MERRILL LYNCH MUNICIPAL BOND FUND INC
N-30D, 1995-02-24
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MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.



FUND LOGO





Semi-Annual Report

December 31, 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
90 Washington Street, 12th Floor
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

Volatility in the US financial markets
continued during the December quarter,
largely prompted by concerns of increas-
ing inflationary pressures. The possi-
bility of continued monetary policy
tightening by the Federal Reserve Board
was predominant in the minds of
investors throughout most of the period.
Therefore, there was little surprise in
mid-November when the central bank
announced the sixth increase in short-
term interest rates in 1994. Early in the
period, the weakness of the US dollar in
foreign exchange markets prompted
declines in US stock and bond prices,
but some strengthening of the US
currency has occurred recently.
<PAGE>
The manufacturing sector was the
driving force behind the US economy
through the final quarter of the year,
making an important contribution to
the substantial increase in corporate
earnings. US companies have been
successful at containing labor costs,
which are an important component of
the inflation outlook. Although con-
sumer spending grew at a slower pace
than in previous economic recoveries,
purchases of vehicles and household
durable goods rose in the latter months
of 1994. Despite the relatively modest
rise in consumer spending, the personal
savings rate fell to an all-time annual
low in 1994.

In the weeks ahead, investors will
continue to assess economic data and
inflationary trends in order to gauge
whether further increases in short-term
interest rates are likely. The core
inflation rate rose less than 3% in 1994
following a 3% increase in 1993, the
best sustained inflation performance in
30 years. It is not likely that such
positive inflation results will be dupli-
cated in 1995. In addition, investor
interest in the new year will also be
focused on the progress that the new
Congress makes on both reducing spend-
ing and the Federal budget deficit and
passing tax cuts that promote savings
and investment. Legislative progress,
combined with continued indications
of moderate and sustainable levels of
economic growth, would be positive
for the US capital markets. However,
the lagged effects of higher interest
rates could slow the economy sharply
and with it, the growth of corporate
profits.
<PAGE>
The Municipal Market
During the three months ended
December 31, 1994, the tax-exempt bond
market continued to deteriorate amid
signs of a strong domestic economy and
a restrictive Federal Reserve Board. By
the end of the December quarter,
municipal revenue bond yields had
increased over 25 basis points (0.25%)
to 6.97%. Interest rate volatility
remained significant, with yields fluc-
tuating by as much as 10 basis points--15
basis points weekly. Long-term US
Treasury bonds also remained very
volatile during the December quarter.
By mid-November, US Treasury yields
had risen over 35 basis points to 8.15%
before declining to end the quarter
at 7.875%.

Tax-exempt bonds remained very attrac-
tive throughout the quarter. Over the
last three months, long-term municipal
bonds yielded as much as 90% of
comparable US Treasury bonds. Yield
ratios in excess of 85% are considered
historically attractive to long-term inves-
tors. Additionally, with taxable equiva-
lent yields in excess of 10% for taxpayers
in the 39% tax bracket throughout the
quarter, municipal bonds continued to
represent considerable value relative
to other investment alternatives.
<PAGE>
The municipal bond market's technical
position remained very positive through-
out the December quarter. Approxi-
mately $36 billion in long-term
municipal securities were issued during
the three months ended December 31,
1994. This represents a decline of over
48% versus the December 1993 quarter.
Similarly, $164 billion in long-term
tax-exempt bonds were issued during
1994, a 44% decline from 1993 annual
issuance levels. Also, estimates of net
cash available for reinvestment in early
1995, based on maturities, coupon
income, and advanced refunded matur-
ities, were in excess of $25 billion.
However, this combination of reduced
supply and sizable future demand has
not generated lower interest rates as
would normally be expected. Once
current uncertainties regarding the
strength and volatility of the current
economic expansion are resolved, and,
more importantly, when no further
interest rate increases by the Federal
Reserve Board can be expected, the
municipal bond market appears poised
to respond to its present favorable
position and recoup some of the
price deterioration suffered over the
last quarters.

Portfolio Strategy
The December quarter provided a period
of extreme price volatility in the fixed-
income markets because of the uncer-
tainty of contrasting economic signals
and a vacillating foreign exchange
picture for the US dollar. Merrill Lynch
Municipal Bond Fund, Inc.'s Insured and
National Portfolios each maintained
cash reserve positions between 7% and
10% of net assets during most of the
quarter. These reserve positions give
each Portfolio the ability to purchase
income-oriented long-term bonds when
they are attractively offered. As the
quarter was coming to its end, the
Portfolios selectively purchased secur-
ities as yields approached 6.75%--7.00%.
These securities should provide an
attractive level of tax-exempt income in
the months and years ahead.
<PAGE>
The Limited Maturity Portfolio contin-
ued to be defensively positioned during
the December quarter as the Federal
Reserve Board continued its restrictive
monetary policy by again raising short-
term interest rates in November 1994.
Both the Federal Funds rate and the
discount rate were increased 75 basis
points. As a result of this rising interest
rate environment and continued strong
economic data, we maintained the
average portfolio maturity at approxi-
mately 14 months, and the cash reserve
position at approximately 20% of net
assets throughout most of the quarter.
This strategy helped cushion the impact
on the Portfolio's net asset values
during this rapidly rising interest rate
environment.

In Conclusion
We appreciate your ongoing interest in
Merrill Lynch Municipal Bond Fund,
Inc., and we look forward to serving
your investment needs and objectives
in 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


February 9, 1995

<PAGE>

PERFORMANCE DATA

About Fund
Performance

 Since October 21, 1994, investors have been able to purchase shares
 of the Fund through the Merrill Lynch Select Pricing SM System,
 which offers four pricing alternatives:

*Class A Shares incur a maximum initial sales charge (front-end
 load) of 4% and bear no ongoing distribution or account mainte-
 nance fees for Insured and National Portfolios. Limited Maturity
 Portfolio incurs a maximum initial sales charge (front-end load) of
 1% and bears no ongoing distribution or account maintenance fees.

*Class B Shares are subject to a maximum contingent deferred
 sales charge of 4% if redeemed during the first year, decreasing 1%
 each year thereafter to 0% after the fourth year for Insured and
 National Portfolios. Limited Maturity Portfolio is subject to a maxi-
 mum contingent deferred sales charge of 1% if redeemed within
 one year of purchase. In addition, Insured and National Portfolios
 are subject to a distribution fee of 0.50% and an account maintenance
 fee of 0.25%. Limited Maturity Portfolio is subject to a distribution
 fee of 0.20% and an account maintenance fee of 0.15%. All three
 classes of shares automatically convert to Class D Shares after
 10 years.

*Class C Shares are subject to a distribution fee of 0.55% and an
 account maintenance fee of 0.25% for Insured and National Port-
 folios. Limited Maturity Portfolio is subject to a distribution fee of
 0.20% and an account maintenance fee of 0.15%. In addition, Class C
 Shares are subject to a 1% contingent deferred sales charge if re-
 deemed within one year of purchase.

*Class D Shares incur a maximum initial sales charge of 4% and
 an account maintenance fee of 0.25% (but no distribution fee) for
 Insured and National Portfolios. Limited Maturity Portfolio incurs
 a maximum initial sales charge of 1% and an account maintenance
 fee of 0.10% (but no distribution fee).

 Performance data for the Fund's Class A Shares and Class B Shares
 are presented in the "Performance Summary" and "Average Annual
 Total Return" tables on pages 4, 5, 7 and 8. "Aggregate Total Return"
 tables for Class C and D Shares are presented on page 5. Data for
 all of the Fund's shares, including Class C and Class D Shares, are
 presented in the "Recent Performance Results" table.
<PAGE>
 The "Recent Performance Results" table on pages 6 and 7 shows
 investment results before the deduction of any sales charges for
 Class A and Class B Shares for the 12-month and 3-month periods
 ended  December 31, 1994 and for Class C and Class D Shares for
 the period since inception through December 31, 1994. All data in
 this table assume imposition of the actual total expenses incurred
 by each class of shares during the relevant period.

 None of the past results shown should be considered a representa-
 tion 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. Dividends paid to each
 class of shares will vary because of the different levels of account
 maintenance, distribution and transfer agency fees applicable to
 each class, which are deducted from the income available to be
 paid to shareholders.


Average Annual
Total Return

Insured Portfolio

                                            % Return Without    % Return With
Class A Shares*                               Sales Charge      Sales Charge**

Year Ended 12/31/94                              -6.76%             -10.49%
Five Years Ended 12/31/94                        +6.61              + 5.74
Ten Years Ended 12/31/94                         +8.99              + 8.54

[FN]
 *Maximum sales charge is 4%.
**Assuming maximum sales charge.


                                                % Return           % Return
Class B Shares*                               Without CDSC        With CDSC**

Year Ended 12/31/94                              -7.36%             -10.81%
Five Years Ended 12/31/94                        +5.81              + 5.81
Inception (10/21/88) through 12/31/94            +6.26              + 6.26


[FN]
 *Maximum contingent deferred sales charge is 4% and is reduced to 0%
  after 4 years.
**Assuming payments of applicable contingent deferred sales charge.


<PAGE>
National Portfolio


                                            % Return Without    % Return With
Class A Shares*                               Sales Charge      Sales Charge**

Year Ended 12/31/94                              -6.55%             -10.29%
Five Years Ended 12/31/94                        +6.52              + 5.65
Ten Years Ended 12/31/94                         +9.12              + 8.68

[FN]
 *Maximum sales charge is 4%.
**Assuming maximum sales charge.


                                                % Return           % Return
Class B Shares*                               Without CDSC        With CDSC**

Year Ended 12/31/94                              -7.27%             -10.70%
Five Years Ended 12/31/94                        +5.70              + 5.70
Inception (10/21/88) through 12/31/94            +6.11              + 6.11

[FN]
 *Maximum contingent deferred sales charge is 4% and is reduced to 0%
  after 4 years.
**Assuming payment of applicable contingent deferred sales charge.



Limited Maturity Portfolio

                                            % Return Without    % Return With
Class A Shares*                               Sales Charge      Sales Charge**

Year Ended 12/31/94                              +1.35%              +0.34%
Five Years Ended 12/31/94                        +4.93               +4.72
Ten Years Ended 12/31/94                         +5.48               +5.37

[FN]
 *Maximum sales charge is 1%.
**Assuming maximum sales charge.


                                                % Return           % Return
Class B Shares*                               Without CDSC        With CDSC**

Year Ended 12/31/94                              +1.03%              +0.05%
Inception (11/02/92) through 12/31/94            +2.78               +2.78
<PAGE>
[FN]
 *Maximum contingent deferred sales charge is 1% and is reduced to 0%
  after one year.
**Assuming payment of applicable contingent deferred sales charge.


Aggregate
Total Return

Insured Portfolio

                                                % Return           % Return
Class C Shares*                               Without CDSC        With CDSC**

Inception (10/21/94) through 12/31/94            -0.41%              -1.38%

[FN]
 *Maximum contingent deferred sales charge is 1% and is reduced to 0%
  after one year.
**Assuming payment of applicable contingent deferred sales charge.


                                            % Return Without    % Return With
Class D Shares*                               Sales Charge      Sales Charge**


Inception (10/21/94) through 12/31/94            -0.30%              -4.29%

[FN]
 *Maximum sales charge is 4%.
**Assuming maximum sales charge.


National Portfolio

                                                % Return           % Return
Class C Shares*                               Without CDSC        With CDSC**

Inception (10/21/94) through 12/31/94            -1.39%              -2.35%

[FN]
 *Maximum contingent deferred sales charge is 1% and is reduced to 0%
  after one year.
**Assuming payment of applicable contingent deferred sales charge.


                                            % Return Without    % Return With
Class D Shares*                               Sales Charge      Sales Charge**

Inception (10/21/94) through 12/31/94            -1.29%              -5.24%
<PAGE>
[FN]
 *Maximum sales charge is 4%.
**Assuming maximum sales charge.


Limited Maturity Portfolio

                                                % Return           % Return
Class C Shares*                               Without CDSC        With CDSC**

Inception (10/21/94) through 12/31/94            +0.11%              -0.88%

[FN]
 *Maximum contingent deferred sales charge is 1% and is reduced to 0%
  after one year.
**Assuming payment of applicable contingent deferred sales charge.


                                            % Return Without    % Return With
Class D Shares*                               Sales Charge      Sales Charge**

Inception (10/21/94) through 12/31/94            +0.13%              -0.87%

[FN]
 *Maximum sales charge is 1%.
**Assuming maximum sales charge.



