2,017,542) (990,914)
Net unrealized appreciation on investments 4,219,949 4,715,359 6,241,677
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 89,480,246 $ 73,290,061 $ 95,953,829
====================================================================================================================
NET ASSETS BY CLASS:
Class A Shares $ 89,480,246 $ 73,290,061 $ 95,953,829
Class B Shares - - -
Class C Shares - - -
Class P Shares - - -
OUTSTANDING SHARES BY CLASS*:
Class A Shares 15,831,438 13,767,263 18,164,894
Class B Shares - - -
Class C Shares - - -
Class P Shares - - -
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS DIVIDED BY OUTSTANDING SHARES):
Class A Shares-Net asset value $ 5.65 $ 5.32 $ 5.28
Class A Shares-Maximum offering price
(Net asset value plus sales charge of 3.25%) $ 5.84 $ 5.50 $ 5.46
Class B Shares-Net asset value - - -
Class C Shares-Net asset value - - -
Class P Shares-Net asset value - - -
====================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
109
<Page>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
NATIONAL CALIFORNIA
INVESTMENT INCOME:
Interest $ 29,912,724 $ 9,224,650
Dividends 106,905 8,253
- --------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 30,019,629 9,232,903
- --------------------------------------------------------------------------------------
EXPENSES:
Management fees 2,985,227 932,702
12b-1 distribution plan-Class A 1,798,209 615,629
12b-1 distribution plan-Class B 366,997 -
12b-1 distribution plan-Class C 467,459 147,739
Shareholder servicing 343,644 87,203
Professional 81,314 36,510
Reports to shareholders 58,940 18,388
Fund administration 238,818 74,616
Custody 39,277 7,863
Directors' fees 17,508 6,292
Registration 52,151 6,589
Other 51,111 1,906
- --------------------------------------------------------------------------------------
Gross expenses 6,500,655 1,935,437
Expense reductions (5,752) (2,111)
Expenses assumed by advisor (208,299) -
- --------------------------------------------------------------------------------------
NET EXPENSES 6,286,604 1,933,326
- --------------------------------------------------------------------------------------
NET INVESTMENT INCOME 23,733,025 7,299,577
======================================================================================
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments (2,244,311) 357,488
Net change in unrealized appreciation
(depreciation) on investments 1,250,648 768,708
======================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) (993,663) 1,126,196
======================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 22,739,362 $ 8,425,773
======================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
110
<Page>
<Table>
<Caption>
CONNECTICUT HAWAII MINNESOTA MISSOURI NEW JERSEY
INVESTMENT INCOME:
Interest $ 4,687,847 $ 3,660,262 $ 1,801,044 $ 7,479,830 $ 7,571,479
Dividends 3,085 - - - 8,963
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 4,690,932 3,660,262 1,801,044 7,479,830 7,580,442
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees 460,945 355,951 192,502 769,399 732,373
12b-1 distribution plan-Class A 325,932 265,335 - 555,729 526,202
12b-1 distribution plan-Class B - - - - -
12b-1 distribution plan-Class C - - - - -
Shareholder servicing 45,351 33,994 24,693 89,487 77,463
Professional 25,562 17,601 17,736 33,167 32,124
Reports to shareholders 8,997 6,681 3,940 16,041 14,038
Fund administration 36,876 28,476 15,400 61,552 58,590
Custody 6,146 5,770 1,461 8,526 8,575
Directors' fees 2,960 2,141 805 4,025 4,949
Registration 4,850 3,523 1,467 10,540 5,827
Other 5,848 1,653 4,334 12,570 4,320
- ----------------------------------------------------------------------------------------------------------------------------------
Gross expenses 923,467 721,125 262,338 1,561,036 1,464,461
Expense reductions (1,229) (2,683) (1,792) (8,808) (1,636)
Expenses assumed by advisor - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 922,238 718,442 260,546 1,552,228 1,462,825
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 3,768,694 2,941,820 1,540,498 5,927,602 6,117,617
==================================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments 129,772 84,687 18,867 3,280 (7,949)
Net change in unrealized appreciation
(depreciation) on investments 453,352 (147,263) 4,593 (250,775) (590,297)
==================================================================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) 583,124 (62,576) 23,460 (247,495) (598,246)
==================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,351,818 $ 2,879,244 $ 1,563,958 $ 5,680,107 $ 5,519,371
==================================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
111
<Page>
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
NEW YORK TEXAS
INVESTMENT INCOME:
Interest $ 13,184,764 $ 4,161,972
Dividends 30,920 9,416
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 13,215,684 4,171,388
- ---------------------------------------------------------------------------------------
EXPENSES:
Management fees 1,270,689 390,071
12b-1 distribution plan-Class A 836,419 283,036
12b-1 distribution plan-Class B - -
12b-1 distribution plan-Class C 129,762 -
12b-1 distribution plan-Class P - -
Shareholder servicing 140,830 38,581
Professional 43,156 26,370
Reports to shareholders 24,801 6,581
Fund administration 101,655 31,206
Custody 16,156 4,996
Directors'/Trustees' fees 6,439 2,435
Registration 10,698 43,019
Offering - -
Other 11,633 2,264
- ---------------------------------------------------------------------------------------
Gross expenses 2,592,238 828,559
Expense reductions (4,794) (1,235)
Expenses assumed by advisor (131,074) -
Management fee waived - -
- ---------------------------------------------------------------------------------------
NET EXPENSES 2,456,370 827,324
- ---------------------------------------------------------------------------------------
NET INVESTMENT INCOME 10,759,314 3,344,064
=======================================================================================
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments (345,225) 31,927
Net change in unrealized appreciation(depreciation)
on investments 24,685 (666,009)
=======================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) (320,540) (634,082)
=======================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,438,774 $ 2,709,982
=======================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
112
<Page>
<Table>
<Caption>
INSURED
WASHINGTON INTERMEDIATE FLORIDA GEORGIA
INVESTMENT INCOME:
Interest $ 2,590,572 $ 211,400 $ 4,316,669 $ 4,243,993
Dividends 10,382 1,806 11,834 -
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 2,600,954 213,206 4,328,503 4,243,993
- ---------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees 250,845 32,493 411,289 442,203
12b-1 distribution plan-Class A - 17,150 269,562 -
12b-1 distribution plan-Class B - 3,548 - -
12b-1 distribution plan-Class C - 19,977 62,597 -
12b-1 distribution plan-Class P - 45 - -
Shareholder servicing 32,327 2,104 48,432 54,043
Professional 17,635 17,994 33,099 34,722
Reports to shareholders 4,938 641 6,751 7,559
Fund administration 20,068 2,888 32,903 35,376
Custody 3,716 2,070 6,073 3,652
Directors'/Trustees' fees 1,436 2,358 2,753 1,541
Registration 10,219 28,111 4,661 4,100
Offering - 46,850 - -
Other 8,509 10,358 2,896 6,795
- ---------------------------------------------------------------------------------------------------------------------------
Gross expenses 349,693 186,587 881,016 589,991
Expense reductions (852) (833) (1,306) (4,410)
Expenses assumed by advisor - (117,492) - -
Management fee waived - (32,493) - -
- ---------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 348,841 35,769 879,710 585,581
- ---------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,252,113 177,437 3,448,793 3,658,412
===========================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments (321,373) (65,122) 138,092 (125,302)
Net change in unrealized appreciation(depreciation)
on investments (45,383) 93,702 (1,428,793) 336,193
===========================================================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) (366,756) 28,580 (1,290,701) 210,891
===========================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,885,357 $ 206,017 $ 2,158,092 $ 3,869,303
===========================================================================================================================
<Caption>
MICHIGAN PENNSYLVANIA
INVESTMENT INCOME:
Interest $ 3,485,162 $ 5,036,529
Dividends - -
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 3,485,162 5,036,529
- ---------------------------------------------------------------------------------------
EXPENSES:
Management fees 358,606 487,733
12b-1 distribution plan-Class A - 298,467
12b-1 distribution plan-Class B - -
12b-1 distribution plan-Class C - -
12b-1 distribution plan-Class P - -
Shareholder servicing 49,450 60,242
Professional 31,475 36,024
Reports to shareholders 6,173 8,075
Fund administration 28,688 39,019
Custody 2,521 4,883
Directors'/Trustees' fees 1,564 2,881
Registration 5,623 6,430
Offering - -
Other 678 2,463
- ---------------------------------------------------------------------------------------
Gross expenses 484,778 946,217
Expense reductions (3,136) (4,366)
Expenses assumed by advisor - -
Management fee waived - -
- ---------------------------------------------------------------------------------------
NET EXPENSES 481,642 941,851
- ---------------------------------------------------------------------------------------
NET INVESTMENT INCOME 3,003,520 4,094,678
=======================================================================================
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments (111,469) 71,748
Net change in unrealized appreciation(depreciation)
on investments (317,711) 106,952
=======================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) (429,180) 178,700
=======================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,574,340 $ 4,273,378
=======================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
113
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
INCREASE (DECREASE) IN NET ASSETS NATIONAL CALIFORNIA
OPERATIONS:
Net investment income $ 23,733,025 $ 7,299,577
Net realized gain (loss) on investments (2,244,311) 357,488
Net change in unrealized appreciation(depreciation)
on investments 1,250,648 768,708
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 22,739,362 8,425,773
=======================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (21,073,022) (6,995,209)
Class B (1,257,674) -
Class C (1,609,329) (504,685)
- ---------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (23,940,025) (7,499,894)
=======================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 47,752,580 15,171,634
Reinvestment of distributions 15,773,645 4,213,091
Cost of shares reacquired (88,424,680) (35,426,256)
- ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS (24,898,455) (16,041,531)
=======================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (26,099,118) (15,115,652)
=======================================================================================
NET ASSETS:
Beginning of year 604,289,661 194,339,067
- ---------------------------------------------------------------------------------------
END OF YEAR $ 578,190,543 $ 179,223,415
=======================================================================================
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME $ (1,980,040) $ (356,004)
=======================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
114
<Page>
<Table>
<Caption>
INCREASE (DECREASE) IN NET ASSETS CONNECTICUT HAWAII MINNESOTA MISSOURI
OPERATIONS:
Net investment income $ 3,768,694 $ 2,941,820 $ 1,540,498 $ 5,927,602
Net realized gain (loss) on investments 129,772 84,687 18,867 3,280
Net change in unrealized appreciation(depreciation)
on investments 453,352 (147,263) 4,593 (250,775)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 4,351,818 2,879,244 1,563,958 5,680,107
===========================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (3,902,944) (2,906,371) (1,527,568) (6,263,326)
Class B - - - -
Class C - - - -
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (3,902,944) (2,906,371) (1,527,568) (6,263,326)
===========================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 4,868,025 3,261,628 6,617,392 17,433,306
Reinvestment of distributions 1,979,132 1,615,420 1,293,734 5,111,920
Cost of shares reacquired (13,780,412) (10,369,174) (6,475,356) (19,543,879)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS (6,933,255) (5,492,126) 1,435,770 3,001,347
===========================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (6,484,381) (5,519,253) 1,472,160 2,418,128
===========================================================================================================================
NET ASSETS:
Beginning of year 96,469,320 75,116,933 37,015,749 153,488,078
- ---------------------------------------------------------------------------------------------------------------------------
END OF YEAR $ 89,984,939 $ 69,597,680 $ 38,487,909 $ 155,906,206
===========================================================================================================================
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME $ (291,576) $ (218,057) $ (102,188) $ (509,947)
===========================================================================================================================
<Caption>
INCREASE (DECREASE) IN NET ASSETS NEW JERSEY
OPERATIONS:
Net investment income $ 6,117,617
Net realized gain (loss) on investments (7,949)
Net change in unrealized appreciation(depreciation)
on investments (590,297)
- ---------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 5,519,371
=====================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (6,146,663)
Class B -
Class C -
- ---------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (6,146,663)
=====================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 9,433,698
Reinvestment of distributions 3,509,645
Cost of shares reacquired (26,651,225)
- ---------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS (13,707,882)
=====================================================================
NET INCREASE (DECREASE) IN NET ASSETS (14,335,174)
=====================================================================
NET ASSETS:
Beginning of year 153,797,022
- ---------------------------------------------------------------------
END OF YEAR $ 139,461,848
=====================================================================
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME $ (458,689)
=====================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
115
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEAR ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
INCREASE (DECREASE) IN NET ASSETS NEW YORK TEXAS
OPERATIONS:
Net investment income $ 10,759,314 $ 3,344,064
Net realized gain (loss) on investments (345,225) 31,927
Net change in unrealized appreciation(depreciation)
on investments 24,685 (666,009)
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 10,438,774 2,709,982
=======================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (10,434,743) (3,377,784)
Class B - -
Class C (476,777) -
Class P - -
- ---------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (10,911,520) (3,377,784)
=======================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 17,285,278 4,368,880
Reinvestment of distributions 6,459,408 2,453,832
Cost of shares reacquired (33,138,106) (9,754,104)
- ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS (9,393,420) (2,931,392)
=======================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (9,866,166) (3,599,194)
=======================================================================================
NET ASSETS:
Beginning of year 259,532,097 79,185,484
- ---------------------------------------------------------------------------------------
END OF YEAR $ 249,665,931 $ 75,586,290
=======================================================================================
UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET
INVESTMENT INCOME $ (974,204) $ (221,234)
=======================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
116
<Page>
<Table>
<Caption>
INSURED
INCREASE (DECREASE) IN NET ASSETS WASHINGTON INTERMEDIATE FLORIDA GEORGIA
OPERATIONS:
Net investment income $ 2,252,113 $ 177,437 $ 3,448,793 $ 3,658,412
Net realized gain (loss) on investments (321,373) (65,122) 138,092 (125,302)
Net change in unrealized appreciation(depreciation)
on investments (45,383) 93,702 (1,428,793) 336,193
