MERRILL
LYNCH
MUNICIPAL
BOND
FUND, INC.
FUND LOGO
Annual Report June 30, 1994
This report is not authorized for use as an offer of sale
or a solicitation of an offer to buy shares of the Fund
unless accompanied or preceded by the Fund's current
prospectus. Past performance results shown in this
report should not be considered a representation of
future performance. Investment return and principal
value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their
original cost.
Merrill Lynch
Municipal Bond Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MERRILL LYNCH MUNICIPAL BOND FUND, INC.
Officers and
Directors
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Bank of New York
110 Washington Street
New York, New York 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
TO OUR SHAREHOLDERS
The expectation of increasing inflationary pressures
and higher interest rates initially heightened investor
concerns and increased financial market volatility
during the June quarter. However, by the quarter's
close, it was the weakness of the US dollar in foreign
exchange markets that dominated the financial news and
prolonged stock and bond market declines.
<PAGE>
The US dollar's weakness relative to other major currencies
reflects the deteriorating US trade deficit and widening net
long-term capital outflows. In 1993, an expanding US economy
and recession in other industrial countries led to a higher
level of imports and weaker export growth, widening the US
trade deficit further. In addition, global investors favored
non-US dollar denominated assets throughout 1993, which has
further depressed the dollar's value. This trend is not
improving significantly thus far in 1994 since foreign inflows
into US capital markets continue to decline, although US
investors are investing outside of the United States
to a lesser degree.
Over the long term, if the economies of the United States'
major trading partners expand (improving the prospects for
US export growth), the outlook for the US dollar is likely
to improve. In the near term, central banks have attempt-
ed to reverse the dollar's decline through currency market
intervention. These efforts have met with limited success
thus far, giving rise to the concern that the Federal Reserve
Board will be forced to continue to raise short-term interest
rates to attract investment capital back to the United States
and bolster the dollar's value. However, further interest rate
increases may jeopardize the US economic expansion. In the weeks
ahead, investors will continue to assess economic data and
inflationary trends as they focus on the US dollar in order
to gauge whether further increases in short-term interest
rates are imminent.
The Municipal Market
During the three months ended June 30, 1994, tax-exempt bond
yields exhibited moderate volatility as yields fluctuated between
6.20% and 6.60%, as measured by the Bond Buyer Revenue Index. The
yield on newly issued municipal bonds maturing in 30 years began
at 6.39% on March 31 and ended approximately 17 basis points
(0.17%) higher at 6.56% by the end of June. Yields on seasoned
municipal revenue issues rose by over 20 basis points in sympathy
with the rise in US Treasury bond yields. By the end of June,
yields on US Treasury securities had risen by over 53 basis
points to 7.61%.
<PAGE>
Long-term tax-exempt interest rates moved within a moderate
interest rate range throughout the June quarter. On a weekly
basis, municipal bond yields fluctuated by as much as 15 basis
points as investors shifted their focus between the rapid
economic growth in the first quarter of 1994 with the relatively
low inflation numbers released by the US Treasury Department.
Following the Federal Reserve Board's interest rate increases in
February, municipal bond prices eroded in concert with taxable
bond prices as investors began to sell securities in anticipation
of further interest rate increases. As the Federal Reserve Board
continued to raise short-term interest rates in subsequent
months, municipal bond yields continued to rise throughout the
quarter to 6.60% in mid-May. For the remainder of the second
quarter, interest rates meandered in a narrow range as the
Federal Reserve Board sat on the sidelines and waited for more
data to determine if the economy was indeed slowing because
of the recent rise in interest rates.
The magnitude of the rise in tax-exempt bond yields the past six
months has not been seen since 1987 when municipal bond yields
rose 250 basis points from March to October of that year. It is
very important to note that the municipal bond price declines
during the last six months were much different than the 1987
episode. Recent price declines have largely been the result of
consistent and insistent selling pressures over the last four
months. In the 1987 period, the tax-exempt bond market was much
more volatile as investors sought to liquidate positions without
much concern to fundamental value. The recent price deterioration
has been orderly and the municipal bond market's liquidity and
integrity have not been challenged or jeopardized.
To a large extent, the municipal bond market has continued to be
supported by its strong technical position. New-issue volume for
the last six months has been approximately $89 billion. This
represents a decline of approximately 40% versus the comparable
period a year earlier. This decline has been even more pronounced
over the last three months when only $38 billion in long-term
securities were issued, representing over a 53% decline in the
issuance level from a year ago. This decline has been expected
and discussed in earlier shareholder reports. This reduced
issuance has minimized potential selling pressures in recent
months as institutional investors have been wary of selling
appreciable amounts of securities that they may be unable to
replace later this year at any price level. We expect this
decline in new bond issuance to continue this year and into 1995.
<PAGE>
Despite recent price declines, tax-exempt securities remain an
attractive investment. After the recent yield increases, longer-
term municipal securities yielded approximately 86% of comparable
US Treasury issues. Purchasers of these municipal bonds also
accrue substantial after-tax yield advantages. With prevailing
estimates of 1994 inflation at no more than 3%--4%, real after-
tax rates easily compensate longer-term investors for much of the
price volatility recently experienced.
We continue to look for municipal bond yields to decline later
this year and into 1995 as inflationary pressures remain low and
as the domestic economy is further slowed by the impact of higher
interest rates. If this scenario unfolds, currently available
tax-exempt products should generate attractive returns for
long-term investors.
Portfolio Strategy
During the June quarter, the Insured and National Portfolios
became less aggressively invested than at any time during the
previous 12 months. Rising interest rates, improving economic
data, and a weakening of the US dollar in the currency markets
prompted this slightly defensive investment strategy. In
anticipation of this, we raised the Portfolios' cash reserve
positions to 5%--10% of net assets. These cash positions will be
used to selectively purchase securities at adjusted levels. This
contrasts with a relatively aggressive portfolio strategy during
the previous year when our cash positions were minimal or fully
invested.
During the fiscal year, the primary emphasis has been to provide
a competitive level of tax-exempt income. As a result, the
Portfolios are invested in long-term municipal securities which
meet our credit standards and which are well diversified both
geographically and by industry.
During the June quarter, the cash position of the Limited Maturity
Portfolio was reduced from approximately 15% to 5% by the end of
May. This was done after the Federal Reserve Board's last round
of tightenings on May 17 in an effort to lock in higher yields in
the belief that monetary policy would remain steady for the immediate
future until a clearer picture emerges as to the strength of the
economy.
Over the course of the fiscal year in the Limited Maturity
Portfolio, we maintained a concentration in A-rated or better
securities, together with a modest average portfolio maturity and
cash position. This was successfully done in an effort to limit
fluctuations of the Portfolio's net asset value in periods
of interest rate volatility.
<PAGE>
We appreciate your ongoing interest in Merrill Lynch Municipal
Bond Fund, Inc., and we look forward to assisting you with your
financial needs in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President and
Portfolio Manager
(Kenneth A. Jacob)
Kenneth A. Jacob
Vice President and Portfolio Manager
July 29, 1994
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of shares
will fluctuate so that shares, when redeemed, may be worth more or less
than their original cost.
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
6/30/94 3/31/94 6/30/93 % Change %Change
<S> <C> <C> <C> <C> <C>
Insured Portfolio Class A Shares $ 7.88 $ 7.93 $ 8.64 -6.88%(1) -0.63%
Insured Portfolio Class B Shares 7.87 7.93 8.63 -6.89(1) -0.76
National Portfolio Class A Shares 10.08 10.11 11.02 -7.22(2) -0.30
National Portfolio Class B Shares 10.07 10.11 11.02 -7.31(2) -0.40
Limited Maturity Portfolio Class A Shares 9.87 9.90 10.01 -1.40 -0.30
Limited Maturity Portfolio Class B Shares 9.87 9.90 10.01 -1.40 -0.30
Insured Portfolio Class A Shares--Total Return -1.08(3) +0.71(4)
Insured Portfolio Class B Shares--Total Return -1.81(5) +0.42(6)
National Portfolio Class A Shares--Total Return -0.47(7) +1.16(8)
National Portfolio Class B Shares--Total Return -1.39(9) +0.80(10)
Limited Maturity Portfolio Class A Shares--Total Return +2.30(11) +0.60(12)
Limited Maturity Portfolio Class B Shares--Total Return +1.98(13) +0.56(14)
Insured Portfolio Class A Shares--Standardized 30-day Yield 5.20%
Insured Portfolio Class B Shares--Standardized 30-day Yield 4.65%
National Portfolio Class A Shares--Standardized 30-day Yield 5.59%
National Portfolio Class B Shares--Standardized 30-day Yield 5.05%
Limited Maturity Portfolio Class A Shares--Standardized 30-day Yield 3.89%
Limited Maturity Portfolio Class B Shares--Standardized 30-day Yield 3.56%
<FN>
*Investment results shown for the 3-month and 12-month periods are before the deduction
of any sales charges.
(1)Percent change includes reinvestment of $0.181 per share capital gains distributions.
(2)Percent change includes reinvestment of $0.157 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.503 per share ordinary income dividends
and $0.181 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.097 per share ordinary income dividends.
(5)Percent change includes reinvestment of $0.441 per share ordinary income dividends
and $0.181 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.084 per share ordinary income dividends.
(7)Percent change includes reinvestment of $0.740 per share ordinary income dividends
and $0.157 per share capital gains distributions.
(8)Percent change includes reinvestment of $0.127 per share ordinary income dividends.
(9)Percent change includes reinvestment of $0.661 per share ordinary income dividends
and $0.157 per share capital gains distributions.
(10)Percent change includes reinvestment of $0.111 per share ordinary income dividends.
(11)Percent change includes reinvestment of $0.357 per share ordinary income dividends.
(12)Percent change includes reinvestment of $0.079 per share ordinary income dividends.
(13)Percent change includes reinvestment of $0.326 per share ordinary income dividends.
(14)Percent change includes reinvestment of $0.075 per share ordinary income dividends.
</TABLE>
<PAGE>
Insured Portfolio--
Total Return
Based on a
$10,000
Investment
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX GRAPHIC AND IMAGE MATERIAL ITEM 1.
Insured Portfolio--
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/94 - 1.08% -5.03%
Five Years Ended 6/30/94 + 7.49 +6.62
Ten Years Ended 6/30/94 +10.06 +9.61
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/94 -1.81% -5.44%
Five Years Ended 6/30/94 +6.67 +6.67
Inception (10/21/88) through 6/30/94 +7.08 +7.08
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
PERFORMANCE DATA (continued)
National Portfolio--
Total Return
Based on a
$10,000
Investment
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX GRAPHIC AND IMAGE MATERIAL ITEM 2.
National Portfolio--
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/94 - 0.47% -4.45%
Five Years Ended 6/30/94 + 7.55 +6.67
Ten Years Ended 6/30/94 +10.29 +9.84
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/94 -1.39% -5.03%
Five Years Ended 6/30/94 +6.72 +6.72
Inception (10/21/88) through 6/30/94 +7.06 +7.06
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
Limited Maturity
Portfolio--
Total Return
Based on a
$10,000
Investment
GRAPHIC MATERIAL APPEARS HERE.
SEE APPENDIX GRAPHIC AND IMAGE MATERIAL ITEM 3.
Limited Maturity
Portfolio--
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/94 +2.30% +1.53%
Five Years Ended 6/30/94 +5.41 +5.25
Ten Years Ended 6/30/94 +5.80 +5.72
[FN]
*Maximum sales charge is 0.75%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/94 +1.98% +0.99%
Inception (11/2/92) through 6/30/94 +3.17 +3.17
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after one year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
1/1--12/31 Beginning/Ending Net Asset Value Dividends Paid* % Change**
Period Limited Limited Limited
Covered Insured National Maturity Insured National Maturity Insured National Maturity
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/77--12/77 $9.80/9.80 -- -- $ 0.09 -- -- + 0.94% -- --
1978 9.80/8.97 -- -- 0.48 -- -- - 3.69 -- --
1979++ 8.97/8.39 $ 9.60/ 9.60 $ 9.90/ 9.88 0.53 $ 0.11 $0.10 - 0.75 + 1.17% +0.86%
1980 8.39/6.86 9.60/ 8.54 9.88/ 9.74 0.60 0.79 0.64 -11.44 - 3.00 +5.13
1981 6.86/5.66 8.54/ 7.34 9.74/ 9.78 0.65 0.90 0.77 - 8.51 - 3.82 +8.64
1982 5.66/6.81 7.34/ 8.71 9.78/ 9.89 0.67 0.93 0.80 +33.96 +33.16 +9.67
1983 6.81/6.97 8.71/ 9.01 9.89/ 9.76 0.65 0.89 0.67 +12.41 +14.04 +5.57
1984 6.97/6.88 9.01/ 8.96 9.76/ 9.74 0.66 0.90 0.67 + 8.49 +10.00 +6.91
1985 6.88/7.53 8.96/ 9.86 9.74/ 9.75 0.64 0.88 0.63 +19.56 +20.76 +6.71
1986 7.53/8.18 9.86/10.67 9.75/ 9.90 0.61(1) 1.01(1) 0.56 +17.24 +19.08 +7.47
1987 8.18/7.56 10.67/ 9.76 9.90/ 9.68 0.68(2) 0.86(2) 0.53(2) + 0.86 - 0.40 +3.18
1988 7.56/7.79 9.76/10.11 9.68/ 9.68 0.57 0.76 0.56 +10.92 +11.71 +5.90
1989 7.79/7.94 10.11/10.25 9.68/ 9.74 0.57 0.75 0.59 + 9.49 + 9.11 +6.93
1990 7.94/7.86 10.25/10.09 9.74/ 9.72 0.61(3) 0.73 0.60 + 7.07 + 5.85 +6.11
1991 7.86/8.18 10.09/10.49 9.72/ 9.88 0.60(4) 0.82(4) 0.54 +12.07 +12.58 +7.39
1992 8.18/8.27 10.49/10.55 9.88/ 9.97 0.63(5) 0.89(5) 0.45 + 9.06 + 9.37 +5.62
1993 8.27/8.60 10.55/10.91 9.97/10.01 0.71(6) 0.94(6) 0.38 +12.85 +12.59 +4.30
1/1/94--6/30/94 8.60/7.88 10.91/10.08 10.01/ 9.87 0.21 0.28 0.17 - 5.82 - 4.89 +0.40
------ ------ -----
Total $10.16 $12.44 $8.66
Cumulative total return as of 6/30/94: +204.36%** +284.14%** +140.82%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not include
sales charge; results would be lower if sales charge was included.
++For National and Limited Maturity Portfolios, period covered is from
11/30/79 to 12/31/79.
(1)Includes capital gains of $0.011 and $0.178 for the Insured and National
Portfolios, respectively.
(2)Includes capital gains of $0.098, $0.073 and $0.012 for the Insured,
National and Limited Maturity Portfolios, respectively.
(3)Includes capital gains of $0.064 for the Insured Portfolio.
(4)Includes capital gains of $0.058 and $0.060 for the Insured and National
Portfolios, respectively.
(5)Includes capital gains of $0.084 and $0.130 for the Insured and National
Portfolios, respectively.
(6)Includes capital gains of $0.181 and $0.157 for the Insured and National
Portfolios, respectively.
</TABLE>
<PAGE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
1/1--12/31 Beginning/Ending Net Asset Value Dividends Paid* % Change**
Period Limited Limited Limited
Covered Insured National Maturity*** Insured National Maturity*** Insured National Maturity***
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/21/88--12/31/88 $7.81/7.78 $10.14/10.11 -- $0.11 $0.14 -- + 0.97% + 1.08% --
1989 7.78/7.94 10.11/10.25 -- 0.51 0.67 -- + 8.81 + 8.29 --
1990 7.94/7.86 10.25/10.09 -- 0.55(1) 0.66 -- + 6.28 + 5.05 --
1991 7.86/8.17 10.09/10.49 -- 0.54(2) 0.75(2) -- +11.10 +11.74 --
1992 8.17/8.27 10.49/10.55 $ 9.93/ 9.97 0.56(3) 0.81(3) $0.06 + 8.36 + 8.54 +1.05%
1993 8.27/8.59 10.55/10.90 9.97/10.01 0.64(4) 0.85(4) 0.35 +11.88 +11.65 +3.93
1/1/94--6/30/94 8.59/7.87 10.90/10.07 10.01/ 9.87 0.18 0.24 0.16 - 6.16 - 5.32 +0.27
----- ----- -----
Total $3.09 $4.12 $0.57
Cumulative total return as of 6/30/94: +47.60%** +47.43%** +5.31%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not reflect
deduction of any sales charge; results would be lower if sales charge
was deducted.
***Commenced operations on 11/02/92.
(1)Includes capital gains of $0.064 for the Insured Portfolio.
(2)Includes capital gains of $0.058 and $0.060 for the Insured and National
Portfolios, respectively.
(3)Includes capital gains of $0.084 and $0.130 for the Insured and National
Portfolios, respectively.
(4)Includes capital gains of $0.181 and $0.157 for the Insured and National
Portfolios, respectively.