PERFORMANCE DATA (continued)

<TABLE>
Recent
Performance
Results*
<CAPTION>
<PAGE>                                                                                       12 Month    3 Month      Standardized
                                                          12/31/94   9/30/94++   12/31/93    % Change    % Change++   30-day Yield
<S>                                                        <C>        <C>         <C>        <C>          <C>              <C>
Insured Portfolio Class A Shares                           $7.43      $7.78       $ 8.60     -11.97%(1)   -2.69%(1)        5.94%
Insured Portfolio Class B Shares                            7.43       7.77         8.59     -11.86(1)    -2.56(1)         5.42
Insured Portfolio Class C Shares                            7.43       7.68         --         --         -1.42(1)         5.39
Insured Portfolio Class D Shares                            7.43       7.68         --         --         -1.42(1)         5.28
National Portfolio Class A Shares                           9.40       9.96        10.91     -11.93(2)    -3.53(2)         6.43
National Portfolio Class B Shares                           9.39       9.95        10.90     -11.94(2)    -3.53(2)         5.92
National Portfolio Class C Shares                           9.40       9.85         --         --         -2.45(2)         5.88
National Portfolio Class D Shares                           9.40       9.85         --         --         -2.45(2)         6.18
Limited Maturity Portfolio Class A Shares                   9.77       9.85        10.01     - 2.40       -0.81            3.92
Limited Maturity Portfolio Class B Shares                   9.77       9.85        10.01     - 2.40       -0.81            3.60
Limited Maturity Portfolio Class C Shares                   9.77       9.83         --         --         -0.61            3.80
Limited Maturity Portfolio Class D Shares                   9.77       9.83         --         --         -0.61            3.83
Insured Portfolio Class A Shares--Total Return                                               - 6.76(3)    -1.24(4)
Insured Portfolio Class B Shares--Total Return                                               - 7.36(5)    -1.31(6)
Insured Portfolio Class C Shares--Total Return                                                 --         -0.41(7)
Insured Portfolio Class D Shares--Total Return                                                 --         -0.30(8)
National Portfolio Class A Shares--Total Return                                              - 6.55(9)    -1.99(10)
National Portfolio Class B Shares--Total Return                                              - 7.27(11)   -2.20(12)
National Portfolio Class C Shares--Total Return                                                --         -1.39(13)
National Portfolio Class D Shares--Total Return                                                --         -1.29(14)
Limited Maturity Portfolio Class A Shares--Total Return                                      + 1.35(15)   +0.12(16)
Limited Maturity Portfolio Class B Shares--Total Return                                      + 1.03(17)   +0.03(18)
Limited Maturity Portfolio Class C Shares--Total Return                                        --         +0.11(19)
Limited Maturity Portfolio Class D Shares--Total Return                                        --         +0.13(20)
<PAGE>
<FN>
   *Investment results shown do not reflect any sales charges; results shown would be lower 
    if a sales charge was included.
  ++Investment results shown for Class C and Class D Shares are since inception (10/21/94).
 (1)Percent change includes reinvestment of $0.141 per share capital gains distributions.
 (2)Percent change includes reinvestment of $0.209 per share capital gains distributions.
 (3)Percent change includes reinvestment of $0.454 per share ordinary income dividends and 
    $0.141 per share capital gains distributions.
 (4)Percent change includes reinvestment of $0.121 per share ordinary income dividends and 
    $0.141 per share capital gains distributions.
 (5)Percent change includes reinvestment of $0.394 per share ordinary income dividends and 
    $0.141 per share capital gains distributions.
 (6)Percent change includes reinvestment of $0.105 per share ordinary income dividends and 
    $0.141 per share capital gains distributions.
 (7)Percent change includes reinvestment of $0.076 per share ordinary income dividends and 
    $0.141 per share capital gains distributions.
 (8)Percent change includes reinvestment of $0.084 per share ordinary income dividends and 
    $0.141 per share capital gains distributions.
 (9)Percent change includes reinvestment of $0.599 per share ordinary income dividends and 
    $0.209 per share capital gains distributions.
(10)Percent change includes reinvestment of $0.161 per share ordinary income dividends and 
    $0.209 per share capital gains distributions.
(11)Percent change includes reinvestment of $0.522 per share ordinary income dividends and
    $0.209 per share capital
    gains distributions.
(12)Percent change includes reinvestment of $0.142 per share ordinary income dividends and 
    $0.209 per share capital gains distributions.
(13)Percent change includes reinvestment of $0.103 per share ordinary income dividends and 
    $0.209 per share capital gains distributions.
(14)Percent change includes reinvestment of $0.113 per share ordinary income dividends and 
    $0.209 per share capital gains distributions.
(15)Percent change includes reinvestment of $0.373 per share ordinary income dividends.
(16)Percent change includes reinvestment of $0.102 per share ordinary income dividends.
(17)Percent change includes reinvestment of $0.341 per share ordinary income dividends.
(18)Percent change includes reinvestment of $0.093 per share ordinary income dividends.
(19)Percent change includes reinvestment of $0.071 per share ordinary income dividends.
(20)Percent change includes reinvestment of $0.072 per share ordinary income dividends.
</TABLE>

<PAGE>
<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
1994                8.60/7.43   10.91/ 9.40   10.01/ 9.77       0.60(7)  0.81(7)   0.37      -  6.76     - 6.55      +1.35
                                                              ------   ------     -----
                                                        Total $10.55   $12.97     $8.86

                                                     Cumulative total return as of 12/31/94: +201.31%** +277.44%** +143.10%**

<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 charges; 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.
(7)Includes capital gains of $0.141 and $0.209 for the Insured and National
   Portfolios, respectively.
</TABLE>
<PAGE>

PERFORMANCE DATA (concluded)


<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
1994                8.59/7.43    10.90/ 9.39  10.01/ 9.77       0.53(5)  0.73(5)   0.34       - 7.36     - 7.27      +1.03
                                                              ------   ------     -----
                                                        Total $ 3.44   $ 4.61     $0.75

                                                   Cumulative total return as of 12/31/94:    +45.71%**  +44.40%**   +6.10%**

<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 charges; 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 Portfolios.
(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.
(5)Includes capital gains of $0.141 and $0.209 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
EDA        Economic Development Authority
GO         General Obligation Bonds
HDA        Housing Development Authority
HFA        Housing Finance Agency
IDA        Industrial Development Authority
IDR        Industrial Development Revenue Bonds
PCR        Pollution Control Revenue Bonds
RAN        Revenue Anticipation Notes
RAW        Revenue Anticipation Warrants
RIB        Residual Interest Bonds
SAVRS      Select Auction Variable Rate Securities
S/F        Single-Family
TAN        Tax Anticipation Notes
TRAN       Tax Revenue Anticipation Notes
UPDATES    Unit Priced Demand Adjustable
           Tax-Exempt Securities
UT         Unlimited Tax
VRDN       Variable Rate Demand Notes

 
<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--0.9%        AAA        Aaa    $  1,625      Alabama Water Pollution Control Authority, Revolving Fund Loan,
                                                     Series A, 6.75% due 8/15/2017(b)                                   $    1,642
                                                     Auburn University, Alabama, Revenue Refunding Bonds(e):
                     AAA        Aaa       5,925          (Athletic Project), 5.25% due 4/01/2010                             5,150
                     AAA        Aaa       5,000          (General Fee), 5.25% due 6/01/2013                                  4,248
                     AAA        Aaa       1,250      Mobile, Alabama, GO, Refunding and Capital Improvement Bonds,
                                                     10.875% due 11/01/2007(c)                                               1,663
                     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)                                                  6,477

<PAGE>
Alaska--0.7%                                         Kenai Peninsula Borough, Alaska, GO(b):
                     AAA        Aaa       6,450          8.40% due 1/01/2000                                                 7,166
                     AAA        Aaa       8,460          8.40% due 1/01/2001                                                 9,525


Arizona--2.2%        AAA        Aaa       4,000      Arizona State Municipal Financing Program, COP, Series 34,
                                                     7.25% due 8/01/2009(g)                                                  4,351
                     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)                                                        4,065
                                                     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)                           4,129
                     A1+        VMIG1     1,200          VRDN, Series B2, 4.10% due 12/01/2008(f)                            1,200
                     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)                                                       8,368
                                                     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                        10,538
                     AAA        Aaa       7,340          Series A-1, 7.625% due 1/01/2019                                    7,715
                                                     Phoenix, Arizona, Street and Highway User, Revenue Refunding Bonds,
                                                     Junior-Lien, Series A(h)(j)(k):
                     AAA        Aaa       5,000        5.63% due 7/01/2012                                                   1,578
                     AAA        Aaa       5,000        5.63% due 7/01/2013                                                   1,472
                     AAA        Aaa       7,000      Tucson, Arizona, Refunding Bonds, 4.90% due 7/01/2013(h)                5,723
                     AAA        Aaa       5,250      University of Arizona Medical Center Corporation, Hospital
                                                     Revenue Refunding Bonds, 5% due 7/01/2021(e)                            4,112


California--7.6%     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)       4,277
                     AAA        Aaa       6,000      Anaheim, California, Public Financing Authority, Revenue Refunding
                                                     Bonds (Electric Utility Projects), 5.625% due 10/01/2022(e)             4,995
                     AAA        Aaa      65,000      California State, RAW, Series C, 5.71% due 4/25/1996(h)                65,116
                     AAA        Aaa       5,000      Contra Costa, California, Water District Water Revenue Refunding
                                                     Bonds, Series F, 5% due 10/01/2020(h)                                   3,872
                     AAA        Aaa      12,000      Fresno, California, Sewer Revenue Bonds, Series A-1,
                                                     6.25% due 9/01/2014(b)                                                 11,616
                     AAA        Aaa       3,935      Los Angeles, California, Mortgage Revenue Refunding Bonds,
                                                     Series A, 6.30% due 1/01/2025(e)                                        3,601
                     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)                                                  2,359
                                                     Los Angeles, California, Wastewater System Revenue Refunding Bonds(e):
                     AAA        Aaa       5,000          Series A, 5.70% due 6/01/2001                                       4,451
                     AAA        Aaa      12,825          Series A, 5.70% due 6/01/2020                                      11,129
                     AAA        Aaa       5,000          Series C, 5.60% due 6/01/2015                                       4,362
</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>
California           AAA        Aaa    $  6,000      Los Angeles County, California, Transportation Commission,
(concluded)                                          Sales Tax Revenue Bonds, Series A, 6.75% due 7/01/2001(a)(h)       $    6,401
                     AAA        Aaa      17,600      Northern California Power Agency, Multiple Capital Facilities
                                                     Revenue Bonds, 5% due 8/01/2025(e)                                     17,206
                     AAA        Aaa      12,500      San Diego, California, Sewer Revenue Bonds, Series A,
                                                     5.25% due 5/15/2020(b)                                                 10,133
                                                     University of California, Revenue Bonds (Multiple Purpose Projects):
                     AAA        Aaa       4,650          Refunding, Series C, 5% due 9/01/2012(b)                            3,817
                     AAA        Aaa      12,075          Refunding, Series C, 5.25% due 9/01/2016(b)                         9,932
                     AAA        Aaa      16,000          Refunding, Series C, 5% due 9/01/2023(b)                           12,287
                     AAA        Aaa       5,000          Series D, 6.375% due 9/01/2024(e)                                   4,779


Delaware--0.5%       AAA        Aaa       6,000      Delaware EDA, PCR, Refunding (Delmarva Power and Light Company),
                                                     Series B, 7.30% due 3/01/2014(e)                                        6,219
                     AAA        Aaa       3,750      Delaware State Health Facilities Authority, Crossover Revenue
                                                     Refunding Bonds (Delaware Medical Center), 7% due 10/01/2015(e)         3,808


District of                                          District of Columbia, Hospital Revenue Refunding Bonds
Columbia--0.7%                                       (National Rehabilitation Hospital--Medlantic), Series A(e):
                     AAA        Aaa       7,000          7.10% due 11/01/2011                                                7,162
                     AAA        Aaa       9,250          7.125% due 11/01/2019                                               9,371


Florida--6.6%        AAA        Aaa       2,735      Altamonte Springs, Florida, Health Facilities Authority,
                                                     Hospital Revenue Bonds (Adventist Health/Sunbelt), Series A,
                                                     7% due 11/15/2014(b)                                                    2,810
                                                     Florida Municipal Power Agency Revenue Bonds:
                     AAA        Aaa      14,150          (All Requirements Power Supply Project), 5.10% due 10/01/2025(b)   11,215
                     AAA        Aaa       4,500          Refunding (Saint Lucie Project), 5.25% due 10/01/2021(h)            3,693
                     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(b)                    5,094
                                                     Florida Turnpike Authority, Turnpike Revenue Bonds, Series A:
                     AAA        Aaa       2,935          9.50% due 7/01/2001(b)                                              3,527
                     AAA        Aaa       4,500          Refunding, 5% due 7/01/2015(h)                                      3,675
                                                     Jacksonville, Florida, Health Facilities Authority, Hospital
                                                     Revenue Refunding and Improvement Bonds
<PAGE>                                               (Baptist Medical Center Project):
                     AAA        Aaa         500          11.50% due 10/01/2012(c)                                              749
                     AAA        Aaa      26,500          Series A, 7.30% due 6/01/2019(e)                                   27,497
                     AAA        Aaa       8,750      Jacksonville, Florida, Port Authority Revenue Bonds, AMT,
                                                     7.875% due 11/01/2018(g)                                                9,182
                     AAA        Aaa      20,000      Lee County, Florida, Hospital Board of Directors, Hospital
                                                     Revenue Bonds, 5% due 4/01/2020(e)                                     19,803
                     AAA        Aaa      16,700      Martin County, Florida, PCR, Refunding (Florida Power and Light
                                                     Company Project), 7.30% due 7/01/2020(e)                               17,463
                     AAA        Aaa      11,585      Orange County, Florida, Health Facilities Authority, Revenue
                                                     Refunding Bonds (Pooled Hospital Loan), Series B,
                                                     7.875% due 12/01/2025(g)                                               12,164
                     AAA        Aaa       3,950      Orange County, Florida, HFA, Mortgage Revenue Refunding Bonds,
                                                     Series A, 7.60% due 1/01/2024(h)                                        4,149
                                                     Palm Beach County, Florida, Criminal Justice Facilities,
                                                     Revenue Refunding Bonds(h):
                     AAA        Aaa       5,000          5.375% due 6/01/2008                                                4,518
                     AAA        Aaa      11,985          5.375% due 6/01/2009                                               10,766
                     AAA        Aaa       4,935          5.375% due 6/01/2010                                                4,368
                     AAA        Aaa       4,430          5.375% due 6/01/2011                                                3,899
                     AAA        Aaa       3,500      Saint Lucie County, Florida, Sales Tax Revenue Refunding Bonds,
                                                     5% due 10/01/2023(h)                                                    2,745
                     AAA        Aaa       5,700      South Broward, Florida, Hospital District Revenue Bonds, SAVRS,
                                                     6.469% due 5/01/2021(b)(d)                                              5,658
                     AAA        Aaa       5,000      Tampa, Florida, Revenue Bonds (Allegany Health System--Saint
                                                     Joseph's), 5.125% due 12/01/2023(e)                                     3,999
                     AAA        Aaa       2,000      Tampa, Florida, Water and Sewer System Revenue Bonds, Sub-Lien,
                                                     Series A, 7.25% due 10/01/2016(b)                                       2,102
                     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)                                             3,049