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,885,357 206,017 2,158,092 3,869,303
===========================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (2,330,177) (131,284) (3,280,783) (3,617,686)
Class B - (6,968) - -
Class C - (38,441) (228,100) -
Class P - (253) - -
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,330,177) (176,946) (3,508,883) (3,617,686)
===========================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 5,215,055 7,648,050 11,334,926 20,338,939
Reinvestment of distributions 1,700,051 124,479 1,656,626 3,005,354
Cost of shares reacquired (8,132,368) (2,131,106) (17,513,481) (19,556,311)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS (1,217,262) 5,641,423 (4,521,929) 3,787,982
===========================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (1,662,082) 5,670,494 (5,872,720) 4,039,599
===========================================================================================================================
NET ASSETS:
Beginning of year 50,496,565 4,307,765 84,791,891 85,440,647
- ---------------------------------------------------------------------------------------------------------------------------
END OF YEAR $ 48,834,483 $ 9,978,259 $ 78,919,171 $ 89,480,246
===========================================================================================================================
UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET
INVESTMENT INCOME $ 308,094 $ 2,489 $ (200,992) $ 81,301
===========================================================================================================================
<Caption>
INCREASE (DECREASE) IN NET ASSETS MICHIGAN PENNSYLVANIA
OPERATIONS:
Net investment income $ 3,003,520 $ 4,094,678
Net realized gain (loss) on investments (111,469) 71,748
Net change in unrealized appreciation(depreciation)
on investments (317,711) 106,952
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,574,340 4,273,378
=======================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (2,991,011) (4,086,719)
Class B - -
Class C - -
Class P - -
- ---------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,991,011) (4,086,719)
=======================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 12,764,741 7,107,514
Reinvestment of distributions 2,051,281 2,149,255
Cost of shares reacquired (9,398,863) (12,769,221)
- ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 5,417,159 (3,512,452)
=======================================================================================
NET INCREASE (DECREASE) IN NET ASSETS 5,000,488 (3,325,793)
=======================================================================================
NET ASSETS:
Beginning of year 68,289,573 99,279,622
- ---------------------------------------------------------------------------------------
END OF YEAR $ 73,290,061 $ 95,953,829
=======================================================================================
UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET
INVESTMENT INCOME $ (216,216) $ (331,017)
=======================================================================================
</Table>
117
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30, 2003
<Table>
<Caption>
INCREASE (DECREASE) IN NET ASSETS NATIONAL CALIFORNIA
OPERATIONS:
Net investment income $ 25,745,981 $ 8,446,940
Net realized loss on investments (3,633,689) (1,186,273)
Net change in unrealized appreciation(depreciation)
on investments (7,999,689) (5,697,202)
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 14,112,603 1,563,465
=======================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (23,106,774) (8,268,393)
Class B (1,475,958) -
Class C (1,798,412) (602,949)
- ---------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (26,381,144) (8,871,342)
=======================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 87,871,238 21,862,214
Reinvestment of distributions 17,228,752 4,746,343
Cost of shares reacquired (100,082,141) (31,432,216)
- ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 5,017,849 (4,823,659)
=======================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (7,250,692) (12,131,536)
=======================================================================================
NET ASSETS:
Beginning of year 611,540,353 206,470,603
- ---------------------------------------------------------------------------------------
END OF YEAR $ 604,289,661 $ 194,339,067
=======================================================================================
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME $ (1,835,360) $ (139,549)
=======================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
118
<Page>
<Table>
<Caption>
INCREASE (DECREASE) IN NET ASSETS CONNECTICUT HAWAII MINNESOTA MISSOURI
OPERATIONS:
Net investment income $ 4,287,858 $ 3,198,874 $ 1,260,262 $ 6,226,404
Net realized loss on investments (337,794) (1,515,044) (135,034) (64,372)
Net change in unrealized appreciation(depreciation)
on investments (1,137,773) (307,015) (12,332) (1,636,391)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,812,291 1,376,815 1,112,896 4,525,641
===========================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (4,356,708) (3,177,488) (1,329,120) (6,009,033)
Class B - - - -
Class C - - - -
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (4,356,708) (3,177,488) (1,329,120) (6,009,033)
===========================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 8,277,443 5,689,315 13,529,899 21,797,533
Reinvestment of distributions 2,133,051 1,718,249 1,074,347 4,742,370
Cost of shares reacquired (12,755,193) (10,478,031) (4,940,488) (16,574,053)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS (2,344,699) (3,070,467) 9,663,758 9,965,850
===========================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (3,889,116) (4,871,140) 9,447,534 8,482,458
===========================================================================================================================
NET ASSETS:
Beginning of year 100,358,436 79,988,073 27,568,215 145,005,620
- ---------------------------------------------------------------------------------------------------------------------------
END OF YEAR $ 96,469,320 $ 75,116,933 $ 37,015,749 $ 153,488,078
===========================================================================================================================
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME $ (164,899) $ (252,486) $ (114,910) $ (171,343)
===========================================================================================================================
<Caption>
INCREASE (DECREASE) IN NET ASSETS NEW JERSEY
OPERATIONS:
Net investment income $ 7,161,752
Net realized loss on investments (2,262,823)
Net change in unrealized appreciation(depreciation)
on investments (2,907,312)
- ---------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,991,617
=====================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (7,202,044)
Class B -
Class C -
- ---------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (7,202,044)
=====================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 12,943,621
Reinvestment of distributions 4,120,036
Cost of shares reacquired (22,789,599)
- ---------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS (5,725,942)
=====================================================================
NET INCREASE (DECREASE) IN NET ASSETS (10,936,369)
=====================================================================
NET ASSETS:
Beginning of year 164,733,391
- ---------------------------------------------------------------------
END OF YEAR $ 153,797,022
=====================================================================
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME $ (439,953)
=====================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
119
<Page>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEAR ENDED SEPTEMBER 30, 2003
<Table>
<Caption>
INCREASE (DECREASE) IN NET ASSETS NEW YORK TEXAS
- ---------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 11,559,707 $ 3,547,636
Net realized loss on investments (106,572) (545,423)
Net change in unrealized appreciation(depreciation)
on investments (4,912,170) (462,922)
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 6,540,965 2,539,291
=======================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (11,283,897) (3,451,579)
Class B - -
Class C (421,949) -
Class P - -
Net realized gain
Class A - -
- ---------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (11,705,846) (3,451,579)
=======================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 39,026,822 5,794,790
Reinvestment of distributions 6,958,868 2,443,223
Cost of shares reacquired (42,918,061) (9,508,780)
- ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 3,067,629 (1,270,767)
=======================================================================================
NET INCREASE (DECREASE) IN NET ASSETS (2,097,252) (2,183,055)
=======================================================================================
NET ASSETS:
Beginning of period 261,629,349 81,368,539
- ---------------------------------------------------------------------------------------
END OF PERIOD $ 259,532,097 $ 79,185,484
=======================================================================================
UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET
INVESTMENT INCOME $ (920,238) $ (189,178)
=======================================================================================
</Table>
*FOR THE PERIOD JUNE 23, 2003 (COMMENCEMENT OF INVESTMENT OPERATIONS) TO
SEPTEMBER 30, 2003.
SEE NOTES TO FINANCIAL STATEMENTS.
120
<Page>
<Table>
<Caption>
INSURED
INCREASE (DECREASE) IN NET ASSETS WASHINGTON INTERMEDIATE* FLORIDA GEORGIA
- ---------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,326,760 $ 18,565 $ 3,745,773 $ 3,339,308
Net realized loss on investments (536,677) (74,668) (1,142,594) (151,629)
Net change in unrealized appreciation(depreciation)
on investments (528,302) 85,959 (558,447) (636,285)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,261,781 29,856 2,044,732 2,551,394
===========================================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (2,382,580) (17,525) (3,594,847) (3,203,266)
Class B - (538) - -
Class C - (1,178) (226,244) -
Class P - (60) - -
Net realized gain
Class A - - - (214,585)
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,382,580) (19,301) (3,821,091) (3,417,851)
===========================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 7,523,395 4,290,634 8,839,350 29,415,648
Reinvestment of distributions 1,662,262 11,784 1,593,473 2,740,742
Cost of shares reacquired (6,616,919) (5,208) (14,116,455) (15,685,717)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 2,568,738 4,297,210 (3,683,632) 16,470,673
===========================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS 1,447,939 4,307,765 (5,459,991) 15,604,216
===========================================================================================================================
NET ASSETS:
Beginning of period 49,048,626 - 90,251,882 69,836,431
- ---------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 50,496,565 $ 4,307,765 $ 84,791,891 $ 85,440,647
===========================================================================================================================
UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET
INVESTMENT INCOME $ 386,456 $ 1,658 $ (167,738) $ 41,241
===========================================================================================================================
<Caption>
INCREASE (DECREASE) IN NET ASSETS MICHIGAN PENNSYLVANIA
- ---------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,786,104 $ 4,365,250
Net realized loss on investments (128,687) (299,948)
Net change in unrealized appreciation(depreciation)
on investments (587,723) (1,645,092)
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,069,694 2,420,210
=======================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (2,853,218) (4,360,779)
Class B - -
Class C - -
Class P - -
Net realized gain
Class A - -
- ---------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,853,218) (4,360,779)
=======================================================================================
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 19,167,974 9,858,382
Reinvestment of distributions 1,886,197 2,139,148
Cost of shares reacquired (10,612,775) (12,279,254)
- ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 10,441,396 (281,724)
=======================================================================================
NET INCREASE (DECREASE) IN NET ASSETS 9,657,872 (2,222,293)
=======================================================================================
NET ASSETS:
Beginning of period 58,631,701 101,501,915
- ---------------------------------------------------------------------------------------
END OF PERIOD $ 68,289,573 $ 99,279,622
=======================================================================================
UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET
INVESTMENT INCOME $ (228,030) $ (343,942)
=======================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
121
<Page>
FINANCIAL HIGHLIGHTS
NATIONAL TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 11.50 $ 11.73 $ 11.33 $ 10.76 $ 10.79
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .47 .50 .54 .53 .51
Net realized and unrealized gain (loss) (.01) (.22) .40 .59 .01
---------- ---------- ---------- ---------- ----------
Total from investment operations .46 .28 .94 1.12 .52
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.47) (.51) (.54) (.55) (.55)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 11.49 $ 11.50 $ 11.73 $ 11.33 $ 10.76
========== ========== ========== ========== ==========
Total Return(b) 4.10% 2.48% 8.57% 10.64% 5.02%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions .96% .98% 1.03% 1.01% .98%
Expenses, excluding waiver and
expense reductions 1.00% .98% 1.04% 1.06% .99%
Net investment income 4.07% 4.33% 4.74% 4.78% 4.85%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 500,519 $ 515,694 $ 530,563 $ 512,426 $ 487,188
Portfolio turnover rate 183.06% 209.07% 63.74% 77.46% 185.25%
================================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
122
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
NATIONAL TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 11.53 $ 11.76 $ 11.36 $ 10.79 $ 10.82
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .39 .42 .47 .46 .44
Net realized and unrealized gain (loss) (.01) (.21) .40 .60 .01
---------- ---------- ---------- ---------- ----------
Total from investment operations .38 .21 .87 1.06 .45
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.39) (.44) (.47) (.49) (.48)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 11.52 $ 11.53 $ 11.76 $ 11.36 $ 10.79
========== ========== ========== ========== ==========
Total Return(b) 3.40% 1.86% 7.88% 9.96% 4.32%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.61% 1.63% 1.65% 1.64% 1.63%
Expenses, excluding waiver and
expense reductions 1.65% 1.63% 1.66% 1.69% 1.63%
Net investment income 3.42% 3.68% 4.12% 4.15% 4.15%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 34,263 $ 39,122 $ 36,250 $ 28,531 $ 17,594
Portfolio turnover rate 183.06% 209.07% 63.74% 77.46% 185.25%
================================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
123
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
NATIONAL TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 11.52 $ 11.76 $ 11.35 $ 10.77 $ 10.81
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .39 .42 .47 .46 .45
Net realized and unrealized gain (loss) (.02) (.22) .41 .60 (.01)
---------- ---------- ---------- ---------- ----------
Total from investment operations .37 .20 .88 1.06 .44
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.39) (.44) (.47) (.48) (.48)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 11.50 $ 11.52 $ 11.76 $ 11.35 $ 10.77
========== ========== ========== ========== ==========
Total Return(b) 3.32% 1.80% 7.95% 10.04% 4.23%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.61% 1.63% 1.61% 1.68% 1.63%
Expenses, excluding waiver and
expense reductions 1.65% 1.63% 1.62% 1.73% 1.64%
Net investment income 3.42% 3.68% 4.16% 4.11% 4.19%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 43,409 $ 49,474 $ 44,727 $ 37,803 $ 34,999
Portfolio turnover rate 183.06% 209.07% 63.74% 77.46% 185.25%
================================================================================================================================
</Table>
(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.
SEE NOTES TO FINANCIAL STATEMENTS.