</TABLE>
<PAGE>
Portfolio
Abbreviations
To simplify the listings of Merrill Lynch Municipal
Bond Fund, Inc.'s portfolio holdings in the Schedule
of Investments, we have abbreviated the names of many
of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
DDN Daily Demand Note
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
LT Limited Tax
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
SAVRS Select Auction Variable Rate Securities
S/F Single-Family
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
UPDATES Unit Price Daily Adjustable Tax-Exempt
Securities
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--0.8% Auburn University, Alabama, Revenue Refunding Bonds(e):
AAA Aaa $ 5,925 (Athletic Project), 5.25% due 4/01/2010 $ 5,430
AAA Aaa 5,000 (General Fee), 5.25% due 6/01/2013 4,429
AAA Aaa 1,500 (Housing and Dining), 5.25% due 6/01/2012 1,344
AAA Aaa 1,250 Mobile, Alabama, GO, Refunding and Capital Improvement Bonds,
10.875% due 11/01/2007(e) 1,712
AAA Aaa 7,465 Montgomery, Alabama, Baptist Medical Center, Special Care
Facilities Financing Authority Revenue Bonds, Series A, 5.75% due
1/01/2022(h) 6,850
Alaska--0.7% Kenai Peninsula Borough, Alaska, GO(b):
AAA Aaa 6,450 8.40% due 1/01/2000 7,394
AAA Aaa 8,460 8.40% due 1/01/2001 9,841
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Arizona--2.1% AAA Aaa $ 4,000 Arizona State Municipal Financing Program, COP, Series 34,
7.25% due 8/01/2009(g) $ 4,491
AAA Aaa 3,800 Maricopa County, Arizona, IDA, Health Facilities Revenue Bonds
(Saint Joseph's Care Center Project), Series A, 7.75% due
7/01/2020(e) 4,241
Maricopa County, Arizona, IDA, Hospital Facilities Revenue Bonds
(Samaritan Health Services Hospital):
AAA Aaa 4,000 Refunding, Series A, 7% due 12/01/2013(e) 4,318
A1+ VMIG1 500 VRDN, Series B2, 2.90% due 12/01/2008(f) 500
AAA Aaa 7,000 Maricopa County, Arizona, Unified School District No. 97 Revenue
Bonds (Deer Valley Project), 1986 Series E, 10% due 7/01/2000(h) 8,685
Mesa, Arizona, IDA, Health Care Facilities Revenue Bonds (Western
Health Network)(g):
AAA Aaa 10,000 Refunding, Series A-2, 7.625% due 1/01/2013 10,902
AAA Aaa 7,340 Series A-1, 7.625% due 1/01/2019 8,104
Phoenix, Arizona, Street and Highway User, Revenue Refunding Bonds,
Series A(h)(j):
AAA Aaa 5,000 5.63% due 7/01/2012 1,527
AAA Aaa 5,000 5.63% due 7/01/2013 1,421
AAA Aaa 7,000 Tucson, Arizona, Refunding Bonds, 4.90% due 7/01/2013(h) 5,937
AAA Aaa 5,250 University of Arizona Medical Center Corporation, Hospital Revenue
Refunding Bonds, 5% due 7/01/2021(e) 4,311
<PAGE>
California--6.5% AAA Aaa 5,000 Anaheim, California, Public Financing Authority Revenue Bonds, 2nd
Series-Electric Utility, San Juan 4, 5.75% due 10/01/2022(h) 4,571
AAA Aaa 6,000 Anaheim, California, Public Financing Authority, Revenue Refunding
Bonds (Electric Utility Projects), 5.625% due 10/01/2022(e) 5,388
AAA Aaa 8,000 Central Coast Water Authority, California, Revenue Bonds (State
Water Project Regional Facilities), 6.60% due 10/01/2022(b) 8,160
AAA Aaa 12,000 Fresno, California, Sewer Revenue Bonds, Series A-1, 6.25% due
9/01/2014(b) 12,067
AAA Aaa 2,415 Los Angeles, California, Regional Airports Improvement Corporation,
Lease Revenue Bonds (Los Angeles International Airport), AMT, 6.50%
due 1/01/2012(h) 2,459
Los Angeles, California, Wastewater System Revenue Bonds(e):
AAA Aaa 5,000 Series A, 5.70% due 6/01/2013 4,671
AAA Aaa 5,000 Series C, 5.60% due 6/01/2015 4,569
AAA Aaa 20,000 Series C, 5.60% due 6/01/2020 18,033
NR NR 28,800 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Refunding Bonds (Proposition C--Second
Series), VRDN, Series A, 2.60% due 7/01/2020(e)(f) 28,800
AAA Aaa 6,000 Los Angeles County, California, Transportation Commission, Sales
Tax Revenue Bonds, Series A, 6.75% due 7/01/2001(a)(h) 6,643
A1+ VMIG1 11,100 Mountain View, California, M/F Housing Revenue Bonds (Villa
Mariposa Project), VRDN, Series A, 2.40% due 3/01/2017(f) 11,100
AAA Aaa 17,600 Northern California Power Agency, Multiple Capital Facilities
Revenue Bonds, 6.53% due 8/01/2025(a)(e) 18,932
University of California, Revenue Bonds (Multiple Purpose Projects)(b):
AAA Aaa 4,650 Series C, 5% due 9/01/2012 3,983
AAA Aaa 12,075 Series C, 5.25% due 9/01/2016 10,415
AAA Aaa 33,500 Series C, 5% due 9/01/2023 27,074
AAA Aaa 5,000 Series D, 6.375% due 9/01/2024 4,996
AAA Aaa 9,000 West and Central Basin Financing Authority, California, Revenue
Bonds, 6.125% due 8/01/2022(b) 8,707
Colorado--0.0% AAA Aaa 1,000 Colorado Health Facilities Authority, Revenue Refunding Bonds (Rose
Medical Center Project), 5.125% due 8/15/2021(e) 844
Connecticut--0.4% AAA Aaa 1,325 Connecticut State Health and Educational Facilities Authority Revenue
Bonds (New Britain General Hospital), Series B, 6% due 7/01/2024(b) 1,261
AAA Aaa 3,500 Connecticut State Health and Educational Facilities Authority
Revenue Bonds (Saint Francis Hospital and Medical Center), Series C,
5% due 7/01/2023(h) 2,850
AAA Aaa 625 Connecticut State Health and Educational Facilities Authority,
Revenue Refunding Bonds (Fairfield University), Series G, 5% due
7/01/2018(e) 518
AAA Aaa 8,400 Connecticut State Municipal Electric Energy Cooperative Power Supply
System, Revenue Refunding Bonds, Series A, 5% due 1/01/2018(e) 7,003
AAA Aaa 885 New Britain Connecticut, UT, 5% due 2/01/2014(e) 769
<PAGE>
Delaware--0.3% AAA Aaa 6,000 Delaware EDA, PCR, Refunding (Delmarva Power and Light Company),
Series B, 7.30% due 3/01/2014(e) 6,552
AAA Aaa 3,750 Delaware State Health Facilities Authority, Crossover Revenue
Refunding Bonds (Delaware Medical Center), 7% due 10/01/2015(e) 4,019
District of District of Columbia, Hospital Revenue Refunding Bonds (National
Columbia--0.7% Rehabilitation Hospital-Medlantic), Series A(e):
AAA Aaa 7,000 7.10% due 11/01/2011 7,552
AAA Aaa 9,250 7.125% due 11/01/2019 9,985
<PAGE>
Florida--8.0% AAA Aaa 2,735 Altamonte Springs, Florida, Health Facilities Authority, Hospital
Revenue Bonds (Adventist Health/Sunbelt), Series A, 7% due
11/15/2014(b) 2,954
A1+ VMIG1 23,200 Dade County, Florida, Water and Sewer System Revenue Bonds, VRDN,
3% due 10/05/2022(f)(h) 23,200
Florida Municipal Power Agency Revenue Bonds:
AAA Aaa 22,710 (All Requirement Power Supply Project), 5.10% due 10/01/2025(b) 18,804
AAA Aaa 5,000 Refunding (Saint Lucie Project), 5.25% due 10/01/2021(h) 4,378
AAA Aaa 4,840 Florida Municipal Power Agency, Revenue Refunding Bonds (All
Requirement Power Supply Project), 6.25% due 10/01/2019(a)(b) 5,180
AAA Aaa 5,000 Florida State Division, Board of Finance, Department of General
Services Revenue Bonds (Department of Natural Resource
Preservation), Series 2000-A, 6.75% due 7/01/2013 5,237
Florida Turnpike Authority, Turnpike Revenue Bonds, Series A:
AAA Aaa 2,935 9.50% due 7/01/2001(b) 3,658
AAA Aaa 4,500 5% due 7/01/2015(h) 3,838
Jacksonville, Florida, Health Facilities Authority, Hospital Revenue
Refunding and Improvement Bonds (Baptist Medical Center Project):
AAA Aaa 500 11.50% due 10/01/2012 783
AAA Aaa 26,500 Series A, 7.30% due 6/01/2019(e) 28,721
AAA Aaa 8,750 Jacksonville, Florida, Port Authority Revenue Bonds, AMT,
7.875% due 11/01/2018(g) 9,536
AAA Aaa 20,000 Lee County, Florida, Hospital Board of Directors, Hospital Revenue
Bonds, 6.60% due 4/01/2020(e) 20,531
AAA Aaa 16,700 Martin County, Florida, PCR, Refunding (Florida Power and Light
Company Project), 7.30% due 7/01/2020(e) 18,125
AAA Aaa 11,640 Orange County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan), Series B, 7.875% due
12/01/2025(g) 12,513
AAA Aaa 3,950 Orange County, Florida, HFA, Mortgage Revenue Refunding Bonds,
Series A, 7.60% due 1/01/2024(h) 4,077
AAA Aaa 4,495 Orange County, Florida, Sales Tax Revenue Bonds, 6.125% due
1/01/2019(h) 4,392
Palm Beach County, Florida, Criminal Justice Facilities, Revenue
Refunding Bonds(h):
AAA Aaa 5,000 5.375% due 6/01/2008 4,757
AAA Aaa 11,985 5.375% due 6/01/2009 11,320
AAA Aaa 4,935 5.375% due 6/01/2010 4,597
AAA Aaa 34,690 Reedy Creek, Florida, Improvement District, Florida Utilities
Revenue Refunding Bonds, Series 1, 5% due 10/01/2019(e) 28,984
AAA Aaa 3,500 Saint Lucie County, Florida, Sales Tax, Revenue Refunding Bonds,
5% due 10/01/2023(h) 2,891
AAA Aaa 5,700 South Broward, Florida, Hospital District Revenue Bonds, 6.61% due
5/01/2021(b) 5,857
AAA Aaa 2,000 Tampa, Florida, Water and Sewer System Revenue Bonds, Series A,
7.25% due 10/01/2016(b) 2,159
AAA Aaa 2,240 West Coast Regional Water Supply Authority, Florida, Capital
Improvement Revenue Bonds (Hillsborough County Project), 10.40%
due 10/01/2010(a)(b) 3,215
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Georgia--3.4% AAA Aaa $ 5,000 Douglasville-Douglas County, Georgia, Water and Sewer Authority,
Water and Sewer Revenue Bonds, 5.625% due 6/01/2015(b) $ 4,638
AAA Aaa 20,000 Georgia Municipal Electric Authority Revenue Bonds, Series EE,
7% due 1/01/2025(b) 21,945
Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax
Revenue Refunding Bonds(b):
AAA Aaa 1,000 Series A, 5.125% due 7/01/2016 862
AAA Aaa 4,990 Series A, 5.125% due 7/01/2019 4,235
AAA Aaa 10,500 Series A, 5.125% due 7/01/2020 8,885
AAA Aaa 18,605 Series P, 6% due 7/01/2013 18,092
AAA Aaa 28,165 Series P, 6.25% due 7/01/2020 27,879
AAA Aaa 9,000 Municipal Electric Authority, Georgia, Special Obligation Bonds
(Fifth Crossover Series, Project One), 6.40% due 1/01/2013(b) 9,157
Hawaii--2.3% Hawaii Airport System Revenue Bonds, AMT:
AAA Aaa 21,795 7.30% due 7/01/2020(b) 23,420
AAA Aaa 23,200 Second Series, 7.50% due 7/01/2020(h) 25,160
Hawaii County, Hawaii, Revenue Refunding and Improvement Bonds,
Series A, UT(h):
AAA Aaa 1,000 5.60% due 5/01/2012 941
AAA Aaa 1,000 5.60% due 5/01/2013 939
Hawaii Department of Budget and Finance, Special Purpose Mortgage
Revenue Bonds (Hawaiian Electric Company), AMT(e):
AAA Aaa 4,340 7.625% due 12/01/2018 4,873
AAA Aaa 5,000 Series C, 7.375% due 12/01/2020 5,421
AAA Aaa 4,500 Hawaii Harbor Capital Improvement Revenue Bonds, AMT, 7% due
7/01/2017(e) 4,716
<PAGE>
Illinois--5.5% AAA Aaa 25,000 Chicago, Illinois, Public Building Commission Revenue Bonds (Community
College District No. 508), Series B, 8.75% due 1/01/2007(c)(g) 27,636
AAA Aaa 25,000 Chicago, Illinois, Public Building Commission Revenue Bonds, Series
A, 7.125% due 1/01/2015(c)(e) 27,756
AAA Aaa 20,000 Cook County, Illinois, GO, UT, Series A, 6.60% due 11/15/2022(e) 20,207
AAA Aaa 11,000 Evergreen Park, Illinois, Hospital Facility Revenue Refunding Bonds
(Little Company of Mary Hospital), 7.75% due 2/15/2009(e) 12,021
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 3,250 (Elmhurst Memorial Hospital), 6.625% due 1/01/2022(h) 3,292
AAA Aaa 4,000 (Methodist Health Project), 6.903% due 5/01/2021(b) 4,133
AAA Aaa 5,500 (Northern Illinois Medical Center), 7.875% due 9/01/2014(b) 6,035
AAA Aaa 16,000 (Rush-Presbyterian Saint Luke's Medical Center), 6.80% due
10/01/2024(e) 16,439
Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Bonds, Series A(h)(j)(k):
AAA Aaa 7,000 5.67% due 6/15/2010 2,521
AAA Aaa 5,000 5.70% due 6/15/2011 1,675
AAA Aaa 27,215 5.75% due 6/15/2013 8,017
AAA Aaa 25,845 5.75% due 6/15/2014 7,001
AAA Aaa 1,940 6.10% due 6/15/2015 492
AAA Aaa 9,750 6.10% due 6/15/2016 2,317
AAA Aaa 8,400 6.50% due 6/15/2027 8,388
AAA Aaa 3,025 Northwest Suburban Municipal Joint Action Water Agency, Illinois,
Water Supply System Revenue Refunding Bonds, Series A, 5.90% due
5/01/2015(e) 2,845
Indiana--0.8% AAA Aaa 6,725 Goshen-Chandler, Indiana, School Building Corporation, First Mortgage
Revenue Refunding Bonds, UT, 5.75% due 1/15/2010(e) 6,439
AAA Aaa 2,470 Indiana Employment Development Commission, Environmental Revenue
Bonds (Public Service Company of Indiana), AMT, 7.50% due 3/15/2015(e) 2,693
AAA Aaa 4,040 Indianapolis, Indiana, Local Public Improvement Bond Bank, Series A,
7.90% due 2/01/2002(a)(g) 4,662
AAA Aaa 2,000 Jasper County, Indiana, PCR, Refunding (Northern Indiana Public
Service), 7.10% due 7/01/2017(e) 2,140
AAA Aaa 3,830 Purdue University, Indiana, University Revenue Bonds (Purdue
University Dormitory System), Series B, 6% due 7/01/2001(a)(b) 4,057
AAA Aaa 3,550 Rockport, Indiana, PCR, Refunding (Indiana-Michigan Power), Series B,
7.60% due 3/01/2016(h) 3,904
Iowa--0.4% AAA Aaa 5,000 Des Moines, Iowa, Parking Facilities Revenue Bonds, 7.25% due
7/01/2015(h) 5,413
Iowa Finance Authority, Hospital Facilities Revenue Refunding Bonds
(Allen Memorial Hospital), Series A(b):
AAA Aaa 3,500 5.50% due 2/15/2013 3,188
AAA Aaa 2,100 5.60% due 2/15/2020 1,865
<PAGE>
Kentucky--0.9% AAA Aaa 4,500 Boone County, Kentucky, PCR, Refunding (Cincinnati Gas and Electric),
5.50% due 1/01/2024 3,977
AAA Aaa 11,470 Kentucky Development Finance Authority, Hospital Revenue Refunding
and Improvement Bonds (Saint Elizabeth Medical Center), Series A, 9%
due 11/01/2000(h) 13,748
Owensboro, Kentucky, Electric Light and Power Revenue Bonds,
Series B(b)(j)(k):
AAA Aaa 1,000 5.70% due 1/01/2011 346
AAA Aaa 5,000 5.90% due 1/01/2014 1,407
AAA Aaa 9,125 5.80% due 1/01/2015 2,410
AAA Aaa 7,675 5.90% due 1/01/2016 1,900
AAA Aaa 3,500 5.72% due 1/01/2019 713
Louisiana--0.4% AAA Aaa 8,700 Louisiana Public Facilities Authority, Health and Education Capital
Facilities Revenue Bonds (Our Lady of the Lake Regional Medical
Center), Series C, 8.20% due 12/01/2015(g) 9,776
Maryland--1.4% Baltimore, Maryland, Revenue Refunding Bonds (Water Projects),
Series A(h):
AAA Aaa 10,000 6.25% due 7/01/2002(a) 10,677
AAA Aaa 9,125 5% due 7/01/2024 7,482
Maryland Health and Higher Educational Facilities Authority
Revenue Bonds (University of Maryland Medical Systems) (h):
AAA Aaa 2,250 Series A, 7% due 7/01/2001(a) 2,505
AAA Aaa 4,400 Series B, 7% due 7/01/2022 4,948
Maryland Health and Higher Educational Facilities Authority,
Revenue Refunding Bonds:
AAA Aaa 6,325 (Greater Baltimore Medical Center), 5% due 7/01/2013(h) 5,409
AAA Aaa 7,500 (Sinai Hospital Project), 5.25% due 7/01/2019(b) 6,415
Massachusetts--1.6% AAA Aaa 3,175 Massachusetts Bay Transportation Authority, Massachusetts General
Transportation System Revenue Bonds, Series A, 7.10% due
3/01/1999(a)(g) 3,491
AAA Aaa 13,000 Massachusetts Bay Transportation Authority Revenue Bonds, COP,
Series A, 7.65% due 8/01/2015(i) 14,451
AAA Aaa 5,505 Massachusetts Educational Loan Authority Revenue Bonds, AMT, Issue D,
Series A, 7.25% due 1/01/2009(e) 5,717
Massachusetts Health and Educational Facilities Authority Revenue
Bonds:
AAA Aaa 2,355 (Massachusetts General Hospital), Refunding, Series G, 5.25%
due 7/01/2023(b) 1,986
AAA Aaa 6,200 (Saint Elizabeth Hospital), 6.56% due 8/15/2021(i) 6,413
AAA Aaa 3,250 Massachusetts Port Authority Revenue Bonds, 13% due 7/01/2013(c) 5,382
AAA Aaa 5,500 Massachusetts State Industrial Finance Agency Revenue Bonds
(Brandeis University), Series C, 6.80% due 10/01/2019(e) 5,670
AAA Aaa 4,500 Massachusetts State Turnpike Authority Turnpike Revenue Refunding
Bonds, Series A, 5.125% due 1/01/2023(h) 3,765
<PAGE>
Michigan--3.6% AAA Aaa 10,500 Chippewa Valley, Michigan, Schools Revenue Refunding Bonds, 5% due
5/01/2021(h) 8,695
AAA Aaa 10,000 Grand Rapids, Michigan, Water Supply Systems, Revenue Refunding
Bonds, 5.75% due 1/01/2018(h) 9,318
A1+ VMIG1 700 Michigan Higher Education Student Loan Authority, Revenue Refunding
Bonds, VRDN, AMT, Series X11-B, 2.65% due 10/01/2013(b)(f) 700
AAA Aaa 26,120 Michigan State Trunk Line, Series A, 5.80% due 11/15/2024 (h) 24,326
Monroe County, Michigan, PCR (Detroit Edison Company Project), AMT:
AAA Aaa 16,500 Project 1, 7.65% due 9/01/2020(h) 18,159
AAA Aaa 13,255 Series CC, 7.50% due 12/01/2019(b) 14,696
AAA Aaa 9,745 Series I-B, 7.50% due 9/01/2019(b) 10,771
AAA Aaa 15,000 Western Michigan University Revenue Bonds, Series A, 6.50% due
7/15/2001(a)(b) 16,328
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Minnesota--0.2% AAA Aaa $ 5,000 Northern Municipal Power Agency, Minnesota, Electric Systems,
Revenue Refunding Bonds, Series A, 6% due 1/01/2019(b) $ 4,832
Mississippi--0.6% AAA Aaa 1,320 Harrison County, Mississippi, Wastewater Management District,
Revenue Refunding Bonds, Wastewater Treatment Facilities, Series A,
8.50% due 2/01/2013(h) 1,656
AAA Aaa 1,750 Hinds County, Mississippi, Revenue Refunding Bonds (Methodist
Hospital and Rehabilitation), 5.60% due 5/01/2012(b) 1,632
AAA Aaa 13,000 Mississippi Hospital Equipment and Facilities Authority, Revenue
Refunding and Improvement Bonds (North Mississippi Health
Services), 5.75% due 3/08/2016(b) 12,083
Montana--0.2% AAA Aaa 5,600 Montana Health Facilities Authority, Hospital Facilities Revenue
Bonds (Deaconess Medical Center Project), SAVRS, Series A, 2.80%
due 2/15/2016(b)(d) 5,600
<PAGE>
Nevada--2.7% AAA Aaa 6,500 Clark County, Nevada, Airport Improvement Revenue Bonds, AMT, 8.125%
due 7/01/2018(g) 7,307
Clark County, Nevada, Airport Revenue Bonds(a)(h):
AAA Aaa 4,450 6.90% due 6/01/2009 4,871
AAA Aaa 5,590 6.25% due 6/01/2011 5,920
AAA VMIG1 200 Clark County, Nevada, Airport Revenue Refunding Bonds, Series A,
VRDN, 2.85% due 7/01/2012(e)(f) 200
AAA Aaa 10,000 Clark County, Nevada, Passenger Facility Revenue Bonds (Las Vegas
McCarran International Airport), Series A, 6% due 7/01/2022(b) 9,570
AAA Aaa 8,000 Henderson, Nevada, Health Care Facility Revenue Refunding Bonds
(Catholic Healthcare), Series A, 5% due 7/01/2020(b) 6,529
Las Vegas, Nevada, Revenue Refunding Bonds(h):
AAA Aaa 1,500 6.50% due 10/01/2007 1,554
AAA Aaa 2,665 6.50% due 10/01/2008 2,747
AAA Aaa 35,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific
Power), AMT, 6.65% due 6/01/2017(e) 35,709
New Jersey--1.7% AAA Aaa 3,350 Cape May County, New Jersey, Industrial Pollution Control Financing
Authority, Revenue Refunding Bonds (Atlantic City Electric Company),
Series A, 6.80% due 3/01/2021(e) 3,666
AAA Aaa 4,750 Jersey City, New Jersey, Sewer Authority Revenue Refunding Bonds,
6.25% due 1/01/2014(b) 4,847