Georgia--4.3%        AAA        Aaa       5,500      Chatham County, Georgia, School District, UT, 6.75%
                                                     due 8/01/2019(e)                                                        5,541
                     AAA        Aaa       5,000      Douglasville-Douglas County, Georgia, Water and Sewer Authority,
                                                     Water and Sewer Revenue Refunding Bonds, 5.625% due 6/01/2015(b)        4,437
                                                     Georgia Municipal Electric Authority, Power Revenue Bonds:
                     AAA        Aaa      12,100          Refunding, Series Z, 5.50% due 1/01/2012(h)                        10,724
                     AAA        Aaa      20,000          Series EE, 7% due 1/01/2025(b)                                     20,825
                                                     Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales
                                                     Tax Revenue Refunding Bonds(b):
                     AAA        Aaa       3,990          Series A, 5.125% due 7/01/2019                                      3,214
                     AAA        Aaa      10,500          Series A, 5.125% due 7/01/2020                                      8,426
                     AAA        Aaa      18,605          Series P, 6% due 7/01/2013                                         17,536
                     AAA        Aaa      28,165          Series P, 6.25% due 7/01/2020                                      26,790
                     AAA        Aaa       9,000      Municipal Electric Authority, Georgia, Special Obligation Bonds
                                                     (Fifth Crossover Series, Project One), 6.40% due 1/01/2013(b)           8,915

<PAGE>
Hawaii--2.9%                                         Hawaii County, Hawaii, Revenue Refunding and Improvement Bonds,
                                                     GO, UT, Series A(h):
                     AAA        Aaa       1,000          5.60% due 5/01/2012                                                   898
                     AAA        Aaa       1,000          5.60% due 5/01/2013                                                   895
                                                     Hawaii Department of Budget and Finance, Special Purpose Mortgage
                                                     Revenue Bonds (Hawaiian Electric Company, Inc.), AMT(e):
                     AAA        Aaa       4,340          7.625% due 12/01/2018                                               4,539
                     AAA        Aaa       5,000          Series C, 7.375% due 12/01/2020                                     5,167
                     AAA        Aaa       4,500          Hawaii Harbor Capital Improvement Revenue Bonds, AMT,
                                                         7% due 7/01/2017(e)                                                 4,544
                                                     Hawaii State Airport System Revenue Bonds:
                     AAA        Aaa      21,795          AMT, 7.30% due 7/01/2020(b)                                        22,299
                     AAA        Aaa      23,200          AMT, Second Series, 7.50% due 7/01/2020(h)                         24,114
                     AAA        Aaa      10,000          Refunding, Series 1993, 6.45% due 7/01/2013(e)                      9,841


Illinois--5.7%       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)                                                    26,489
                     AAA        Aaa      25,000      Chicago, Illinois, Public Building Commission Revenue Bonds,
                                                     Series A, 7.125% due 1/01/2015(c)(e)                                   26,417
                     AAA        Aaa      27,000      Cook County, Illinois, GO, UT, Series A, 6.60% due 11/15/2022(e)       26,392
                     AAA        Aaa      11,000      Evergreen Park, Illinois, Hospital Facility Revenue Refunding Bonds
                                                     (Little Company of Mary Hospital), 7.75% due 2/15/2009(e)              11,602
                                                     Illinois Health Facilities Authority Revenue Bonds:
                     AAA        Aaa       3,250          (Elmhurst Memorial Hospital), 6.625% due 1/01/2022(h)               3,164
                     AAA        Aaa       4,000          (Methodist Health Project), SAVRS, 4% due 5/01/2021(b)(d)           3,995
                     AAA        Aaa       5,500          (Northern Illinois Medical Center), 7.875% due 9/01/2014(b)         5,754
                     AAA        Aaa      20,000          (Rush-Presbyterian Saint Luke's Medical Center),
                                                         5% due 10/01/2024(e)                                               19,721
                                                     Metropolitan Pier and Exposition Authority, Illinois, Dedicated
                                                     State Tax Revenue Bonds, Series A(j):
                     AAA        Aaa       7,000          5.65% due 6/15/2010(h)(k)                                           2,509
                     AAA        Aaa       5,000          5.70% due 6/15/2011(h)(k)                                           1,674
                     AAA        Aaa       6,600          6.50% due 6/15/2027(b)                                              6,333
                     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)                                                  2,736


Indiana--1.2%        AAA        Aaa       6,725      Goshen-Chandler, Indiana, School Building Corporation, First
                                                     Mortgage Revenue Refunding Bonds, UT, 5.75% due 1/15/2010(e)            6,119
                     AAA        Aaa       2,470      Indiana Employment Development Commission, Environmental
                                                     Revenue Bonds (Public Service Company of Indiana), AMT,
                                                     7.50% due 3/15/2015(e)                                                  2,560
                     AAA        Aaa       5,000      Indianapolis, Indiana, Gas Utility Revenue Bonds, Series A,
                                                     5.875% due 6/01/2024(b)                                                 4,397
                     AAA        Aaa       4,040      Indianapolis, Indiana, Local Public Improvement Bond Bank,
                                                     Series A, 7.90% due 2/01/2002(a)(g)                                     4,524
                     AAA        Aaa       2,000      Jasper County, Indiana, PCR, Refunding (Collateral--Northern
                                                     Indiana Public Service), 7.10% due 7/01/2017(e)                         2,038
                     AAA        Aaa       3,830      Purdue University, Indiana, University Revenue Bonds (Purdue
                                                     University Dormitory System), Series B, 6% due 7/01/2001(a)(b)          3,945
                     AAA        Aaa       3,550      Rockport, Indiana, PCR, Refunding (Indiana-Michigan Power),
                                                     Series B, 7.60% due 3/01/2016(h)                                        3,755
</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>
Iowa--0.4%           AAA        Aaa    $  5,000      Des Moines, Iowa, Parking Facilities Revenue Bonds, Series A,
                                                     7.25% due 7/01/2015(h)                                             $    5,130
                                                     Iowa Finance Authority, Hospital Facilities Revenue Refunding 
                                                     Bonds (Allen Memorial Hospital), Series A(b):
                     AAA        Aaa       3,500          5.50% due 2/15/2013                                                 3,073
                     AAA        Aaa       2,100          5.60% due 2/15/2020                                                 1,792


Kansas--0.4%         AAA        Aaa      11,175      Kansas City, Kansas, Utility System Revenue Refunding and
                                                     Improvement Bonds, 6.375% due 9/01/2023(h)                             10,894


Kentucky--0.7%       AAA        Aaa       4,500      Boone County, Kentucky, PCR, Refunding (Collateral--Cincinnati
                                                     Gas and Electric), Series A, 5.50% due 1/01/2024(e)                     3,773
                     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)                                         13,294


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)                      9,493


Maryland--1.2%       AAA        Aaa      23,500      Baltimore, Maryland, Revenue Refunding Bonds (Kidder Maryland
                                                     Water Projects), Series A, 5.65% due 7/01/2020(e)                      20,350
                                                     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)                                       2,436
                     AAA        Aaa       4,400          Series B, 7% due 7/01/2022(c)                                       4,608
                     AAA        Aaa       2,500      Maryland Health and Higher Educational Facilities Authority,
                                                     Revenue Refunding Bonds (Sinai Hospital Project),
                                                         5.25% due 7/01/2019(b)                                              2,046

<PAGE>
Massachusetts--3.2%  AAA        Aaa       3,175      Massachusetts Bay Transportation Authority, Massachusetts
                                                     General Transportation System Revenue Bonds, Series A,
                                                     7.10% due 3/01/1999(a)(g)                                               3,406
                     AAA        Aaa      13,000      Massachusetts Bay Transportation Authority Revenue Bonds, COP,
                                                     Series A, 7.65% due 8/01/2015(i)                                       13,795
                     AAA        Aaa       5,505      Massachusetts Educational Loan Authority Revenue Bonds, AMT,
                                                     Issue D, Series A, 7.25% due 1/01/2009(e)                               5,676
                     AAA        Aaa       3,250      Massachusetts Port Authority Revenue Bonds, 13% due 7/01/2013(c)        5,280
                                                     Massachusetts State Health and Educational Facilities Authority
                                                     Revenue Bonds:
                     A1+        VMIG1       900          (Capital Asset Program), VRDN, Series C, 5% due 7/01/2005(e)(f)       900
                     SP-1+      VMIG1    17,000          (Capital Asset Program), VRDN, Series D, 5% due 1/01/2035(e)(f)    17,000
                     AAA        Aaa       6,200          (Saint Elizabeth Hospital), 5% due 8/15/2021(i)                     6,146
                     AAA        Aaa      19,755      Massachusetts State, HFA, Housing Revenue Refunding Bonds
                                                     (Insured Rental), AMT, Series A, 6.75% due 7/01/2028(b)                18,948
                     AAA        Aaa       5,500      Massachusetts State Industrial Finance Agency Revenue Bonds
                                                     (Brandeis University), Series C, 6.80% due 10/01/2019(e)                5,532
                     AAA        Aaa       4,500      Massachusetts State Turnpike Authority Turnpike Revenue Refunding
                                                     Bonds, Series A, 5.125% due 1/01/2023(h)                                3,562


Michigan--4.6%       AAA        Aaa      10,500      Chippewa Valley, Michigan, Schools Revenue Refunding Bonds,
                                                     UT, Series Q, 5% due 5/01/2021(h)                                       8,261
                     AAA        Aaa      10,000      Grand Rapids, Michigan, Water Supply Systems, Revenue Refunding
                                                     Bonds, 5.75% due 1/01/2018(h)                                           8,904
                     A-1        VMIG1     5,000      Michigan Higher Education Student Loan Authority, Revenue Bonds,
                                                     VRDN, AMT, Series XII-D, 5% due 10/01/2015(b)(f)                        5,000
                                                     Michigan State Trunk Line, Series A(h):
                     AAA        Aaa      14,365          5.75% due 11/15/2020                                               12,665
                     AAA        Aaa      26,120          5.80% due 11/15/2024                                               23,038
                                                     Monroe County, Michigan, PCR (Detroit Edison Company Project), AMT:
                     AAA        Aaa      16,500          Project 1, 7.65% due 9/01/2020(h)                                  17,305
                     AAA        Aaa      13,255          Series CC, 7.50% due 12/01/2019(b)                                 13,765
                     AAA        Aaa       9,745          Series I-B, 7.50% due 9/01/2019(b)                                 10,102
                     AAA        Aaa      15,000      Western Michigan University Revenue Refunding Bonds, Series A,
                                                     6.50% due 7/15/2001(a)(b)                                              15,846


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)                                        1,575
                     AAA        Aaa      13,000      Mississippi Hospital Equipment and Facilities Authority,
                                                     Revenue Refunding and Improvement Bonds (North Mississippi
                                                     Health Services), 5.75% due 5/15/2016(b)                               11,459


Montana--0.2%        AAA        Aaa       5,600      Montana Health Facilities Authority, Hospital Facilities
                                                     Revenue Bonds (Deaconess Medical Center Project), SAVRS,
                                                     Series A, 5% due 2/15/2016(b)(d)                                        5,600

<PAGE>
Nevada--2.3%         AAA        Aaa       6,500      Clark County, Nevada, Airport Improvement Revenue Bonds, AMT,
                                                     8.125% due 7/01/2018(g)                                                 6,886
                                                     Las Vegas, Nevada, Revenue Refunding Bonds (h):
                     AAA        Aaa       1,500          6.50% due 10/01/2007                                                1,513
                     AAA        Aaa       2,665          6.50% due 10/01/2008                                                2,691
                     AAA        Aaa      45,000      Washoe County, Nevada, Water Facility Revenue Bonds
                                                     (Sierra Pacific Power), AMT, 6.65% due 6/01/2017(e)                    44,226


New Jersey--3.8%     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)                     3,462
                     AAA        Aaa       4,750      Jersey City, New Jersey, Sewer Authority Revenue Refunding Bonds,
                                                     6.25% due 1/01/2014(b)                                                  4,626
                     AAA        Aaa      20,000      New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds
                                                     (NUI Corp.), Series A, 6.35% due 10/01/2022(b)                         19,291
                     AAA        Aaa      11,525      New Jersey EDA, Revenue Bonds (Market Transition Facility),
                                                     Senior Lein, Series A, 5.80% due 7/01/2007(e)                          11,157
                     AAA        Aaa       5,000      New Jersey EDA, Water Facilities, Revenue Refunding Bonds
                                                     (Hackensack Water Company), Series A, 7% due 1/01/2019(b)               5,064
                     A-1        VMIG1     5,600      New Jersey Sports and Exposition Authority, State Contract
                                                     Revenue Bonds, VRDN, Series C, 5% due 9/01/2024(e)(f)                   5,600
                                                     New Jersey State Housing and Mortgage Finance Agency Revenue Bonds
                                                     (Home Buyer), AMT(e):  
                     AAA        Aaa       7,065          Series B, 7.90% due 10/01/2022                                      7,331
                     AAA        Aaa      12,845          Series D, 7.70% due 10/01/2029                                     13,181
                     AAA        Aaa      23,890          Series M, 7% due 1/01/2026                                         24,095