124
<Page>
FINANCIAL HIGHLIGHTS
CALIFORNIA TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 10.80 $ 11.19 $ 10.89 $ 10.29 $ 10.16
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .43 .46 .52 .51 .53
Net realized and unrealized gain (loss) .07 (.36) .29 .61 .12
---------- ---------- ---------- ---------- ----------
Total from investment operations .50 .10 .81 1.12 .65
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.44) (.49) (.51) (.52) (.52)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 10.86 $ 10.80 $ 11.19 $ 10.89 $ 10.29
========== ========== ========== ========== ==========
Total Return(b) 4.73% .94% 7.65% 11.09% 6.62%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .99% .99% 1.03% 1.00% .94%
Expenses, excluding expense
reductions .99% .99% 1.04% 1.04% .94%
Net investment income 3.97% 4.27% 4.82% 4.81% 5.30%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 165,270 $ 178,156 $ 192,181 $ 192,624 $ 186,041
Portfolio turnover rate 28.81% 86.47% 45.31% 72.84% 100.22%
================================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
125
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
CALIFORNIA TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 10.80 $ 11.20 $ 10.91 $ 10.30 $ 10.16
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .36 .39 .46 .45 .47
Net realized and unrealized gain (loss) .08 (.37) .27 .61 .12
---------- ---------- ---------- ---------- ----------
Total from investment operations .44 .02 .73 1.06 .59
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.37) (.42) (.44) (.45) (.45)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 10.87 $ 10.80 $ 11.20 $ 10.91 $ 10.30
========== ========== ========== ========== ==========
Total Return(b) 4.14% .26% 6.94% 10.53% 6.02%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.63% 1.63% 1.61% 1.55% 1.55%
Expenses, excluding expense
reductions 1.63% 1.63% 1.62% 1.59% 1.55%
Net investment income 3.32% 3.63% 4.22% 4.26% 4.70%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 13,953 $ 16,183 $ 14,290 $ 11,591 $ 10,646
Portfolio turnover rate 28.81% 86.47% 45.31% 72.84% 100.22%
================================================================================================================================
</Table>
(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.
SEE NOTES TO FINANCIAL STATEMENTS.
126
<Page>
FINANCIAL HIGHLIGHTS
CONNECTICUT TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF YEAR $ 10.55 $ 10.71 $ 10.32 $ 9.79 $ 9.89
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .43 .46 .50 .49 .49
Net realized and unrealized gain (loss) .08 (.16) .38 .53 (.08)
---------- ---------- ---------- ---------- ----------
Total from investment operations .51 .30 .88 1.02 .41
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.45) (.46) (.49) (.49) (.51)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 10.61 $ 10.55 $ 10.71 $ 10.32 $ 9.79
========== ========== ========== ========== ==========
Total Return(b) 4.92% 2.95% 8.79% 10.65% 4.32%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.00% 1.01% 1.03% 1.01% 1.02%
Expenses, excluding expense
reductions 1.00% 1.01% 1.04% 1.03% 1.02%
Net investment income 4.09% 4.33% 4.82% 4.85% 5.10%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 89,985 $ 96,469 $ 100,358 $ 101,242 $ 96,901
Portfolio turnover rate 20.16% 41.50% 48.64% 21.52% 37.92%
================================================================================================================================
</Table>
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
SEE NOTES TO FINANCIAL STATEMENTS.
127
<Page>
FINANCIAL HIGHLIGHTS
HAWAII TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF YEAR $ 5.08 $ 5.20 $ 5.01 $ 4.83 $ 4.84
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .21 .21 .23 .22 .24
Net realized and unrealized gain (loss) -(c) (.12) .20 .20 (.01)
---------- ---------- ---------- ---------- ----------
Total from investment operations .21 .09 .43 .42 .23
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.21) (.21) (.24) (.24) (.24)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 5.08 $ 5.08 $ 5.20 $ 5.01 $ 4.83
========== ========== ========== ========== ==========
Total Return(b) 4.18% 1.86% 8.78% 8.88% 4.94%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.01% .99% 1.05% 1.04% .99%
Expenses, excluding expense
reductions 1.01% 1.00% 1.06% 1.07% .99%
Net investment income 4.13% 4.20% 4.60% 4.49% 5.03%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 69,598 $ 75,117 $ 79,988 $ 71,022 $ 70,190
Portfolio turnover rate 6.31% 27.90% 30.99% 32.38% 30.06%
================================================================================================================================
</Table>
(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) Amount is less than $0.01.
SEE NOTES TO FINANCIAL STATEMENTS.
128
<Page>
FINANCIAL HIGHLIGHTS
MINNESOTA TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF YEAR $ 5.14 $ 5.18 $ 5.00 $ 4.76 $ 4.78
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .20 .21 .24 .25 .23
Net realized and unrealized gain (loss) .01 (.03) .18 .24 .01
---------- ---------- ---------- ---------- ----------
Total from investment operations .21 .18 .42 .49 .24
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.20) (.22) (.24) (.25) (.26)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 5.15 $ 5.14 $ 5.18 $ 5.00 $ 4.76
========== ========== ========== ========== ==========
Total Return(b) 4.24% 3.57% 8.56% 10.57% 5.32%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions .68% .69% .46% .19% .24%
Expenses, excluding waiver and
expense reductions .68% .72% .75% .82% .74%
Net investment income 4.00% 4.03% 4.79% 5.16% 5.00%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 38,488 $ 37,016 $ 27,568 $ 24,708 $ 20,864
Portfolio turnover rate 24.67% 35.15% 22.33% 24.34% 50.37%
================================================================================================================================
</Table>
(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.
SEE NOTES TO FINANCIAL STATEMENTS.
129
<Page>
FINANCIAL HIGHLIGHTS
MISSOURI TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF YEAR $ 5.36 $ 5.41 $ 5.25 $ 4.96 $ 4.99
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .20 .22 .23 .25 .24
Net realized and unrealized gain (loss) -(c) (.05) .16 .29 (.02)
---------- ---------- ---------- ---------- ----------
Total from investment operations .20 .17 .39 .54 .22
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.22) (.22) (.23) (.25) (.25)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 5.34 $ 5.36 $ 5.41 $ 5.25 $ 4.96
========== ========== ========== ========== ==========
Total Return(b) 3.77% 3.18% 7.67% 11.11% 4.63%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.02% 1.00% 1.03% .89% 1.02%
Expenses, excluding waiver and
expense reductions 1.01% 1.01% 1.06% 1.08% 1.02%
Net investment income 3.85% 4.19% 4.44% 4.80% 4.98%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 155,906 $ 153,488 $ 145,006 $ 130,122 $ 120,058
Portfolio turnover rate 41.82% 48.47% 80.04% 43.75% 43.30%
================================================================================================================================
</Table>
(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) Amount is less than $0.01.
SEE NOTES TO FINANCIAL STATEMENTS.
130
<Page>
FINANCIAL HIGHLIGHTS
NEW JERSEY TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF YEAR $ 5.20 $ 5.37 $ 5.21 $ 4.96 $ 4.97
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .22 .24 .25 .25 .25
Net realized and unrealized gain (loss) (.02) (.17) .15 .26 -(c)
---------- ---------- ---------- ---------- ----------
Total from investment operations .20 .07 .40 .51 .25
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.22) (.24) (.24) (.26) (.26)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 5.18 $ 5.20 $ 5.37 $ 5.21 $ 4.96
========== ========== ========== ========== ==========
Total Return(b) 3.89% 1.31% 7.96% 10.41% 5.31%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.00% 1.00% 1.03% .90% .97%
Expenses, excluding waiver and
expense reductions 1.00% 1.00% 1.05% 1.06% .98%
Net investment income 4.18% 4.49% 4.77% 4.93% 5.03%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 139,462 $ 153,797 $ 164,733 $ 160,171 $ 151,048
Portfolio turnover rate 32.57% 70.02% 97.76% 101.02% 125.73%
================================================================================================================================
</Table>
(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) Amount is less than $0.01.
SEE NOTES TO FINANCIAL STATEMENTS.
131
<Page>
FINANCIAL HIGHLIGHTS
NEW YORK TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 11.42 $ 11.66 $ 11.16 $ 10.53 $ 10.51
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .48 .52 .54 .53 .55
Net realized and unrealized gain (loss) -(c) (.24) .49 .64 .02
---------- ---------- ---------- ---------- ----------
Total from investment operations .48 .28 1.03 1.17 .57
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.49) (.52) (.53) (.54) (.55)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 11.41 $ 11.42 $ 11.66 $ 11.16 $ 10.53
========== ========== ========== ========== ==========
Total Return(b) 4.33% 2.55% 9.50% 11.35% 5.65%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions .94% .96% 1.03% 1.01% .96%
Expenses, excluding waiver and
expense reductions .99% .96% 1.04% 1.04% .97%
Net investment income 4.27% 4.54% 4.80% 4.80% 5.28%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 237,349 $ 247,153 $ 252,831 $ 242,367 $ 228,362
Portfolio turnover rate 48.17% 47.94% 51.72% 70.03% 76.33%
================================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
132
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
NEW YORK TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF YEAR $ 11.42 $ 11.67 $ 11.17 $ 10.54 $ 10.51
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .41 .44 .48 .46 .49
Net realized and unrealized gain (loss) (.01) (.23) .49 .65 .02
---------- ---------- ---------- ---------- ----------
Total from investment operations .40 .21 .97 1.11 .51
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.42) (.46) (.47) (.48) (.48)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 11.40 $ 11.42 $ 11.67 $ 11.17 $ 10.54
========== ========== ========== ========== ==========
Total Return(b) 3.57% 1.88% 8.90% 10.74% 5.07%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.59% 1.63% 1.51% 1.62% 1.55%
Expenses, excluding waiver and
expense reductions 1.64% 1.63% 1.52% 1.65% 1.56%
Net investment income 3.62% 3.87% 4.32% 4.19% 4.72%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 12,317 $ 12,379 $ 8,798 $ 6,662 $ 5,278
Portfolio turnover rate 48.17% 47.94% 51.72% 70.03% 76.33%
================================================================================================================================
</Table>
(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) Amount is less than $0.01.
SEE NOTES TO FINANCIAL STATEMENTS.
133
<Page>
FINANCIAL HIGHLIGHTS
TEXAS TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF YEAR $ 10.36 $ 10.47 $ 9.99 $ 9.43 $ 9.55
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .44 .46 .45 .46 .51
Net realized and unrealized gain (loss) (.07) (.13) .48 .57 (.13)
---------- ---------- ---------- ---------- ----------
Total from investment operations .37 .33 .93 1.03 .38
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.45) (.44) (.45) (.47) (.50)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 10.28 $ 10.36 $ 10.47 $ 9.99 $ 9.43
========== ========== ========== ========== ==========
Total Return(b) 3.62% 3.32% 9.55% 11.30% 4.14%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and
expense reductions 1.06% 1.02% 1.00% .64% .99%
Expenses, excluding waiver and
expense reductions 1.06% 1.02% 1.05% 1.09% 1.01%
Net investment income 4.29% 4.44% 4.49% 4.70% 5.47%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 75,586 $ 79,185 $ 81,369 $ 77,860 $ 74,405
Portfolio turnover rate 21.33% 58.09% 89.30% 108.27% 163.39%
================================================================================================================================
</Table>
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
SEE NOTES TO FINANCIAL STATEMENTS.
134
<Page>
FINANCIAL HIGHLIGHTS
WASHINGTON TAX-FREE FUND
<Table>
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
2004 2003 2002 2001 2000
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF YEAR $ 5.21 $ 5.32 $ 5.15 $ 4.89 $ 4.91
========== ========== ========== ========== ==========
Investment operations
Net investment income(a) .23 .24 .26 .26 .27
Net realized and unrealized gain (loss) (.04) (.10) .17 .26 (.04)
---------- ---------- ---------- ---------- ----------
Total from investment operations .19 .14 .43 .52 .23
---------- ---------- ---------- ---------- ----------
Distributions to shareholders from
net investment income (.24) (.25) (.26) (.26) (.25)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 5.16 $ 5.21 $ 5.32 $ 5.15 $ 4.89
========== ========== ========== ========== ==========
Total Return(b) 3.75% 2.75% 8.71% 10.92% 4.90%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .70% .68% .71% .70% .71%
Expenses, excluding expense
reductions .70% .68% .72% .73% .71%
Net investment income 4.49% 4.68% 5.14% 5.22% 5.58%
<Caption>
YEAR ENDED 9/30
----------------------------------------------------------------------
SUPPLEMENTAL DATA: 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) $ 48,834 $ 50,497 $ 49,049 $ 45,883 $ 44,512
Portfolio turnover rate 49.05% 58.05% 40.20% 52.09% 152.63%
================================================================================================================================
</Table>
(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.
SEE NOTES TO FINANCIAL STATEMENTS.