AAA Aaa 5,000 New Jersey EDA, Water Facilities, Revenue Refunding Bonds (Hackensack
Water Company), Series A, 7% due 1/01/2019(b) 5,297
A1 VMIG1 4,000 New Jersey Sports and Exposition Authority, State Contract Revenue
Bonds, Series C, VRDN, 2.70% due 9/01/2024(e)(f) 4,000
New Jersey State Housing and Mortgage Finance Agency Revenue Bonds
(Home Buyer), AMT(e):
AAA Aaa 7,530 Series B, 7.90% due 10/01/2022 7,784
AAA Aaa 17,470 Series D, 7.70% due 10/01/2029 18,028
NR VMIG1 5,800 New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds,
Series D, VRDN, 2.60% due 1/01/2018(f)(h) 5,800
New York--5.2% AAA Aaa 9,650 Metropolitan Transportation Authority, New York, Service Contract
Revenue Refunding Bonds (Transportation Facilities), Series L, 7.50%
due 7/01/2017(b) 10,571
New York City, New York, GO, Series I(b):
AAA Aaa 2,645 7.25% due 8/15/2013 2,893
AAA Aaa 10,130 7.25% due 8/15/2016 11,012
AAA Aaa 4,505 UT, 7.25% due 8/15/2013 4,991
AAA Aaa 6,010 New York City, New York, Health and Hospital Authority, Local
Government Revenue Refunding Bonds, Series A, 5.625% due 2/15/2013(b) 5,556
New York City, New York, Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds:
AAA Aaa 50,000 5.20% due 6/15/2008(d) 46,479
AAA Aaa 4,510 Series C, 6.20% due 6/15/2021(b) 4,423
AAA Aaa 4,000 Series F, 5.50% due 6/15/2023(e) 3,519
New York City, New York, Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds(h):
AAA Aaa 12,075 Refunding, Series A, 5.75% due 6/15/2018 11,189
AAA Aaa 1,090 Series A, 6.75% due 6/15/2014 1,128
New York City, New York, Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds, VRDN(f)(h):
A1+ VMIG1 10,500 Series C, 3.30% due 6/15/2022 10,500
AAA VMIG1 500 Series C, 3.30% due 6/15/2023(g) 500
AAA VMIG1 6,100 Series G, 3.10% due 6/15/2024 6,100
New York City, New York, Series B, VRDN(f)(h):
A1+ VMIG1 2,500 3.30% due 10/01/2020 2,500
A1+ VMIG1 3,200 3.30% due 10/01/2022 3,200
A1+ VMIG1 300 3.30% due 10/01/2021 300
New York State Medical Care Facilities Finance Agency Revenue Bonds
(Mental Health Services):
AAA Aaa 3,085 Series C, 7.375% due 8/15/2019(e) 3,375
AAA Aaa 11,500 Series D, 5.90% due 8/15/2022(b) 10,824
Suffolk County, New York, Water Authority, Waterworks Revenue
Refunding Bonds(b):
AAA Aaa 1,235 7.375% due 6/01/2012 1,358
AAA Aaa 7,345 5.75% due 6/01/2013 6,979
AAA Aaa 1,100 Series C, 5.75% due 6/01/2002(a) 1,143
<PAGE>
North Carolina--0.8% AAA VMIG1 100 Charlotte, North Carolina, Airport Revenue Refunding Bonds,
VRDN, Series A, 2.55% due 7/01/2016(e)(f) 100
AAA Aaa 27,855 North Carolina Municipal Power Agency, Electric Revenue Refunding
Bonds (Catawba Electric Project No. 1), 5% due 1/01/2018(e) 23,221
Ohio--1.3% AAA Aaa 12,000 Clermont County, Ohio, Hospital Facilities Revenue Refunding Bonds
(Mercy Health Systems), Series A, 7.50% due 9/01/2019(b) 13,299
AAA Aaa 2,250 Cleveland, Ohio, Revenue Refunding Bonds, 5.375% due 9/01/2009(b) 2,124
AAA Aaa 6,700 Ohio Municipal Electric Generation Agency, Joint Ventures, COP,
5.376% due 2/15/2013(b) 6,101
AAA Aaa 15,000 Ohio State Air Quality Development Authority, Revenue Refunding
Bonds, PCR, Series B, Ohio Edison, 5.625% due 11/15/2029(b) 13,571
Oklahoma--1.3% AAA Aaa 7,500 Oklahoma Industrial Authority, Hospital Revenue Bonds (Baptist
Medical Center), Series A, 7% due 8/15/2014(b) 7,946
AAA Aaa 5,000 Tulsa, Oklahoma, Airports Revenue Bonds, 7.50% due 6/01/2008(e) 5,455
AAA Aaa 21,560 Tulsa, Oklahoma, Industrial Authority, Hospital Revenue Bonds
(Saint John's Medical Center, Inc.), 7.25% due 12/01/2009(e) 23,788
Oregon--0.2% AAA Aaa 1,200 Jefferson County, Oregon (School District No 509j), 5.50% due
6/15/2013(i) 1,113
AAA Aaa 4,000 Port Portland, Oregon, Portland International Airport, Airport
Revenue Bonds, Series 7-B, AMT, 7.10% due 7/01/2021(e) 4,273
Pennsylvania--8.8% AAA Aaa 1,500 Allegheny County, Pennsylvania, Airport Revenue Bonds (Greater
Pittsburgh International Airport), AMT, Series C, 7% due
1/01/2018(e) 1,579
AAA Aaa 1,750 Allegheny County, Pennsylvania, Hospital Development Authority
Revenue Bonds (Mercy Hospital of Pittsburgh), 6.75% due 4/01/2021(b) 1,796
AAA Aaa 6,900 Beaver County, Pennsylvania, Hospital Authority Revenue Bonds (Medical
Center of Beaver, Pennsylvania Incorporated), Series A, 6.25% due
7/01/2022(b) 6,705
AAA Aaa 3,365 Beaver County, Pennsylvania, IDA, PCR, Refunding (Ohio Edison
Company), Series A, 7% due 6/01/2021(h) 3,576
AAA Aaa 3,610 Berks County, Pennsylvania, Municipal Revenue Bonds (Reading Hospital
Medical Center Project), 5.70% due 10/01/2014(e) 3,356
AAA Aaa 6,500 Bethlehem, Pennsylvania, Water Authority Revenue Refunding Bonds,
5.20% due 11/15/2021(e) 5,498
AAA Aaa 9,000 Bucks County Pennsylvania, IDA, Revenue Bonds (Grand View Hospital
Project), 7% due 7/01/2001(a)(b) 10,033
AAA Aaa 10,000 Lehigh County, Pennsylvania, Revenue Refunding Bonds, UT, 5.125%
due 11/15/2011(h) 8,788
AAA Aaa 3,400 Monroeville, Pennsylvania, Hospital Authority, Hospital Revenue Bonds
(Forbes Health System), Series B, 7.35% due 10/01/2015(g) 3,656
AAA Aaa 8,000 Montgomery County, Pennsylvania, Higher Education and Health
Authority, Hospital Revenue Bonds (Abington Memorial Hospital),
5.125% due 6/01/2014(b) 6,880
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Pennsylvania AAA Aaa $ 9,725 Pennsylvania Convention Center Authority Revenue Bonds, Series A,
(concluded) 6.70% due 9/01/2016(c)(h) $10,391
Pennsylvania Higher Educational Assistance Agency, Student Loan
Revenue Bonds, AMT:
AAA Aaa 34,000 6.03% due 3/01/2022(b) 31,750
AAA Aaa 20,000 6.71% due 9/03/2026(b) 20,437
AAA Aaa 16,000 7.437% due 3/01/2020(e) 16,940
Pennsylvania State Higher Educational Facilities Authority, College
and University Revenue Bonds:
AAA Aaa 1,500 (Bryn Mawr College), 6.50% due 12/01/2009(h) 1,555
AAA Aaa 4,250 (Temple University), First Series, 6.50% due 4/01/2021(e) 4,278
AAA Aaa 20,390 Pennsylvania Turnpike Commission, Turnpike Revenue Bonds, Series L,
6.25% due 6/01/2011(1) 20,499
Philadelphia, Pennsylvania, Airport Revenue Bonds, AMT(e):
AAA Aaa 8,150 7.75% due 6/15/2015 8,996
AAA Aaa 24,000 7.375% due 6/15/2018 25,967
AAA Aaa 5,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th Series B,
7% due 5/15/2020(c)(e) 5,588
AAA Aaa 5,750 Philadelphia, Pennsylvania, Parking Authority, Airport Parking
Revenue Bonds, 7.375% due 9/01/2018(b) 6,254
AAA Aaa 26,800 Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds, 5.01%
due 6/15/2004(h) 26,068
Pittsburgh, Pennsylvania, Revenue Refunding Bonds, UT, Series A(b):
AAA Aaa 1,200 5.10% due 9/01/2005 1,145
AAA Aaa 1,000 5.20% due 9/01/2006 947
AAA Aaa 1,000 5.40% due 9/01/2008 944
Pittsburgh, Pennsylvania, Water and Sewer Authority, Water and Sewer
System Revenue Refunding Bonds, Series A(h):
AAA Aaa 5,000 6.50% due 9/01/2001(a) 5,447
AAA Aaa 9,000 4.75% due 9/01/2016 7,217
AAA Aaa 7,500 University Area Joint Authority, Pennsylvania, Sewer Revenue
Refunding Bonds, 4.75% due 11/01/2020(e) 5,902
<PAGE>
Rhode Island--2.4% Providence, Rhode Island, GO, UT(e):
AAA Aaa 1,540 6.75% due 1/15/2008 1,635
AAA Aaa 1,540 6.75% due 1/15/2009 1,631
AAA Aaa 1,540 6.75% due 1/15/2010 1,627
Rhode Island Depositors Economic Protection Corporation, Special
Obligation Bonds, Series A(i):
AAA Aaa 35,000 5.75% due 8/01/2019 32,174
AAA Aaa 6,100 6.625% due 8/01/2002(a) 6,680
AAA Aaa 21,600 Rhode Island Health and Educational Building Corporation Revenue
Bonds (Rhode Island Hospital), 6.71% due 8/15/2021(h) 22,336
South Carolina-- AAA Aaa 7,000 Charleston, South Carolina, Waterworks and Sewer Revenue Refunding
6.8% Improvement Bonds, 6% due 1/01/2016(b) 6,754
AAA Aaa 5,000 Florence County, South Carolina, Hospital Revenue Bonds (McLeod
Regional Medical Center Project), 6.75% due 11/01/2020(h) 5,137
AAA Aaa 4,000 Georgetown County, South Carolina, Hospital Facilities Revenue
Refunding Bonds (Georgetown Memorial Hospital), Series B, 7.25%
due 11/01/2017(b) 4,413
AAA Aaa 1,750 Greenville, South Carolina, Hospital System, Hospital Facilities
Revenue Bonds, Series A, 7.50% due 5/01/2016(h) 1,866
AAA Aaa 2,410 Myrtle Beach, South Carolina, Water and Sewer System Revenue Bonds,
5.25% due 3/01/2020(e) 2,063
AAA Aaa 3,500 Pickens and Richland Counties, South Carolina, Hospital Facilities
Revenue Bonds (Baptist Hospital), Series A, 7% due 8/01/2001(a)(b) 3,896
Piedmont Municipal Power Agency, South Carolina, Electric Revenue
Refunding Bonds:
AAA Aaa 9,150 6.25% due 1/01/2021(h) 9,103
AAA Aaa 12,235 5% due 1/01/2022(h) 9,964
AAA Aaa 10,000 6.30% due 1/01/2022(e) 9,859
AAA Aaa 15,750 Series A, 7.40% due 1/01/2018(b) 17,057
AAA Aaa 29,100 South Carolina Jobs, EDA, Hospital Facilities Revenue Bonds,
5.41% due 8/01/2021(b) 24,802
South Carolina State Public Service Authority, Revenue Refunding
Bonds (Santee Cooper):
AAA Aaa 6,000 Series A, 5.50% due 7/01/2011(b) 5,568
AAA Aaa 37,805 Series A, 5.50% due 7/01/2021(e) 33,195
AAA Aaa 17,090 Series A, 6.375% due 7/01/2021(b) 16,970
AAA Aaa 4,000 Series B, 6.10% due 7/01/2027(b) 3,804
AAA Aaa 2,750 Series C, 5% due 1/01/2014(b) 2,324
AAA Aaa 18,500 Series C, 5% due 1/01/2018(h) 15,257
AAA Aaa 25,400 Series C, 5% due 1/01/2025(h) 20,485
Tennessee--0.2% AAA Aaa 1,905 Jackson, Tennessee, Water and Sewer System Revenue Bonds, 10.375%
due 7/01/2012 2,205
AAA Aaa 2,200 Knox County, Tennessee, Health, Educational and Housing Facilities
Board, Hospital Facilities Crossover Revenue Refunding Bonds (Mercy
Health Care System), Series A, 7.60% due 9/01/2019 2,465
<PAGE>
Texas--13.8% Austin, Texas, Utility System Revenue Bonds(e):
AAA Aaa 11,190 9.25% due 11/15/2004(a)(g) 14,245
AAA Aaa 5,250 Refunding, Series B, 5.25% due 5/15/2018 4,510
AAA Aaa 2,000 Bexar, Texas, Metropolitan Water District, Water Works System
Revenue Bonds, 5% due 5/01/2019(b) 1,650
Brazos River Authority, Texas, PCR, Refunding (Texas Utilities
Electric Company Project), AMT:
AAA Aaa 6,000 6.50% due 12/01/2027(b) 6,013
AAA Aaa 12,000 Series B, 6.625% due 6/01/2022(h) 12,134
Brazos River Authority, Texas, Revenue Refunding Bonds (Houston
Light and Power):
AAA Aaa 12,700 5.60% due 12/01/2017(e) 11,446
AAA Aaa 13,900 Series B, 7.20% due 12/01/2018(h) 15,159
AAA Aaa 20,000 Brownsville, Texas, Utility System Revenue Refunding Bonds, 6.25%
due 9/01/2014(e) 20,066
A1+ VMIG1 600 Harris County, Texas, Health Facilities Development Corporation,
Special Facilities, Revenue Bonds (Texas Medical Center Project),
VRDN, 3.40% due 2/15/2022(e)(f) 600
AAA Aaa 5,000 Harris County, Texas, Hospital District Mortgage, Revenue Refunding
Bonds, 7.40% due 2/15/2010(b) 5,616
AAA Aaa 1,695 Harris County, Texas, Toll Road Revenue Bonds, Series A, 6.50%
due 8/15/2011 1,734
Harris County, Texas, Toll Road Senior Lien Revenue Bonds:
AAA Aaa 6,045 5.30% due 8/15/2013(b) 5,378
AAA Aaa 2,750 6.50% due 8/15/2017(b) 2,770
AAA Aaa 42,065 5.375% due 8/15/2020(h) 36,624
AAA Aaa 4,000 5.50% due 8/15/2021(h) 3,539
AAA Aaa 10,305 Series A, 6.50% due 8/15/2002(a)(h) 11,218
AAA Aaa 15,250 Series A, 6.50% due 8/15/2002(a)(b) 16,622
AAA Aaa 8,390 Houston, Texas, Independent School District Refunding and School
House Bonds, 5.65% due 8/15/2009(b)(j)(k) 3,198
Houston, Texas, Water and Sewer System, Revenue Refunding Bonds,
Series C(b)(j)(k):
AAA Aaa 11,250 5.70% due 12/01/2009 4,258
AAA Aaa 17,700 5.70% due 12/01/2010 6,192
AAA Aaa 45,960 5.70% due 12/01/2011 15,005
AAA Aaa 53,850 5.78% due 12/01/2012 16,429
AAA Aaa 3,500 Houston, Texas, Water Conveyance System COP, Series J, 6.25%
due 12/15/2013(b) 3,527
Lower Colorado River Authority, Texas, Revenue Refunding Bonds:
AAA Aaa 5,000 5.15% due 1/01/2021 4,196
AAA Aaa 27,500 Fifth Supplemental Series, 5.25% due 1/01/2015(e) 24,029
AAA Aaa 4,415 Series B, 5.60% due 1/01/2009(c)(e)(j) 1,771
AAA Aaa 650 Series B, 7% due 1/01/2001(a)(b) 718
Matagorda County, Texas, Navigation District No. 1, PCR, AMT:
AAA Aaa 5,000 (Central Power and Light Company Project), 7.50% due 3/01/2020(b) 5,485
AAA Aaa 8,250 (Houston Light and Power), Series D, 7.60% due 10/01/2019(h) 9,063
Matagorda County, Texas, Navigation District No. 1, Revenue
Refunding Bonds (Houston Light and Power):
AAA Aaa 11,800 Series A, 6.70% due 3/01/2027(b) 12,034
AAA Aaa 26,305 Series C, 7.125% due 7/01/2019(h) 28,361
AAA Aaa 6,470 Series E, 7.20% due 12/01/2018(h) 7,031
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Texas AAA Aaa $ 15,000 Southwest Higher Education Authority Incorporated, Texas, Revenue
(concluded) Refunding Bonds (Southern Methodist University), Series B,
6.25% due 10/01/2022(h) $ 14,591
Tarrant County, Texas, Water Control and Improvement District No.
001, Water Revenue Refunding Bonds(b):
AAA Aaa 5,000 4.50% due 3/01/2011 4,074
AAA Aaa 5,000 4.75% due 3/01/2013 4,113
Texas Municipal Power Agency, Revenue Refunding Bonds:
AAA Aaa 10,000 5.50% due 9/01/2010(e) 9,388
AAA Aaa 33,885 6.10% due 9/01/2014(e)(j) 9,127
AAA Aaa 2,900 Series A, 6.75% due 9/01/2012(b) 3,008
Texas State Public Finance Authority, Building Revenue Capital
Appreciation Refunding Bonds(e)(j):
AAA Aaa 7,000 5.80% due 2/01/2009 2,761
AAA Aaa 2,890 6.10% due 2/01/2011 995
AAA Aaa 8,500 5.81% due 2/01/2012 2,736
Texas Turnpike Authority, Turnpike Revenue Refunding Bonds (Dallas
North Thruway)(b):
AAA Aaa 3,230 4.75% due 1/01/2011 2,733
AAA Aaa 2,085 4.75% due 1/01/2013 1,720
AAA Aaa 3,725 4.75% due 1/01/2014 3,042
AAA Aaa 25,875 Trinity River Authority, Texas, Regional Wastewater System, Revenue
Refunding Bonds, Series A, 5% due 8/01/2016(b) 21,688
Utah--1.5% AAA Aaa 2,805 Salt Lake City, Utah, Hospital Revenue Bonds (Holy Cross Health
System Corporation--Holy Cross Hospital), 7.375% due 12/01/2018(h) 3,020
AAA Aaa 28,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds (IHC Hospital,
Incorporated), 6.75% due 5/15/2020(b) 28,766
AA- Aaa 1,000 Uintah County, Utah, PCR (Deseret Generation and Transmission
Cooperative-National Rural Utilities Company), Series 1984 F-2,
10.50% due 6/15/2001(a) 1,298
AAA Aaa 2,650 Utah Board of Regents, Student Loan Revenue Bonds, AMT, Series F,
7.45% due 11/01/2008(b) 2,775
A1+ VMIG1 3,100 Utah Board of Regents, Student Loan Revenue Bonds, AMT, VRDN,
Series C, 2.60% due 11/01/2013(b)(f) 3,100
Utah Municipal Power Agency, Electric System Revenue Refunding
Bonds, Series A(h):
AAA Aaa 3,120 5.50% due 7/01/2012 2,850
AAA Aaa 3,295 5.50% due 7/01/2013 2,988
<PAGE>
Vermont--0.7% AAA Aaa 18,950 Vermont HFA Revenue Bonds (Home Mortgage Purchase), AMT, Series B,
7.60% due 12/01/2024(e) 19,578
Virginia--1.6% AAA Aaa 16,800 Prince William County, Virginia, Service Authority, Water and Sewer
System, Revenue Refunding Bonds, 5% due 7/01/2021(h) 13,758
AAA Aaa 19,020 Roanoke, Virginia, IDA, Hospital Revenue Bonds (Roanoke Memorial
Hospital Projects), Series A, 5% due 7/01/2024(e) 15,359
AAA Aaa 11,000 Upper Occoquan Sewer Authority, Virginia, Regional Sewer Revenue
Bonds, 6% due 7/01/2001(a)(e) 11,498
AAA Aaa 5,000 Winchester, Virginia, IDA, Hospital Facilities Revenue Refunding
Bonds (Winchester Medical Center--First Mortgage), SAVRS, 3.08%
due 1/21/2014(b)(d) 5,000
Washington--4.2% Seattle, Washington, Municipality, Metropolitan Seattle, Sewer
Revenue Bonds, Series W(e):
AAA Aaa 2,465 6.25% due 1/01/2022 2,405
AAA Aaa 4,485 6.25% due 1/01/2023 4,374
Seattle, Washington, Municipality, Metropolitan Seattle, Sewer
Revenue Refunding Bonds(h):
AAA Aaa 8,155 Series X, 5.30% due 1/01/2008 7,632
AAA Aaa 9,605 Series X, 5.375% due 1/01/2009 8,915
AAA Aaa 9,755 Series X, 5.40% due 1/01/2010 8,966
AAA Aaa 10,960 Series X, 5.40% due 1/01/2011 10,020
AAA Aaa 6,560 Series Y, 5.70% due 1/01/2015 6,082
AAA Aaa 3,315 Series Y, 5.70% due 1/01/2016 3,050
AAA Aaa 10,000 Seattle, Washington, Solid Waste Utility, Revenue Refunding
Bonds, Series A, 6.875% due 5/01/2009(g) 10,518
Tacoma, Washington, Sewer Revenue Bonds(e):
AAA Aaa 3,425 7.625% due 12/01/2006 3,741
AAA Aaa 4,075 7.625% due 12/01/2007 4,450
AAA Aaa 4,400 7.625% due 12/01/2008 4,805
AAA Aaa 3,250 University of Washington Revenue Bonds (Housing and Dining), 7% due
12/01/2021(e) 3,486
AAA Aaa 7,000 Washington Health Care Facilities Authority Revenue Bonds (Southwest
Washington Hospital-Vancouver), 7.125% due 10/01/2019(g) 7,600
D NR 719 Washington Public Power Supply System, Generating Facilities Revenue
Bonds (Nuclear Project Numbers 4 & 5), Series D, 12.50% due 7/01/2010 719
Washington Public Power Supply System, Revenue Refunding Bonds(e):
AAA Aaa 5,750 Project No. 1, 6.25% due 7/01/2017 5,606
AAA Aaa 12,380 Project No. 2, Series A, 5.70% due 7/01/2008 12,054
AAA Aaa 2,530 Washington Public Power Supply Systems, Revenue Refunding Bonds,
Project No. 1, Series A, 5.70% due 7/01/2017(e) 2,301
AAA Aaa 10,000 Washington Public Power Supply System, Revenue Refunding Bonds,
Project No. 1, Series B, 5.60% due 7/01/2015(e) 9,072
<PAGE>
West Virginia--0.8% AAA Aaa 9,270 Kanawha County, West Virginia, Building Commission Revenue Refunding
Bonds (Charleston Area Medical Center Inc.), Series A, 7.10% due
6/01/2013(e) 9,976
AAA Aaa 7,650 Putnam County, West Virginia, PCR, Refunding (Appalachian Power
Company Project), Series D, 5.45% due 6/01/2019(b) 6,690
AAA Aaa 5,600 West Virginia School Building Authority Revenue Bonds (Capital
Improvement), Series B, 6.75% due 7/01/2010(e) 5,810
Wisconsin--1.5% AAA Aaa 7,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds
(Midwest Energy Resources), Series E, 6.90% due 8/01/2021(h) 7,590
Wisconsin Health and Educational Facilities Authority Revenue Bonds:
AAA Aaa 1,500 (Saint Lukes Medical Center Project), 7.10% due 8/15/2019(e) 1,594
AAA Aaa 5,750 (Waukesha Memorial Hospital), Series B, 7.25% due 8/15/2019(b) 6,134
Wisconsin Public Power System Incorporated, Power Supply System
Revenue Bonds, Series A(b):
AAA Aaa 18,485 5.25% due 7/01/2021 15,644
AAA Aaa 6,500 6.875% due 7/01/2001(a) 7,211
Total Investments (Cost--$2,690,286)--96.3% 2,702,602
Other Assets Less Liabilities--3.7% 105,332
----------
Net Assets--100.0% $2,807,934
==========
<FN>
(a)Prerefunded.