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)                                                 10,068
                                                     New York City, New York, GO, UT, Series I(b):
                     AAA        Aaa       4,505          7.25% due 8/15/2013                                                 4,726
                     AAA        Aaa       2,645          7.25% due 8/15/2013                                                 2,729
                     AAA        Aaa      10,130          7.25% due 8/15/2016                                                10,423
                     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)                                                 5,314
                                                     New York City, New York, Municipal Water Finance Authority,
                                                     Water and Sewer System Revenue Bonds:
                     AAA        Aaa      50,000          5% due 6/15/2008(e)                                                43,943
                     AAA        Aaa       1,090          Series A, 6.75% due 6/15/2014(h)                                    1,097
                     AAA        Aaa       4,510          Series C, 6.20% due 6/15/2021(b)                                    4,248
                     AAA        Aaa      11,000          Series F, 5.50% due 6/15/2023(e)                                    9,295
                     AAA        Aaa      12,075      New York City, New York, Municipal Water Finance Authority,
                                                     Water and Sewer System Revenue Refunding Bonds, Series A,
                                                     5.75% due 6/15/2018(h)                                                 10,701
                                                     New York State Medical Care Facilities Finance Agency Revenue Bonds
<PAGE>                                               (Mental Health Services):
                     AAA        Aaa       3,085          Series C, 7.375% due 8/15/2019(e)                                   3,203
                     AAA        Aaa      11,500          Series D, 5.90% due 8/15/2022(b)                                   10,295
                                                     Niagara Falls, New York, Public Improvement Bonds, UT(e):
                     AAA        Aaa       2,975          6.90% due 3/01/2023                                                 2,991
                     AAA        Aaa       3,190          6.90% due 3/01/2024                                                 3,207
                                                     Suffolk County, New York, Water Authority, Waterworks Revenue
                                                     Refunding Bonds(b):
                     AAA        Aaa       1,235          7.375% due 6/01/2012                                                1,291
                     AAA        Aaa       7,345          Series C, 5.75% due 6/01/2013                                       6,743
</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>
Ohio--1.3%           AAA        Aaa    $ 12,000      Clermont County, Ohio, Hospital Facilities Revenue Refunding Bonds
                                                     (Mercy Health Systems), Series A, 7.50% due 9/01/1999(a)(b)        $   13,104
                     AAA        Aaa      12,000      Cleveland, Ohio, Public Power System Revenue Bonds (First
                                                     Mortgage), Series A, 7% due 11/15/2024(a)                              12,310
                     AAA        Aaa       6,700      Ohio Municipal Electric Generation Agency, Joint Ventures, COP,
                                                     5.375% due 2/15/2013(b)                                                 5,839
                     AAA        Aaa       3,500      Ohio State Air Quality Development Authority Revenue Refunding
                                                     Bonds (Cincinnati Gas and Electric), Series B, 5.45%
                                                     due 1/01/2024(e)                                                        2,924


Oklahoma--1.4%       AAA        Aaa       7,500      Oklahoma Industrial Authority, Hospital Revenue Bonds (Baptist
                                                     Medical Center), Series A, 7% due 8/15/2014(b)                          7,592
                     AAA        Aaa       5,000      Tulsa, Oklahoma, Airports Improvement Trust, General Revenue Bonds,
                                                     7.50% due 6/01/2008(e)                                                  5,242
                     AAA        Aaa      21,560      Tulsa, Oklahoma, Industrial Authority Hospital Revenue Bonds
                                                     (Saint John's Medical Center, Inc.), 7.25% due 12/01/2009(e)           22,448


Oregon--0.2%         AAA        Aaa       4,000      Port Portland, Oregon, Portland International Airport, Airport
                                                     Revenue Bonds, AMT, Series 7-B, 7.10% due 7/01/2021(e)                  4,079

<PAGE>
Pennsylvania--8.1%   AAA        Aaa       1,750      Allegheny County, Pennsylvania, Hospital Development Authority
                                                     Revenue Bonds (Mercy Hospital of Pittsburgh), 6.75%
                                                     due 4/01/2021(b)                                                        1,741
                     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)                                                  6,447
                     AAA        Aaa       3,365      Beaver County, Pennsylvania, IDA, PCR, Refunding (Ohio Edison
                                                     Company/Mansfield), Series A, 7% due 6/01/2021(h)                       3,427
                     AAA        Aaa       3,610      Berks County, Pennsylvania, Municipal Authority Hospital Revenue
                                                     Bonds (Reading Hospital Medical Center Project),
                                                     5.70% due 10/01/2014(e)                                                 3,217
                     AAA        Aaa       3,400      Monroeville, Pennsylvania, Hospital Authority, Hospital Revenue
                                                     Bonds (Forbes Health System), Series B, 7.35% due 10/01/2015(g)         3,492
                     AAA        Aaa       3,000      Montgomery County, Pennsylvania, Higher Education and Health
                                                     Authority, Hospital Revenue Bonds (Abington Memorial Hospital),
                                                     5.125% due 6/01/2014(b)                                                 2,463
                                                     Pennsylvania Higher Educational Assistance Agency,
                                                     Student Loan Revenue Bonds:
                     AAA        Aaa      20,000          5% due 9/03/2026(b)                                                19,642
                     AAA        Aaa      10,000          AMT, 3.52% due 9/03/2026(b)                                         9,821
                     AAA        Aaa      16,000          AMT, 5% due 3/01/2020(e)                                           16,484
                     AAA        Aaa      34,000          AMT, 6.172% due 3/01/2022(b)                                       30,625
                                                     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)                        1,502
                     AAA        Aaa       4,250          (Temple University), First Series, 6.50% due 4/01/2021(e)           4,181
                     AAA        Aaa      10,390      Pennsylvania Turnpike Commission, Turnpike Revenue Bonds, Series L,
                                                     6.25% due 6/01/2011(b)                                                 10,160
                                                     Philadelphia, Pennsylvania, Airport Revenue Bonds, AMT(e):
                     AAA        Aaa       8,150          7.75% due 6/15/2015                                                 8,539
                     AAA        Aaa      24,000          7.375% due 6/15/2018                                               24,510
                     AAA        Aaa       5,000      Philadelphia, Pennsylvania, Gas Works Revenue Bonds,
                                                     12th Series B, 7% due 5/15/2020(c)(e)                                   5,282
                     AAA        Aaa       5,750      Philadelphia, Pennsylvania, Parking Authority,
                                                     Airport Parking Revenue Bonds, 7.375% due 9/01/2018(b)                  5,943
                     AAA        Aaa      26,800      Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds,
                                                     5% due 6/15/2004(h)                                                    24,684
                                                     Pittsburgh, Pennsylvania, Revenue Refunding Bonds, UT, Series A(b):
                     AAA        Aaa       1,200          5.10% due 9/01/2005                                                 1,091
                     AAA        Aaa       1,000          5.20% due 9/01/2006                                                   913
                     AAA        Aaa       1,000          5.40% due 9/01/2008                                                   902
                                                     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)                                              5,285
                     AAA        Aaa       9,000          4.75% due 9/01/2016                                                 6,881
                     AAA        Aaa       7,500      University Area Joint Authority, Pennsylvania, Sewer Revenue
                                                     Refunding Bonds, 4.75% due 11/01/2020(e)                                5,618

<PAGE>
Rhode Island--3.4%                                   Providence, Rhode Island, GO, UT(e):
                     AAA        Aaa       1,540          6.75% due 1/15/2008                                                 1,591
                     AAA        Aaa       1,540          6.75% due 1/15/2009                                                 1,585
                     AAA        Aaa       1,540          6.75% due 1/15/2010                                                 1,580
                                                     Rhode Island Depositors Economic Protection Corporation,
                                                     Special Obligation Bonds, Series A(i):
                     AAA        Aaa       6,100          6.625% due 8/01/2002(a)                                             6,492
                     AAA        Aaa      35,000          5.75% due 8/01/2019                                                30,357
                     AAA        Aaa      16,520          5.50% due 8/01/2020                                                13,792
                     AAA        Aaa      25,600      Rhode Island Health and Educational Building Corporation Revenue
                                                     Bonds (Rhode Island Hospital), 5% due 8/15/2021(h)                     25,566


South Carolina--4.8% AAA        Aaa       7,000      Charleston, South Carolina, Waterworks and Sewer Revenue
                                                     Refunding and Improvement Bonds, 6% due 1/01/2016(b)                    6,452
                     AAA        Aaa       5,000      Florence County, South Carolina, Hospital Revenue Bonds
                                                     (McLeod Regional Medical Center Project), 6.75% due 11/01/2020(h)       4,945
                     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)                                                 4,121
                     AAA        Aaa       1,750      Greenville, South Carolina, Hospital System, Hospital Facilities
                                                     Revenue Bonds, Series A, 7.50% due 5/01/2016(h)                         1,824
                     AAA        Aaa       2,410      Myrtle Beach, South Carolina, Water and Sewer System Revenue Bonds,
                                                     5.25% due 3/01/2020(e)                                                  1,955
                     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)      3,785
                                                     Piedmont Municipal Power Agency, South Carolina,
                                                     Electric Revenue Refunding Bonds:
                     AAA        Aaa       9,150          6.25% due 1/01/2021(h)                                              8,657
                     AAA        Aaa       7,000          6.30% due 1/01/2022(e)                                              6,562
                     AAA        Aaa      20,750          Series A, 7.40% due 1/01/2018(b)                                   21,403
                                         29,100      South Carolina Jobs, EDA, Hospital Facilities Revenue Bonds,
                                                     4% due 8/01/2021(b)                                                    24,313
                                                     South Carolina State Public Service Authority, Revenue Bonds:
                     AAA        Aaa       6,000          Refunding, Series A, 5.50% due 7/01/2011(e)                         5,282
                     AAA        Aaa      17,090          Refunding, Series A, 6.375% due 7/01/2021(b)                       16,324
                     AAA        Aaa       2,750          Refunding, Series C, 5% due 1/01/2014(b)                            2,241
                     AAA        Aaa       4,000          Series B, 6.10% due 7/01/2027(b)                                    3,654


Tennessee--0.2%      AAA        Aaa       1,905      Jackson, Tennessee, Water and Sewer System Revenue Bonds,
                                                     10.375% due 7/01/2012(b)                                                2,250
                     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 9/01/1999(a)(b)         2,411

<PAGE>
Texas--13.6%                                         Austin, Texas, Utility System Revenue Bonds, Prior-Lien:
                     AAA        Aaa      11,190          9.25% due 5/15/2004(a)(e)                                          13,776
                     AAA        Aaa      14,825          Refunding, Series A, 6.20% due 11/15/2011(e)                        4,892
                                                     Brazos River Authority, Texas, PCR
                                                     (Collateral--Texas Utilities Electric Company Project), AMT:
                     AAA        Aaa       6,000          Refunding, 6.50% due 12/01/2027(b)                                  5,719
                     AAA        Aaa      12,000          Series B, 6.625% due 6/01/2022(h)                                  11,652
                                                    Brazos River Authority, Texas, Revenue Refunding Bonds
                                                    (Collateral-Houston Light and Power Co.):
                     AAA        Aaa      12,700          5.60% due 12/01/2017(e)                                            11,048
                     AAA        Aaa      13,900          Series B, 7.20% due 12/01/2018(h)                                  14,240
                     AAA        Aaa      20,000      Brownsville, Texas, Utility System Revenue Refunding Bonds,
                                                     6.25% due 9/01/2014(e)                                                 19,275
                     A1+        VMIG1     1,300      Harris County, Texas, Health Facilities Development Corporation,
                                                     Special Facilities, Revenue Bonds (Texas Medical Center Project),
                                                     VRDN, 4% due 2/15/2022(e)(f)                                            1,300
                     AAA        Aaa       5,000      Harris County, Texas, Hospital District Mortgage, Revenue
                                                     Refunding Bonds, 7.40% due 2/15/2010(b)                                 5,418
                     AAA        Aaa       1,695      Harris County, Texas, Toll Road Revenue Bonds, Series A,
                                                     6.50% due 8/15/2011(h)                                                  1,688
                                                     Harris County, Texas, Toll Road Senior Lien Revenue Bonds:
                     AAA        Aaa       6,045          Refunding, 5.30% due 8/15/2013(b)                                   5,157
                     AAA        Aaa       8,300          Refunding, 5.375% due 8/15/2020(h)                                  6,917
                     AAA        Aaa       4,000          Refunding, 5.50% due 8/15/2021(h)                                   3,403
                     AAA        Aaa      10,305          Refunding, Series A, 6.50% due 8/15/2002(a)(h)                     10,903
                     AAA        Aaa      15,250          Series A, 6.50% due 8/15/2002(a)(b)                                16,135
                     AAA        Aaa       2,750          Series A, 6.50% due 8/15/2017(b)                                    2,710
</TABLE>