135
<Page>
FINANCIAL HIGHLIGHTS
INSURED INTERMEDIATE TAX-FREE TRUST
<Table>
<Caption>
YEAR 6/23/2003(a)
ENDED TO
9/30/2004 9/30/2003
PER SHARE OPERATING PERFORMANCE (CLASS A SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.94 $ 10.00
=========== ============
Unrealized depreciation on investments (.01)
------------
NET ASSET VALUE ON SEC EFFECTIVE DATE $ 9.99
============
Investment operations
Net investment income(b) .27 .06
Net realized and unrealized gain (loss) .01 (.05)
----------- ------------
Total from investment operations .28 .01
----------- ------------
Distributions to shareholders from net investment income (.27) (.06)
----------- ------------
NET ASSET VALUE, END OF PERIOD $ 9.95 $ 9.94
=========== ============
Total Return(d) 2.84% .16%(e)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions .25%(+) .07%(e)(+)
Expenses, excluding waiver and expense reductions 2.35%(+) 2.47%(e)(+)
Net investment income 2.70%(+) .66%(e)(+)
<Caption>
YEAR 6/23/2003(a)
ENDED TO
SUPPLEMENTAL DATA: 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 6,360 $ 3,673
Portfolio turnover rate 60.08% 107.99%
==============================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
136
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
INSURED INTERMEDIATE TAX-FREE TRUST
<Table>
<Caption>
YEAR 6/23/2003(a)
ENDED TO
9/30/2004 9/30/2003
PER SHARE OPERATING PERFORMANCE (CLASS B SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.93 $ 10.00
=========== ============
Unrealized depreciation on investments (.02)
------------
NET ASSET VALUE ON SEC EFFECTIVE DATE $ 9.98
============
Investment operations
Net investment income(b) .20 .05
Net realized and unrealized gain (loss) -(c) (.05)
----------- ------------
Total from investment operations .20 -
----------- ------------
Distributions to shareholders from net investment income (.19) (.05)
----------- ------------
NET ASSET VALUE, END OF PERIOD $ 9.94 $ 9.93
=========== ============
Total Return(d) 2.09% .04%(e)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions 1.00%(+) .27%(e)(+)
Expenses, excluding waiver and expense reductions 3.00%(+) 2.64%(e)(+)
Net investment income 1.95%(+) .46%(e)(+)
<Caption>
YEAR 6/23/2003(a)
ENDED TO
SUPPLEMENTAL DATA: 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 311 $ 312
Portfolio turnover rate 60.08% 107.99%
==============================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
137
<Page>
FINANCIAL HIGHLIGHTS (CONTINUED)
INSURED INTERMEDIATE TAX-FREE TRUST
<Table>
<Caption>
YEAR 6/23/2003(a)
ENDED TO
9/30/2004 9/30/2003
PER SHARE OPERATING PERFORMANCE (CLASS C SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.93 $ 10.00
=========== ============
Unrealized depreciation on investments (.02)
------------
NET ASSET VALUE ON SEC EFFECTIVE DATE $ 9.98
============
Investment operations
Net investment income(b) .20 .05
Net realized and unrealized gain (loss) -(c) (.05)
----------- ------------
Total from investment operations .20 -
----------- ------------
Distributions to shareholders from net investment income (.19) (.05)
----------- ------------
NET ASSET VALUE, END OF PERIOD $ 9.94 $ 9.93
=========== ============
Total Return(d) 2.05% .04%(e)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions 1.00%(+) .27%(e)(+)
Expenses, excluding waiver and expense reductions 3.00%(+) 2.64%(e)(+)
Net investment income 1.95%(+) .46%(e)(+)
<Caption>
YEAR 6/23/2003(a)
ENDED TO
SUPPLEMENTAL DATA: 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 3,297 $ 313
Portfolio turnover rate 60.08% 107.99%
==============================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
138
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
INSURED INTERMEDIATE TAX-FREE TRUST
<Table>
<Caption>
YEAR 6/23/2003(a)
ENDED TO
9/30/2004 9/30/2003
PER SHARE OPERATING PERFORMANCE (CLASS P SHARES)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.94 $ 10.00
=========== ============
Unrealized depreciation on investments (.01)
------------
NET ASSET VALUE ON SEC EFFECTIVE DATE $ 9.99
============
Investment operations
Net investment income(b) .25 .06
Net realized and unrealized gain (loss) .01 (.05)
----------- ------------
Total from investment operations .26 .01
----------- ------------
Distributions to shareholders from net investment income (.25) (.06)
----------- ------------
NET ASSET VALUE, END OF PERIOD $ 9.95 $ 9.94
=========== ============
Total Return(d) 2.65% .11%(e)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver and expense reductions .45%(+) .12%(e)(+)
Expenses, excluding waiver and expense reductions 2.45%(+) 2.49%(e)(+)
Net investment income 2.50%(+) .61%(e)(+)
<Caption>
YEAR 6/23/2003(a)
ENDED TO
SUPPLEMENTAL DATA: 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 10 $ 10
Portfolio turnover rate 60.08% 107.99%
==============================================================================================
</Table>
(+) The ratios have been determined on a Fund basis.
(a) Commencement of investment operations; SEC effective date and date shares
first became available to the public is June 30, 2003.
(b) Calculated using average shares outstanding during the period.
(c) Amount is less than $0.01.
(d) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(e) Not annualized.
(f) Total return for the period June 30, 2003 (SEC effective date) to
September 30, 2003.
SEE NOTES TO FINANCIAL STATEMENTS.
139
<Page>
FINANCIAL HIGHLIGHTS
FLORIDA TAX-FREE TRUST
<Table>
<Caption>
YEAR ENDED 9/30 11/1/1999 YEAR
--------------------------------------------------- TO ENDED
2004 2003 2002 2001 9/30/2000* 10/31/1999
PER SHARE OPERATING PERFORMANCE (CLASS
A SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 4.88 $ 4.97 $ 4.82 $ 4.57 $ 4.52 $ 4.98
========= ========= ========= ========= ========== ============
Investment operations
Net investment income .20(a) .21(a) .23(a) .23(a) .23(a) .23
Net realized and
unrealized gain (loss) (.05) (.09) .15 .25 .03 (.46)
--------- --------- --------- --------- ---------- ------------
Total from investment
operations .15 .12 .38 .48 .26 (.23)
--------- --------- --------- --------- ---------- ------------
Distributions to shareholders
from net investment income (.21) (.21) (.23) (.23) (.21) (.23)
--------- --------- --------- --------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 4.82 $ 4.88 $ 4.97 $ 4.82 $ 4.57 $ 4.52
========= ========= ========= ========= ========== ============
Total Return(b) 3.13% 2.62% 8.10% 10.68% 5.86%(c) (4.74)%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.02% 1.04% 1.07% .99% .89%(c) .97%
Expenses, excluding expense
reductions 1.02% 1.04% 1.08% 1.05% .89%(c) .97%
Net investment income 4.24% 4.33% 4.74% 4.77% 5.00%(c) 4.73%
<Caption>
YEAR ENDED 9/30 11/1/1999 YEAR
--------------------------------------------------- TO ENDED
SUPPLEMENTAL DATA: 2004 2003 2002 2001 9/30/2000* 10/31/1999
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 72,995 $ 78,278 $ 84,325 $ 83,798 $ 94,817 $ 100,924
Portfolio turnover rate 74.33% 86.95% 82.90% 84.37% 169.02% 191.12%
==============================================================================================================================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
140
<Page>
FINANCIAL HIGHLIGHTS (CONCLUDED)
FLORIDA TAX-FREE TRUST
<Table>
<Caption>
YEAR ENDED 9/30 11/1/1999 YEAR
--------------------------------------------------- TO ENDED
2004 2003 2002 2001 9/30/2000* 10/31/1999
PER SHARE OPERATING PERFORMANCE (CLASS
C SHARES)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 4.89 $ 4.98 $ 4.83 $ 4.58 $ 4.52 $ 4.98
========= ========= ========= ========= ========== ============
Investment operations
Net investment income .17(a) .18(a) .20(a) .20(a) .20(a) .20
Net realized and
unrealized gain (loss) (.05) (.09) .14 .25 .04 (.46)
--------- --------- --------- --------- ---------- ------------
Total from investment
operations .12 .09 .34 .45 .24 (.26)
--------- --------- --------- --------- ---------- ------------
Distributions to shareholders
from net investment income (.18) (.18) (.19) (.20) (.18) (.20)
--------- --------- --------- --------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 4.83 $ 4.89 $ 4.98 $ 4.83 $ 4.58 $ 4.52
========= ========= ========= ========= ========== ============
Total Return(b) 2.44% 1.97% 7.32% 9.99% 5.44%(c) (5.43)%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions 1.67% 1.71% 1.73% 1.64% 1.42%(c) 1.62%
Expenses, excluding expense
reductions 1.67% 1.71% 1.74% 1.70% 1.43%(c) 1.62%
Net investment income 3.59% 3.66% 4.08% 4.13% 4.52%(c) 4.07%
<Caption>
YEAR ENDED 9/30 11/1/1999 YEAR
--------------------------------------------------- TO ENDED
SUPPLEMENTAL DATA: 2004 2003 2002 2001 9/30/2000* 10/31/1999
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 5,924 $ 6,514 $ 5,927 $ 5,230 $ 4,706 $ 6,046
Portfolio turnover rate 74.33% 86.95% 82.90% 84.37% 169.02% 191.12%
==============================================================================================================================
</Table>
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
* The Trust changed its fiscal year-end.
SEE NOTES TO FINANCIAL STATEMENTS.
141
<Page>
FINANCIAL HIGHLIGHTS
GEORGIA TAX-FREE TRUST
<Table>
<Caption>
YEAR ENDED 9/30 11/1/1999 YEAR
--------------------------------------------------- TO ENDED
2004 2003 2002 2001 9/30/2000* 10/31/1999
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE,
BEGINNING OF PERIOD $ 5.63 $ 5.70 $ 5.44 $ 5.07 $ 4.91 $ 5.43
========= ========= ========= ========= ========== ============
Investment operations
Net investment income .23(a) .24(a) .23(a) .26(a) .21(a) .28
Net realized and
unrealized gain (loss) .02 (.06) .26 .37 .19 (.50)
--------- --------- --------- --------- ---------- ------------
Total from investment
operations .25 .18 .49 .63 .40 (.22)
--------- --------- --------- --------- ---------- ------------
Distributions to shareholders
from:
Net investment income (.23) (.23) (.23) (.26) (.24) (.26)
Net realized gain - (.02) - - - (.04)
--------- --------- --------- --------- ---------- ------------
Total distributions (.23) (.25) (.23) (.26) (.24) (.30)
--------- --------- --------- --------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 5.65 $ 5.63 $ 5.70 $ 5.44 $ 5.07 $ 4.91
========= ========= ========= ========= ========== ============
Total Return(b) 4.54% 3.21% 9.27% 12.69% 8.59%(c) 4.36%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver
and expense reductions .67% .68% .69% .31% .17%(c) .18%
Expenses, excluding waiver
and expense reductions .67% .69% .72% .78% .63%(c) .68%
Net investment income 4.14% 4.26% 4.24% 4.81% 4.30%(c) 5.32%
<Caption>
YEAR ENDED 9/30 11/1/1999 YEAR
--------------------------------------------------- TO ENDED
SUPPLEMENTAL DATA: 2004 2003 2002 2001 9/30/2000* 10/31/1999
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 89,480 $ 85,441 $ 69,836 $ 46,235 $ 29,245 $ 27,432
Portfolio turnover rate 21.27% 34.13% 48.66% 43.50% 122.44% 115.87%
==============================================================================================================================
</Table>
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
* The Trust changed its fiscal year-end.
SEE NOTES TO FINANCIAL STATEMENTS.
142
<Page>
FINANCIAL HIGHLIGHTS
MICHIGAN TAX-FREE TRUST
<Table>
<Caption>
YEAR ENDED 9/30 11/1/1999 YEAR
--------------------------------------------------- TO ENDED
2004 2003 2002 2001 9/30/2000* 10/31/1999
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE,
BEGINNING OF PERIOD $ 5.36 $ 5.43 $ 5.20 $ 4.87 $ 4.75 $ 5.18
========= ========= ========= ========= ========== ============
Investment operations
Net investment income .22(a) .23(a) .25(a) .25(a) .21(a) .26
Net realized and
unrealized gain (loss) (.04) (.07) .23 .33 .14 (.44)
--------- --------- --------- --------- ---------- ------------
Total from investment
operations .18 .16 .48 .58 .35 (.18)
--------- --------- --------- --------- ---------- ------------
Distributions to shareholders
from net investment income (.22) (.23) (.25) (.25) (.23) (.25)
--------- --------- --------- --------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 5.32 $ 5.36 $ 5.43 $ 5.20 $ 4.87 $ 4.75
========= ========= ========= ========= ========== ============
Total Return(b) 3.48% 3.16% 9.57% 12.21% 7.57%(c) (3.55)%
RATIOS TO AVERAGE NET ASSETS
Expenses, including expense
reductions .67% .71% .73% .69% .67%(c) .69%
Expenses, excluding expense
reductions .67% .73% .75% .74% .67%(c) .69%
Net investment income 4.19% 4.28% 4.77% 4.91% 4.37%(c) 5.21%
<Caption>
YEAR ENDED 9/30 11/1/1999 YEAR
--------------------------------------------------- TO ENDED
SUPPLEMENTAL DATA: 2004 2003 2002 2001 9/30/2000* 10/31/1999
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 73,290 $ 68,290 $ 58,632 $ 49,330 $ 45,666 $ 49,356
Portfolio turnover rate 34.92% 59.46% 48.09% 100.27% 111.48% 186.97%
==============================================================================================================================
</Table>
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
* The Trust changed its fiscal year-end.
SEE NOTES TO FINANCIAL STATEMENTS.
143
<Page>
FINANCIAL HIGHLIGHTS
PENNSYLVANIA TAX-FREE TRUST
<Table>
<Caption>
YEAR ENDED 9/30 11/1/1999 YEAR
--------------------------------------------------- TO ENDED
2004 2003 2002 2001 9/30/2000* 10/31/1999
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE,
BEGINNING OF PERIOD $ 5.27 $ 5.37 $ 5.18 $ 4.90 $ 4.81 $ 5.28
========= ========= ========= ========= ========== ============
Investment operations
Net investment income .22(a) .23(a) .24(a) .25(a) .22(a) .26
Net realized and
unrealized gain (loss) .01 (.10) .19 .28 .10 (.47)
--------- --------- --------- --------- ---------- ------------
Total from investment
operations .23 .13 .43 .53 .32 (.21)
--------- --------- --------- --------- ---------- ------------
Distributions to shareholders
from net investment income (.22) (.23) (.24) (.25) (.23) (.26)
--------- --------- --------- --------- ---------- ------------
NET ASSET VALUE, END OF PERIOD $ 5.28 $ 5.27 $ 5.37 $ 5.18 $ 4.90 $ 4.81
========= ========= ========= ========= ========== ============
Total Return(b) 4.48% 2.52% 8.57% 11.06% 6.83%(c) (4.13)%
RATIOS TO AVERAGE NET ASSETS
Expenses, including waiver
and expense reductions .97% .94% 1.08% .90% .88%(c) .96%
Expenses, excluding waiver
and expense reductions .97% .95% 1.10% 1.06% .88%(c) .96%
Net investment income 4.20% 4.37% 4.66% 4.88% 4.54%(c) 5.02%
<Caption>
YEAR ENDED 9/30 11/1/1999 YEAR
--------------------------------------------------- TO ENDED
SUPPLEMENTAL DATA: 2004 2003 2002 2001 9/30/2000* 10/31/1999
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 95,954 $ 99,280 $ 101,502 $ 94,550 $ 91,750 $ 93,835
Portfolio turnover rate 27.80% 29.76% 60.87% 65.63% 61.00% 40.76%
==============================================================================================================================
</Table>
(a) Calculated using average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads and assumes the
reinvestment of all distributions.