(b)AMBAC Insured.
(c)Escrowed to maturity.
(d)The interest rate is subject to change periodically and inversely based upon the
prevailing market rate. The interest rate shown is the rate in effect at June 30,
1994.
(e)MBIA Insured.
(f)The interest rate is subject to change periodically based upon the prevailing
market rate. The interest rate shown is the rate in effect at June 30, 1994.
(g)BIG Insured.
(h)FGIC Insured.
(i)FSA Insured.
(j)Principal only securities which are traded on a discount basis and are amortized
to maturity.
(k)The interest rate shown represents the yield to maturity.
Ratings of issues shown have not been
audited by Deloitte & Touche.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alaska--1.0% Valdez, Alaska, Marine Terminal Revenue Refunding Bonds:
AA- A1 $ 5,000 (British Petroleum Pipeline), Series B, 7% due 12/01/2025 $ 5,229
AA- A1 11,250 (Sohio Pipeline), 7.125% due 12/01/2025 11,819
Arizona--6.2% AA Aa 5,000 Arizona State Transportation Board, Highway Revenue Refunding
Bonds, Series A, 5% due 7/01/2010 4,467
A A3 19,500 Greenlee County, Arizona, IDA, PCR, Revenue Refunding (Phelps Dodge
Corporation Project), 5.45% due 6/01/2009 18,070
NR P1+ 3,100 Maricopa County, Arizona, IDA, M/F Housing Revenue Bonds (Vista
Ventana Apartments Project), VRDN, AMT, Series D, 2.60% due 6/01/2034
(a) 3,100
Phoenix, Arizona, Civic Improvement Corporation, Wastewater System,
Lease Revenue Bonds:
A NR 4,000 6.125% due 7/01/2003(k) 4,236
A A1 20,865 Refunding, 5% due 7/01/2018 16,807
A A1 6,930 Refunding, 4.75% due 7/01/2023 5,240
A1+ VMIG1 7,500 Phoenix, Arizona, VRDN, Series 1, 3.30% due 6/01/2018(a) 7,500
AA Aa 49,400 Salt River Project, Arizona, Agricultural Improvement and Power
District, Electric System Revenue Bonds, 5.050% due
1/01/2011(m) 43,354
Arkansas--0.0% AAA NR 500 Arkansas State, Development Finance Authority, S/F Mortgage
Revenue Bonds, Mortgage Back Securities Program, Series D,
5.65% due 6/01/2016(g) 452
NR NR 520 Hot Springs, Arkansas, Water Revenue Refunding Bonds, 5.60%
due 9/01/2008 501
California--2.6% SP1 MIG1++ 5,100 California State, RAN, Series B, 3.50% due 7/26/1994 5,102
NR NR 4,000 Long Beach, California, GO, Special Tax Community Facilities,
District No. 3, 6.375% due 9/01/2023 3,613
Los Angeles, California, Department of Water and Power, Electric
Plant Revenue Bonds, Second Issue:
AA Aa 5,000 4.75% due 10/15/2020 3,904
AA Aa 10,000 Crossover Refunding, 4.75% due 11/15/2019 7,869
SP1+ MIG2 20,000 Los Angeles County, California, Revenue Bonds, TRAN, 4.50% due
6/30/1995 20,154
A1+ VMIG1 3,900 Mountain View, California, M/F Housing Revenue Bonds (Villa
Mariposa Project), VRDN, Series A, 2.40% due 3/01/2017(a) 3,900
<PAGE>
Colorado--2.0% Boulder County, Colorado, Hospital Revenue Refunding Bonds
(Longmont United Hospital Project):
BBB+ Baa1 2,000 5.80% due 12/01/2013 1,790
BBB+ Baa1 1,000 5.875% due 12/01/2020 872
NR VMIG1 4,700 Colorado Student Obligation Bond Authority, Student Loan Revenue
Bonds, VRDN, Series A, 2.30% due 3/01/2024(a) 4,700
Denver, Colorado, City and County Airport Revenue Bonds, AMT:
BB Baa 8,570 Series A, 8% due 11/15/2025 8,600
BB Baa 1,310 Series B, 7.25% due 11/15/2007 1,282
BB Baa 3,000 Series B, 7.25% due 11/15/2023 2,765
BB Baa 5,650 Series C, 6.75% due 11/15/2022 4,952
BB Baa 7,840 Series D, 7.75% due 11/15/2021 7,716
Connecticut--1.4% AA+ Aa 2,500 Connecticut State Clean Water Fund Revenue Bonds, 5.80% due
6/01/2016 2,358
AA- Aa 4,900 Connecticut State, GO, Revenue Refunding Bonds, UT, Series B,
5.50% due 3/15/2012 4,599
A NR 750 Connecticut State Health and Educational Facilities Authority
Revenue Bonds (Taft School Issue),Series B, 5.40% due 7/01/2020 641
AA Aa 5,000 Connecticut State, HFA, Housing Mortgage Finance Program, Series B,
6.30% due 5/15/2024 4,856
AA- A 6,550 Connecticut State Resource Recovery Authority Revenue Bonds (American
Refuse Fuel), AMT, Series A, 8% due 11/15/2015 7,164
AA- A1 1,000 Connecticut State Special Tax Obligation Revenue Bonds (Trans-
portation Infrastructure), Series C, 5% due 10/01/2013 857
AA Aa 1,280 Danbury, Connecticut, UT, 4.50% due 2/01/2014 1,018
AAA Aaa 1,000 South Central Connecticut, Regional Water Authority, Water System
Revenue Bonds, 11th Series, 5.75% due 8/01/2012(f) 964
Westport, Connecticut, UT:
NR Aaa 580 5.70% due 6/15/2011 565
NR Aaa 580 5.75% due 6/15/2012 566
NR Aaa 580 5.75% due 6/15/2013 564
NR Aaa 580 5.75% due 6/15/2014 561
Delaware--0.5% BBB A1 7,500 Delaware State Health Facilities Authority Revenue Bonds (Beebe
Medical Center Project), 8.50% due 6/01/2016 8,125
District of AA- A1 7,500 District of Columbia Revenue Bonds (Georgetown University), 6.56% due
Columbia--0.5% 4/01/2022 7,463
<PAGE>
Florida--5.0% NR Aaa 10,580 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G1, 7.90%
due 3/01/2022(g) 10,872
Florida State, Board of Education, Capital Outlay Refunding, UT,
Series B:
NR Aa 23,400 5.125% due 6/01/2008 21,485
NR Aa 21,600 5.125% due 6/01/2009 19,535
AA- Aa2 5,000 Hillborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), Series 1991, 7.875% due 8/01/2021 5,562
AA Aa1 7,240 Jacksonville, Florida, Electric Authority Revenue Refunding Bonds
(Saint John's River Power Park System), Issue 2, Series 9, 5.25%
due 10/01/2021 6,155
NR NR 2,700 Leesburg, Florida, Hospital Capital Improvement Revenue Bonds
(Leesburg Regional Medical Center Project), Series 1991-A,
7.50% due 7/01/2002(k) 3,107
AAA NR 4,800 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT, Series A,
8.375% due 3/01/2021(g) 4,919
A1 VMIG1 6,085 Pinellas County, Florida, Health Facilities Authority Revenue
Refunding Bonds (Pooled Hospital Loan Program), DATES, VRDN,
3.40% due 12/01/2015(a)(f) 6,085
AA- Aa 5,000 Saint Petersburg, Florida, Public Utility, Revenue Bonds, 5.60%
due 10/01/2018 4,539
Georgia--1.7% AA- Aa 30,705 Atlanta, Georgia, Water and Sewer Revenue Refunding Bonds, 4.75%
due 1/01/2023 23,806
AA Aa 5,500 Fulton County, Georgia, School District, UT, 5.625% due 1/01/2021 4,972
Idaho--0.2% AA NR 2,775 Idaho Housing Agency, S/F Mortgage Revenue Bonds, AMT, Series E, 7.875%
due 7/01/2024(b) 2,864
<PAGE>
Illinois--6.0% Chicago, Illinois, Gas Supply Revenue Bonds (Peoples Gas, Light &
Coke Company Project), AMT, Series A:
AA- Aa3 8,000 8.10% due 5/05/2020 8,950
AA- Aa3 12,450 5.75% due 12/01/2023 10,981
Chicago, Illinois, O'Hare International Airport, Special Facilities
Revenue Bonds (United Airlines, Inc.):
BB Baa2 4,895 AMT, Series B, 8.95% due 5/01/2018 5,329
BB Baa2 14,330 Series 1984-B, 8.85% due 5/01/2018 15,642
AAA Aaa 5,015 Chicago, Illinois, Public Building Commission Revenue Bonds (Community
College District No. 508), Series B, 8.75% due 1/01/2007(d)(i) 5,544
A1+ MIG1++ 8,200 Chicago, Illinois, Tender Notes, VRDN, Series B, 2.30% due 10/31/1995
(a) 8,200
BBB NR 3,000 Illinois Educational Facilities Authority, Revenue Refunding Bonds
(Columbia College), 6.875% due 12/01/2017 3,003
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 3,000 (Methodist Health Project), 6.90% due 5/01/2021(c) 3,100
AAA Aaa 10,000 (Rush-Presbyterian Saint Luke's Medical Center), 6.80% due
10/01/2024(f) 10,274
A+ A1 5,905 Illinois Health Facilities Authority, Revenue Refunding Bonds (OSF
Healthcare Systems), 6% due 11/15/2023 5,412
A+ Aa 11,500 Illinois Housing Development Authority, Residential Mortgage Revenue
Bonds, AMT, 6.874% due 2/01/2018 11,493
Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Bonds (McCormick Place Expansion Project),
Series A(e)(j)(l):
AAA Aaa 18,595 5.75% due 6/15/2015 4,718
AAA Aaa 26,250 5.75% due 6/15/2016 6,239
NR A1 4,000 Southwestern Illinois, Development Authority, Sewer Facilities
Revenue Bonds (Monsanto Company Project), AMT, 7.30% due 7/15/2015 4,248
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Indiana--0.7% NR Baa1 $ 3,500 Indiana Health Facilities Financing Authority, Hospital Revenue
Bonds (Riverview Hospital Project), 6.875% due 8/01/2017 $ 3,395
A+ A1 2,000 Indiana Transportation Finance Authority, Highway Revenue Bonds,
Series A, 7.25% due 6/01/2015 2,239
A+ NR 5,000 Indianapolis, Indiana, Local Public Improvement Refunding Bond Bank,
Series D, 6.75% due 2/01/2020 5,030
NR Aa 1,500 Marion County, Indiana, Hospital Authority, Hospital Facility
Revenue Bonds (Daughters of Charity--Saint Vincent's Hospital Project),
10.125% due 11/01/2015 1,626
<PAGE>
Iowa--0.6% NR NR 9,000 Iowa Financing Authority, Health Care Facilities Revenue Bonds (Mercy
Health Initiatives Project), 9.95% due 7/01/2019 9,512
Kentucky--1.0% Owensboro, Kentucky, Electric Light and Power Revenue Bonds, Series
B(c)(j)(l):
AAA Aaa 6,100 5.72% due 1/01/2011 2,112
AAA Aaa 6,475 5.75% due 1/01/2012 2,096
AAA Aaa 2,750 5.75% due 1/01/2013 830
NR NR 4,500 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds (TJ
International Project), AMT, 7% due 6/01/2024 4,444
AA Aa2 6,345 Trimble County, Kentucky, PCR (Louisville Gas and Electric Company),
AMT, Series A, 7.625% due 11/01/2020 6,846
Louisiana--1.7% NR Ba1 24,000 Lake Charles, Louisiana, Harbor and Terminal District Port Facilities,
Revenue Refunding Bonds (Trunkline LNG Company Project), 7.75% due
8/15/2022 25,525
BB- NR 3,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
Company Project), 7.50% due 7/01/2013 2,963
Maryland--1.5% AA- Aa 7,000 Maryland State Stadium Authority, Sports Facilities Lease Revenue
Bonds, AMT, Series D, 7.60% due 12/15/2019 7,733
A+ A1 14,750 Montgomery County, Maryland, PCR, Refunding (Potomac Electric Power
Company), 5.375% due 2/15/2024 12,700
NR Baa 2,850 Prince Georges County, Maryland, Hospital Revenue Bonds (Greater
Southeast Healthcare Systems), 6.375% due 1/01/2023 2,635
Massachusetts-- AAA Aaa 6,000 Massachusetts Bay Transportation Authority Revenue Bonds, Series B,
5.6% 7.875% due 3/01/2001(a) 6,965
A+ A 4,000 Massachusetts Bay Transportation Authority Refunding Bonds, Series B,
6.20% due 3/01/2016 3,943
A+ A 20,000 Massachusetts State, Consolidated Loans, UT, Series B, 9.25% due
7/01/2000 24,051
Massachusetts State, Health and Educational Facilities Authority
Revenue Bonds:
A- NR 4,250 (Jordon Hospital), Series C, 6.875% due 10/01/2022 4,241
NR NR 9,600 (North Adams Regional Hospital), Series A, 9.625% due 7/01/2018 10,240
NR Baa 12,350 Massachusetts State, Health and Educational Facilities Authority,
Revenue Refunding Bonds (New England Memorial Hospital), Series B,
6.25% due 7/01/2023 10,984
A1 VMIG1 4,000 Massachusetts State, Industrial Finance Agency Revenue Bonds, VRDN,
3.40% due 3/15/2004(a) 4,000
A+ A1 13,750 Massachusetts State, Turnpike Authority, Turnpike Revenue Refunding
Bonds, Series A, 5% due 1/01/2020 11,315
A A 12,105 Massachusetts State, Water Resources Authority, Refunding, Series B,
5% due 3/01/2022 9,721
A A 6,985 Massachusetts State, Water Resources Authority, Series A, 5.75% due
12/01/2021 6,318
<PAGE>
Michigan--5.3% A+ A 1,000 Marquette, Michigan, City Hospital Finance Authority, Hospital
Revenue Refunding Bonds (Marquette General Hospital), Series C,
7.50% due 4/01/2019 1,063
AAA VMIG1 6,600 Michigan Higher Education Student Loan Authority Revenue Bonds, AMT,
Series XII-F, 2.30% due 10/01/2020(a)(c) 6,600
Michigan State Building Authority Revenue Bonds:
AA- A 3,000 Refunding, Series I, 6.25% due 10/01/2020 2,917
AA- A 14,000 Series II, 6.25% due 10/01/2020 13,611
Michigan State Hospital Finance Authority, Hospital Revenue Bonds
(Detroit Medical Center):
A- A 3,500 Refunding, Obligation Group, Series A, 7.50% due 8/15/2011 3,766
A- A 6,500 Refunding, Series A, 6.50% due 8/15/2018 6,285
A- A 19,585 Refunding, Series B, 5.75% due 8/15/2013 17,594
A- A 10,000 Refunding, Series B, 5.50% due 8/15/2023 8,437
AAA Aaa 7,365 Michigan State Trunk Line, GO, Series A, 5.67% due 10/01/2012 2,271
BBB Baa1 9,350 Monroe County, Michigan, PCR (Detroit Edison Project), AMT, Series
A, 7.75% due 12/01/2019 10,056
Royal Oaks, Michigan, Hospital Financing Authority, Hospital
Revenue Refunding Bonds (William Beaumont Hospital), Series G:
AA Aa 3,250 5.50% due 11/15/2013 2,894
AA Aa 12,000 5.25% due 11/15/2019 10,017
West Ottowa, Michigan, Public School District, Revenue Refunding
Bonds UT(e)(j)(1):
AAA Aaa 5,275 5.85% due 5/01/2016 1,278
AAA Aaa 5,755 5.85% due 5/01/2017 1,306
Minnesota--1.2% AA+ NR 6,215 Minnesota State, HFA, S/F Mortgage Bonds, AMT, Series A, 7.45%
due 7/01/2022(b) 6,436
AAA NR 9,255 Saint Paul, Minnesota, Housing and Redevelopment Authority, S/F
Mortgage Revenue Refunding Bonds, Series C, 6.95% due 12/01/2031(g) 9,367
A+ A1 4,250 Southern Minnesota, Municipal Power Agency, Power Supply Systems,
Revenue Refunding Bonds, Series A, 4.75% due 1/01/2016 3,416
Mississippi--0.9% BBB Baa 5,950 Lowndes County, Mississippi, Hospital Revenue Refunding Bonds
(Golden Triangle Medical Center), 8.50% due 2/01/2010 6,446
Medical Center Educational Building Corporation, Mississippi,
Revenue Bonds (University of Mississippi Medical Center Project):
A- NR 1,000 5.65% due 12/01/2009 941
A- NR 1,500 5.80% due 12/01/2014 1,362
A- NR 5,000 5.90% due 12/01/2023 4,448
<PAGE>
Missouri--0.9% BBB- NR 3,625 Joplin, Missouri, IDA, Hospital Facilities Revenue Refunding and
Improvement Bonds (Tri-State Osteopathic), 8.25% due 12/15/2014 3,899
NR Baa1 6,150 Missouri State Health and Educational Facilities Authority, Health
Facilities Revenue Refunding Bonds (Jefferson Memorial Hospital
Association Project), 6% due 8/15/2023 5,275
A+ A1 4,000 Missouri State Regional Convention and Sports Complex Authority
Refunding Bonds, Series A, 5.60% due 8/15/2017 3,533
St. Louis County, Missouri, Regional Convention and Sports Complex
Authority Refunding Bonds, Series B:
BBB+ A 2,575 5.50% due 8/15/2013 2,267
BBB+ A 4,760 5.75% due 8/15/2021 4,155