<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    $  8,375      Houston, Texas, Water and Sewer System Revenue Bonds, Junior Lien,
(concluded)                                          Series A, 6.375% due 12/01/2022(e)                                 $    8,063
                                                     Houston, Texas, Water and Sewer System, Revenue Refunding Bonds,
                                                     Junior Lien, Series C(b)(j):
                     AAA        Aaa      12,700          5.70% due 12/01/2010(k)                                             4,470
                     AAA        Aaa      45,960          5.70% due 12/01/2011(k)                                            15,123
                     AAA        Aaa      53,850          5.78% due 12/01/2012(k)                                            16,534
                     AAA        Aaa      18,400          5.75% due 12/01/2015                                               16,428
                     AAA        Aaa       3,500      Houston, Texas, Water Conveyance System COP, Series J,
                                                     6.25% due 12/15/2013(b)                                                 3,387
<PAGE>                                               Lower Colorado River Authority, Texas, Revenue Refunding Bonds:
                     AAA        Aaa       4,415      5.60% due 1/01/2009(c)(e)(j)                                            1,845
                     AAA        Aaa         650      Series B, 7% due 1/01/2001(a)(b)                                          698
                                                     Matagorda County, Texas, Navigation District No. 1, PCR, AMT:
                     AAA        Aaa       5,000          (Collateralized--Central Power and Light Company Project),
                                                         7.50% due 3/01/2020(b)                                              5,150
                     AAA        Aaa       8,250          (Collateralized--Houston Light and Power), Series D,
                                                         7.60% due 10/01/2019(h)                                             8,538
                                                     Matagorda County, Texas, Navigational District No. 1,
                                                     Revenue Refunding Bonds (Houston Light and Power):
                     AAA        Aaa      11,800          Series A, 6.70% due 3/01/2027(b)                                   11,830
                     AAA        Aaa      26,305          Series C, 7.125% due 7/01/2019(h)                                  26,789
                     AAA        Aaa       6,470          Series E, 7.20% due 12/01/2018(h)                                   6,614
                     AAA        VMIG1    11,000      North Texas Higher Education Authority Incorporation,
                                                     Student Loan Revenue Bonds, VRDN, AMT, Series C,
                                                     5% due 4/01/2020(b)(f)                                                 11,000
                     AAA        Aaa      15,000      Southwest Higher Education Authority Incorporated, Texas,
                                                     Revenue Refunding Bonds (Southern Methodist University),
                                                     Series B, 6.25% due 10/01/2022(h)                                      13,939
                                                     Texas Municipal Power Agency, Revenue Refunding Bonds:
                     AAA        Aaa      10,000          5.50% due 9/01/2010(e)                                              8,935
                     AAA        Aaa       2,900          Series A, 6.75% due 9/01/2012(b)                                    2,938
                                                     Texas State Public Finance Authority, Building Revenue Capital
                                                     Appreciation Refunding Bonds(e)(j):
                     AAA        Aaa       7,000          5.80% due 2/01/2009                                                 2,805
                     AAA        Aaa       2,890          6.10% due 2/01/2011                                                 1,004
                     AAA        Aaa       8,500          5.81% due 2/01/2012                                                 2,757
                                                     Texas Turnpike Authority, Turnpike Revenue Refunding Bonds
                                                     (Dallas North Thruway)(b):
                     AAA        Aaa       3,230          4.75% due 1/01/2011                                                 2,626
                     AAA        Aaa       2,085          4.75% due 1/01/2013                                                 1,662
                     AAA        Aaa      25,875      Trinity River Authority, Texas, Regional Wastewater System
                                                     Revenue Refunding Bonds, Series A, 5% due 8/01/2016(b)                 20,791


Utah--2.2%           AAA        VMIG1       500      Emery County, Utah, PCR, Refunding (Pacificorp. Projects), VRDN,
                                                     5% due 11/01/2024(b)(f)                                                   500
                     AAA        Aaa       2,805      Salt Lake City, Utah, Hospital Revenue Bonds (Holy Cross Health 
                                                     System Corporation--Holy Cross Hospital), 7.375% due 12/01/1996(a)(h)   2,963
                     AAA        Aaa      28,000      Salt Lake City, Utah, Hospital Revenue Refunding Bonds
                                                     (IHC Hospital, Incorporated), 5% due 5/15/2020(b)                      27,596
                     AA-        Aa2       1,000      Uintah County, Utah, PCR (Desert Generation and Transmission
                                                     Cooperative--National Rural Utilities Company), Series 1984 F-2,
                                                     10.50% due 6/15/2001(a)                                                 1,252
                     AAA        Aaa       2,650      Utah Board of Regents, Student Loan Revenue Bonds, AMT, Series F,
                                                     7.45% due 11/01/2008(b)                                                 2,771
                     A1+        VMIG1     3,100      Utah Board of Regents, Student Loan Revenue Bonds, VRDN, AMT,
                                                     Series C, 6.50% due 11/01/2013(b)(f)                                    3,100
                     A1+        VMIG1    11,300      Utah Board of Regents, Student Loan Revenue Bonds, VRDN,
                                                     Series B, 5% due 11/01/2000(b)(f)                                      11,300
                                                     Utah Municipal Power Agency, Electric System Revenue 
                                                     Refunding Bonds, Series A(h):
                     AAA        Aaa       3,120          5.50% due 7/01/2012                                                 2,732
                     AAA        Aaa       3,295          5.50% due 7/01/2013                                                 2,879

<PAGE>
Vermont--0.8%        AAA        Aaa      18,950      Vermont, HFA, Revenue Bonds (Home Mortgage Purchase), AMT,
                                                     Series B, 7.60% due 12/01/2024(e)                                      19,741

Virginia--0.9%       AAA        Aaa       5,000      Danville, Virginia, IDA, Hospital Revenue Refunding Bonds
                                                     (Danville Regional Medical Center), 6.50% due 10/01/2019(h)             4,850
                     AAA        Aaa      16,800      Prince William County, Virginia, Service Authority, Water and Sewer
                                                     System, Revenue Refunding Bonds, 5% due 7/01/2021(h)                   13,143
                     AAA        Aaa       5,000      Winchester, Virginia, IDA, Hospital Facilities Revenue
                                                     Refunding Bonds (Winchester Medical Center), SAVRS,
                                                     4.89% due 12/01/2014(b)(d)                                              5,000


Washington--4.9%     AAA        Aaa      33,535      Seattle, Washington, Municipal Light and Power Revenue Bonds,
                                                     6.625% due 7/01/2020(h)                                                33,229
                                                     Seattle, Washington, Municipality, Metropolitan Seattle,
                                                     Sewer Revenue Bonds:
                     AAA        Aaa       3,865          Refunding, Series Z, 5.45% due 1/01/2022(b)                         3,203
                     AAA        Aaa       2,465          Series W, 6.25% due 1/01/2022(e)                                    2,301
                     AAA        Aaa       4,485          Series W, 6.25% due 1/01/2023(e)                                    4,183
                                                     Seattle, Washington, Municipality, Metropolitan Seattle,
                                                     Sewer Revenue Refunding Bonds(h):
                     AAA        Aaa       8,155          Series X, 5.30% due 1/01/2008                                       7,200
                     AAA        Aaa       9,605          Series X, 5.375% due 1/01/2009                                      8,429
                     AAA        Aaa       9,755          Series X, 5.40% due 1/01/2010                                       8,533
                     AAA        Aaa      10,960          Series X, 5.40% due 1/01/2011                                       9,555
                     AAA        Aaa       6,560          Series Y, 5.70% due 1/01/2015                                       5,790
                     AAA        Aaa       3,315          Series Y, 5.70% due 1/01/2016                                       2,900
                     AAA        Aaa      10,000      Seattle, Washington, Solid Waste Utility, Revenue Refunding Bonds,
                                                     Series A, 6.875% due 5/01/2009(g)                                      10,139
                     AAA        Aaa      11,900      Tacoma, Washington, Sewer Revenue Bonds, 7.625% due 12/01/1998(a)(e)   12,762
                     AAA        Aaa       3,250      University of Washington Revenue Bonds (Housing and Dining),
                                                     7% due 12/01/2021(e)                                                    3,306
                     AAA        Aaa       7,000      Washington Health Care Facilities Authority Revenue Bonds
                                                     (Southwest Washington Hospital--Vancouver), 7.125% due 10/01/2019(g)    7,086
                     D          NR*         719      Washington Public Power Supply System, Generating Facilities
                                                     Revenue Bonds (Nuclear Project Numbers 4 and 5), Series D,
                                                     12.50% due 7/01/2010                                                      719
                     AAA        Aaa       5,750      Washington Public Power Supply System, Revenue Refunding Bonds
                                                     (Project No. 1), Series A, 6.25% due 7/01/2017(e)                       5,413


West Virginia--1.1%  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)                                                  9,434
                     AAA        Aaa      10,100      Putnam County, West Virginia, PCR, Refunding (Appalachian Power
                                                     Company Project), Series D, 5.45% due 6/01/2019(b)                      8,444
                     AAA        Aaa       5,600      West Virginia School Building Authority Revenue Bonds
                                                     (Capital Improvement), Series B, 6.75% due 7/01/2010(e)                 5,633
                     AAA        Aaa       5,000      West Virginia State Parkways Economic Development and Tourism
                                                     Authority, 5.80% due 5/15/2013(h)                                       4,543

<PAGE>
Wisconsin--0.9%      AAA        Aaa       7,000      Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds
                                                     (Midwest Energy Resources), Series E, 6.90% due 8/01/2021(h)            7,154
                                                     Wisconsin Health and Educational Facilities Authority Revenue Bonds:
                     AAA        Aaa       1,500          (Saint Luke's Medical Center Project), 7.10% due 8/15/2019(e)       1,523
                     AAA        Aaa       5,750          (Waukesha Memorial Hospital), Series B, 7.25% due 8/15/2019(b)      5,894
                     AAA        Aaa       6,500      Wisconsin Public Power System Incorporated, Power Supply System
                                                     Revenue Bonds, Series A, 6.875% due 7/01/2001(a)(b)                     7,004


                     Total Investments (Cost--$2,487,700)--100.1%                                                        2,444,913
                                          
                     Liabilities in Excess of Other Assets--(0.1)%                                                          (1,196)
                                                                                                                        ----------
                     Net Assets--100.0%                                                                                 $2,443,717
                                                                                                                        ==========
                     <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 December 31, 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 December 31, 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.
                       *Not Rated.

                     See Notes to Financial Statements.
</TABLE>



<TABLE>
SCHEDULE OF INVESTMENTS                                                                                              (in Thousands)
<CAPTION>
                     Municipal Bonds                                                                            National Portfolio
<PAGE>
                     S&P      Moody's   Face                                                                                Value
STATE                Ratings  Ratings  Amount        Issue                                                                (Note 1a)
<S>                  <S>        <S>    <C>           <S>                                                                <C>
Alaska--4.2%                                         Valdez, Alaska, Marine Terminal Revenue Refunding Bonds:
                     AA-        A1     $  6,000          (British Petroleum Pipeline), Series B, 7% due 12/01/2025      $    5,947
                     AA-        A1       33,835          (British Petroleum Pipeline), Series B, 5.50% due 10/01/2028       27,145
                     AA-        A1       27,150          (Sohio Pipeline), 7.125% due 12/01/2025                            27,147


Arizona--0.0%        A1+        VMIG1       200      Maricopa County, Arizona, IDA, Hospital Facilities Revenue Bonds
                                                     (Samaritan Health Services Hospital), VRDN, Series B2,
                                                     4.10% due 12/01/2008(a)                                                   200


California--3.2%     AA         Aa       17,535      California State, Department of Water Resources, Water System
                     SP-1+      MIG1++               Revenue Refunding Bonds (Central Valley Project), Series L, 5.875%
                                                     due 12/01/2025                                                         15,189
                                          7,400      California State, GO, RAN, Series A, 5% due 6/28/1995                   7,411
                     NR*        NR*       4,000      Long Beach, California, GO, Special Tax Community Facilities,
                                                     District No. 3, 6.375% due 9/01/2023                                    3,435
                     SP-1+      MIG1++   18,000      Los Angeles County, California, Revenue Bonds, TRAN, UT,
                                                     4.50% due 6/30/1995                                                    17,978
                     SP-1+      MIG1++    5,000      Santa Clara County, California, TRAN, UT, 4.25% due 7/07/1995           4,950


Colorado--2.2%                                       Denver, Colorado, City and County Airport Revenue Bonds, AMT:
                     BB         Baa       5,000          Series A, 8% due 11/15/2017                                         4,847
                     BB         Baa       3,000          Series A, 7.50% due 11/15/2023                                      2,769
                     BB         Baa       8,570          Series A, 8% due 11/15/2025                                         8,358
                     BB         Baa       1,310          Series B, 7.25% due 11/15/2007                                      1,255
                     BB         Baa       3,000          Series B, 7.25% due 11/15/2023                                      2,701
                     BB         Baa       5,650          Series C, 6.75% due 11/15/2022                                      4,838
                     BB         Baa       7,840          Series D, 7.75% due 11/15/2021                                      7,499


Connecticut--0.7%    AA+        Aa        1,000      Connecticut State Clean Water Fund Revenue Bonds, 5.80% 
                                                     due 6/01/2016                                                             905
                     AA         Aa        5,000      Connecticut State, HFA, Housing Mortgage Finance Program, Series B,
                                                     6.30% due 5/15/2024                                                     4,543
                     AA-        A         4,550      Connecticut State Resource Recovery Authority Revenue Bonds
                                                     (American Refuse Fuel), AMT, Series A, 8% due 11/15/2015                4,790


Delaware--0.6%       AAA        NR*       7,500      Delaware State Health Facilities Authority Revenue Refunding Bonds
                                                     (Beebe Medical Center Project), 8.50% due 6/01/2000(k)                  8,592


District of          AA-        A1        7,500      District of Columbia Revenue Bonds, SAVRS (Georgetown University),
Columbia--0.5%                                       5% due 4/01/2022(m)                                                     6,965

<PAGE>
Florida--4.6%        NR*        Aaa       9,775      Florida HFA, Home Ownership Revenue Bonds, AMT, Series G1,
                                                     7.90% due 3/01/2022(g)                                                 10,337
                     AA         Aa       10,000      Florida State, Board of Education Capital Outlay, UT, Series E,
                                                     5.75% due 6/01/2019                                                     8,909
                     AA-        Aa2       5,000      Hillsborough County, Florida, IDA, PCR, Refunding
                                                     (Tampa Electric Company Project), Series 1991, 7.875% due 8/01/2021     5,388
                     AA         Aa1      19,900      Jacksonville, Florida, Electric Authority Refunding Bonds
                                                     (Saint John's River Power Park System), Issue 2, Series 7,
                                                     5.50% due 10/01/2014                                                   17,402
                     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)                                                  3,015
                     AAA        NR*       4,765      Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT,
                                                     Series A, 8.375% due 3/01/2021(o)                                       5,044
                     A1         VMIG1     1,000      Saint Lucie County, Florida, PCR, Refunding
                                                     (Florida Power and Light Company Project), VRDN, 5% due 1/01/2026(a)    1,000
                     AA-        Aa        5,000      Saint Petersburg, Florida, Public Utility, Revenue Bonds, GO,
                                                     5.60% due 10/01/2018                                                    4,390
                     AAA        Aaa      11,700      South Broward, Florida, Hospital District Revenue Bonds, SAVRS,
                                                     6.469% due 5/13/2021(m)                                                11,614