(c) Not annualized.
* The Trust changed its fiscal year-end.
SEE NOTES TO FINANCIAL STATEMENTS.
144
<Page>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Lord Abbett Tax-Free Income Fund, Inc. (the "Company") and Lord Abbett Tax-Free
Income Trust (the "Trust") are registered under the Investment Company Act of
1940 (the "Act") as open-end management investment companies. The Company was
organized as a Maryland corporation on December 27, 1983. The Trust was
organized as a Massachusetts Business Trust on September 11, 1991 and was
reorganized as a Delaware Business Trust on July 22, 2002.
The Company consists of the following ten portfolios and their respective
classes (separately, a "Fund" and collectively, the "Funds"): Lord Abbett
National Tax-Free Income Fund ("National"), Class A, B, C and P shares; Lord
Abbett California Tax-Free Income Fund ("California") and Lord Abbett New York
Tax-Free Income Fund ("New York"), Class A, C and P shares; Lord Abbett
Connecticut Tax-Free Income Fund ("Connecticut"), Lord Abbett Hawaii Tax-Free
Income Fund ("Hawaii"), Lord Abbett Minnesota Tax-Free Income Fund
("Minnesota"), Lord Abbett Missouri Tax-Free Income Fund ("Missouri"), Lord
Abbett New Jersey Tax-Free Income Fund ("New Jersey"), Lord Abbett Texas
Tax-Free Income Fund ("Texas") and Lord Abbett Washington Tax-Free Income Fund
("Washington"), Class A and P shares. The Trust consists of the following five
portfolios and their respective classes (separately, a "Fund" and collectively,
the "Funds"): Florida Series ("Florida"), Class A, C and P shares; Georgia
Series ("Georgia"), Michigan Series ("Michigan"), Pennsylvania Series
("Pennsylvania"), Class A and P shares, and Lord Abbett Insured Intermediate
Tax-Free Fund ("Insured"), Class A, B, C and P shares. Each Fund is
non-diversified as defined under the Act, except for National and Insured. As of
the date of this report, only Insured has issued Class P shares.
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 National and Insured) also seeks as high a level of
interest income exempt from the personal income tax of its state as is
consistent with reasonable risk. New York also seeks as high a level of interest
income exempt from New York City personal income tax as is consistent with
reasonable risk. Each class has different expenses and dividends. A front-end
sales charge is normally added to the Net Asset Value ("NAV") for Class A
shares. There is no front-end sales charge in the case of the Class B, C and P
shares, although there may be a contingent deferred sales charge ("CDSC") as
follows: certain redemptions of Class A shares made within 24 months (12 months
if shares were purchased on or after November 1, 2004) following certain
purchases made without a sales charge; Class B shares redeemed before the sixth
anniversary of purchase; and Class C shares redeemed before the first
anniversary of purchase. Class B shares will convert to Class A shares on the
eighth anniversary of the original purchase of Class B shares.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.
145
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES
(a) INVESTMENT VALUATION-Securities are valued at prices supplied by
independent pricing services approved by the Directors/Trustees. Such
prices reflect broker/dealer supplied valuations and electronic data
processing techniques. Prices reflect the mean of the bid and asked
prices. Securities for which market quotations are not readily available
are valued at fair value, as determined by management and approved in
good faith by the Board of Directors/Trustees. Short-term securities with
60 days or less remaining to maturity are valued using the amortized cost
method, which approximates current market value.
(b) SECURITY TRANSACTIONS-Security transactions are recorded as of the date
that the securities are purchased or sold (trade date). Realized gains
and losses from sales of portfolio securities are calculated using the
identified-cost method. Realized and unrealized gains or losses are
allocated to each class of shares, based upon the relative proportion of
net assets at the beginning of the day.
(c) INVESTMENT INCOME-Dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. Discounts are accreted
and premiums are amortized using the effective interest method.
Investment income is allocated to each class of shares based upon the
relative proportion of net assets at the beginning of the day.
(d) FEDERAL TAXES-It is the policy of each Fund to meet the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all taxable income
and capital gains to its shareholders. Therefore, no federal income tax
provision is required.
(e) EXPENSES-Expenses incurred by the Company and Trust that do not
specifically relate to an individual Fund are generally allocated to the
Funds on a pro-rata basis. Expenses, excluding class specific expenses,
are allocated to each class of shares based upon the relative proportion
of net assets at the beginning of the day. Class A, B, C and P shares
bear all expenses and fees relating to their respective 12b-1
Distribution Plans.
(f) OFFERING COSTS-Lord Abbett incurred initial offering costs on behalf of
Insured that were reimbursed by the Fund for the full amount thereof.
Such expenses were deferred and amortized on the straight-line method
over a period of one year from the commencement of investment operations.
(g) 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 normally taking place approximately one month after
the purchase date.
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES
The Company and Trust each have a management agreement with Lord, Abbett & Co.
LLC ("Lord Abbett"), pursuant to which Lord Abbett supplies each Fund with
investment management services and executive and other personnel, pays the
remuneration of officers, provides office space and pays for ordinary and
necessary office and clerical expenses relating to research and statistical work
and supervision of each Fund's investment portfolio. The management fee is based
on each Fund's average daily net assets for each month at an annual rate of .50%
for all
146
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Funds, excluding Insured. The management fee for Insured is based on average
daily net assets at the following annual rate:
<Table>
- --------------------------------
First $2 Billion .45%
Next $3 Billion .425%
Over $5 Billion .40%
</Table>
For the year ended September 30, 2004, Lord Abbett voluntarily reimbursed all
expenses, other than 12b-1 service fees, for Insured. In addition, for the year
ended September 30, 2004, Lord Abbett voluntarily reimbursed $208,299 and
$131,074 of expenses for National and New York, respectively. Lord Abbett may
stop reimbursing expenses at any time.
Lord Abbett provides certain administrative services to each Fund pursuant to an
Administrative Services Agreement at an annual rate of .04% of each Fund's
average daily net assets.
12b-1 DISTRIBUTION PLAN
Each Fund has adopted a distribution plan with respect to one or more classes of
shares pursuant to Rule 12b-1 of the Act, which provides for the payment of
ongoing distribution and service fees to Lord Abbett Distributor LLC
("Distributor"), an affiliate of Lord Abbett. The fees are accrued daily at
annual rates based upon average daily net assets as follows:
<Table>
<Caption>
FEE CLASS A(1) CLASS B CLASS C CLASS P
- ------------------------------------------------------------------------
Service .25%(2) .25% .25% .20%
Distribution .10%(3) .75% .75% .25%
</Table>
(1) The Class A Plans of Minnesota, Washington, Georgia and Michigan will not
go into effect until the quarter subsequent to the net assets of each of
these Funds reaching $100 million. As of September 30, 2004, the net assets
of each such Fund have not reached $100 million.
(2) Annual service fee is .15% of the average daily net assets attributable to
Class A shares sold prior to the following dates:
<Table>
<Caption>
DATE
- --------------------------------------------------------------------------------
National, New York, Texas June 1, 1990
Hawaii January 1, 1993
New Jersey July 1, 1992
Florida October 1, 1992
Pennsylvania March 31, 1998
</Table>
(3) In addition, the Funds pay a one-time distribution fee of up to 1% on
certain qualifying purchases, which is generally amortized over a two-year
period.
147
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
COMMISSIONS
Distributor received the following commissions on sales of Class A shares of the
Funds, after concessions were paid to authorized dealers, for the year ended
September 30, 2004:
<Table>
<Caption>
DISTRIBUTOR DEALERS'
COMMISSIONS CONCESSIONS
- ------------------------------------------------------------------
National $ 84,664 $ 401,658
California 29,950 137,953
Connecticut 14,188 67,173
Hawaii 12,994 65,828
Minnesota 24,100 116,429
Missouri 62,743 292,482
New Jersey 22,543 105,969
New York 22,908 109,965
Texas 7,748 39,727
Washington 15,848 83,303
Insured 6,028 29,781
Florida 11,186 53,418
Georgia 74,925 355,814
Michigan 36,910 185,983
Pennsylvania 21,141 99,327
</Table>
One Director/Trustee and certain of the Company's and Trust's officers have an
interest in Lord Abbett.
4. DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARDS
Dividends from net investment income, if any, are declared daily and paid
monthly. Taxable net realized gains from investment transactions, reduced by
capital loss carryforwards, if any, are declared and distributed to shareholders
at least annually. The capital loss carryforward amount is available to offset
future net capital gains. Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions from
net investment income and net realized capital gains are determined in
accordance with federal income tax regulations which may differ from accounting
principles generally accepted in the United States of America. These book/tax
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the components of net assets based on their federal tax basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed earnings and profits for tax purposes are reported as
distributions of paid-in capital.
148
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The tax character of the distributions paid during the years ended September 30,
2004, and September 30, 2003 are as follows:
<Table>
<Caption>
NATIONAL CALIFORNIA
- ----------------------------------------------------------------------------------------------
9/30/2004 9/30/2003 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Distributions paid from:
Tax exempt income $ 23,940,025 $ 25,672,140 $ 7,499,894 $ 8,871,342
Ordinary income - 709,004 - -
Net long term capital gains - - - -
- ----------------------------------------------------------------------------------------------
Total distributions paid $ 23,940,025 $ 26,381,144 $ 7,499,894 $ 8,871,342
==============================================================================================
<Caption>
CONNECTICUT HAWAII
- ----------------------------------------------------------------------------------------------
9/30/2004 9/30/2003 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Distributions paid from:
Tax exempt income $ 3,902,944 $ 4,356,708 $ 2,906,371 $ 3,177,488
Ordinary income - - - -
Net long term capital gains - - - -
- ----------------------------------------------------------------------------------------------
Total distributions paid $ 3,902,944 $ 4,356,708 $ 2,906,371 $ 3,177,488
==============================================================================================
<Caption>
MINNESOTA MISSOURI
- ----------------------------------------------------------------------------------------------
9/30/2004 9/30/2003 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Distributions paid from:
Tax exempt income $ 1,527,568 $ 1,329,120 $ 6,263,326 $ 6,009,033
Ordinary income - - - -
Net long term capital gains - - - -
- ----------------------------------------------------------------------------------------------
Total distributions paid $ 1,527,568 $ 1,329,120 $ 6,263,326 $ 6,009,033
==============================================================================================
<Caption>
NEW JERSEY NEW YORK
- ----------------------------------------------------------------------------------------------
9/30/2004 9/30/2003 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Distributions paid from:
Tax exempt income $ 6,146,663 $ 7,202,044 $ 10,911,520 $ 11,705,846
Ordinary income - - - -
Net long term capital gains - - - -
- ----------------------------------------------------------------------------------------------
Total distributions paid $ 6,146,663 $ 7,202,044 $ 10,911,520 $ 11,705,846
==============================================================================================
<Caption>
TEXAS WASHINGTON
- ----------------------------------------------------------------------------------------------
9/30/2004 9/30/2003 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Distributions paid from:
Tax exempt income $ 3,377,784 $ 3,451,579 $ 2,330,177 $ 2,382,580
Ordinary income - - - -
Net long term capital gains - - - -
- ----------------------------------------------------------------------------------------------
Total distributions paid $ 3,377,784 $ 3,451,579 $ 2,330,177 $ 2,382,580
==============================================================================================
</Table>
149
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<Table>
<Caption>
INSURED FLORIDA
- ----------------------------------------------------------------------------------------------
9/30/2004 9/30/2003* 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Distributions paid from:
Tax exempt income $ 176,946 $ 19,301 $ 3,508,883 $ 3,821,091
Ordinary income - - - -
Net long term capital gains - - - -
- ----------------------------------------------------------------------------------------------
Total distributions paid $ 176,946 $ 19,301 $ 3,508,883 $ 3,821,091
==============================================================================================
<Caption>
GEORGIA MICHIGAN
- ----------------------------------------------------------------------------------------------
9/30/2004 9/30/2003 9/30/2004 9/30/2003
- ----------------------------------------------------------------------------------------------
Distributions paid from:
Tax exempt income $ 3,617,686 $ 3,203,266 $ 2,991,011 $ 2,853,218
Ordinary income - - - -
Net long term capital gains - 214,585 - -
- ----------------------------------------------------------------------------------------------
Total distributions paid $ 3,617,686 $ 3,417,851 $ 2,991,011 $ 2,853,218
==============================================================================================
<Caption>
PENNSYLVANIA
- --------------------------------------------------------------
9/30/2004 9/30/2003
- --------------------------------------------------------------
Distributions paid from:
Tax exempt income $ 4,086,719 $ 4,360,779
Ordinary income - -
Net long term capital gains - -
- --------------------------------------------------------------
Total distributions paid $ 4,086,719 $ 4,360,779
==============================================================
</Table>
* For the period June 23, 2003 (commencement of investment operations) to
September 30, 2003.