Missouri & BBB+ NR 11,400 Bi-State Development Agency, Missouri and Illinois, Metropolitan
Illinois--0.9% No. 5, Revenue Refunding Bonds (American Commonwealth), No. 5,
7.75% due 6/01/2010 12,225
Montana--1.0% Forsyth, Montana, PCR, Refunding (The Montana Power Company):
BBB+ Baa1 12,000 Project A, 6.125% due 5/01/2023 11,180
BBB+ Baa1 5,000 Series B, 5.90% due 12/01/2023 4,512
Nebraska--0.6% AAA Aaa 10,600 Nebraska Investment Finance Authority, S/F Mortgage Revenue Bonds,
AMT, 7.631% due 9/10/2030(g) 11,037
New Hampshire--1.3% NR Baa1 7,065 New Hampshire Higher Educational and Health Facilities Authority
Revenue Bonds (Saint Anselm College), 6.375% due 7/01/2023 6,721
A+ Aa 3,315 New Hampshire State, HFA, S/F Residential Mortgage Bonds, AMT, 7.90%
due 7/01/2022 3,428
New Hampshire State, IDA, PCR (Public Service Co. of New Hampshire
Project), AMT:
BB+ Baa3 4,850 Series A, 7.65% due 5/01/2021 5,063
BB+ Baa3 6,500 Series C, 7.65% due 5/01/2021 6,792
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New Jersey--2.3% New Jersey Building Authority, State Building Revenue Refunding
Bonds:
AA- Aa $ 15,000 5% due 6/15/2015 $12,888
AA- Aa 10,000 5% due 6/15/2018 8,381
NR NR 6,700 New Jersey Health Care Facilities Financing Authority Revenue
Bonds (Riverwood Center Issue), Series A, 9.90% due 7/01/2021 7,363
AA A 9,500 University Medicine and Dentistry of New Jersey, Revenue Bonds,
Series C, 7.20% due 12/01/2019 10,331
New Mexico--0.7% BB Ba2 12,000 Farmington, New Mexico, PCR, Refunding (Public Service Company,
San Juan Project), Series A, 6.40% due 8/15/2023 10,889
New York and Port Authority of New York and New Jersey, Consolidated Refunding
New Jersey--1.1% Bonds:
AA- A1 4,265 87th Series, 5.20% due 7/15/2012 3,797
AA- A1 3,705 87th Series, 5.25% due 7/15/2014 3,258
AA- A1 6,000 89th Series, 5.125% due 10/01/2021 4,985
AA- A1 8,000 91st Series, 5.20% due 11/15/2016 6,977
<PAGE>
New York--15.4% A A 5,700 Battery Park City Authority, New York, Revenue Refunding Bonds
(Junior Lien), Series A, 5.70% due 11/01/2023 5,005
Metropolitan Transportation Authority, New York, Service Contract
Revenue Refunding Bonds (Commuter Facilities), Series 5:
BBB Baa1 2,145 6.90% due 7/01/2006 2,247
BBB Baa1 5,000 7% due 7/01/2012 5,231
New York City, New York, GO, UT:
A- Baa1 3,600 Series A, 7.75% due 8/15/2016 3,968
A- Baa1 4,065 Series A, 7.75% due 8/15/2017 4,481
A- Baa1 1,450 Series A, 8% due 8/15/2018 1,647
A-1 VMIG1 6,000 Series B, 3.25% due 9/01/1995(a) 6,000
A- Baa1 5,375 Series B, 8.25% due 6/01/2006 6,348
A- Baa1 2,700 Series B, 8.25% due 6/01/2007 3,200
A- Baa1 10,000 Series B, 7.75% due 2/01/2011 11,046
A- Baa1 4,500 Series B, 7.75% due 2/01/2012 4,953
A- Baa1 2,875 Series B, 7.75% due 2/01/2013 3,165
A- Baa1 1,650 Series B, 7.75% due 2/01/2014 1,816
A- Baa1 2,000 Series D, 7.70% due 2/01/2011 2,203
A- Baa1 3,575 Series D, Group C, 8% due 8/01/2015 4,058
A- Aaa 1,085 Series F, 8.25% due 11/15/2001(k) 1,297
A- Aaa 5,495 Series F, 8.25% due 11/15/2001(k) 6,567
AAA VMIG1 6,500 New York City, New York, Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds, VRDN, Series C, 3.30% due 6/15/2023
(a) 6,500
New York State Dormitory Authority Revenue Bonds (City University
Systems), Series A:
BBB Baa1 10,000 Consolidated, 2nd General, Series A, 5.75% due 7/01/2013 9,178
BBB Baa1 4,900 Crossover, Refunding, Series E, 5.75% due 7/01/2011 4,563
New York State Dormitory Authority Revenue Bonds (State University
Educational Facilities):
BBB Baa1 7,500 Refunding, Series A, 5.50% due 5/15/2010 6,868
BBB Baa1 5,000 Refunding, Series A, 5.875% due 5/15/2011 4,702
BBB+ Baa1 5,725 Refunding, Series A, 5.50% due 5/15/2013 5,101
BBB+ Baa1 6,000 Refunding, Series A, 6.25% due 5/15/2017 5,774
BBB+ Baa1 4,000 Refunding, Series A, 5.50% due 5/15/2019 3,501
BBB+ Baa1 15,000 Refunding, Series B, 5.25% due 5/15/2011 13,150
BBB+ Baa1 5,085 Refunding, Series B 7.375% due 5/15/2014 5,466
BBB+ Baa1 5,000 Series A, 7.50% due 5/15/2013 5,633
New York State Energy Research and Development Authority, Electric
Facilities Revenue Bonds (Long Island Lighting), AMT, Series A:
BB+ Ba1 10,500 7.15% due 6/01/2020 10,474
BB+ Ba1 13,000 7.15% due 12/01/2020 12,983
A-1+ NR 1,000 New York State Environmental Facilities Corporation, Resource Recovery
Revenue Bonds (OFS Equity Huntington Project), AMT, VRDN, 2.95% due
11/01/2014(a) 1,000
New York State Local Government Assistance Corporation:
A A 10,000 Refunding, Series A, 6.50% due 4/01/2020 10,052
A A 5,000 Refunding, Series B, 5.375% due 4/01/2016 4,376
A A 6,000 Series A, 7% due 4/01/2012(k) 6,369
A Aaa 4,000 Series B, 7.375% due 4/01/2012(k) 4,546
<PAGE> A A 10,000 Series B, 6% due 4/01/2018 9,432
AAA Aaa 6,000 Series B, 7.50% due 4/01/2020 6,862
A A 5,000 Series D, 5.375% due 4/01/2014 4,419
A A 15,325 Series D, 5% due 4/01/2023 12,349
A A1 5,380 New York State Thruway Authority, General Revenue Bonds, Series A,
5.75% due 1/01/2019 4,938
Triborough Bridge and Tunnel Authority, New York, General Purpose
Revenue Refunding Bonds:
A+ Aa 9,000 Series A, 4.75% due 1/01/2019 7,110
A+ Aa 9,075 Series Q, 6.75% due 1/01/2009 9,710
A+ Aa 10,000 Series Y, 5.50% due 1/01/2017 8,962
Ohio--3.1% A A1 3,610 Cuyahoga County, Ohio, Hospital Revenue Bonds (Meridia Health
Systems), 7.25% due 8/15/2019 3,783
NR VMIG1 2,300 Cuyahoga County, Ohio, Hospital Revenue Bonds (University Hospital
of Cleveland), VRDN, 3% due 1/01/2016(a) 2,300
NR VMIG1 2,100 Franklin County, Ohio, Health Systems Revenue Bonds (Franciscan
Sisters--Saint Anthony Medical Center), Series B, VRDN, 3% due
7/01/2015(a) 2,100
NR VMIG1 3,000 Hamilton County, Ohio, Health System Revenue Bonds (Franciscan
Sisters Poor Health), Series A, 2.55% due 3/01/2017(a) 3,000
Ohio HFA, S/F Mortgage Revenue Bonds, AMT(g):
AAA Aaa 22,000 RIB, Series B-4, 6.903% due 3/31/2031 22,031
AAA NR 2,980 Series B, 8.25% due 12/15/2019 3,060
AAA NR 4,955 Series C, 7.85% due 9/01/2021 5,135
BBB- Baa2 14,000 Ohio State Air Quality Development Authority, PCR, Refunding
(Ohio-Edison), Series A, 5.95% due 5/15/2029 12,252
NR VMIG1 1,000 Student Loan Funding Corporation Cincinnati Ohio Student Loan
Revenue, Series A-2, AMT, VRDN, 2.25% due 1/01/2007(a) 1,000
Oregon--0.2% AA- Aa 1,135 Oregon State, PCR, UT, Series C, 5.625% due 6/01/2013 1,076
AAA Aaa 1,200 Polk County, Oregon, School District No. 002, GO, UT, 5.40% due
6/01/2012(h) 1,108
<PAGE>
Pennsylvania--5.8% NR A1 7,600 Allegheny County, Pennsylvania, Industrial Development Authority,
PCR, Refunding (Parkway Center Project), 3.35% due 5/01/2009 7,600
BB+ Baa3 15,650 Beaver County, Pennsylvania, IDA, PCR, Refunding (Ohio Edison
Project), Series A, 7.75% due 9/01/2024 16,399
A1+ NR 2,500 Geisinger Authority, Pennsylvania, Health System Revenue Bonds,
VRDN, Series B, 3.30% due 7/01/2022(a) 2,500
AA Aa 17,600 Pennsylvania, HFA, Revenue Refunding Bonds, 7% due 10/01/2023 17,800
NR P1 2,100 Pennsylvania Higher Educational Facilities Authority, College
and University Revenue Bonds (Temple University), VRDN, 3.10%
due 10/01/2009(a) 2,100
AAA Aaa 20,000 Pennsylvania State Higher Educational Assistance Agency, Student
Loan Revenue Bonds, AMT, 6.80% due 9/03/2026(c) 20,437
A1+ VMIG1 4,300 Pennsylvania State Higher Educational Assistance Agency Student Loan
Revenue Bonds, AMT, VRDN, Series B, 2.30% due 7/01/2018(a) 4,300
BBB Baa1 2,000 Philadelphia, Pennsylvania, Hospital and Higher Educational Facilities
Authority, Hospital Revenue Bonds (Frankford Hospital), Series A, 6%
due 6/01/2023 1,712
BBB Baa1 5,400 Philadelphia, Pennsylvania, Hospital and Higher Educational
Facilities Authority Revenue Bonds (Graduate Health Systems),
Series A, 6.25% due 7/01/2013 5,010
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Pennsylvania BBB Baa $ 7,335 Philadelphia, Pennsylvania, Water and Wastewater Revenue Refunding
(concluded) Bonds, 5.75% due 6/15/2013 $ 6,636
AAA Aaa 4,800 Pittsburgh, Pennsylvania, Water and Sewer Authority, Water and
Sewer System Revenue Refunding Bonds, Series A, 6.75% due 9/01/2001
(e) 5,294
BBB Baa 5,650 Ridley Park, Pennsylvania, Hospital Authority Revenue Refunding
Bonds (Taylor Hospital), Series A, 6.125% due 12/01/2020 4,924
AAA Aaa 2,500 York County, Pennsylvania, Hospital Authority Revenue Bonds (York
Hospital), 7% due 7/01/2001(c)(k) 2,767
A1+ P1 800 York County, Pennsylvania, IDA, PCR, Refunding (Philadelphia
Electric Company), Series A, 3.10% due 8/01/2016(a) 800
<PAGE>
Puerto Rico--0.7% BB Baa 1,025 Puerto Rico Commonwealth Aqueduct and Sewer Authority Revenue,
Series A, 7% due 7/01/2019 1,062
A Baa1 5,000 Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue Bonds, Series W, 5.25% due 7/01/2020 4,210
A Baa1 1,000 Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue Refunding Bonds, Series K, 5.50% due 7/01/2015 905
A Baa1 1,000 Puerto Rico Commonwealth Refunding Bonds, UT, 5.25% due 7/01/2018 849
NR Aaa 1,500 Puerto Rico, Industrial, Medical and Environmental Pollution Control
Facilities, Financing Authority Revenue Bonds, Series A, 5.10% due
12/01/2018 1,294
Rhode Island--2.4% Rhode Island Depositors Economic Protection Corporation, Special
Obligation Bonds, Series A:
AAA NR 5,250 6.95% due 8/01/2002(k) 5,856
A- Baa1 5,500 Refunding, 5.75% due 8/01/2012 5,032
A- Baa1 30,000 Refunding, 6.25% due 8/01/2016 28,519
South Carolina--0.9% BBB- Baa 8,355 South Carolina Jobs, EDA, Economic Development Revenue Bonds (Saint
Francis Hospital--Franciscan Sisters), 7% due 7/01/2015 8,229
A+ A1 8,750 South Carolina State, Public Service Authority, Revenue Refunding
Bonds, Series C, 5.125% due 1/01/2021 7,210
Tennessee--0.6% NR NR 10,000 Knox County, Tennessee, Health, Educational and Housing Facilities
Board, Hospital Facilities Revenue Bonds (Baptist Health System of
East Tennessee), 8.60% due 4/15/2016 10,537
Texas--9.0% A- NR 13,500 Brazos County, Texas, Health Facility Development Corporation,
Franciscan Services Corporation, Revenue Refunding Bonds (Saint
Joseph Hospital and Health Center), Series B, 6% due 1/01/2013 12,320
Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series A:
BBB Baa2 2,095 8.25% due 1/01/2019 2,271
BBB Baa2 18,150 7.875% due 3/01/2021 19,585
A A2 12,350 Brazos River Authority, Texas, Revenue Refunding Bonds (Houston
Light and Power), Series 1989-A, 7.625% due 5/01/2019 13,183
Dallas, Texas, Waterworks and Sewer Systems, Revenue Refunding
and Improvement Bonds, Series A:
AA Aa 2,195 4% due 10/01/2012 1,565
AA Aa 2,320 4% due 10/01/2013 1,634
BBB Baa1 5,000 Gulf Coast Waste Disposal Authority, Texas, Revenue Bonds (Champion
International Corporation), AMT, 7.45% due 5/01/2026 5,182
Harris County, Texas, Certificates of Obligation, Tax and Revenue
Bonds:
AA+ Aa 2,400 10% due 10/01/2000 3,009
<PAGE> AA+ Aa 2,400 10% due 10/01/2001 3,077
A1+ NR 1,200 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Saint Lukes Episcopal), Series D, 3% due
2/15/2016(a) 1,200
Houston, Texas, Water and Sewer System, Revenue Refunding Bonds
(Junior Lien), Series C(c)(j)(l):
AAA Aaa 3,500 5.80% due 12/01/2009 1,325
AAA Aaa 5,000 5.80% due 12/01/2010 1,749
BBB- Baa 8,255 Jefferson County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Baptist Healthcare System Project), 8.875%
due 6/01/2021 9,196
A NR 19,410 Lower Colorado River Authority, Texas, Revenue Refunding Bonds
(Junior Lien 4th), 5.25% due 1/01/2015(i) 17,494
AA Aa 24,000 North Central Texas, Health Facilities Development Corporation
Revenue Bonds (Baylor University Medical Center), Series A,
6.70% due 5/15/2016 24,801
AAA Aaa 13,685 Round Rock, Texas, Independent School District and School Building
Refunding Bonds, UT, 5.80% due 8/15/2011(f)(j)(l) 4,553
San Antonio, Texas, Refunding and General Improvement Bonds:
AA Aa 2,535 4% due 8/01/2011 1,917
AA Aa 4,610 4% due 8/01/2012 3,475
AA Aa 4,885 4% due 8/01/2013 3,614
AA Aa 5,775 4% due 8/01/2014 4,158
A+ Aa 10,105 Texas Housing Agency, Residential Development Mortgage Revenue
Bonds, Series A, 7.50% due 7/01/2015(g) 10,182
BBB Baa2 2,000 West Side Calhoun County, Texas, Navigation District, Solid Waste
Disposal Revenue Bonds (Union Carbide Chemicals Project), AMT, 6.40%
due 5/01/2023 1,859
Utah--0.9% AA Aa 7,835 Intermountain Power Agency, Utah, Power Supply Revenue Bonds, Series
B, 5.35% due 7/01/2004(j)(l) 4,337
AA Aa 5,000 Intermountain Power Agency, Utah, Power Supply Revenue Refunding
Bonds, Series A, 5.81% due 7/01/2017(j)(l) 1,098
A1+ VMIG1 8,100 Utah State Board Regents, Student Loan Revenue Bonds, Series B,
2.25% due 11/01/2000(a) 8,100
Virginia--0.5% A+ A1 9,000 Alexandria, Virginia, IDA, PCR, Refunding (Potomac Electric Project),
5.375% due 2/15/2024 7,738
Washington--2.2% AA Aa 20,000 Washington State, GO, Series A, 4.50% due 10/01/2018 14,903
Washington State Public Power Supply System, Revenue Refunding
Bonds (Nuclear Project #2), Series A:
AA Aa 16,470 5.80% due 7/01/2007 15,995
AA Aa 6,195 5.75% due 7/01/2012 5,682
Total Investments (Cost--$1,634,001)--96.1% 1,597,539
Other Assets Less Liabilities--3.9% 64,811
----------
Net Assets--100.0% $1,662,350
==========
<PAGE>
<FN>
(a)The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at June 30, 1994.
(b)FHA Insured.
(c)AMBAC Insured.
(d)BIG Insured.
(e)FGIC Insured.
(f)MBIA Insured.
(g)GNMA/FNMA Collateralized.
(h)FSA Insured.
(i)Escrowed to Maturity.
(j)The interest rate shown represents the yield to maturity.
(k)Prerefunded.
(l)Principal only securities which are traded on a discount basis and are
amortized to maturity.
(m)The interest rate is subject to change periodically and inversely based upon
prevailing market rates. The interest rate shown is the rate in effect at
June 30, 1994.
++Represents the highest short-term rating issued by Moody's Investors Service, Inc.
Ratings off issues shown have not been audited by Deloitte & Touche.