Georgia--4.0%        AA         Aa       20,000      Atlanta, Georgia, UT, Series A, 6.125% due 12/01/2023                  18,513
                     AA-        Aa       30,705      Atlanta, Georgia, Water and Sewer Revenue Refunding Bonds,
                                                     4.75% due 1/01/2023                                                    22,689
                     AAA        Aaa      16,000      Metropolitan Atlanta Rapid Transit Authority, Georgia,
                                                     Sales Tax Revenue Bonds, Second Indenture, Series A,
                                                     6.90% due 7/01/2020(f)                                                 16,318


Idaho--0.2%          AA         NR*       2,445      Idaho Housing Agency, S/F Mortgage Revenue Bonds, AMT,
                                                     Series E, 7.875% due 7/01/2024(b)                                       2,539

Illinois--6.0%       AA-        Aa3       8,000      Chicago, Illinois, Gas Supply Revenue Bonds (Peoples Gas,
                                                     Light & Coke Company Project), AMT, Series A, 8.10% due 5/01/2020       8,727
                                                     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                                  5,196
                     BB         Baa2     14,330          Series 1984-B, 8.85% due 5/01/2018                                 15,283
                     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)                                                     5,314
                     BBB        NR*       3,000      Illinois Educational Facilities Authority, Revenue Refunding Bonds
                                                     (Columbia College), 6.875% due 12/01/2017                               2,765
                                                     Illinois Health Facilities Authority Revenue Bonds:
                     AAA        Aaa       3,000          (Methodist Health Project), 5% due 5/01/2021(c)                     2,996
                     AAA        Aaa      22,000          (Rush-Presbyterian Saint Luke's Medical Center),
                                                          6.80% due 10/01/2024(f)                                           21,693
                                                     Illinois Health Facilities Authority Revenue Refunding Bonds:
                     A+         A1        5,905          (OSF Healthcare Systems), 6% due 11/15/2023                         4,985
                     BBB-       NR*       2,625          (Saint Elizabeth's Hospital--Chicago), 7.75% due 7/01/2016          2,532
                     A+         Aa       11,500      Illinois Housing Development Authority, Residential Mortgage
                                                     Revenue Bonds, AMT, SAVRS, 4% due 2/01/2018(m)                         10,982
                     NR*        A1        4,000      Southwestern Illinois, Development Authority, Sewer Facilities
                                                     Revenue Bonds (Monsanto Company Project), AMT, 7.30% due 7/15/2015      4,055

<PAGE>
Indiana--0.7%        NR*        Baa1      3,500      Indiana Health Facilities Financing Authority, Hospital Revenue Bonds
                                                     (Riverview Hospital Project), 6.875% due 8/01/2017                      3,124
                     A+         A1        2,000      Indiana Transportation Finance Authority, Highway Revenue Bonds,
                                                     Series A, 7.25% due 6/01/2015                                           2,112
                     A+         NR*       5,000      Indianapolis, Indiana, Local Public Improvement Refunding Bond Bank,
                                                     Series D, 6.75% due 2/01/2020                                           4,830
                     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                                        1,590


Iowa--0.6%           NR*        NR*       9,000      Iowa Finance Authority, Health Care Facilities Revenue Bonds
                                                     (Mercy Health Initiatives Project), 9.95% due 7/01/2019                 9,443


Kansas--1.6%         AAA        Aaa      24,000      Wichita, Kansas, Hospital Revenue Bonds, SAVRS, 5% due 10/01/2017(m)   23,154


Kentucky--0.8%       NR*        NR*       4,500      Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
                                                     (TJ International Project), AMT, 7% due 6/01/2024                       4,051
                     AA         Aa2       6,345      Trimble County, Kentucky, PCR (Louisville Gas and Electric Company),
                                                     AMT, Series A, 7.625% due 11/01/2020                                    6,642


Louisiana--2.7%      NR*        Baa3     35,500      Lake Charles, Louisiana, Harbor and Terminal District Port Facilities,
                                                     Revenue Refunding Bonds (Trunkline LNG Company Project),
                                                     7.75% due 8/15/2022                                                    36,008
                     BB-        NR*       3,000      Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
                                                     Company Project), 7.50% due 7/01/2013                                   2,890


Maine--0.2%          AA-        A1        3,815      Maine State, Housing Authority Mortgage Purchase, AMT, Series B-4,
                                                     6.90% due 11/15/2026                                                    3,631


Maryland--0.5%       AA-        Aa        7,000      Maryland State Stadium Authority, Sports Facilities Lease Revenue
                                                     Bonds, AMT, Series D, 7.60% due 12/15/2019                              7,322


Massachusetts--5.7%  A+         A1        4,000      Massachusetts Bay Transportation Authority Refunding Bonds,
                                                     Series B, 6.20% due 3/01/2016                                           3,775
                     AAA        Aaa       6,000      Massachusetts Bay Transportation Authority Revenue Bonds, Series B,
                                                     7.875% due 3/01/2001(k)                                                 6,755
                     A+         A1       20,000      Massachusetts State, Consolidated Loans, UT, Series B,
                                                     9.25% due 7/01/2000                                                    23,261
                                                     Massachusetts State, Health and Educational Facilities
                                                     Authority Revenue Bonds:
                     NR*        NR*       9,520          (North Adams Regional Hospital), Series A, 9.625% due 12/01/2018    9,641
                     AAA        Aaa      10,000          (Tufts University), 5.95% due 8/15/2018(e)                          9,094
<PAGE>               NR*        Ba       12,350      Massachusetts State, Health and Educational Facilities Authority,
                                                     Revenue Refunding Bonds (New England Memorial Hospital),
                                                     Series B, 6.25% due 7/01/2023                                           9,375
                                                     Massachusetts State, HFA, Residential Development, Series C(h):
                     AAA        Aaa       5,000          6.875% due 11/15/2011                                               5,032
                     AAA        Aaa       7,500          6.90% due 11/15/2021                                                7,418
                     A-1        VMIG1       300      Massachusetts State, Industrial Finance Agency Revenue Refunding Bonds
                                                     (Showa Women's Institute Inc.), VRDN, 5% due 3/15/2004(a)                 300
                     A          A         6,985      Massachusetts State, Water Resources Authority, Series A,
                                                     5.75% due 12/01/2021                                                    6,008
                     NR*        NR*       3,000      Reading, Massachusetts, BAN, GO, 4.25% due 7/14/1995                    2,991
</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>
Michigan--5.8%       A+         A      $  1,000      Marquette, Michigan, City Hospital Finance Authority,
                                                     Revenue Refunding Bonds (Marquette General Hospital), Series C,
                                                     7.50% due 4/01/2019                                                $    1,021
                                                     Michigan State Building Authority Revenue Bonds:
                     AA-        A         3,000          Refunding, Series I, 6.25% due 10/01/2020                           2,783
                     AA-        A        14,000          Series II, 6.25% due 10/01/2020                                    12,988
                                                     Michigan State Hospital Finance Authority, Hospital Revenue Bonds
                                                     (Detroit Medical Center):
                     A-         A         6,500          Refunding, Obligation Group, Series A, 6.50% due 8/15/2018          5,979
                     A-         A        19,585          Refunding, Series B, 5.75% due 8/15/2013                           16,677
                     A-         A         3,500          Series A, 7.50% due 8/15/2011                                       3,614
                                                     Michigan State Trunk Line, GO, Series A:
                     AAA        Aaa       7,365          5.67% due 10/01/2012(c)(j)                                          2,286
                     AA-        A1       18,545          5.50% due 10/01/2021                                               15,530
                     BBB        Baa1      9,350      Monroe County, Michigan, PCR (Detroit Edison Project), AMT,
                                                     Series A, 7.75% due 12/01/2019                                          9,752
                                                     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                                                2,740
                     AA         Aa       12,000          5.25% due 11/15/2019                                                9,470


Minnesota--1.2%      AA+        Aa        6,110      Minnesota State, HFA, S/F Mortgage Bonds, AMT, Series A,
                                                     7.45% due 7/01/2022(b)                                                  6,257
                     AAA        NR*       9,220      Saint Paul, Minnesota, Housing and Redevelopment Authority,
                                                     S/F Mortgage Revenue Refunding Bonds, Series C,
                                                     6.95% due 12/01/2031(n)                                                 9,063
                     A+         A         4,250      Southern Minnesota, Municipal Power Agency, Power Supply Systems,
                                                     Revenue Refunding Bonds, Series A, 4.75% due 1/01/2016                  3,279

<PAGE>
Mississippi--1.2%    BBB        Baa       5,950      Lowndes County, Mississippi, Hospital Revenue Refunding Bonds
                                                     (Golden Triangle Medical Center), 8.50% due 2/01/2010                   6,238
                                                     Medical Center Educational Building Corporation, Mississippi,
                                                     Revenue Bonds (University of Mississippi Medical Center Project):
                     A-         NR*       1,000          5.65% due 12/01/2009                                                  874
                     A-         NR*       1,500          5.80% due 12/01/2014                                                1,267
                     A-         NR*       5,000          5.90% due 12/01/2023                                                4,085
                     NR*        Aaa       4,195      Mississippi Home Corporation, S/F Mortgage Revenue Bonds
                                                     (Access Program), AMT, Series A, 6.90% due 6/01/2024(o)                 4,061


Missouri--1.0%       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                         4,860
                     A+         A1        4,000      Missouri State Regional Convention and Sports Complex Authority
                                                     Refunding Bonds, Series A, 5.60% due 8/15/2017                          3,364
                                                     St. Louis County, Missouri, Regional Convention and Sports Complex
                                                     Authority Refunding Bonds, Series B:
                     BBB+       A         2,575          5.50% due 8/15/2013                                                 2,195
                     BBB+       A         4,760          5.75% due 8/15/2021                                                 3,937


Missouri &           BBB+       NR*      11,400      Bi-State Development Agency, Missouri and Illinois, Metropolitan 
Illinois--0.8%                                       No. 5, Revenue Refunding Bonds (American Commonwealth),
                                                     7.75% due 6/01/2010                                                    11,703


Nebraska--0.7%       AAA        Aaa       9,700      Nebraska Investment Finance Authority, S/F Mortgage Revenue Bonds,
                                                     AMT, SAVRS, 5% due 9/10/2030(m)(o)                                      9,954


New Hampshire--1.3%  NR*        Baa1      7,065      New Hampshire Higher Educational and Health Facilities Authority
                                                     Revenue Refunding Bonds (Saint Anselm College), 6.375% due 7/01/2023    6,113
                     A+         Aa        3,215      New Hampshire State, HFA, S/F Residential Mortgage Bonds, AMT,
                                                     7.90% due 2/01/2022                                                     3,313
                                                     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                                       4,853
                     BB+        Baa3      6,500          Series C, 7.65% due 5/01/2021                                       6,503


New Jersey--5.0%                                     New Jersey Building Authority, State Building Revenue 
                                                     Refunding Bonds:
                     AA-        Aa       15,000          5% due 6/15/2015                                                   12,182
                     AA-        Aa       10,000          5% due 6/15/2018                                                    7,993
                     AAA        Aaa      22,000      New Jersey EDA, Revenue Bonds (Market Transition Facility),
                                                     Senior Lien, Series A, 5.875% due 7/01/2011(f)                         20,684
                     NR*        NR*       6,700      New Jersey Health Care Facilities Financing Authority Revenue Bonds
                                                     (Riverwood Center Issue), Series A, 9.90% due 7/01/2021                 7,229
                     A-1        VMIG1    15,400      New Jersey Sports and Exposition Authority, State Contract
                                                     Revenue Bonds, Series C, VRDN, 5% due 9/01/2024(a)                     15,400
                     AA         A         9,500      University Medicine and Dentistry of New Jersey, Revenue Bonds,
                                                     Series C, 7.20% due 12/01/2019                                          9,828

<PAGE>
New York--13.7%                                      Metropolitan Transportation Authority, New York, Service Contract
                                                     Revenue Refunding Bonds (Commuter Facilities), Series 5:
                     BBB        Baa1      2,145          6.90% due 7/01/2006                                                 2,155
                     BBB        Baa1      5,000          7% due 7/01/2012                                                    5,013
                                                     New York City, New York, GO, UT:
                     A-         Baa1      1,445          Series A, 8% due 8/15/2001(k)                                       1,640
                     A-         Baa1      3,600          Series A, 7.75% due 8/15/2016                                       3,730
                     A-         Baa1      4,065          Series A, 7.75% due 8/15/2017                                       4,211
                     A-         Baa1      5,375          Series B, 8.25% due 6/01/2006                                       5,964
                     A-         Baa1      2,700          Series B, 8.25% due 6/01/2007                                       2,998
                     A-         Baa1     10,000          Series B, 7.75% due 2/01/2011                                      10,422
                     A-         Baa1      4,500          Series B, 7.75% due 2/01/2012                                       4,684
                     A-         Baa1      2,875          Series B, 7.75% due 2/01/2013                                       2,988
                     A-         Baa1      1,650          Series B, 7.75% due 2/01/2014                                       1,714
                     A-         Baa1      3,495          Series D, 8% due 8/01/2001(k)                                       3,975
                     A-         Baa1      2,000          Series D, 7.70% due 2/01/2011                                       2,078
                     A-         Aaa       6,580          Series F, 8.25% due 11/15/2001(k)                                   7,603
                     BBB        Baa1     10,000      New York State Dormitory Authority Revenue Bonds
                                                     (City University Systems), Series A, Consolidated, 2nd General,
                                                     Series A, 5.75% due 7/01/2013                                           8,677
                     A1+        VMIG1     1,200      New York State Dormitory Authority Revenue Bonds (Cornell 
                                                     University), Series B, VRDN, 5% due 7/01/2025(a)                        1,200
                                                     New York State Dormitory Authority Revenue Bonds
                                                     (State University Educational Facilities):
                     BBB+       Baa1      7,500          Refunding, Series A, 5.50% due 5/15/2010                            6,457
                     BBB+       Baa1      5,000          Refunding, Series A, 5.875% due 5/15/2011                           4,488
                     BBB+       Baa1      5,725          Refunding, Series A, 5.50% due 5/15/2013                            4,829
                     BBB+       Baa1     15,000          Refunding, Series B, 5.25% due 5/15/2011(k)                        12,401
                     BBB+       Baa1      5,085          Refunding, Series B, 7.375% due 5/15/2014                           5,187
                     BBB+       Baa1      5,000          Series A, 7.50% due 5/15/2013                                       5,272
                     BBB+       Baa1      6,000          Series A, 6.25% due 5/15/2017                                       5,432
                                                     New York State Energy Research and Development Authority,
                                                     Electric Facilities Revenue Bonds (Long Island Lighting), AMT:
                     BBB-       Baa3      8,230          Series A, 7.15% due 9/01/2019                                       7,546
                     BB+        Ba1       2,000          Series A, 7.15% due 12/01/2020                                      1,831
                     BB+        Baa3      4,000          Series B, 7.15% due 2/01/2022                                       3,646
                     BB+        Ba1      10,250      New York State Energy Research and Development Authority,
                                                     Electric Facilities Revenue Bonds (Long Island Lighting), AMT,
                                                     Series A, 7.15% due 6/01/2020                                           9,391
                     A-         A         4,500      New York State, GO, UT, 5.625% due 3/01/2013                            3,978
                                                     New York State Local Government Assistance Corporation:
                     A          A         5,000          Refunding, Series B, 5.375% due 4/01/2016                           4,168
                     A          A         6,000          Series A, 7% due 4/01/2012(k)                                       6,093
                     A          A        10,000          Series A, 6.50% due 4/01/2020                                       9,650
                     A          A        10,000          Series B, 6% due 4/01/2018                                          9,060
                     A          A         5,000          Series D, 5.375% due 4/01/2014                                      4,194
                                                     New York State Power Authority General Purpose Revenue Refunding 
                                                     Bonds, Series CC:
                     AA-        Aa        4,550          5% due 1/01/2014                                                    3,675
<PAGE>               AA-        Aa       10,500          5.25% due 1/01/2018                                                 8,517
                     AAA        Aaa      14,595      New York State, Urban Development Corporation,
                                                     Revenue Refunding Bonds (Correctional Capital Facilities), Series A,
                                                     6.50% due 1/01/2010(h)                                                 14,720