As of September 30, 2004, the components of accumulated earnings (losses) on a
tax basis are as follows:
<Table>
<Caption>
NATIONAL CALIFORNIA
- -----------------------------------------------------------------------------------------------
Capital loss carryforwards* $ (15,840,057) $ (4,095,412)
Temporary differences (4,261,567) (386,206)
Unrealized gains - net 33,300,381 9,377,011
- -----------------------------------------------------------------------------------------------
Total accumulated earnings - net $ 13,198,757 $ 4,895,393
===============================================================================================
<Caption>
CONNECTICUT HAWAII
- -----------------------------------------------------------------------------------------------
Capital loss carryforwards* $ (1,653,351) $ (2,483,764)
Temporary differences (301,035) (228,331)
Unrealized gains - net 5,740,353 5,014,622
- -----------------------------------------------------------------------------------------------
Total accumulated earnings - net $ 3,785,967 $ 2,302,527
===============================================================================================
<Caption>
MINNESOTA MISSOURI
- -----------------------------------------------------------------------------------------------
Capital loss carryforwards* $ (669,392) $ (318,601)
Temporary differences (115,431) (536,359)
Unrealized gains - net 1,590,530 7,607,428
- -----------------------------------------------------------------------------------------------
Total accumulated earnings - net $ 805,707 $ 6,752,468
===============================================================================================
</Table>
150
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<Table>
<Caption>
NEW JERSEY NEW YORK
- -----------------------------------------------------------------------------------------------
Capital loss carryforwards* $ (5,449,585) $ (2,341,238)
Temporary differences (664,021) (1,268,097)
Unrealized gains - net 8,781,714 17,707,800
- -----------------------------------------------------------------------------------------------
Total accumulated earnings - net $ 2,668,108 $ 14,098,465
===============================================================================================
<Caption>
TEXAS WASHINGTON
- -----------------------------------------------------------------------------------------------
Undistributed tax exempt income - net $ - $ 313,650
- -----------------------------------------------------------------------------------------------
Total undistributed earnings $ - $ 313,650
===============================================================================================
Capital loss carryforwards* $ (3,847,536) $ (2,197,727)
Temporary differences (243,919) (334,751)
Unrealized gains - net 7,209,454 3,430,143
- -----------------------------------------------------------------------------------------------
Total accumulated earnings - net $ 3,117,999 $ 1,211,315
===============================================================================================
<Caption>
INSURED FLORIDA
- -----------------------------------------------------------------------------------------------
Undistributed tax exempt income - net $ 5,406 $ -
- -----------------------------------------------------------------------------------------------
Total undistributed earnings $ 5,406 $ -
===============================================================================================
Capital loss carryforwards* $ (74,668) $ (6,287,528)
Temporary differences (68,379) (352,773)
Unrealized gains - net 179,661 6,012,531
- -----------------------------------------------------------------------------------------------
Total accumulated earnings - net $ 42,020 $ (627,770)
===============================================================================================
<Caption>
GEORGIA MICHIGAN
- -----------------------------------------------------------------------------------------------
Undistributed tax exempt income - net $ 81,090 $ -
- -----------------------------------------------------------------------------------------------
Total undistributed earnings $ 81,090 $ -
===============================================================================================
Capital loss carryforwards* $ (171,175) $ (1,914,823)
Temporary differences (106,373) (330,359)
Unrealized gains - net 4,221,443 4,726,783
- -----------------------------------------------------------------------------------------------
Total accumulated earnings - net $ 4,024,985 $ 2,481,601
===============================================================================================
<Caption>
PENNSYLVANIA
- --------------------------------------------------------------
Capital loss carryforwards* $ (989,890)
Temporary differences (340,647)
Unrealized gains - net 6,250,283
- --------------------------------------------------------------
Total accumulated earnings - net $ 4,919,746
==============================================================
</Table>
* At September 30, 2004, the capital loss carryforwards along with the related
expiration dates are as follows:
<Table>
<Caption>
2005 2007 2008 2009 2011 2012 TOTAL
- --------------------------------------------------------------------------------------------------------------------------------
National $ - $ - $ 11,399,772 $ 385,136 $ 255,373 $ 3,799,776 $ 15,840,057
California - - 3,282,765 - 34,990 777,657 4,095,412
Connecticut - - 677,619 518,107 - 457,625 1,653,351
Hawaii - 37,384 584,699 268,000 - 1,593,681 2,483,764
Minnesota - - - 560,978 - 108,414 669,392
Missouri 31,063 - 151,236 86,407 - 49,895 318,601
New Jersey - - 3,467,129 - 405,467 1,576,989 5,449,585
New York - - 983,645 1,190,572 25,993 141,028 2,341,238
Texas - - 2,739,564 579,267 - 528,705 3,847,536
Washington - - 947,474 710,842 42,693 496,718 2,197,727
Insured - - - - - 74,668 74,668
Florida - 3,917,644 1,479,660 - 763,887 126,337 6,287,528
Georgia - - - - 92,644 78,531 171,175
Michigan - 998,605 711,637 - - 204,581 1,914,823
Pennsylvania - - 762,318 - 1,955 225,617 989,890
</Table>
151
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Capital losses incurred after October 31 ("post-October losses"), within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. Each Fund incurred and will elect to defer net capital losses
during fiscal 2004 as follows:
<Table>
<Caption>
POST-OCTOBER
LOSSES
- -----------------------------------------
National $ 2,159,319
Minnesota 7,545
New Jersey 168,615
New York 283,123
Texas 9,913
Washington 318,341
Insured 65,462
Florida 141,114
Georgia 105,090
Michigan 102,719
</Table>
As of September 30, 2004, the aggregate unrealized security gains and losses
based on cost for U.S. Federal income tax purposes are as follows:
<Table>
<Caption>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
TAX COST GAIN LOSS GAIN
- ----------------------------------------------------------------------------------
National $ 544,372,611 $ 33,473,984 $ (173,603) $ 33,300,381
California 168,769,285 9,512,944 (135,933) 9,377,011
Connecticut 82,924,936 5,806,364 (66,011) 5,740,353
Hawaii 63,028,480 5,037,688 (23,066) 5,014,622
Minnesota 36,374,006 1,629,378 (38,848) 1,590,530
Missouri 141,155,400 7,649,789 (42,361) 7,607,428
New Jersey 129,480,932 8,793,139 (11,425) 8,781,714
New York 230,169,486 17,801,785 (93,985) 17,707,800
Texas 68,235,510 7,227,326 (17,872) 7,209,454
Washington 45,125,245 3,430,143 - 3,430,143
Insured 9,857,685 187,190 (7,529) 179,661
Florida 71,854,752 6,027,655 (15,124) 6,012,531
Georgia 84,078,686 4,325,040 (103,597) 4,221,443
Michigan 66,627,658 4,732,689 (5,906) 4,726,783
Pennsylvania 88,161,214 6,328,230 (77,947) 6,250,283
</Table>
The difference between book-basis and tax-basis unrealized gains (losses) is
primarily attributable to wash sales and other temporary tax adjustments.
152
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Permanent items identified during the year ended September 30, 2004 have been
reclassified among the components of net assets based on their tax treatment as
follows:
<Table>
<Caption>
UNDISTRIBUTED/
(DISTRIBUTIONS
IN EXCESS OF ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN
INCOME) LOSS CAPITAL
- -------------------------------------------------------------------------------
National $ 62,320 $ 41,379 $ (103,699)
California (16,138) 16,138 -
Connecticut 7,573 260,896 (268,469)
Hawaii (1,020) 1,097,918 (1,096,898)
Minnesota (208) 208 -
Missouri (2,880) 541,970 (539,090)
New Jersey 10,310 119,701 (130,011)
New York 98,240 1,670,449 (1,768,689)
Texas 1,664 (1,664) -
Washington (298) 295,401 (295,103)
Insured 340 (340) -
Florida 26,836 1,009,034 (1,035,870)
Georgia (666) 666 -
Michigan (695) 695 -
Pennsylvania 4,966 628 (5,594)
</Table>
The permanent differences are primarily attributable to treatment of certain
securities purchased at a discount and the expiration of capital loss
carryforwards.
5. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
are as follows:
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30, 2004
- -------------------------------------------------------------------
PURCHASES SALES
- -------------------------------------------------------------------
National $ 1,077,906,281 $ 1,094,925,653
California 52,924,756 65,500,993
Connecticut 18,360,318 25,073,416
Hawaii 4,416,906 9,490,025
Minnesota 12,963,684 9,129,719
Missouri 62,727,255 64,101,165
New Jersey 46,625,183 60,918,841
New York 120,690,189 129,169,706
Texas 16,331,601 19,264,543
Washington 24,668,704 23,755,364
Insured 10,097,611 4,188,136
Florida 59,422,085 67,213,507
Georgia 23,190,533 18,388,640
Michigan 29,093,884 24,029,204
Pennsylvania 26,830,136 29,598,595
</Table>
There were no purchases or sales of U.S. Government securities for the year
ended September 30, 2004.
153
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. DIRECTORS'/TRUSTEES' REMUNERATION
The Company's and Trust's officers and the one Director/Trustee who are
associated with Lord Abbett do not receive any compensation from the Company or
Trust for serving in such capacities. Outside Directors'/Trustees' fees are
allocated among all Lord Abbett-sponsored funds based on the net assets of each
fund. There is an equity based plan available to all outside Directors/Trustees
under which outside Directors/Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of Directors'/Trustees'
fees. The deferred amounts are treated as though equivalent dollar amounts have
been invested proportionately in the funds. Such amounts and earnings accrued
thereon are included in Directors'/Trustees' fees on the Statements of
Operations and in Directors'/Trustees' fees payable on the Statements of Assets
and Liabilities and are not deductible for U.S. federal income tax purposes
until such amounts are paid.
7. EXPENSE REDUCTIONS
The Company and Trust have entered into agreements with their transfer agent
and/or custodian whereby credits realized as a result of uninvested cash
balances are used to reduce a portion of each Fund's expenses.
8. CUSTODIAN AND ACCOUNTING AGENT
State Street Bank and Trust Company ("SSB") is the Funds' custodian and
accounting agent. SSB performs custodian, accounting and recordkeeping functions
relating to portfolio transactions and calculating each Fund's NAV.
9. INVESTMENT RISKS
Each Fund's performance and the value of its investments will vary in response
to changes in interest rates and other market factors. As interest rates rise, a
Fund's investments typically will lose value. This risk is usually greater for
long-term bonds than for short-term bonds. As a result, the Funds, which tend to
invest in longer-term bonds than many other municipal bond funds, normally will
have more price volatility than those funds.
Additional risks that could reduce each Fund's performance or increase
volatility include call risk, governmental risk, legislative risk, management
risk and credit risk. Credit risk varies among states based upon the economic
and fiscal conditions of each state and the municipalities within the state.
Each Fund (except National and Insured) is non-diversified which means that it
may invest a greater portion of its assets in a single issuer than a diversified
fund. Thus, it may be exposed to greater risk.
Because each Fund other than National and Insured invests primarily in issuers
of its particular state, its performance may be more affected by local, state
and regional factors than a fund investing in municipal bonds issued in many
states, such as National and Insured. These factors may include economic,
political or state legislative 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 may harm the performance of each Fund, and
may do so disproportionately
154
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
as a result of the corresponding disproportionate impact of such occurrences on
particular state, territory, or local economies.
Each Fund may invest up to 20% of its net assets in residual interest bonds
("RIBs"). RIBs, sometimes referred to as inverse floaters, are debt instruments
with a floating or variable interest rate that moves in the opposite direction
of the interest rate on another security or the value of an index. Changes in
the interest rate on the other security or index inversely affect the residual
interest paid on the RIB, with the result that when interest rates rise, RIBs
make lower interest payments and their values fall faster than fixed-rate bonds.
But, when interest rates fall, not only do RIBs make higher interest payments,
their values also rise faster than fixed-rate bonds.
Each Fund may purchase securities on a forward commitment or when-issued basis.
Delivery and payment for such securities can take place a month or more after
the transaction date. During this period, such securities are subject to market
fluctuations.