See Notes to Financial Statements.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--0.5% NR Aa $ 5,050 Alabama State Public School and College Authority, Refunding
Bonds, 3.70% due 12/01/1996 $ 4,962
<PAGE>
Alaska--1.0% Alaska State Housing Finance Corporation, GO, Series A:
A+ Aa 2,300 3.80% due 12/01/1994 2,304
A+ Aa 1,700 4.20% due 12/01/1995 1,692
AAA Aaa 5,000 Anchorage, Alaska, GO, Refunding Bonds, 4.85% due 7/01/1995(d) 5,045
Arizona--0.9% A+ A1 3,000 Maricopa County, Arizona, Transportation Board, Excise Tax Revenue
Bonds, 7.10% due 7/01/1996 3,140
AAA NR 5,000 Phoenix, Arizona, Street and Highway Revenue Refunding Bonds, 7.50%
due 7/01/1994(a) 5,101
AA P1 300 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont Mining Corp),
DDN, 3.40% due 12/01/2009(b) 300
California--3.0% NR VMIG1 5,850 California Higher Education Loan Authority, Student Loan Revenue
Refunding Bonds, Senior Lien, Series A-1, 3.90% due 7/01/1995 5,850
SP-1 MIG1++ 2,200 California State, RAN, Series B, 3.50% due 7/26/1994 2,201
A+ Aa 10,000 California State Various Purpose Bonds, GO, 4% due 10/01/1995 10,030
AA Aa 5,005 California Statewide Communities Development Authority, Revenue
Bonds, COP (Saint Joseph Health Systems), 4.10% due 7/01/1997 4,907
AA- Aa 1,100 San Diego County, California, Water Authority, Water Revenue Bonds,
COP, Series A, 4.10% due 5/01/1995 1,102
AAA Aaa 4,750 San Francisco, California, City and County Airports, International
Airport Revenue Refunding Bonds, Second Series, Issue 1, 6.10% due
5/01/1998(c) 4,940
Colorado--2.4% NR A 5,000 Colorado Student Obligation Bond Authority, Student Loan Revenue
Bonds, Series B, 5.10% due 12/01/1994 5,033
NR NR 10,000 Denver, Colorado, City and County Airport Revenue Bonds, Sub-series
B, 4.25% due 9/01/1995(b) 10,040
AAA Aaa 3,500 Denver, Colorado, Metropolitan Major League Baseball Stadium
District, Revenue Refunding Bonds (Sales Tax--Baseball Stadium
Project), 3.65% due 10/01/1997(f) 3,393
AA Baa1 3,810 Jefferson County, Colorado District No. R-001, Revenue Refunding
Bonds, Series A, 3.65% due 12/15/1996 3,737
Connecticut--3.4% Connecticut State Economic Recovery Notes, GO, Series A:
AA- Aa 4,200 5.25% due 12/15/1994 4,245
AA- Aa 3,900 5.40% due 12/15/1995 3,985
AA- Aa 3,250 5.50% due 6/15/1996 3,329
Connecticut State, GO:
AA- Aa 3,650 Series A, 5.20% due 3/15/1996 3,698
AA- Aa 6,705 Series B, 4.90% due 11/15/1995 6,800
NR Aa3 3,955 Connecticut State Housing Mortgage Revenue Bonds (Chestnut
Hill Apartments), 4.60% due 4/01/1997 3,940
AA- A1 3,515 Connecticut State Special Tax Obligation Revenue Bonds, Trans-
portation Infrastructure, Series C, 4.40% due 10/01/1997 3,485
AAA Aaa 2,000 Stratford, Connecticut, GO, 3.50% due 11/01/1996(f) 1,959
<PAGE>
Delaware--0.2% AAA Aaa 1,500 Delaware Realty Transfer Tax Revenue Bonds (Land and Water Con-
servation Trust Fund Program), 5.30% due 4/01/1995(f) 1,518
District of District of Columbia, General Fund Recovery Bonds DDN:
Columbia--1.8% A1+ VMIG1 3,400 Series B-3, 3.45% due 7/01/1994 3,400
AAA Aaa 11,000 Series C, 5.50% due 6/01/1995(f) 11,120
AAA Aaa 1,465 District of Columbia, GO, Series B, UT, 5.30% due 6/01/1995(d) 1,478
Florida--4.8% Dade County, Florida, Aviation Revenue Refunding Bonds, Series X:
A Aa 3,595 3.75% due 10/01/1994 3,599
A Aa 2,000 4.10% due 10/01/1995 2,010
AAA Aaa 1,900 Dade County, Florida, Water System Revenue Refunding Bonds, 4%
due 6/01/1995(f)(g) 1,907
Florida State Division, Board of Finance Revenue Bonds (Department
of Natural Resources Preservation 2000), Series A(c):
AAA Aaa 5,000 6.10% due 7/01/1994 5,000
AAA Aaa 5,000 6.10% due 7/01/1995 5,111
Florida State, GO, COP (Construction Equipment Financing Program):
A+ A 15,000 5.55% due 11/15/1994 15,109
A+ A 3,860 5.75% due 11/15/1995 3,945
Florida State Turnpike Authority, Turnpike Revenue Bonds, Series
A(f):
AAA Aaa 2,000 5% due 7/01/1994 2,000
AAA Aaa 2,375 5% due 7/01/1995 2,401
AAA Aaa 4,000 Homestead, Florida, Special Insurance Assessment Revenue Bonds
(Hurricane Andrew Covered Claim), 4.20% due 3/01/1996(d) 3,984
Georgia--1.1% A- A3 5,000 Crisp County, Georgia, Development Authority, Solid Waste Disposal
Revenue Bonds (International Paper Company), AMT, Series B, 3.35%
due 9/10/1994 4,999
AA Aa1 2,000 Gwinnett County, Georgia, COP (Water and Sewer), 7.60% due 8/01/1995 2,076
AAA Aaa 3,965 Metropolitan Atlanta, Georgia, Rapid Transit Authority, Sales Tax
Revenue Refunding Bonds, Series P, 4.75% due 7/01/1995(c) 3,998
<PAGE>
Illinois--7.3% Chicago, Illinois, Metropolitan Water Reclamation District, Greater
Chicago Revenue Refunding Bonds:
AA Aa 5,000 4% due 12/01/1996 4,944
AA Aa 3,100 4.10% due 12/01/1995 3,109
AA Aa 3,000 4.50% due 12/01/1996 2,998
A+ A1 2,580 Chicago, Illinois, O'Hare International Airport Revenue Bonds,
Series A, AMT, 4.40% due 1/01/1995 2,589
SP1+ NR 10,000 Chicago, Illinois, Park District Notes, GO, 3.25% due 10/01/1994 9,986
AAA Aaa 2,755 Chicago, Illinois, School Financing Authority, Revenue Refunding
Bonds, Series A, 5% due 6/01/1995(f) 2,773
Chicago, Illinois, Tender Notes:
A1+ VMIG1 7,500 Series A-1, 3.10% due 10/31/1995 7,500
A1+ VMIG1 15,000 Series B, 3.85% due 10/31/1994 15,046
AAA Aaa 3,750 Cook County, Illinois, High School District No. 205 Revenue Bonds,
UT (Thornton Township), 5% due 6/01/1995(f) 3,797
AAA Aaa 3,975 Illinois Educational Facilities Authority Revenue Bonds (University
of Chicago), 7% due 12/01/1996(a) 4,267
Illinois State, GO:
AA- Aa 3,000 5.50% due 6/01/1995 3,039
AA- Aa 4,120 5.25% due 10/01/1994 4,139
A A1 3,625 Illinois State Toll and Highway Authority, Revenue Refunding Bonds,
Series A, 3.70% due 1/01/1996 3,577
Indiana--0.5% AA- Aa 4,800 Purdue University, Indiana, University Revenue Bonds, Student
Fees, Series J, 4.15% due 7/01/1996 4,762
Kentucky--1.8% A A 13,000 Kentucky State Property and Building Community, Revenue Refunding
Bonds, Project No. 55, 3.60% due 9/01/1996 12,737
AAA Aaa 3,250 Kentucky State Turnpike Authority, Economic Development,
Refunding Revenue Bonds (Revitalization Projects), 4% due
7/01/1996(c) 3,224
Louisiana--1.1% Louisiana State Offshore Terminal Authority Revenue Bonds
(Deepwater Port), Series B:
A A3 4,000 4.20% due 9/01/1994 3,997
A A3 5,410 4.60% due 9/01/1995 5,441
NR NR 905 New Orleans, Louisiana, COP, 6.75% due 10/01/1994 912
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Maine--0.6% AA+ Aa $ 5,255 Maine State General Purpose Bonds, 4.10% due 9/01/1995 $ 5,279
Maryland--0.6% AA+ Aaa 1,000 Baltimore County, Maryland, Metropolitan District, 63rd Issue,
Special Assessment Revenue Bonds, UT, 5.70% due 7/01/1994 1,000
A+ A1 4,535 Maryland State Transportation Authority Revenue Bonds UT, 6% due
7/01/1995 4,626
Massachusetts-- BBB+ NR 4,157 Massachusetts State, COP, 5.10% due 6/30/1996 4,186
4.9% A+ A 7,000 Massachusetts State, GO, Revenue Refunding Bonds, Series C, 3.55%
due 9/01/1994 6,991
AAA Aaa 2,900 Massachusetts State, GO, Series A, Dedicated Income Tax, 7% due
6/01/1995 (f) 2,978
AAA Aaa 7,535 Massachusetts State, GO, Series A, 7.87% due 6/01/1997 8,195
Massachusetts State Health and Educational Facilities Authority
Revenue Bonds:
AAA NR 4,590 (Melrose-Wakefield Hospital), Series A, 8.625% due 7/01/1996(a) 5,042
AAA Aaa 2,005 (New England Medical Center Hospitals), Series G, 3.80% due
7/01/1997(d) 1,950
Massachusetts State, HFA, Housing Projects, Revenue Refunding Bonds,
Series A:
A+ A1 6,720 3.90% due 4/01/1995(g) 6,688
A+ A1 3,600 4.40% due 10/01/1996 3,572
Massachusetts State Water Resource Authority, GO, Series A:
A A 1,690 6.70% due 4/01/1995 1,722
AAA Aaa 2,555 6.70% due 4/01/1995(g) 2,617
NR NR 1,015 South Hadley, Massachusetts, Industrial Revenue Bonds (South Hadley
Health Care), AMT, Series A, 5% due 12/01/1996 1,015
Michigan--1.4% NR VMG1 1,000 Detroit, Michigan, Downtown Development Authority Revenue Bonds
(Millender Center Project), VRDN, 2.40% due 7/01/1994(b) 1,000
SP1 MIG1++ 5,075 Detroit, Michigan, GO, Notes, 3.80% due 7/01/1995 5,136
A1 NR 600 Detroit, Michigan, Tax Increment Finance Authority Revenue Bonds, VRDN,
2.75% due 7/01/1994(b) 600
AAA NR 5,475 Michigan State Hospital Finance Authority Revenue Bonds (Harper--Grace
& Huron Valley Hospitals), Series A, 10% due 10/01/1995(a) 5,958
NR VMG1 800 Michigan State Strategic Fund, Solid Waste Disposal Revenue Bonds
(Grayling Generating Project), AMT, DDN, 2.75% due 1/01/2014(b) 800
<PAGE>
Minnesota--1.3% A1+ VMIG1 300 Duluth, Minnesota, Tax Increment Revenue Bonds (Lake Superior Paper),
DDN, 2.65% due 7/01/1994(b) 300
Hennepin County, Minnesota, Capital Improvement Bonds, Series B:
AAA Aaa 4,300 2.80% due 12/01/1994 4,292
AAA Aaa 3,225 3.25% due 12/01/1995 3,206
AAA Aaa 1,600 Minneapolis and St. Paul, Minnesota, Metropolitan Airports Revenue
Bonds, AMT, Series 8, 4.60% due 1/01/1995 1,607
AA+ NR 1,650 Minnesota Public Facilities Authority, Water Pollution Control
Revenue Bonds, Series A, 4.70% due 3/01/1995 1,662
Mississippi--1.1% A NR 10,000 Mississippi Higher Education Assistance Corporation, Student Loan
Revenue Refunding Bonds, Series C, AMT, 5.40% due 1/01/1996 10,126
Missouri--1.7% NR VMIG1 2,300 Missouri Higher Education Loan Authority, Student Loan Revenue
Bonds, DDN, AMT, Series A, 2.85% due 6/01/2017(b) 2,300
SP1+ NR 14,500 Missouri State Environmental Improvement and Energy Resource
Authority, Water, PCR (State Revolving Fund Program), Series
A, 3.90% due 9/01/1996 14,265
Nebraska--2.5% Nebraska Public Power District Revenue Bonds:
A+ A1 8,000 (Nuclear Facility), 3.60% due 7/01/1994 8,000
A+ A1 7,000 (Nuclear Facility), 4% due 7/01/1995 6,999
A+ A1 3,570 (Power Supply System), Series C, 3.50% due 1/01/1996 3,516
A+ A1 3,500 Refunding (Electric System), Series A, 4.50% due 1/01/1995 3,516
Nevada--0.8% AAA Aaa 7,000 Washoe County, Nevada, Airport Authority, Airport Systems
Improvement Revenue Bonds, AMT, Series A, 3.90% due 7/01/1995(d) 6,982
<PAGE>
New Jersey--7.9% Camden County, New Jersey, Improvement Authority (Solid Waste
Disposal), Revenue Refunding Bonds (Landfill Project):
A- A1 1,125 3.55% due 7/01/1995 1,121
A- A1 2,000 4% due 7/01/1997 1,954
AA+ Aaa 4,500 Middlesex County, New Jersey, Refunding Bonds, 3.60% due 7/15/1996 4,442
AAA Aaa 3,820 Middlesex County, New Jersey, Utility Authority, Solid Waste System
Revenue Bonds, 5.20% due 12/01/1995(f) 3,890
AA- Aa 4,365 New Jersey State Building Authority, Revenue Refunding Bonds, 4.20%
due 6/15/1997 4,314
AA+ NR 6,000 New Jersey State Governmental, GO, 5.80% due 8/01/1994(g) 6,015
New Jersey State Housing and Mortgage Finance Agency, Revenue
Refunding Bonds, Series 1:
A+ NR 3,670 4% due 11/01/1994 3,679
A+ VMIG1 5,000 3.40% due 3/29/1995 5,000
A+ NR 3,765 4.50% due 11/01/1995 3,760
New Jersey State Transportation Trust Fund Authority Revenue
Bonds (Transportation Systems):
A+ AA 5,505 Refunding, Series B, 3.20% due 6/15/1995 5,463
A+ AA 25,000 Series A, 5% due 12/15/1997 25,157
A A 2,160 New Jersey State Turnpike Authority, Revenue Refunding Bonds,
Series A, 5.50% due 1/01/1996 2,189
Passaic Valley, New Jersey, Sewage Commissioners Revenue Refunding
Bonds, Series D(c):
AAA Aaa 3,100 5.70% due 12/01/1994 3,132
AAA Aaa 3,265 5.70% due 12/01/1995 3,348
New Mexico--0.8% A1+ P1 5,000 Farmington, New Mexico, PCR, Refunding (Arizona Public Service Co.),
Series A, DDN, 3.30% due 5/01/2024(b) 5,000
AAA Aaa 2,500 New Mexico Education Loan Assistance Foundation, Student Loan
Revenue Bonds, Series A, AMT, 5.75% due 4/01/1996(c) 2,531
New York--4.4% AAA Aaa 4,000 Albany County, New York, Revenue Refunding Bonds, 3.30% due
10/01/1995(f) 3,985
AAA Aaa 2,000 Nassau County, New York, GO, 3.62% due 10/01/1997(c) 1,919
New York City, New York, GO:
A- Baa1 5,000 Refunding, Series A, 4.60% due 8/01/1995 5,028
A- Baa1 3,000 Series A, 7.20% due 3/15/1995(a)(g) 3,079
A- Aaa 945 Series D, 6.40% due 2/01/1995(a)(g) 962
A- Baa1 10,405 Series D, 6.40% due 2/01/1995 10,550
New York State Dormitory Authority Revenue Bonds, Series B:
A1+ VMIG1 7,000 (Cornell University), DDN, 3% due 7/01/2025(b) 7,000
A1+ VMIG1 7,000 (New York Public Library), 3.875% due 7/01/1995 7,029
A A 2,000 New York State Local Government Assistance Corporation Revenue
Bonds, Series A, 5% due 4/01/1995 2,014
<PAGE>
North Carolina--1.3% AAA Aaa 9,490 North Carolina Municipal Power Agency, Revenue Refunding Bonds
(Catawba Electric Project No. 1), 4.60% due 1/01/1997(f) 9,470
NR VMIG1 3,700 Person County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Solid Waste Disposal-
Carolina Power and Light Company Project), AMT, DDN, 3.30% due
11/01/2016(b) 3,700
North Dakota--0.5% NR Aa 5,000 North Dakota Student Loan Revenue Refunding Bonds, Series A, 5.40%
due 7/01/1996 5,072
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Ohio--11.6% Cincinnati, Ohio, City School District:
A+ NR $ 2,500 RAN, 5.35% due 6/15/1996 $ 2,535
A+ NR 7,500 TAN, 5% due 6/01/1995 7,593
Cleveland, Ohio, City School District, RAN(c):
AAA Aaa 3,000 4.20% due 6/01/1996 2,984
AAA Aaa 10,000 4.35% due 6/01/1997 9,858
NR Aa1 2,700 Columbus, Ohio, Sewer Improvement Revenue Bonds (Waterworks
Parks), 6.75% due 7/01/1995(g) 2,777
NR MIG1++ 5,100 North Olmsted, Ohio, BAN, 3.97% due 12/15/1994 5,125
Ohio State Air Quality Development Authority, PCR (Ohio Edison
Company):
AAA Aaa 6,700 5.65% due 9/01/1994 6,714
A1+ VMIG1 10,500 Refunding, Series A, 4.25% due 8/01/1996 10,427
A1+ VMIG1 6,700 Series A, 3.45% due 2/01/1996 6,582
A1+ P1 3,000 Series C, AMT, 3.125% due 9/01/1994 3,000
A+ A1 2,500 Ohio State Building Authority, Revenue Refunding Bonds (State
Correctional Facility), Series A, 3.70% due 10/01/1994 2,501
A+ A1 5,620 Ohio State Higher Education Facilities Revenue Bonds, Series II-B,
5.875% due 12/01/1994 5,677
Ohio State Public Facilities Commission, Higher Education Facilities:
A+ A1 3,300 Capital Facilities, Series II-A, 5.30% due 12/01/1996 3,347
AAA AAA 5,000 Capital Facilities, Series II-A, Refunding, 4.60% due 6/01/1997(c) 4,973
A+ A1 3,090 Capital Facilities, Series II-C, Refunding, 4% due 12/01/1994 3,100
AAA Aaa 1,995 Series II-A, 6.25% due 5/01/1995(c) 2,039
A+ A1 8,500 Series II-B, 4.625% due 12/01/1996 8,514
A1+ P1 4,000 Ohio State Water Development Authority, Pollution Control Facility
Revenue Bonds (Ohio Edison Company Project), AMT, Series B, 3.125%
due 9/01/1994 4,000
NR MIG1++ 6,140 Toledo, Ohio, City Services Special Assessment Notes, 3.20% due
12/01/1994 6,145
AAA Aaa 10,250 Trumbull County, Ohio, Hospital Revenue Bonds (Trumbull Memorial
Hospital Project), 9.625% due 11/01/2012(a)(f) 11,172
<PAGE>
Oklahoma--0.7% A+ Aa 6,370 Oklahoma County, Oklahoma, Independent School District No. 89, 6.50%
due 2/01/1998 6,705
Pennsylvania--0.3% AAA Aaa 3,000 Pittsburgh, Pennsylvania, Water and Sewer Authority, Revenue
Refunding Bonds, Series A, 3.50% due 9/01/1996(f) 2,937
Puerto Rico--1.2% BBB Baa 7,065 Puerto Rico, Finance Housing Agency, Revenue Refunding Bonds, 3.75%
due 12/01/1995 6,978
A Baa1 3,415 Puerto Rico Public Buildings Authority, Revenue Refunding Bonds,
Series J, 5.20% due 7/01/1995 3,452
Rhode Island--2.3% Providence, Rhode Island, Redevelopment Agency, BAN:
NR NR 3,120 (Parcel 12 Project), Series 2, 4.25% due 7/28/1994 3,122
NR NR 3,435 (Promenade Project), Series I, 4.25% due 7/28/1994 3,437
Rhode Island Depositors Economic Protection Corporation, Special
Obligation Bonds, Series A(e):
AAA Aaa 4,395 4.70% due 8/01/1994 4,400
AAA Aaa 4,180 5% due 8/01/1995 4,228
NR A 6,000 Rhode Island State, Student Loan Authority, Student Loan Revenue
Refunding Bonds, Series A, 5.70% due 12/01/1996 6,188
South Carolina--1.4% NR NR 7,800 Berkeley County, South Carolina, Water and Sewer, BAN, 3.25% due
9/01/1994 7,802
AA- A1 1,000 Charleston, South Carolina, Waterworks and Sewer Improvement Revenue
Refunding Bonds, 4.45% due 1/01/1995 1,004
A+ A1 5,170 South Carolina State Public Service Authority Revenue Refunding
Bonds, Series C, 3.80% due 1/01/1997 5,043
<PAGE>
Texas--9.1% AAA Aaa 4,880 Austin, Texas, Utility System Revenue Refunding Bonds, Series A,
Prior Lien, 4.80% due 11/15/1995(d) 4,937
Brazos, Texas, Higher Education Authority, Student Loan Revenue
Refunding Bonds, AMT:
NR Aaa 2,250 Series A-1, 5% due 12/01/1996 2,254
NR Aaa 2,000 Series C-1, 5% due 11/01/1995 2,021
NR Aa 5,455 Series C-1, 5.60% due 11/01/1997 5,596
AAA Aaa 3,250 Dallas, Texas, Regional Airport Revenue Refunding Bonds
(Dallas-Fort Worth International Airport), 3.75% due 11/01/1996(d) 3,192
NR A1 950 Fort Bend County, Texas, IDR, Corporate, Refunding (Frito Lay
Incorporated Project), 4% due 10/01/1996 936
NR A1 3,650 Fort Bend County, Texas, PCR, Corporate, IDR, Refunding (Frito Lay
Incorporated Project), 4% due 10/01/1996 3,595
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Saint Luke's Episcopal Hospital), DDN(b):
AA NR 500 Series B, 3.50% due 2/15/2016 500
AA NR 2,000 Series C, 3.30% due 2/15/2016 2,000
AA- Aa 3,915 Houston, Texas, Certificates of Obligation, Tax and Revenue Bonds,
Series F, 3.60% due 3/01/1997 3,791
A1+ NR 5,400 Houston, Texas, Health Facilities Development Corporation, Hospital
Revenue Bonds (Methodist Hospital Project), DDN, 3.50% due
12/01/2014(b) 5,400
AAA Aaa 9,500 Houston, Texas, Water and Sewer System, Revenue Refunding Bonds,
Series D, Junior Lien, 5.55% due 12/01/1995(f) 9,697
Panhandle-Plains, Texas, Higher Education Authority Incorporated,
Student Loan Revenue Refunding Bonds (Student Loan Marketing
Association):
NR VMIG1 6,000 Series A, 3.65% due 3/01/1995 6,001
NR Aaa 2,000 Series C, 3.95% due 9/01/1996 1,961
NR Aaa 2,675 Series C, 4.15% due 9/01/1997 2,607
San Antonio, Texas, Electric and Gas Revenue Refunding Bonds,
Series A, Junior Lien:
AA Aa1 9,000 5.80% due 2/01/1995 9,109
AA Aa1 3,000 6% due 2/01/1996 3,067
AA Aa 4,525 Texas State, GO, Refunding, 6.40% due 12/01/1994 4,583
AA Aa 3,000 Texas State Public Finance Authority Revenue Bonds, Series A, 6%
due 10/01/1995 3,077
AAA Aaa 4,770 Texas State Public Property Finance Corporation, Revenue Refunding
Bonds (Mental Health and Retardation), 4.25% due 9/01/1995 4,788
SP1+ MIG1++ 5,500 Texas State, TRAN, 3.25% due 8/31/1994 5,504
AAA Aaa 1,500 Texas Water Development Board Revenue Bonds (State Revolving Fund-
Senior Lien), 4.35% due 7/15/1995 1,505
AAA Aaa 3,000 University of Texas, Revenue Refunding Bonds (Financing System),
Series A, 5.60% due 8/15/1994 3,008
<PAGE>
Utah--4.3% NR NR 24,243 Carbon County, Utah, Solid Waste Disposal Revenue Refunding Bonds
(East Carbon Landfill Project), AMT, 6.04% due 5/01/1997 24,196
Intermountain Power Agency, Utah, Power Supply Revenue Refunding
Bonds:
AA Aa 1,250 Series A, 3.90% due 7/01/1996 1,230
AA Aa 4,250 Series B, 4.60% due 7/01/1995 4,268
AA- NR 1,715 University of Utah, Revenue Refunding Bonds (University Hospital
Project), Series A, 5% due 5/15/1995 1,728
AAA Aaa 3,250 Utah State Board of Regents, Student Loan Revenue Bonds, AMT,
Series D, 6.90% due 11/01/1994(c) 3,288
AAA Aaa 4,825 Utah State Building and Highway, GO, UT, 4.50% due 7/01/1994 4,825
Virginia--2.2% NR Aaa 2,000 Virginia Education Loan Authority, Revenue Refunding Bonds (Guaranteed
Student Loan Program), Series E, 4.625% due 3/01/1995 2,010
AAA Aaa 2,500 Virginia Port Authority Facilities, Revenue Refunding Bonds, 5% due
7/01/1995(c) 2,526
Virginia State Housing Development Authority, Commonwealth Mortgage
Revenue Bonds, AMT, Series B, Sub Series B-1:
AA+ Aa 5,275 5% due 7/01/1994 5,275
AA+ Aa 5,400 5.30% due 1/01/1995 5,412
AA+ Aa 2,975 5.50% due 1/01/1996 3,000
AA Aa 1,500 Virginia State Public Building Authority, Building Revenue Bonds,
Series C, 3.95% due 8/01/1995 1,504
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Washington--4.8% Port Seattle, Washington, Revenue Refunding Bonds:
AA- A1 $ 1,075 Series A, 4.25% due 4/01/1996 $ 1,068
AA- A1 3,000 Series B, 4% due 11/01/1995 2,996
SP1+ MIG1++ 7,655 Seattle, Washington, Metropolitan Municipality, Seattle Sewer
Revenue, BAN, 3.50% due 7/01/1995 7,640
A1+ VMIG1 5,000 Seattle, Washington, Municipal Light and Power Revenue Bonds
(Bond Purchase Agreement), Series A, 5.05% due 11/01/1994 5,030
AA Aa 7,250 Washington State, GO, Series R-93-B-1, 4.125% due 10/01/1997 7,134
Washington State Public Power Supply System, Revenue Refunding
Bonds, Series A:
AA Aa 8,000 (Nuclear Project No. 1), 4.20% due 7/01/1995 7,998
AA Aa 6,275 (Nuclear Project No. 2), 4.20% due 7/01/1995(g) 6,309
AA Aa 2,000 (Nuclear Project No. 2), 3.50% due 7/01/1996 1,951
AA Aa 4,890 (Nuclear Project No. 2), 3.75% due 7/01/1997 4,714
<PAGE>
Wisconsin--1.2% AA- A1 2,500 Milwaukee County, Wisconsin, GO, Series A, 6% due 12/01/1994 2,527
AA Aa 3,500 Milwaukee County, Wisconsin, Metropolitan Sewer District Revenue
Bonds, Series A, 5.25% due 9/01/1995 3,550
Wisconsin Housing and EDA, Housing Revenue Refunding Bonds,
Series C:
A A1 2,200 3.60% due 11/01/1995 2,175
A A1 2,795 4.30% due 11/01/1997 2,739
Wyoming--1.2% NR P1 11,700 Unita County, Wyoming, PCR, Refunding (Chevron USA Incorporated
Project), DDN, 3.25% due 8/15/2020(b) 11,700
Total Investments (Cost--$936,308)--99.9% 934,920
Other Assets Less Liabilities--0.1% 757
--------
Net Assets--100.0% $935,677
========
<PAGE>
<FN>
(a)Prerefunded.