New York &                                           Port Authority of New York and New Jersey, Consolidated 
New Jersey--0.7%                                     Revenue Bonds:
                     AA-        A1        8,000          91st Series, 5.20% due 11/15/2016                                   6,600
                     AA-        A1        3,705          Refunding, 87th Series, 5.25% due 7/15/2014                         3,078
</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>
Ohio--4.0%           AAA        Aaa    $ 12,000      Cleveland, Ohio, Public Power System Revenue Bonds, First Mortgage,
                                                     Series A, 7% due 11/15/2024(f)                                     $   12,310
                     A          A1        3,610      Cuyahoga County, Ohio, Hospital Revenue Bonds
                                                     (Meridia Health System), 7.25% due 8/15/2019                            3,643
                                                     Ohio HFA, S/F Mortgage Revenue Bonds, AMT(o):
                     AAA        Aaa      21,800          RIB, Series B, 4% due 3/31/2031                                    21,240
                     AAA        NR*       2,705          Series B, 8.25% due 12/15/2019                                      2,860
                     AAA        NR*       4,955          Series C, 7.85% due 9/01/2021                                       5,168
                     BBB-       Baa2     14,000      Ohio State Air Quality Development Authority, PCR, Refunding
                                                     (Ohio-Edison), Series A, 5.95% due 5/15/2029                           11,250


Oregon--0.2%         AA-        Aa        1,030      Oregon State, PCR, UT, Series C, 5.625% due 6/01/2013                     927
                     AAA        Aaa       1,200      Polk County, Oregon, School District No. 002, GO, UT,
                                                     5.40% due 6/01/2012(h)                                                  1,072


Pennsylvania--6.0%   A1+        VMIG1     1,100      Allegheny County, Pennsylvania, Hospital Development Authority
                                                     Revenue Bonds (Presbyterian Health Center), VRDN, Series D,
                                                     5.20% due 3/01/2020(a)(f)                                               1,100
                     A-1        NR*      15,000      Emmaus, Pennsylvania, General Authority, Revenue Bonds
                                                     (Local Government), VRDN, Series H-4, 5.20% due 3/01/2024(a)           15,000
                     BB         Ba       11,050      Pennsylvania Convention Center Authority Revenue Refunding Bonds,
                                                     Series A, 6.75% due 9/01/2019                                          10,009
                     AA         Aa       17,600      Pennsylvania, HFA, Revenue Refunding Bonds, AMT, 4% due 10/03/2023     16,905
                     AAA        Aaa      20,000      Pennsylvania State Higher Educational Assistance Agency,
                                                     Student Loan Revenue Bonds, AMT, 5% due 9/03/2026(c)                   19,642
                     BBB        Baa1      2,000      Philadelphia, Pennsylvania, Hospital and Higher Educational
<PAGE>                                               Facilities Authority, Hospital Revenue Bonds (Frankford Hospital),
                                                     Series A, 6% due 6/01/2023                                              1,610
                     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                                           4,630
                     BBB        Baa       7,335      Philadelphia, Pennsylvania, Water and Wastewater Revenue
                                                     Refunding Bonds, 5.75% due 6/15/2013                                    6,313
                     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)(k)     5,139
                     BBB        Baa       5,650      Ridley Park, Pennsylvania, Hospital Authority, Revenue Refunding
                                                     Bonds (Taylor Hospital), Series A, 6.125% due 12/01/2020                4,493
                     AAA        Aaa       2,500      York County, Pennsylvania, Hospital Authority Revenue Bonds
                                                     (York Hospital), 7% due 1/01/2001(c)(k)                                 2,691


Puerto Rico--0.8%    A          Baa1      5,000      Puerto Rico Commonwealth Highway and Transportation Authority,
                                                     Highway Revenue Bonds, Series W, 5.25% due 7/01/2020                    4,001
                                                     Puerto Rico Commonwealth Highway and Transportation Authority,
                                                     Highway Revenue Refunding Bonds, Series X:
                     A          Baa1      1,000          5.50% due 7/01/2015                                                   849
                     A          Baa1      6,000          5.25% due 7/01/2021                                                 4,818
                     A          Baa1      1,000      Puerto Rico Commonwealth Refunding Bonds, UT, 5.25% due 7/01/2018         809


Rhode Island--2.6%                                   Rhode Island Depositors Economic Protection Corporation,
                                                     Special Obligation Bonds, Series A:
                     AAA        Aaa       5,250          6.95% due 8/01/2002(k)                                              5,697
                     A-         Baa1      5,500          Refunding, 5.75% due 8/01/2012                                      4,756
                     A-         Baa1     30,000          Refunding, 6.25% due 8/01/20162                                     7,418


South Carolina--0.5% BBB-       Baa       8,355      South Carolina Jobs, EDA, Economic Development Revenue Bonds
                                                     (Saint Francis Hospital--Franciscan Sisters), 7% due 7/01/2015          7,629


South Dakota--0.6%   AA+        Aa1       9,085      South Dakota, HDA, Homeownership Mortgage, Series A,
                                                     7.15% due 5/01/2027                                                     9,095


Tennessee--0.7%      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         10,310


Texas--8.5%          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         11,929
                                                     Brazos River Authority, Texas, PCR
                                                     (Texas Utilities Electric Company Project), AMT:
                     BBB        Baa      32,095          Series A, 8.25% due 1/01/2019                                       2,196
<PAGE>               BBB        Baa2     18,150          Series A, 7.875% due 3/01/2021                                     18,803
                     BBB        Baa2      2,000          7.875% due 3/01/2017                                                2,049
                     A          A2       12,350      Brazos River Authority, Texas, Revenue Refunding Bonds
                                                     (Houston Light and Power), Series 1989-A, 7.625% due 5/01/2019         12,767
                     BBB        Baa1      5,000      Gulf Coast Waste Disposal Authority, Texas, Revenue Bonds
                                                     (Champion International Corporation), AMT, 7.45% due 5/01/2026          4,881
                                                     Harris County, Texas, Certificates of Obligation, Tax and 
                                                     Revenue Bonds:
                     AA+        Aa        2,400          10% due 10/01/2000                                                  2,897
                     AA+        Aa        2,400          10% due 10/01/2001                                                  2,957
                     A1+        NR*       4,400      Harris County, Texas, Health Facilities Development Corporation,
                                                     Hospital Revenue Bonds (Methodist Hospital), VRDN,
                                                     5% due 12/01/2025(a)(b)                                                 4,400
                     BBB-       Baa       8,255      Jefferson County, Texas, Health Facilities Development Corporation,
                                                     Hospital Revenue Bonds (Baptist Healthcare System Project),
                                                     8.875% due 6/01/2021                                                    8,723
                     AA         Aa       24,000      North Central Texas, Health Facilities Development Corporation
                                                     Revenue Bonds (Baylor University Medical Center), Series A,
                                                     6.71% due 5/15/2016                                                    22,962
                     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)       4,591
                     A+         Aa        9,350      Texas Housing Agency, Residential Development Mortgage Revenue Bonds,
                                                     Series A, 7.50% due 7/01/2015(o)                                        9,508
                     AA         Aa       14,000      Texas State Veteran Housing Assistance, AMT, UT, Series A,
                                                     7% due 12/01/2025                                                      13,824
                     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                                                     1,734


Utah--1.3%           AA         Aa        7,535      Intermountain Power Agency, Utah, Power Supply Revenue Bonds,
                                                     Series B, 5.35% due 7/01/2004(j)(l)                                     4,180
                     A1+        VMIG1     2,100      Utah State Board Regents, Student Loan Revenue Bonds, VRDN,
                                                     Series B, 5% due 11/01/2000(a)                                          2,100
                     AA         NR*      13,250      Weber County, Utah, Municipal Building Authority,
                                                     Lease Revenue Bonds, 7.50% due 12/15/2019                              13,467


Virginia--0.9%       AA-        Aa       10,000      Fairfax County, Virginia, Water Authority, Revenue Refunding Bonds,
                                                     5.75% due 4/01/2029                                                     8,658
                     AA+        Aa1       4,000      Virginia State HDA, Commonwealth Mortgage Revenue Bonds,
                                                     Series A, 7.15% due 1/01/2033                                           4,013


Washington--2.4%     AAA        NR*      14,425      Washington State Housing Finance Community, S/F Mortgage Revenue
                                                     Refunding Bonds, AMT, Series E, 7.10% due 7/01/2022(g)                 14,477
                                                     Washington State Public Power Supply System, Revenue Refunding Bonds
                                                     (Nuclear Project #2), Series A:
                     AA         Aa       16,470          5.80% due 7/01/2007                                                15,268
                     AA         Aa        6,195          5.75% due 7/01/2012                                                 5,426

<PAGE>
West Virginia--0.6%  AA+        Aa1       8,400      West Virginia State, Housing Development Fund, Housing Finance,
                                                     Series D, 7.05% due 11/01/2024                                          8,316


Wisconsin--1.0%                                      Wisconsin Housing and EDA, Housing Revenue Bonds:
                     A          A1        5,400          Series B, 7.05% due 11/01/2022                                      5,360
                     A          A1        5,105          Series C, 7% due 5/01/2015                                          5,082
                     AA         Aa        4,925      Wisconsin Housing, EDA, Home Ownership, Revenue Bonds,
                                                     Series A, 7.10% due 3/01/2023                                           4,957


                     Total Investments (Cost--$1,513,633)--100.5%                                                        1,461,846

                     Liabilities in Excess of Other Assets--(0.5)%                                                          (6,850)
                                                                                                                        ----------
                     Net Assets--100.0%                                                                                 $1,454,996
                                                                                                                        ==========


                     <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 December 31, 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 
                        December 31, 1994.
                     (n)FNMA Insured.
                     (o)GNMA Insured.
                      ++Represents the highest short-term rating issued by Moody's Investors Service, Inc.
                       *Not Rated.