10. SUMMARY OF CAPITAL TRANSACTIONS
Transactions in shares of capital stock or shares of beneficial interest are as
follows:
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30, 2004
----------------------------------------------------------------------------
CONNECTICUT HAWAII MINNESOTA MISSOURI NEW JERSEY
- ---------------------------------------------------------------------------------------------------------------
Shares sold 461,995 644,322 1,287,335 3,267,692 1,822,812
Reinvestment of distributions 188,655 319,980 253,164 962,770 680,491
Shares reacquired (1,318,024) (2,050,585) (1,270,189) (3,669,594) (5,141,542)
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) (667,374) (1,086,283) 270,310 560,868 (2,638,239)
- ---------------------------------------------------------------------------------------------------------------
<Caption>
YEAR ENDED SEPTEMBER 30, 2004
----------------------------------------------------------------------------
TEXAS WASHINGTON GEORGIA MICHIGAN PENNSYLVANIA
- ---------------------------------------------------------------------------------------------------------------
Shares sold 423,921 1,007,594 3,616,190 2,395,641 1,352,917
Reinvestment of distributions 239,032 330,135 538,249 386,785 410,056
Shares reacquired (953,874) (1,580,673) (3,504,732) (1,761,186) (2,435,492)
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) (290,921) (242,944) 649,707 1,021,240 (672,519)
- ---------------------------------------------------------------------------------------------------------------
<Caption>
YEAR ENDED SEPTEMBER 30, 2003
----------------------------------------------------------------------------
CONNECTICUT HAWAII MINNESOTA MISSOURI NEW JERSEY
- ---------------------------------------------------------------------------------------------------------------
Shares sold 784,378 1,118,700 2,634,465 4,063,538 2,469,761
Reinvestment of distributions 202,793 338,450 209,576 888,995 786,255
Shares reacquired (1,212,005) (2,073,364) (963,379) (3,103,766) (4,363,119)
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) (224,834) (616,214) 1,880,662 1,848,767 (1,107,103)
- ---------------------------------------------------------------------------------------------------------------
<Caption>
YEAR ENDED SEPTEMBER 30, 2003
----------------------------------------------------------------------------
TEXAS WASHINGTON GEORGIA MICHIGAN PENNSYLVANIA
- ---------------------------------------------------------------------------------------------------------------
Shares sold 562,546 1,436,340 5,253,056 3,578,052 1,876,842
Reinvestment of distributions 237,487 318,921 491,682 353,430 407,087
Shares reacquired (923,282) (1,270,360) (2,815,614) (1,989,612) (2,336,153)
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) (123,249) 484,901 2,929,124 1,941,870 (52,224)
- ---------------------------------------------------------------------------------------------------------------
</Table>
155
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Transactions (both shares and dollars) in Funds with multiple classes are as
follows:
<Table>
<Caption>
YEAR ENDED YEAR ENDED
NATIONAL SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
- -------------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------
Shares sold 3,541,591 $ 40,681,581 5,669,665 $ 65,071,288
Reinvestment of distributions 1,250,563 14,283,407 1,359,829 15,627,071
Shares reacquired (6,057,488) (69,157,006) (7,418,567) (85,075,942)
- -------------------------------------------------------------------------------------------------------------
Decrease (1,265,334) $ (14,192,018) (389,073) $ (4,377,583)
- -------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- -------------------------------------------------------------------------------------------------------------
Shares sold 244,614 $ 2,815,682 980,446 $ 11,338,944
Reinvestment of distributions 54,551 624,686 58,692 675,936
Shares reacquired (718,023) (8,215,944) (727,080) (8,357,818)
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) (418,858) $ (4,775,576) 312,058 $ 3,657,062
- -------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- -------------------------------------------------------------------------------------------------------------
Shares sold 369,180 $ 4,255,317 988,068 $ 11,461,006
Reinvestment of distributions 75,657 865,552 80,448 925,745
Shares reacquired (966,679) (11,051,730) (577,892) (6,648,381)
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) (521,842) $ (5,930,861) 490,624 $ 5,738,370
- -------------------------------------------------------------------------------------------------------------
<Caption>
YEAR ENDED YEAR ENDED
CALIFORNIA SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
- -------------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------
Shares sold 1,227,944 $ 13,306,351 1,492,737 $ 16,255,433
Reinvestment of distributions 373,383 4,018,098 413,818 4,507,517
Shares reacquired (2,887,725) (31,067,978) (2,583,054) (28,071,598)
- -------------------------------------------------------------------------------------------------------------
Decrease (1,286,398) $ (13,743,529) (676,499) $ (7,308,648)
- -------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- -------------------------------------------------------------------------------------------------------------
Shares sold 172,641 $ 1,865,283 510,721 $ 5,606,781
Reinvestment of distributions 18,107 194,993 21,919 238,826
Shares reacquired (405,207) (4,358,278) (310,511) (3,360,618)
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) (214,459) $ (2,298,002) 222,129 $ 2,484,989
- -------------------------------------------------------------------------------------------------------------
<Caption>
YEAR ENDED YEAR ENDED
NEW YORK SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
- -------------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------
Shares sold 1,231,417 $ 13,986,025 2,926,447 $ 33,217,359
Reinvestment of distributions 553,520 6,264,285 594,191 6,775,806
Shares reacquired (2,618,184) (29,632,409) (3,567,933) (40,743,765)
- -------------------------------------------------------------------------------------------------------------
Decrease (833,247) $ (9,382,099) (47,295) $ (750,600)
- -------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- -------------------------------------------------------------------------------------------------------------
Shares sold 290,075 $ 3,299,253 506,318 $ 5,809,463
Reinvestment of distributions 17,248 195,123 16,052 183,062
Shares reacquired (311,522) (3,505,697) (192,259) (2,174,296)
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) (4,199) $ (11,321) 330,111 $ 3,818,229
- -------------------------------------------------------------------------------------------------------------
</Table>
156
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<Table>
<Caption>
YEAR ENDED FOR THE PERIOD ENDED
INSURED SEPTEMBER 30, 2004 SEPTEMBER 30, 2003*
- -------------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------
Shares sold 392,666 $ 3,876,261 368,851 $ 3,663,501
Reinvestment of distributions 12,009 118,627 1,182 11,397
Shares reacquired (135,018) (1,353,364) (534) (5,208)
- -------------------------------------------------------------------------------------------------------------
Increase 269,657 $ 2,641,524 369,499 $ 3,669,690
- -------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- -------------------------------------------------------------------------------------------------------------
Shares sold 37,806 $ 372,998 31,393 $ 307,348
Reinvestment of distributions 151 1,486 4 38
Shares reacquired (38,056) (368,409) - -
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) (99) $ 6,075 31,397 $ 307,386
- -------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- -------------------------------------------------------------------------------------------------------------
Shares sold 341,011 $ 3,398,791 31,544 $ 309,785
Reinvestment of distributions 418 4,115 32 307
Shares reacquired (41,244) (409,333) - -
- -------------------------------------------------------------------------------------------------------------
Increase 300,185 $ 2,993,573 31,576 $ 310,092
- -------------------------------------------------------------------------------------------------------------
CLASS P SHARES
- -------------------------------------------------------------------------------------------------------------
Shares sold - $ - 1,000 $ 10,000
Reinvestment of distributions 26 251 4 42
Shares reacquired - - - -
- -------------------------------------------------------------------------------------------------------------
Increase 26 $ 251 1,004 $ 10,042
- -------------------------------------------------------------------------------------------------------------
</Table>
* For the period June 23, 2003 (commencement of investment operations) to
September 30, 2003.
<Table>
<Caption>
YEAR ENDED YEAR ENDED
FLORIDA SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
- -------------------------------------------------------------------------------------------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------
Shares sold 2,229,086 $ 10,937,349 1,544,362 $ 7,546,963
Reinvestment of distributions 328,273 1,579,417 314,963 1,533,647
Shares reacquired (3,446,383) (16,529,032) (2,768,788) (13,472,904)
- -------------------------------------------------------------------------------------------------------------
Decrease (889,024) $ (4,012,266) (909,463) $ (4,392,294)
- -------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- -------------------------------------------------------------------------------------------------------------
Shares sold 81,716 $ 397,577 262,470 $ 1,292,387
Reinvestment of distributions 16,008 77,209 12,271 59,826
Shares reacquired (202,977) (984,449) (131,233) (643,551)
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) (105,253) $ (509,663) 143,508 $ 708,662
- -------------------------------------------------------------------------------------------------------------
</Table>
157
<Page>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. SUBSEQUENT EVENTS
Effective October 1, 2004, the annual management fee rate for all Funds,
excluding Insured, was reduced to the following rate:
.45% of the first $1 billion of average daily net assets
.40% of the next $1 billion
.35% of average daily net assets over $2 billion.
The annual management fee rate for Insured was reduced to the following rate:
.40% of the first $2 billion in average daily net assets
.375% of the next $3 billion
.35% of average daily net assets over $5 billion.
In addition, effective October 1, 2004, Distributor will pay the one-time
distribution fee of up to 1% on certain qualifying purchases of Class A shares
of the Funds. Previously, these payments were made by the Funds. The Funds will
continue to amortize the prepaid distribution fee balance outstanding at
September 30, 2004, which is generally amortized over a two-year period. The
remaining balance of the unamortized prepaid distribution fees by Fund, as of
September 30, 2004 are:
<Table>
<Caption>
UNAMORTIZED
BALANCE
- ---------------------------------------
National $ 22,946
California 9,373
Connecticut 885
Hawaii -
Missouri 11,884
New Jersey 8,457
New York 232
Texas 8,469
Florida 37,433
Pennsylvania 1,496
</Table>
158
<Page>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
LORD ABBETT TAX-FREE INCOME FUND, INC.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Lord Abbett Tax-Free Income Fund, Inc. (the
"Company"), comprising Lord Abbett National Tax-Free Income Fund, Lord Abbett
California Tax-Free Income Fund, Lord Abbett Connecticut Tax-Free Income Fund,
Lord Abbett Hawaii Tax-Free Income Fund, Lord Abbett Minnesota Tax-Free Income
Fund, Lord Abbett Missouri Tax-Free Income Fund, Lord Abbett New Jersey Tax-Free
Income Fund, Lord Abbett New York Tax-Free Income Fund, Lord Abbett Texas
Tax-Free Income Fund, and Lord Abbett Washington Tax-Free Income Fund, as of
September 30, 2004, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2004 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios constituting Lord Abbett Tax-Free Income Fund, Inc., as of
September 30, 2004, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with accounting principles generally accepted in the United
States of America.
Deloitte & Touche LLP
New York, New York
November 18, 2004
159
<Page>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE BOARD OF TRUSTEES AND SHAREHOLDERS,
LORD ABBETT TAX-FREE INCOME TRUST:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Lord Abbett Tax-Free Income Trust (the
"Trust"), comprising Lord Abbett Insured Intermediate Tax-Free Fund, Florida
Series, Georgia Series, Michigan Series, and Pennsylvania Series, as of
September 30, 2004, and the related statements of operations, changes in net
assets and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2004 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios constituting Lord Abbett Tax-Free Income Trust as of September
30, 2004, the results of their operations, the changes in their net assets, and
the financial highlights for each of the periods presented, in conformity with
accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
New York, New York
November 18, 2004
160
<Page>
BASIC INFORMATION ABOUT MANAGEMENT
The Company's Board of Directors and the Trust's Board of Trustees are
responsible for the management of the business and affairs of the Company and
Trust in accordance with the laws of the States of Maryland and Delaware,
respectively. Each Board appoints officers who are responsible for the
day-to-day operations of the Company and Trust and who execute policies
authorized by the Boards. Each Board also approves an investment adviser to the
Company and Trust and continues to monitor the cost and quality of the services
provided by the investment adviser, and annually considers whether to renew the
contract with the adviser. Generally, each Director and Trustee holds office
until his/her successor is elected and qualified or until his/her earlier
resignation or removal, as provided in the Company and Trust organizational
documents.
Lord, Abbett & Co. LLC ("Lord Abbett"), a Delaware limited liability company, is
the investment adviser of the Company and Trust.
INTERESTED DIRECTOR/TRUSTEE
The following Director/Trustee is the Managing Partner of Lord Abbett and is an
"interested person" as defined in the Act. Mr. Dow is also an officer, director,
or trustee of each of the fourteen Lord Abbett-sponsored funds, which consist of
49 portfolios or series.
<Table>
<Caption>
CURRENT POSITION
LENGTH OF SERVICE
NAME, ADDRESS AND WITH COMPANY PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH AND TRUST DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------------------------
ROBERT S. DOW Director since Managing Partner and Chief N/A
Lord, Abbett & Co. LLC since 1989; Trustee Investment Officer of Lord
90 Hudson Street since 1991; and Abbett since 1996.
Jersey City, NJ Chairman since 1996
Date of Birth: 3/8/1945
</Table>
----------
INDEPENDENT DIRECTOR/TRUSTEE
The following independent or outside Directors/Trustees are also directors or
trustees of each of the fourteen Lord Abbett-sponsored funds, which consist of
49 portfolios or series.
<Table>
<Caption>
CURRENT POSITION
LENGTH OF SERVICE
NAME, ADDRESS AND WITH COMPANY PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH AND TRUST DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------------------------
E. THAYER BIGELOW Director/Trustee Managing General Partner, Currently serves as director of
c/o Emmerling since 1994 Bigelow Media, LLC (since 2000); Adelphia Communications, Inc.,
Communications Senior Adviser, Time Warner Inc. Crane Co., and Huttig Building
41 Madison Ave., (1998 - 2000); Acting Chief Products Inc.
Suite 3810 Executive Officer of Courtroom
New York, NY Television Network (1997 -
Date of Birth: 10/22/1941 1998); President and Chief
Executive Officer of Time Warner
Cable Programming, Inc. (1991 -
1997).
</Table>
161
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
<Table>
<Caption>
CURRENT POSITION
LENGTH OF SERVICE
NAME, ADDRESS AND WITH COMPANY PRINCIPAL OCCUPATION OTHER
DATE OF BIRTH AND TRUST DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------------------------
WILLIAM H.T. BUSH Director/Trustee Co-founder and Chairman of the Currently serves as director of
Bush-O'Donnell & Co., Inc. since 1998 Board of the financial advisory Wellpoint Health Networks Inc.,
101 South Hanley Road firm of Bush-O'Donnell & Company and Engineered Support Systems,
Suite 1250 (since 1986). Inc.
St. Louis, MO
Date of Birth: 7/14/1938
ROBERT B. CALHOUN, JR. Director/Trustee Managing Director of Monitor Currently serves as director of
Monitor Clipper Partners since 1998 Clipper Partners (since 1997) Avondale, Inc. and Interstate
Two Canal Park and President of Clipper Asset Bakeries Corp.
Cambridge, MA Management Corp. (since 1991),
Date of Birth: 10/25/1942 both private equity investment
funds.
JULIE A. HILL Director/Trustee Owner and CEO of the Hillsdale Currently serves as director of
1280 Bison since 2004 Companies, a business consulting Wellpoint Health Networks Inc.;
Newport Coast, CA firm (1998 - present); Founder, Resources Connection Inc.;
Date of Birth: 7/16/1946 President and Owner of the Holcim (US) Inc. (parent company
Hiram-Hill and Hillsdale Holcim Ltd).
Development Companies from 1998
to 2001.
FRANKLIN W. HOBBS Director/Trustee Senior Advisor (since April Currently serves as director of
Houlihan Lokey since 2000 2003) and Former Chief Executive Adolph Coors Company.
Howard & Zukin Officer of Houlihan Lokey Howard
685 Third Ave. & Zukin, an investment bank
New York, NY (January 2002 - April 2003);
Date of Birth: 7/30/1947 Chairman of Warburg Dillon Read
(1999 - 2001); Global Head of
Corporate Finance of SBC Warburg
Dillon Read (1997 - 1999); Chief
Executive Officer of Dillon,
Read & Co. (1994 - 1997).
C. ALAN MACDONALD Director/Trustee Retired - General Business and Currently serves as director of
P.O. Box 4393 since 1988 Governance Consulting (since H.J. Baker.
Greenwich, CT 1992); formerly President and
Date of Birth: 5/19/1933 CEO of Nestle Foods.
THOMAS J. NEFF Director/Trustee Chairman of Spencer Stuart Currently serves as director of
Spencer Stuart since 1982 (U.S.), an executive search Ace, Ltd. and Exult, Inc.
277 Park Avenue consulting firm (since 1996);
New York, NY President of Spencer Stuart
Date of Birth: 10/2/1937 (1979-1996).