(b)The interest rate is subject to change periodically based upon the
prevailing market rate. The interest rate shown is the rate in effect
at June 30, 1994.
(c)AMBAC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)FGIC Insured.
(g)Escrowed to maturity.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
<CAPTION>
Limited
Insured National Maturity
As of June 30, 1994 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Assets: Investments, at value* (Note 1a) $2,702,601,800 $1,597,539,473 $ 934,920,346
Cash 9,802,505 53,398 7,971,761
Receivables:
Securities sold 80,588,196 65,574,768 --
Interest 49,770,068 28,668,824 12,158,961
Capital shares sold 2,541,957 1,642,703 1,886,281
Prepaid registration fees and other assets (Note 1e) 76,710 55,688 39,846
-------------- -------------- -------------
Total assets 2,845,381,236 1,693,534,854 956,977,195
-------------- -------------- -------------
<PAGE>
Liabilities: Payables:
Securities purchased 23,200,000 21,648,397 12,866,592
Capital shares redeemed 8,078,154 5,699,836 6,993,374
Dividends to shareholders (Note 1f) 4,300,670 2,571,687 975,562
Investment adviser (Note 2) 856,903 665,520 258,042
Distributor (Note 2) 547,427 288,679 42,550
Accrued expenses and other liabilities 463,821 310,835 164,306
-------------- -------------- -------------
Total liabilities 37,446,975 31,184,954 21,300,426
-------------- -------------- -------------
Net Assets: Net assets $2,807,934,261 $1,662,349,900 $ 935,676,769
============== ============== =============
Net Assets Class A Common Stock, $0.10 par value++ $ 24,643,476 $ 11,941,084 $ 8,006,485
Consist of: Class B Common Stock, $0.10 par value++++ 11,001,115 4,558,341 1,474,492
Paid-in capital in excess of par 2,714,075,637 1,653,959,042 932,777,155
Undistributed realized capital gains
(losses)--net (Note 5) 45,898,099 28,352,719 (5,193,769)
Unrealized appreciation/depreciation on investments--net 12,315,934 (36,461,286) (1,387,594)
-------------- -------------- -------------
Net assets $2,807,934,261 $1,662,349,900 $ 935,676,769
============== ============== =============
Net Asset Class A:
Value: Net assets $1,941,741,107 $1,203,180,964 $ 790,142,342
============== ============== =============
Shares outstanding 246,434,764 119,410,837 80,064,850
============== ============== =============
Net asset value and redemption price per share $ 7.88 $ 10.08 $ 9.87
============== ============== =============
Class B:
Net assets $ 866,193,154 $ 459,168,936 $ 145,534,427
============== ============== =============
Shares outstanding 110,011,150 45,583,411 14,744,916
============== ============== =============
Net asset value and redemption price per share $ 7.87 $ 10.07 $ 9.87
============== ============== =============
<FN>
*Identified cost $2,690,285,866 $1,634,000,759 $ 936,307,940
============== ============== =============
++Authorized shares--Class A 500,000,000 375,000,000 150,000,000
============== ============== =============
++++Authorized shares--Class B 375,000,000 375,000,000 150,000,000
============== ============== =============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
<CAPTION>
Limited
Insured National Maturity
For the Year Ended June 30, 1994 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 183,856,750 $ 112,169,662 $ 40,921,727
(Note 1d): Other 226 1,522 812
-------------- -------------- -------------
Total income 183,856,976 112,171,184 40,922,539
-------------- -------------- -------------
Expenses: Investment advisory fees (Note 2) 11,040,540 8,514,268 3,305,839
Distribution fees--Class B (Note 2) 6,980,635 3,496,610 466,701
Transfer agent fees--Class A (Note 2) 656,700 490,579 163,948
Printing and shareholder reports 165,241 93,551 54,317
Transfer agent fees--Class B (Note 2) 333,290 202,133 31,266
Custodian fees 220,118 161,442 96,955
Accounting services (Note 2) 170,190 143,453 100,650
Registration fees (Note 1e) 79,615 104,423 178,362
Professional fees 71,762 40,697 36,001
Pricing services 62,080 37,290 29,099
Portfolio insurance 74,901 8,383 4,674
Directors' fees and expenses 27,619 12,004 8,512
Amortization of organization expenses (Note 1e) 6,857 6,070 --
Other 25,079 11,449 15,230
-------------- -------------- -------------
Total expenses 19,914,627 13,322,352 4,491,554
-------------- -------------- -------------
Investment income--net 163,942,349 98,848,832 36,430,985
-------------- -------------- -------------
Realized & Realized gain (loss) on investments--net 80,935,129 62,008,845 (968,336)
Unrealized Change in unrealized appreciation/depreciation on
Gain (Loss) on investments--net (275,252,365) (172,722,080) (13,063,534)
Investments--Net -------------- -------------- -------------
(Notes 1d & 3): Net Increase (Decrease) in Net Assets Resulting
from Operations $ (30,374,887) $ (11,864,403) $ 22,399,115
============== ============== =============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Insured Portfolio National Portfolio
--------------------------- ---------------------------
For the Year Ended June 30, For the Year Ended June 30,
--------------------------- ---------------------------
Increase (Decrease) in Net Assets: 1994 1993 1994 1993
<S> <S> <C> <C> <C> <C>
Operations: Investment income--net $ 163,942,349 $ 167,805,641 $ 98,848,832 $ 99,669,395
Realized gain (loss) on investments--net 80,935,129 67,994,693 62,008,845 38,689,103
Change in unrealized appreciation/
depreciation on investments--net (275,252,365) 101,260,716 (172,722,080) 49,677,981
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations (30,374,887) 337,061,050 (11,864,403) 188,036,479
-------------- -------------- -------------- --------------
Dividends & Investment income--net:
Distributions to Class A (119,441,701) (126,159,264) (75,680,507) (80,896,286)
Shareholders Class B (44,500,648) (41,646,377) (23,168,325) (18,773,109)
(Note 1f): Realized gain on investments--net:
Class A (57,171,047) (26,812,986) (36,128,677) (22,563,878)
Class B (24,972,443) (10,208,890) (12,798,152) (5,793,680)
-------------- -------------- -------------- --------------
Net decrease in net assets resulting from
dividends and distributions to shareholders (246,085,839) (204,827,517) (147,775,661) (128,026,953)
-------------- -------------- -------------- --------------
Capital Share Net increase (decrease) in net assets
Transactions derived from capital share transactions (52,099,956) 235,653,905 44,114,517 153,435,527
(Note 4): -------------- -------------- -------------- --------------
Net Assets: Total increase (decrease) in net assets (328,560,682) 367,887,438 (115,525,547) 213,445,053
Beginning of period 3,136,494,943 2,768,607,505 1,777,875,447 1,564,430,394
-------------- -------------- -------------- --------------
End of period $2,807,934,261 $3,136,494,943 $1,662,349,900 $1,777,875,447
============== ============== ============== ==============
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Limited Maturity Portfolio
-------------------------------------
For the Year For the Period
Ended June 30, Nov. 2, 1992++ to
Increase (Decrease) in Net Assets: 1994 June 30, 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 36,430,985 $ 31,371,404
Realized gain (loss) on investments--net (968,336) 2,133,811
Change in unrealized appreciation/
depreciation on investments--net (13,063,534) 4,480,891
-------------- --------------
Net increase (decrease) in net assets
resulting from operations 22,399,115 37,986,106
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A (31,987,779) (30,211,746)
Shareholders Class B (4,443,206) (1,159,658)
(Note 1f): Realized gain on investments--net:
Class A -- --
Class B -- --
-------------- --------------
Net decrease in net assets resulting from
dividends and distributions to shareholders (36,430,985) (31,371,404)
-------------- --------------
Capital Share Net increase (decrease) in net assets
Transactions derived from capital share transactions 7,793,356 321,893,595
(Note 4): -------------- --------------
Net Assets: Total increase (decrease) in net assets (6,238,514) 328,508,297
Beginning of period 941,915,283 613,406,986
-------------- --------------
End of period $ 935,676,769 $ 941,915,283
============== ==============
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Insured Portfolio
-----------------------------------------------------------
The following per share data and ratios Class A
have been derived from information -----------------------------------------------------------
provided in the financial statements. For the Year Ended June 30,
-----------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 8.64 $ 8.26 $ 7.92 $ 7.86 $ 7.97
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .47 .50 .52 .54 .55
Realized and unrealized gain (loss) on
investments--net (.53) .49 .41 .12 (.11)
---------- ---------- ---------- ---------- ----------
Total from investment operations (.06) .99 .93 .66 .44
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.47) (.50) (.52) (.54) (.55)
Realized gain on investments--net (.23) (.11) (.07) (.06) --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.70) (.61) (.59) (.60) (.55)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 7.88 $ 8.64 $ 8.26 $ 7.92 $ 7.86
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (1.08%) 12.43% 12.11% 8.84% 5.76%
Return:* ========== ========== ========== ========== ==========
Ratios to Expenses, excluding distribution fees .42% .42% .44% .45% .46%
Average Net ========== ========== ========== ========== ==========
Assets: Expenses .42% .42% .44% .45% .46%
========== ========== ========== ========== ==========
Investment income--net 5.53% 5.94% 6.44% 6.90% 7.03%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year (in thousands) $1,941,741 $2,225,188 $2,062,591 $1,984,307 $2,019,166
Data: ========== ========== ========== ========== ==========
Portfolio turnover 28.34% 43.86% 22.50% 33.12% 23.20%
========== ========== ========== ========== ==========
<PAGE>
<FN>
*Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Insured Portfolio
-----------------------------------------------------------
The following per share data and ratios Class B
have been derived from information -----------------------------------------------------------
provided in the financial statements. For the Year Ended June 30,
-----------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 8.63 $ 8.26 $ 7.92 $ 7.86 $ 7.97
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .40 .44 .46 .48 .49
Realized and unrealized gain (loss) on
investments--net (.53) .48 .41 .12 (.11)
---------- ---------- ---------- ---------- ----------
Total from investment operations (.13) .92 .87 .60 .38
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.40) (.44) (.46) (.48) (.49)
Realized gain on investments--net (.23) (.11) (.07) (.06) --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.63) (.55) (.53) (.54) (.49)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 7.87 $ 8.63 $ 8.26 $ 7.92 $ 7.86
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (1.81%) 11.45% 11.27% 8.02% 4.98%
Return:* ========== ========== ========== ========== ==========
Ratios to Expenses, excluding distribution fees .42% .43% .44% .45% .47%
Average Net ========== ========== ========== ========== ==========
Assets: Expenses 1.17% 1.18% 1.19% 1.20% 1.22%
========== ========== ========== ========== ==========
Investment income--net 4.78% 5.17% 5.69% 6.13% 6.27%
========== ========== ========== ========== ==========
<PAGE>
Supplemental Net assets, end of year (in thousands) $ 866,193 $ 911,307 $ 706,016 $ 537,755 $ 408,641
Data: ========== ========== ========== ========== ==========
Portfolio turnover 28.34% 43.86% 22.50% 33.12% 23.20%
========== ========== ========== ========== ==========
<FN>
*Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
National Portfolio
-----------------------------------------------------------
The following per share data and ratios Class A
have been derived from information -----------------------------------------------------------
provided in the financial statements. For the Year Ended June 30,
-----------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value beginning of year $ 11.02 $ 10.64 $ 10.17 $ 10.12 $ 10.31
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .62 .67 .71 .73 .74
Realized and unrealized gain (loss) on
investments--net (.64) .57 .58 .05 (.19)
---------- ---------- ---------- ---------- ----------
Total from investment operations (.02) 1.24 1.29 .78 .55
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.62) (.67) (.71) (.73) (.74)
Realized gain on investments--net (.30) (.19) (.11) -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.92) (.86) (.82) (.73) (.74)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.08 $ 11.02 $ 10.64 $ 10.17 $ 10.12
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (0.47%) 12.21% 13.09% 7.94% 5.53%
Return:** ========== ========== ========== ========== ==========
<PAGE>
Ratios to Expenses, excluding distribution fees .55% .55% .55% .55% .55%
Average Net ========== ========== ========== ========== ==========
Assets: Expenses .55% .55% .55% .55% .55%
========== ========== ========== ========== ==========
Investment income--net 5.72% 6.23% 6.80% 7.20% 7.27%
========== ========== ========== ========== ==========
Supplemental Net assets, end of year (in thousands) $1,203,181 $1,353,805 $1,278,055 $1,255,820 $1,365,541
Data: ========== ========== ========== ========== ==========
Portfolio turnover 73.33% 65.43% 50.94% 75.25% 48.80%
========== ========== ========== ========== ==========
<CAPTION>
FINANCIAL HIGHLIGHTS (concluded)
National Portfolio
-----------------------------------------------------------
The following per share data and ratios Class B
have been derived from information -----------------------------------------------------------
provided in the financial statements. For the Year Ended June 30,
-----------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value beginning of year $ 11.02 $ 10.63 $ 10.16 $ 10.11 $ 10.30
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .54 .59 .63 .65 .66
Realized and unrealized gain (loss) on
investments--net (.65) .58 .58 .05 (.19)
---------- ---------- ---------- ---------- ----------
Total from investment operations (.11) 1.17 1.21 .70 .47
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.54) (.59) (.63) (.65) (.66)
Realized gain on investments--net (.30) (.19) (.11) -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.84) (.78) (.74) (.65) (.66)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 10.07 $ 11.02 $ 10.63 $ 10.16 $ 10.11
========== ========== ========== ========== ==========
Total Investment Based on net asset value per share (1.39%) 11.47% 12.25% 7.14% 4.74%
Return:** ========== ========== ========== ========== ==========
Ratios to Expenses, excluding distribution fees .55% .56% .56% .56% .56%
Average Net ========== ========== ========== ========== ==========
Assets: Expenses 1.30% 1.31% 1.31% 1.31% 1.31%
========== ========== ========== ========== ==========
Investment income--net 4.97% 5.46% 6.03% 6.43% 6.52%
========== ========== ========== ========== ==========
<PAGE>
Supplemental Net assets, end of year (in thousands) $ 459,169 $ 424,071 $ 286,375 $ 213,581 $ 179,362
Data: ========== ========== ========== ========== ==========
Portfolio turnover 73.33% 65.43% 50.94% 75.25% 48.80%
========== ========== ========== ========== ==========
<CAPTION>
Limited Maturity Portfolio
-------------------------------------------------
Class A
-------------------------------------------------
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.01 $ 9.91 $ 9.75 $ 9.71 $ 9.73
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .37 .41 .50 .57 .60
Realized and unrealized gain (loss) on investments--net (.14) .10 .16 .04 (.02)
-------- -------- -------- -------- --------
Total from investment operations .23 .51 .66 .61 .58
-------- -------- -------- -------- --------
Less dividends:
Investment income--net (.37) (.41) (.50) (.57) (.60)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.87 $ 10.01 $ 9.91 $ 9.75 $ 9.71
======== ======== ======== ======== ========
Total Investment Based on net asset value per share 2.30% 5.28% 6.93% 6.45% 6.16%
Return:** ======== ======== ======== ======== ========
Ratios to Expenses, excluding distribution fees .40% .41% .40% .40% .40%
Average Net ======== ======== ======== ======== ========
Assets: Expenses .40% .41% .40% .40% .40%
======== ======== ======== ======== ========
Investment income--net 3.68% 4.13% 5.02% 5.88% 6.21%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $790,142 $846,736 $613,407 $350,549 $352,005
Data: ======== ======== ======== ======== ========
Portfolio turnover 45.67% 65.43% 96.32% 93.06% 106.44%
======== ======== ======== ======== ========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Aggregate total investment return.
See Notes to Financial Statements.
<CAPTION>
Limited Maturity Portfolio
--------------------------
Class B
--------------------------
For the
For the Period
The following per share data and ratios have been derived Year Nov. 2,
from information provided in the financial statements. Ended 1992++ to
June 30, June 30,
Increase (Decrease) in Net Asset Value: 1994 1993
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 10.01 $ 9.93
Operating -------- --------
Performance: Investment income--net .33 .24
Realized and unrealized gain (loss) on investments--net (.14) .08
-------- --------
Total from investment operations .19 .32
-------- --------
Less dividends:
Investment income--net (.33) (.24)
-------- --------
Net asset value, end of period $ 9.87 $ 10.01
======== ========
Total Investment Based on net asset value per share 1.98% 3.26%++++
Return:** ======== ========
Ratios to Expenses, excluding distribution fees .41% .41%*
Average Net ======== ========
Assets: Expenses .76% .76%*
======== ========
Investment income--net 3.33% 3.60%*
======== ========
Supplemental Net assets, end of period (in thousands) $145,534 $ 95,179
Data: ======== ========
Portfolio turnover 45.67% 65.43%
======== ========
<PAGE>
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
++++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Municipal Bond Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The Fund's
Portfolios offer Class A and Class B Shares. Class A Shares are
sold with a front-end sales charge. Class B Shares may be subject
to a contingent deferred sales charge. Both classes of shares
have identical voting, dividend, liquidation and other rights and
the same terms and conditions, except that Class B Shares bear
certain expenses related to the distribution of such shares and
have exclusive voting rights with respect to matters relating to
such distribution expenditures. The following is a summary of
significant accounting policies followed by the Fund.
(a)Valuation of investments--Insured Portfolio: Where bonds in
the Portfolio have not been insured pursuant to policies obtained
by the issuer, the Fund has obtained insurance with respect to
the payment of interest and principal of each bond. Such
insurance is valid as long as the bonds are held by the Fund.
All Portfolios: Municipal bonds and money market securities are
traded primarily in the over-the-counter markets and are valued
at the most recent bid price or yield equivalent as obtained from
dealers that make markets in such securities. Positions in
futures contracts are valued at closing prices as of the close of
such exchanges. Options, which are traded on exchanges, are
valued at their last sale price as of the close of such exchanges
or, lacking any sales, at the last available bid price. Assets
for which market quotations are not readily available are valued
at fair value on a consistent basis using methods determined in
good faith by the Fund's Board of Directors, including valuations
furnished by a pricing service retained by the Fund, which may
utilize a matrix system for valuations.
<PAGE>
(b)Financial futures contracts--The National and Limited
Maturity Portfolios (the "Portfolios") may purchase or sell interest
rate futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing or the intended purchase
of securities. Futures contracts are contracts for delayed delivery
of securities at a specific future date and at a specific price
or yield. Upon entering into a contract, the Portfolios deposit
and maintain as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the
contract, the Portfolios agree to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in value
of the contract. Such receipts or payments are known as variation
margin and are recorded by the Portfolios as unrealized gains or
losses. When the contract is closed, the Portfolios record a
realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the
time it was closed.
(c)Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income
tax provision is required.
(d)Security transactions and investment income--Security
transactions are recorded on the dates the transactions are
entered into (the trade dates). Interest income is recognized on
the accrual basis. Discounts and market premiums are amortized
into interest income. Realized gains and losses on security
transactions are determined on the identified cost basis.
(e) Deferred organization expenses and prepaid registration
fees--Deferred organization expenses are charged to expenses on a
straight-line basis over a five-year period. Costs related to the
organization of the second class of shares are charged to expense
over a period not exceeding five years. Prepaid registration fees
are charged to expenses as the related shares are issued.
(f)Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of
capital gains are recorded on the ex-dividend dates.
<PAGE>
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). Effective January 1, 1994
the investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc., an indirect wholly-owned subsidiary
of ML & Co. The limited partners are ML & Co. and Fund Asset
Management, Inc. ("FAMI"), which is also an indirect wholly-owned
subsidiary of ML & Co. The Fund also entered into Distribution
Agreements and a Distribution Plan with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or the "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Investment Management, Inc.
FAM is responsible for the management of the Fund's Portfolios
and provides the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Fund.
For such services, FAM receives at the end of each month a fee
with respect to each Portfolio at the annual rates set forth
below which are based upon the average daily value of the Fund's
net assets.
Rate of Advisory Fee
Aggregate of Average Daily Limited
Net Assets of the Three Insured National Maturity
Combined Portfolios Portfolio Portfolio Portfolio
Not exceeding $250 million 0.40 % 0.50 % 0.40 %
In excess of $250 million but not
exceeding $400 million. 0.375 0.475 0.375
In excess of $400 million but not
exceeding $550 million 0.375 0.475 0.35
In excess of $550 million but not
exceeding $1.5 billion 0.375 0.475 0.325
In excess of $1.5 billion 0.35 0.475 0.325
The Investment Advisory Agreement obligates FAM to reimburse the
Fund to the extent that the Fund's expenses (excluding interest,
taxes, distribution fees, brokerage fees and commissions and
extraordinary items) exceed 2.5% of the Fund's first $30 million
of average daily net assets, 2.0% of the Fund's next $70 million
of average daily net assets, and 1.5% of the average daily net
assets in excess thereof. No fee payment will be made to FAM with
respect to any Portfolio during any fiscal year which will cause
the expenses of such Portfolio to exceed the pro rata expense
limitation applicable to such Portfolio at the time of such payment.
<PAGE>
The Fund has adopted a Plan of Distribution (the "Plan") pursuant
to Rule 12b-1 under the Investment Company Act of 1940 pursuant
to which MLFD receives a distribution fee from the Fund for the sale
of Class B Shares of the Portfolios at the end of each month at
the annual rate of 0.50% (in the case of the Insured Portfolio
and the National Portfolio) or 0.25% (in the case of the Limited
Maturity Portfolio) and an account maintenance fee at the annual
rate of 0.25% (in the case of the Insured Portfolio and the
National Portfolio) or 0.10% (in the case of the Limited Maturity
Portfolio) of the average daily net assets of the Class B Shares
of the respective Portfolios. Pursuant to a sub-agreement with the
Distributor, Merrill Lynch also provides the account maintenance
and distribution services to the Fund. The ongoing account maintenance
fee compensates the Distributor and Merrill Lynch for providing
account maintenance services to Class B shareholders. This fee is
to compensate the Distributor for services provided and the expenses
borne by it under the Plan. As authorized by the Plan, the Distributor
has entered into an agreement with Merrill Lynch, Pierce, Fenner &
Smith Inc. ("MLPF&S"), an affiliate of Merrill Lynch Investment
Management, Inc., which provides for the compensation of MLPF&S
for providing distribution-related services to the Fund.
For the year ended June 30, 1994, MLFD earned underwriting
discounts, and MLPF&S earned dealer concessions on sales of the
Fund's Class A Shares as follows:
Insured National Limited Maturity
Portfolio Portfolio Portfolio
MLFD $1,456,474 $103,594 $657,688
MLPF&S 151,583 977,865 88,660
MLPF&S received contingent deferred sales charges of $2,370,916
relating to transactions in Class B Shares, amounting to
$1,469,123, $718,890 and $190,903 in the Insured, National and
Limited Maturity Portfolios, respectively.
Financial Data Services, Inc. ("FDS"), a wholly-owned
subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, FAMI, MLFD, FDS, MLPF&S, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term
securities, for the year ended June 30, 1994 were as follows:
<PAGE>
Purchases Sales
Insured Portfolio $ 819,735,196 $ 1,269,238,817
National Portfolio 1,217,057,053 1,382,174,524
Limited Maturity Portfolio 478,060,792 393,735,111
Net realized and unrealized gains (losses) as of June 30, 1994
were as follows:
Realized Unrealized
Insured Portfolio Gains Gains
Long-term investments $ 80,935,129 $ 12,315,934
-------------- ---------------
Total $ 80,935,129 $ 12,315,934
============== ===============
Realized Unrealized
National Portfolio Gains Losses
Long-term investments $ 43,882,749 $ (36,461,286)
Short-term investments 297,749 --
Financial future contracts on options 17,828,347 --
-------------- ---------------
Total $ 62,008,845 $ (36,461,286)
============== ===============
Realized Unrealized
Limited Maturity Portfolio Losses Losses
Long-term investments $ (903,904) $ (1,387,594)
Short-term investments (64,432) --
-------------- ---------------
Total $ (968,336) $ (1,387,594)
============== ===============
As of June 30, 1994, net unrealized appreciation/depreciation for
Federal income tax purposes were as follows:
Gross Gross Net Unrealized
Unrealized Unrealized Appreciation
Appreciation Depreciation (Depreciation)
Insured Portfolio $105,945,234 $93,629,300 $ 12,315,934
National Portfolio 37,049,072 73,510,358 (36,461,286)
Limited Maturity Portfolio 3,054,399 4,441,993 (1,387,594)
<PAGE>
The aggregate cost of investments at June 30, 1994 for Federal
income tax purposes was $2,690,285,866 for the Insured Portfolio,
$1,634,000,759 for the National Portfolio, and $936,307,940 for
the Limited Maturity Portfolio.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions for the years ended June 30, 1994 and June 30, 1993
were ($52,099,956) and $235,653,905, respectively, for the Insured
Portfolio; $44,114,517 and $153,435,527, respectively, for the
National Portfolio and $7,793,356 and $321,893,595, respectively,
for the Limited Maturity Portfolio.
Transactions in capital shares for Class A and Class B Shares
were as follows:
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 33,131,876 $ 280,935,110
Shares issued to shareholders in
reinvestment of dividends and
distributions 9,445,296 80,198,475
----------- --------------
Total issued 42,577,172 361,133,585
Shares redeemed (53,818,184) (453,958,624)
----------- --------------
Net decrease (11,241,012) $ (92,825,039)
=========== ==============
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1993 Shares Amount
Shares sold 32,564,428 $ 274,538,370
Shares issued to shareholders in
reinvestment of dividends and
distributions 8,286,565 69,474,166
----------- --------------
Total issued 40,850,993 344,012,536
Shares redeemed (32,853,753) (276,837,512)
----------- --------------
Net increase 7,997,240 $ 67,175,024
=========== ==============
<PAGE>
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 21,671,550 $ 184,351,353
Shares issued to shareholders in
reinvestment of dividends and
distributions 4,290,552 36,402,265
----------- --------------
Total issued 25,962,102 220,753,618
Shares redeemed (21,552,384) (180,028,535)
----------- --------------
Net increase 4,409,718 $ 40,725,083
=========== ==============
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1993 Shares Amount
Shares sold 32,402,900 $ 272,169,578
Shares issued to shareholders in
reinvestment of dividends and
distributions 3,185,099 26,690,639
----------- --------------
Total issued 35,587,999 298,860,217
Shares redeemed (15,508,409) (130,381,336)
----------- --------------
Net increase 20,079,590 $ 168,478,881
=========== ==============
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 8,490,083 $ 92,184,282
Shares issued to shareholders in
reinvestment of dividends and
distributions 5,189,718 56,058,472
----------- --------------
Total issued 13,679,801 148,242,754
Shares redeemed (17,141,264) (182,785,636)
----------- --------------
Net decrease (3,461,463) $ (34,542,882)
=========== ==============
<PAGE>
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1993 Shares Amount
Shares sold 11,991,383 $ 128,971,704
Shares issued to shareholders in
reinvestment of dividends and
distributions 4,869,454 52,127,903
----------- --------------
Total issued 16,860,837 181,099,607
Shares redeemed (14,162,108) (152,405,959)
----------- --------------
Net increase 2,698,729 $ 28,693,648
=========== ==============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 14,847,862 $ 161,270,898
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,710,325 18,453,990
----------- --------------
Total issued 16,558,187 179,724,888
Shares redeemed (9,473,731) (101,067,489)
----------- --------------
Net increase 7,084,456 $ 78,657,399
=========== ==============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1993 Shares Amount
Shares sold 17,460,542 $ 188,034,227
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,136,290 12,165,013
----------- --------------
Total issued 18,596,832 200,199,240
Shares redeemed (7,032,886) (75,457,361)
----------- --------------
Net increase 11,563,946 $ 124,741,879
=========== ==============
<PAGE>
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 37,619,639 $ 375,440,124
Shares issued to shareholders in
reinvestment of dividends 1,983,800 19,748,994
----------- --------------
Total issued 39,603,439 395,189,118
Shares redeemed (44,144,662) (439,707,786)
----------- --------------
Net decrease (4,541,223) $ (44,518,668)
=========== ==============
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1993 Shares Amount
Shares sold 56,244,112 $ 561,589,090
Shares issued to shareholders in
reinvestment of dividends 1,844,279 18,415,744
----------- --------------
Total issued 58,088,391 580,004,834
Shares redeemed (35,373,885) (353,118,455)
----------- --------------
Net increase 22,714,506 $ 226,886,379
=========== ==============
Limited Maturity Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 10,622,252 $ 105,858,053
Shares issued to shareholders in
reinvestment of dividends 284,833 2,836,330
----------- --------------
Total issued 10,907,085 108,694,383
Shares redeemed (5,671,375) (56,382,359)
----------- --------------
Net increase 5,235,710 $ 52,312,024
=========== ==============
<PAGE>
Limited Maturity Portfolio
Class B Shares for the Period Dollar
Nov. 2, 1992++ to June 30, 1993 Shares Amount
Shares sold 10,536,340 $ 105,289,015
Shares issued to shareholders in
reinvestment of dividends 69,735 697,915
----------- --------------
Total issued 10,606,075 105,986,930
Shares redeemed (1,096,869) (10,979,714)
----------- --------------
Net increase 9,509,206 $ 95,007,216
=========== ==============
[FN]
++Commencement of Operations.
5. Capital Loss Carryforward:
At June 30, 1994, the Fund had a net capital loss carryforward of
approximately $4,250,000 in the Limited Maturity Portfolio, of
which $1,416,000 expires in 1997, $2,787,000 expires in 1998,
$22,000 expires in 1999 and $25,000 expires in 2002. These will
be available to offset like amounts of any future taxable gains.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Municipal Bond Fund, Inc.:
We have audited the accompanying statements of assets and
liabilities, including the schedules of investments, of the
Insured, National and Limited Maturity Portfolios of Merrill
Lynch Municipal Bond Fund, Inc. as of June 30, 1994, the
related statements of operations for the year then ended and
changes in net assets for each of the years in the two-
year period then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial
statements and the financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights
based on our audits.
<PAGE>
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and the financial highlights are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned at June 30, 1994 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, such financial statements and financial
highlights present fairly, in all material respects, the
financial position of the Insured, National and Limited
Maturity Portfolios of Merrill Lynch Municipal Bond Fund,
Inc. as of June 30, 1994, the results of their operations,
the changes in their net assets, and the financial highlights
for the respective stated periods in conformity with generally
accepted accounting principles.
Deloitte & Touche
Princeton, New Jersey
July 29, 1994
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION
All of the net investment income distributions declared daily by
Merrill Lynch Municipal Bond Fund, Inc. during its taxable year
ended June 30, 1994 qualify as tax-exempt interest dividends for
Federal income tax purposes.
Additionally, the following summarizes the capital gain
distributions declared by the National and Insured Portfolios
during the year:
Short-Term Long-Term
Record Payable Capital Capital
Date Date Gains Gains
National Portfolio 12/22/93 12/31/93 $0.138679 $0.156762
Insured Portfolio 12/22/93 12/31/93 $0.026252 $0.200922
<PAGE>
There were no capital gains distributions declared by Limited
Maturity Portfolio during the year.
Please retain this information for your records.
APPENDIX GRAPHIC AND IMAGE MATERIALS.
ITEM 1:
Insured Portfolio:
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the
Portfolio's Class A Shares compared to growth of an investment in
the Lehman Brothers Municipal Bond Index. Beginning and ending
values are:
6/84 6/94
Insured Portfolio++--
Class A Shares* $9,600 $25,040
Lehman Brothers Municipal
Bond Index++++ $10,000 $27,863
A line graph depicting the growth of an investment in the
Portfolio's Class B Shares compared to growth of an investment in
the Lehman Brothers Municipal Bond Index. Beginning and ending
values are:
10/21/88** 6/94
Insured Portfolio++--
Class B Shares* $10,000 $14,760
Lehman Brothers Municipal
Bond Index++++ $10,000 $15,577
[FN]
++The Insured Portfolio invests primarily in long-term,
investment-grade municipal bonds (bonds rated Baa or better)
covered by portfolio insurance guaranteeing the timely
payment of principal at maturity and interest.
++++This unmanaged Index consists of revenue bonds, pre-refunded
bonds, general obligation bonds and insured bonds, all of
which mature within 30 years.
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commenced operations on October 21, 1988.
<PAGE>
ITEM 2:
National Portfolio:
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the
Portfolio's Class A Shares compared to growth of an investment in
the Lehman Brothers Municipal Bond Index. Beginning and ending
values are:
6/84 6/94
National Portfolio++--
Class A Shares* $9,600 $25,559
Lehman Brothers Municipal
Bond Index++++ $10,000 $27,863
A line graph depicting the growth of an investment in the
Portfolio's Class B Shares compared to growth of an investment in
the Lehman Brothers Municipal Bond Index. Beginning and ending
values are:
10/21/88** 6/94
National Portfolio++--
Class B Shares* $10,000 $14,743
Lehman Brothers Municipal
Bond Index++++ $10,000 $15,577
[FN]
++The National Portfolio invests primarily in long-term,
investment-grade municipal bonds (bonds rated Baa or better)
covered by portfolio insurance guaranteeing the timely
payment of principal at maturity and interest.
++++This unmanaged Index consists of revenue bonds, pre-refunded
bonds, general obligation bonds and insured bonds, all of
which mature within 30 years.
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commenced operations on October 21, 1988.
Past performance is not predictive of future performance.
<PAGE>
ITEM 3:
Limited Maturity Portfolio:
Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the
Portfolio's Class A Shares compared to growth of an investment in
the Lehman Brothers Municipal Bond Index and the Lehman Brothers
3-Yr. General Obligation Bond Index. Beginning and ending
values are:
6/84 6/94
Limited Maturity Portfolio++--
Class A Shares* $9,250 $17,442
Lehman Brothers Municipal
Bond Index++++ $10,000 $27,863
Lehman Brothers 3-Yr. General
Obligation Bond Index++++++ $10,000 $17,607
A line graph depicting the growth of an investment in the
Portfolio's Class B Shares compared to growth of an investment in
the Lehman Brothers Municipal Bond Index and the Lehman Brothers
3-Yr. General Obligation Bond Index. Beginning and ending
values are:
11/02/92** 6/94
Limited Maturity Portfolio++--
Class B Shares* $10,000 $10,531
Lehman Brothers Municipal
Bond Index++++ $10,000 $11,033
Lehman Brothers 3-Yr. General
Obligation Bond Index++++++ $10,000 $10,739
<PAGE>
[FN]
++The Limited Maturity Portfolio invests primarily in
investment-grade municipal bonds (rated Baa or better)
with a maximum maturity not to exceed 4 years.
++++This unmanaged Index consists of revenue bonds, pre-refunded
bonds, general obligation bonds and insured bonds, all of
which mature within 30 years.
++++++This unmanaged Index consists of state and local government
obligation bonds that mature in 3 years--4 years, rated
Baa or better.
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commenced operations on November 2, 1992.
Past performance is not predictive of future performance.