</Table>
162
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONTINUED)
OFFICERS
None of the officers listed below have received compensation from the Company or
Trust. All the officers of the Company and Trust may also be officers of the
other Lord Abbett-sponsored funds and maintain offices at 90 Hudson Street,
Jersey City, NJ 07302.
<Table>
<Caption>
CURRENT POSITION
NAME AND WITH COMPANY LENGTH OF SERVICE PRINCIPAL OCCUPATION
(DATE OF BIRTH) AND TRUST OF CURRENT POSITION DURING PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------------------------
ROBERT S. DOW Chief Executive Elected in 1996 Managing Partner and Chief Investment
(3/8/1945) Officer and President Officer of Lord Abbett since 1996.
RICHARD D. SMOLA Executive Vice Elected in 2003 Partner and Investment Manager, joined
(10/27/1956) President Lord Abbett in 1991.
TRACIE E. AHERN Vice President Elected in 1999 Partner and Director of Portfolio
(1/12/1968) Accounting and Operations, joined Lord
Abbett in 1999, prior thereto Vice
President - Head of Fund Administration of
Morgan Grenfell.
JOAN A. BINSTOCK Chief Financial Elected in 1999 Partner and Chief Operations Officer,
(3/4/1954) Officer and Vice joined Lord Abbett in 1999, prior thereto
President Chief Operating Officer of Morgan
Grenfell.
DANIEL E. CARPER Vice President Elected in 1998 Partner, joined Lord Abbett in 1979.
(1/22/1952) Company; and 1991
Trust
PHILIP P. FANG Vice President Elected in 1994 Investment Manager, joined Lord Abbett in
(6/19/1965) 1991.
PAUL A. HILSTAD Vice President and Elected in 1995 Partner and General Counsel, joined Lord
(12/13/1942) Secretary Abbett in 1995.
LAWRENCE H. KAPLAN Vice President and Elected in 1997 Partner and Deputy General Counsel, joined
(1/16/1957) Assistant Secretary Lord Abbett in 1997.
A. EDWARD OBERHAUS, III Vice President Elected in 1996 Partner and Manager of Equity Trading,
(12/21/1959) joined Lord Abbett in 1983.
</Table>
163
<Page>
BASIC INFORMATION ABOUT MANAGEMENT (CONCLUDED)
<Table>
<Caption>
CURRENT POSITION
NAME AND WITH COMPANY LENGTH OF SERVICE PRINCIPAL OCCUPATION
(DATE OF BIRTH) AND TRUST OF CURRENT POSITION DURING PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------------------------
CHRISTINA T. SIMMONS Vice President and Elected in 2000 Assistant General Counsel, joined Lord
(11/12/1957) Assistant Secretary Abbett in 1999, formerly Assistant General
Counsel of Prudential Investments from
1998 to 1999, prior thereto Counsel of
Drinker, Biddle & Reath LLP, a law firm.
PETER SCOTT SMITH Vice President Elected in 2000 Investment Manager, joined Lord Abbett in
(9/15/1966) 1992.
BERNARD J. GRZELAK Treasurer Elected in 2003 Director of Fund Administration, joined
(6/12/1971) Lord Abbett in 2003, formerly Vice
President, Lazard Asset Management LLC
from 2000 to 2003, prior thereto Manager
of Deloitte & Touche LLP.
</Table>
Please call 888-522-2388 for a copy of the Statement of Additional Information
(SAI), which contains further information about the Company's Directors and the
Trust's Trustees. It is available free upon request.
164
<Page>
HOUSEHOLDING
The Company and Trust have adopted a policy that allows them to send only one
copy of the Funds' Prospectus, proxy material, annual report and semi-annual
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 Lord Abbett
at 800-821-5129 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.
PROXY VOTING POLICIES, PROCEDURES, AND RECORD
A description of the policies and procedures that Lord Abbett uses to vote
proxies related to the Funds' portfolio securities, and information on how Lord
Abbett voted each Funds' proxies during the 12-month period ended September 30,
2004, are available without charge, upon request, (i) by calling 888-522-2388;
(ii) on Lord Abbett's website at www.LordAbbett.com, and (iii) on the Securities
and Exchange Commission's ("SEC") website at www.sec.gov.
SHAREHOLDER REPORTS AND QUARTERLY PORTFOLIO DISCLOSURE
The Funds will be required to file their complete schedule of portfolio holdings
with the SEC for their first and third fiscal quarters on Form N-Q for fiscal
quarters ending on or after July 9, 2004. Once filed, the Funds' Forms N-Q will
be available without charge, upon request on the SEC's website at www.sec.gov
and may be available by calling Lord Abbett at 800-821-5129. You can also obtain
copies of Form N-Q by (i) visiting the SEC's Public Reference Room in
Washington, DC (information on the operation of the Public Reference Room may be
obtained by calling 800-SEC-0330); (ii) sending your request and duplicating fee
to the SEC's Public Reference Room, Washington, DC 20549-0102; or (iii) sending
your request electronically to publicinfo@sec.gov.
TAX INFORMATION
100% of the income distributions paid by each Fund during fiscal year 2004 is
tax-exempt dividend income.
165
<Page>
[LORD ABBETT(R) LOGO]
<Table>
Lord Abbett Tax-Free Income Fund Inc.
Lord Abbett National Tax-Free Income Fund
Lord Abbett California Tax-Free Income Fund
Lord Abbett Connecticut Tax-Free Income Fund
Lord Abbett Hawaii Tax-Free Income Fund
Lord Abbett Minnesota Tax-Free Income Fund
Lord Abbett Missouri Tax-Free Income Fund
Lord Abbett New Jersey Tax-Free Income Fund
Lord Abbett New York Tax-Free Income Fund
Lord Abbett Texas Tax-Free Income Fund
Lord Abbett Washington Tax-Free Income Fund
Lord Abbett Tax-Free Income Trust
This report when not used for the general Lord Abbett Insured Intermediate Tax-Free Fund
information of shareholders of the Fund, is to Florida Series
be distributed only if preceded or accompanied Georgia Series
by a current Fund Prospectus. Michigan Series
Pennsylvania Series
Lord Abbett Mutual Fund shares are distributed by: LATFI-2-904
LORD ABBETT DISTRIBUTOR LLC (11/04)
</Table>
<Page>
ITEM 2: CODE OF ETHICS.
(a) In accordance with applicable requirements, the Registrant adopted a
Sarbanes-Oxley Code of Ethics on June 19, 2003 that applies to the
principal executive officer and senior financial officers of the
Registrant ("Code of Ethics"). The Code of Ethics was in effect
during the fiscal year ended September 30, 2004 (the "Period").
(b) Not applicable.
(c) The Registrant has not amended the Code of Ethics as described in
Form N-CSR during the Period.
(d) The Registrant has not granted any waiver, including an implicit
waiver, from a provision of the Code of Ethics as described in Form
N-CSR during the Period.
(e) Not applicable.
(f) See Item 11(a) concerning the filing of the Code of Ethics. The
Registrant will provide a copy of the Code of Ethics to any person
without charge, upon request. To obtain a copy, please call Lord
Abbett at 800-821-5129.
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT.
The Registrant's Board of Directors has determined that each of the
following independent Directors who are members of the audit
committee are audit committee financial experts: E. Thayer Bigelow,
Robert B. Calhoun, and Franklin W. Hobbs. Each of these persons is
independent within the meaning of the Form N-CSR.
ITEM 4: PRINCIPAL ACCOUNTANT FEES AND SERVICES.
In response to sections (a), (b), (c) and (d) of Item 4, the aggregate fees
billed to the Registrant for the fiscal years ended September 30, 2004 and 2003
by the Registrant's principal accounting firm, Deloitte & Touche LLP, the member
firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively,
"Deloitte") were as follows:
<Table>
<Caption>
FISCAL YEAR ENDED:
2004 2003
Audit Fees {a} $ 228,000 $ 218,000
Audit-Related Fees {b} 342 576
---------------------------
Total audit and audit-related fees 228,342 218,576
---------------------------
</Table>
<Page>
<Table>
Tax Fees {c} 65,882 65,982
All Other Fees {d} -0- 731
---------------------------
Total Fees $ 294,224 $ 285,289
---------------------------
</Table>
- ----------
{a} Consists of fees for audits of the Registrant's annual financial
statements.
{b} Consists of the Registrant's proportionate share of fees for
performing certain agreed-upon procedures regarding compliance with the
provisions of Rule 17a-7 of the Investment Company Act of 1940 and
related Board approved procedures.
{c} Fees for the fiscal years ended September 30, 2004 and 2003 consist
of fees for preparing the U.S. Income Tax Return for Regulated
Investment Companies, New Jersey Corporation Business Tax Return,
New Jersey Annual Report Form, U.S. Return of Excise Tax on
Undistributed Income of Investment Companies, IRS Forms 1099-MISC and
1096 Annual Summary and Transmittal of U.S. Information Returns.
{d} Consists of the Registrant's proportionate share of fees for testing
of Anti-Money Laundering Compliance.
(e) (1) Pursuant to Rule 2-01(c) (7) of Regulation S-X, the Registrant's Audit
Committee has adopted pre-approval policies and procedures. Such policies and
procedures generally provide that the Audit Committee must pre-approve:
- any audit, audit-related, tax, and other services to be
provided to the Lord Abbett Funds, including the Registrant,
and
- any audit-related, tax, and other services to be provided to
the Registrant's investment adviser and any entity
controlling, controlled by or under common control with the
investment adviser that provides ongoing services to one or
more Funds comprising the Registrant if the engagement
relates directly to operations and financial reporting of a
Fund, by the independent auditor to assure that the
provision of such services does not impair the auditor's
independence.
The Audit Committee has delegated pre-approval authority to its Chairman,
subject to a fee limit of $10,000 per event, and not to exceed $25,000 annually.
The Chairman will report any pre-approval decisions to the Audit Committee at
its next scheduled meeting. Unless a type of service to be provided by the
independent auditor has received general pre-approval, it must be pre-approved
by the Audit Committee. Any proposed services exceeding pre-approved cost levels
will require specific pre-approval by the Audit Committee.
(e) (2) The Registrant's Audit Committee has approved 100% of the services
described in this Item 4 (b) through (d).
<Page>
(f) Not applicable.
(g) The aggregate non-audit fees billed by Deloitte for services rendered to the
Registrant are shown above in the response to Item 4 (a), (b), (c) and (d) as
"All Other Fees".
The aggregate non-audit fees billed by Deloitte for services rendered to the
Registrant's investment adviser, Lord, Abbett & Co. LLC ("Lord Abbett"), for the
fiscal years ended September 30, 2004 and 2003 were:
<Table>
<Caption>
FISCAL YEAR ENDED:
2004 2003
All Other Fees {a} $ 81,900 $ 75,000
</Table>
- ----------
{a} Fees for the fiscal years ended September 30, 2004 and 2003 consist
of fees of $81,900 and $75,000, respectively, for Independent Service
Auditors' Report on Controls Placed in Operation and Tests of Operating
Effectiveness related to Lord Abbett's operations and general computer
controls over equity securities processing for institutional and mutual
fund accounts ("SAS 70 Report").
The aggregate non-audit fees billed by Deloitte for services rendered to
entities under the common control of Lord Abbett (i.e., Lord Abbett Distributor
LLC, the Registrant's principal underwriter) for the fiscal years ended
September 30, 2004 and 2003 were:
<Table>
<Caption>
FISCAL YEAR ENDED:
2004 2003
All Other Fees {b} -0- $ 11,378
</Table>
- ----------
{b} Fees for the fiscal year ended September 30, 2003 represent fees for
testing of Anti-Money Laundering Compliance.
(h) The Registrant's Audit Committee has considered the provision of non-audit
services that were rendered to the Registrant's investment adviser, and any
entity controlling, controlled by or under common control with the investment
adviser that provides ongoing services to the Registrant, that were not
pre-approved pursuant to Rule 2-01 (c)(7)(ii) of Regulation S-X and has
determined that the provision of such services is compatible with maintaining
Deloitte's independence.
ITEM 5: AUDIT COMMITTEE OF LISTED REGISTRANTS.
<Page>
Not applicable.
ITEM 6: SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7: DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8: PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable
ITEM10: CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the Registrant's disclosure controls
and procedures (as defined in Rule 30a-3(c) under the Investment
Company Act of 1940) as of November 18, 2004, the Chief Executive
Officer and Chief Financial Officer of the Registrant have concluded
that such disclosure controls and procedures are reasonably designed
and effective to ensure that material information relating to the
Registrant, including its consolidated subsidiaries, is made known
to them by others within those entities.
(b) There were no significant changes in the Registrant's internal
controls over financial reporting (as defined in Rule 30a-3(d) under
the Investment Company Act of 1940) that occurred during the
Registrant's last fiscal half-year that have materially affected, or
are reasonably likely to materially affect, the Registrant's
internal control over financial reporting.
ITEM 11: EXHIBITS.
(a)(1) Amendments to Code of Ethics - Not applicable.
(a)(2) Certification of each principal executive officer and principal
financial officer of the Registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2) is attached hereto as a part of
EX-99.CERT.
<Page>
(a)(3) Certification of each principal executive officer and principal
financial officer of the Registrant as required by Section 906 of
the Sarbanes-Oxley Act of 2002 is attached hereto as a part of
EX-99.906CERT.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LORD ABBETT TAX-FREE INCOME
FUND, INC.
/s/ Robert S. Dow
Robert S. Dow
Chief Executive Officer,
Chairman and President
/s/ Joan A. Binstock
Joan A. Binstock
Chief Financial Officer and Vice President
Date: November 18, 2004
<Page>
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
LORD ABBETT TAX-FREE INCOME FUND, INC.
/s/ Robert S. Dow
Robert S. Dow
Chief Executive Officer,
Chairman and President
/s/ Joan A. Binstock
Joan A. Binstock
Chief Financial Officer and Vice President
Date: November 18, 2004