                      See Notes to Financial Statements.
</TABLE>

<PAGE>
<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--0.6%        NR*        Aa     $  5,050      Alabama State Public School and College Authority, Refunding Bonds,
                                                     3.70% due 12/01/1996                                               $    4,858


Alaska--2.0%         A+         Aa        1,700      Alaska State Housing Finance Corporation, GO, Series A,
                                                     4.20% due 12/01/1995                                                    1,673
                     A1+        VMIG1    10,000      Alaska State Housing Finance Corporation, VRDN, Series A,
                                                     5% due 6/01/2029(b)                                                    10,000
                     AAA        Aaa       5,000      Anchorage, Alaska, GO, Refunding Bonds, UT, 4.85% due 7/01/1995(d)      5,005


Arizona--0.6%        A1+        VMIG1     1,000      Maricopa County, Arizona, IDA, Hospital Facility Revenue Bonds
                                                     (Samaritan Health Services Hospital), VRDN, Series B2,
                                                     4.10% due 12/01/2008(b)(d)                                              1,000
                     A+         A1        3,000      Maricopa County, Arizona, Transportation Board,
                                                     Excise Tax Revenue Bonds, 7.10% due 7/01/1996                           3,073
                     AA         P1          800      Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont Mining Corp.),
                                                     VRDN, 5% due 12/01/2009(b)                                                800


California--9.6%     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           5,824
                     SP-1+      MIG1++    7,500      California State, GO, RAN, Series A, 5% due 6/28/1995                   7,511
                     SP-1+      MIG1++   15,000      California State, GO, RAW, Series C, 5.75% due 4/25/1996               15,002
                     A          A1       10,000      California State Various Purpose Bonds, GO, 4% due 10/01/1995           9,876
                     AA         Aa        5,005      California Statewide Communities Development Authority, Revenue 
                                                     Refunding Bonds, COP (Saint Joseph Health Systems), 4.10% 
                                                     due 7/01/1997                                                           4,773
                     NR*        MIG1++   30,000      Fresno County, California, TRAN, 4.25% due 7/13/1995                   29,843
                     AA-        Aa        1,100      San Diego County, California, Water Authority, Water Revenue
                                                     Refunding Bonds, COP, Series A, 4.10% due 5/01/1995                     1,098
                     SP-1+      MIG1++    4,000      Santa Clara County, California, TRAN, UT, 4.25% due 7/07/1995           3,960


Colorado--1.7%       NR*        NR*      10,000      Denver, Colorado, City and County Airport Revenue Bonds, Sub-series 
                                                     B, 4.25% due 9/01/1995                                                  9,941
                     AA         Baa1      3,810      Jefferson County, Colorado, District No. R-001, Revenue Refunding
                                                     Bonds, Series A, 3.65% due 12/15/1996                                   3,649

<PAGE>
Connecticut--2.4%                                    Connecticut State Economic Recovery Notes, GO, Series A:
                     AA-        Aa        3,900          5.40% due 12/15/1995                                                3,911
                     AA-        Aa        3,250          5.50% due 6/15/1996                                                 3,268
                     AA-        Aa        6,705      Connecticut State, GO, UT, Series B, 4.90% due 11/15/1995               6,692
                     NR*        Aa3       3,940      Connecticut State Housing Mortgage Revenue Bonds (Chestnut Hill
                                                     Apartments), 4.60% due 4/01/1997                                        3,825
                     AAA        Aaa       2,000      Stratford, Connecticut, GO, UT, 3.50% due 11/01/1996(f)                 1,914


Delaware--0.2%       AAA        Aaa       1,500      Delaware State, Realty Transfer Tax Revenue Bonds (Land and Water
                                                     Conservation Trust Fund Program), 5.30% due 4/01/1995(f)                1,503


District of                                          District of Columbia, General Fund Recovery Bonds:
Columbia--1.9%       AAA        Aaa      11,000        UT, Series C, 5.50% due 6/01/1995(f)                                 11,030
                     A1+        VMIG1       900        VRDN, Series B-2, 4.90% due 6/01/2003(b)                                900
                     A1+        VMIG1     1,500        VRDN, Series B-3, 5% due 6/01/2003(b)                                 1,500
                     AAA        Aaa       1,465      District of Columbia, GO, UT, Series B, 5.30% due 6/01/1995(d)          1,468


Florida--3.4%        NR*        VMIG1     3,000      Atlantic Beach, Florida, Revenue Refunding Bonds (Improvement--Fleet
                                                     Landing), VRDN, Series B, 5% due 10/01/2024(b)                          3,000
                     A          Aa        2,000      Dade County, Florida, Aviation Revenue Refunding Bonds, Series X,
                                                     4.10% due 10/01/1995                                                    1,981
                     AAA        Aaa       1,900      Dade County, Florida, Water System Revenue Refunding Bonds,
                                                     4% due 6/01/1995(f)(g)                                                  1,895
                     AAA        Aaa       5,000      Florida State Division, Board of Finance Revenue Bonds
                                                     (Department of Natural Resources Preservation 2000), Series A,
                                                     6.10% due 7/01/1995(c)                                                  5,039
                     A+         A         3,860      Florida State, GO, COP (Construction Equipment Financing Program),
                                                     5.75% due 11/15/1995                                                    3,884
                     AAA        Aaa       2,375      Florida State Turnpike Authority, Turnpike Revenue Bonds, Series A,
                                                     5% due 7/01/1995(f)                                                     2,380
                     AA         Aaa       4,000      Jacksonville, Florida, Electric Authority Revenue Refunding Bonds
                                                     (Saint John's River Park Power), Issue II, Series 4,
                                                     6.90% due 10/01/1995(a)                                                 4,115
                     A-1        VMIG1     2,800      Manatee County, Florida, PCR, Refunding (Florida Power & Light Co.,
                                                     Project), VRDN, 5% due 9/01/2024(b)                                     2,800
                     A-1        VMIG1     2,700      Martin County, Florida, PCR, Refunding (Florida Power & Light Co.,
                                                     Project), VRDN, 5% due 9/01/2024(b)                                     2,700


Georgia--0.8%        AA         Aa1       2,000      Gwinnett County, Georgia, COP (Water and Sewer), 7.60% due 8/01/1995    2,027
                     AAA        Aaa       3,965      Metropolitan Atlanta, Georgia, Rapid Transit Authority, Sales Tax
                                                     Revenue Refunding Bonds, Series P, 4.75% due 7/01/1995(c)               3,969

<PAGE>
Illinois--5.3%                                       Chicago, Illinois, Metropolitan Water Reclamation District, Greater
                                                     Chicago Revenue Refunding Bonds:
                     AA         Aa        5,000          4% due 12/01/1996                                                   4,844
                     AA         Aa        3,100          UT, 4.10% due 12/01/1995                                            3,059
                     AA         Aa        3,000          UT, 4.50% due 12/01/1996                                            2,942
                     A+         A1        2,580      Chicago, Illinois, O'Hare International Airport Revenue Bonds, AMT,
                                                     Series A, 4.40% due 1/01/1995                                           2,580
                                                     Chicago, Illinois, School Financing Authority:
                     AAA        Aaa       5,000          7.25% due 6/01/1998                                                 5,143
                     AAA        Aaa       2,755          Refunding, Series A, 5% due 6/01/1995(f)                            2,758
                     A1+        VMIG1     7,500      Chicago, Illinois, Tender Notes, Series A-1, 3.10% due 10/31/1995       7,341
                     AAA        Aaa       3,750      Cook County, Illinois, High School District No. 205 Revenue Refunding
                                                     Bonds, UT (Thornton Township), 5% due 6/01/1995(f)(g)                   3,756
                     AA         Aaa       3,975      Illinois Educational Facilities Authority Revenue Bonds
                                                     (University of Chicago), 7% due 12/01/1996(a)                           4,175
                     AA-        Aa        3,000      Illinois State, GO, 5.50% due 6/01/1995                                 3,011
                     A          A1        3,625      Illinois State Toll and Highway Authority, Revenue Refunding Bonds,
                                                     Series A, 3.70% due 1/01/1996                                           3,541

Indiana--2.3%        NR*        VMIG1    13,280      Indiana State, HFA, S/F Mortgage Revenue Bonds, Series D,
                                                     4.30% due 7/03/1995                                                    13,240
                     AA-        Aa        4,800      Purdue University, Indiana, University Revenue Bonds, Student Fees,
                                                     Series J, 4.15% due 7/01/1996                                           4,694


Kentucky--2.3%                                       Daviess County, Kentucky, Solid Waste Disposal Facilities 
                                                     Revenue Bonds (Scott Paper Co.  Project), VRDN, AMT(b):
                     A1+        VMIG1       200          Series A, 5.10% due 12/01/2023                                        200
                     A1+        VMIG1     2,300          Series B, 5% due 5/01/2024                                          2,300
                     A+         A        13,000      Kentucky State Property and Building Community, Revenue Refunding
                                                     Bonds, Project No. 55, 3.60% due 9/01/1996                             12,491
                     AAA        Aaa       3,250      Kentucky State Turnpike Authority, Economic Development, Revenue
                                                     Refunding Bonds (Revitalization Projects), 4% due 7/01/1996(c)          3,176


Louisiana--1.2%      A+         A1        3,610      Louisiana Public Facilities Authority Revenue Bonds
                                                     (Tulane University), Series B, 6.80% due 8/15/1996                      3,690
                     A          A3        5,410      Louisiana State Offshore Terminal Authority Revenue Refunding 
                                                     Bonds (Deepwater Port), First Stage, Series B, 4.60% due 9/01/1995      5,399


Maine--0.7%          AA+        Aa        5,255      Maine State General Purpose Bonds, GO, 4.10% due 9/01/1995              5,211


Maryland--0.6%       A+         A1        4,535      Maryland State Transportation Authority Revenue Bonds, 
                                                     6% due 7/01/1995                                                        4,567

<PAGE>
Massachusetts--4.0%  BBB+       NR*       3,660      Massachusetts State, COP, GO, 5.10% due 6/30/1996                       3,612
                                                     Massachusetts State, GO, Series A, Dedicated Income Tax:
                     AAA        Aaa       2,900          7% due 6/01/1995(f)                                                 2,928
                     A+         A1        2,500          7.25% due 6/01/1996                                                 2,572
                     AAA        Aaa       5,000          7.25% due 6/01/1996(f)                                              5,128
                                                     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)     4,897
                     AAA        Aaa       2,005          (New England Medical Center Hospitals), Series G,
                                                         3.80% due 7/01/1997(d)                                              1,905
                     A+         A1        6,720      Massachusetts State, HFA, Housing Projects, Revenue Refunding Bonds,
                                                     Series A, 3.90% due 4/01/1995                                           6,700
                                                     Massachusetts State Water Resource Authority, GO, Series A:
                     A          A         1,690          6.70% due 4/01/1995                                                 1,698
                     AAA        Aaa       2,555          6.70% due 4/01/1995(g)                                              2,570
                     NR*        NR*         995      South Hadley, Massachusetts, Industrial Revenue Bonds (South Hadley
                                                     Health Care), AMT, Series A, 5% due 12/01/1996                            982
</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>
Michigan--2.0%       NR*        VMIG1  $  1,000      Detroit, Michigan, Downtown Development Authority, Revenue Refund-
                                                     ing Bonds (Millender Center Project), VRDN, 5% due 12/01/2010(b)   $    1,000
                     SP-1       MIG1++    5,075      Detroit, Michigan, GO, Notes, 3.80% due 7/01/1995                       5,053
                     A1+        VMIG1     4,000      Grand Rapids, Michigan, Water Supply Systems Revenue Refunding 
                                                     Bonds VRDN, 5% due 1/01/2020(b)(f)                                      4,000
                     AAA        NR*       5,475      Michigan State, HFA, Revenue Bonds (Harper-Grace & Huron Valley
                                                     Hospitals), Series A, 10% due 10/01/1995(a)                             5,778
                     NR*        VMIG1       800      Michigan State Strategic Fund, Solid Waste Disposal Revenue Bonds
                                                     (Grayling Generating Project), VRDN, AMT, 3% due 1/01/2014(b)             800


Minnesota--2.8%      AAA        Aaa       3,225      Hennepin County, Minnesota, Capital Improvement Bonds, UT, Series B,
                                                     3.25% due 12/01/1995                                                    3,154
                     AAA        Aaa       1,600      Minneapolis and St. Paul, Minnesota, Metropolitan Airports Revenue
                                                     Bonds, AMT, UT, Series 8, 4.60% due 1/01/1995                           1,600
                     AA+        NR*       1,650      Minnesota Public Facilities Authority, Water Pollution Control
                                                     Revenue Bonds, Series A, 4.70% due 3/01/1995                            1,650
                                                     Minnesota State, HFA, S/F Mortgage:
                     A1+        VMIG1     4,755          AMT, Series U, 4.95% due 12/14/1995                                 4,746
                     A1+        VMIG1     7,265          AMT, Series V, 4.95% due 12/14/1995                                 7,265
                     A1+        VMIG1     4,105          Series T, 4.85% due 12/14/1995                                      4,095

<PAGE>
Mississippi--1.6%    NR*        P1        1,700      Jackson County, Mississippi, PCR, Refunding
                                                     (Chevron USA, Inc. Project), VRDN, 5% due 12/01/2016(b)                 1,700
                     NR*        P1        2,000      Jackson County, Mississippi, Port Facility Revenue Refunding Bonds
                                                     (Chevron USA, Inc. Project), VRDN, 5% due 6/01/2023(b)                  2,000
                     A          NR*      10,000      Mississippi Higher Education Assistance Corporation, Student Loan
                                                     Revenue Refunding Bonds, AMT, Series C, 5.40% due 1/01/1996             9,975
                     NR*        P1          300      Perry County, Mississippi, PCR, Refunding (Leaf River Forest Project),
                                                     VRDN, 5% due 3/01/2002(b)                                                 300


Missouri--1.7%       SP-1+      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                                                    13,963


Nebraska--1.7%                                       Nebraska Public Power District Revenue Bonds:
                     A+         A1        7,000          (Nuclear Facility), 4% due 7/01/1995                                6,958
                     A+         A1        3,500          Refunding (Electric System), Series A, 4.50% due 1/01/1995          3,500
                     A+         A1        3,570          Refunding (Power Supply System), Series C, 3.50% due 1/01/1996      3,478


Nevada--0.9%         AAA        Aaa       7,000      Washoe County, Nevada, Airport Authority, Airport Systems Improvement
                                                     Revenue Bonds, AMT, Series A, 3.90% due 7/01/1995(d)                    6,968


New Jersey--6.8%                                     Camden County, New Jersey, Improvement Authority (Solid Waste 
                                                     Disposal), Revenue Refunding Bonds (Landfill Project):
                     A-         A1        1,125          3.55% due 7/01/1995                                                 1,119
                     A-         A1        2,000          4% due 7/01/1997                                                    1,909
                     AA+        Aaa       4,500      Middlesex County, New Jersey, Refunding Bonds, UT, 3.60% 
                                                     due 7/15/1996                                                           4,363
                     AAA        Aaa       3,820      Middlesex County, New Jersey, Utility Authority, Solid Waste System
                                                     Revenue Bonds, 5.20% due 12/01/1995(f)                                  3,817
                     AAA        Aaa       9,000      New Jersey EDA, Market Transition Facility Revenue Bonds, Senior Lien,
                                                     Series A, 4.80% due 7/01/1998(d)                                        8,760
                     A+         NR*       3,765      New Jersey State Housing and Mortgage Finance Agency,
                                                     Revenue Refunding Bonds, Series 1, 4.50% due 11/01/1995                 3,732
                                                     New Jersey State Transportation Trust Fund Authority Revenue Bonds
                                                     (Transportation Systems):
                     A+         Aa        5,505          Refunding, Series B, 3.20% due 6/15/1995                            5,472
                     A+         Aa       20,000          Series A, 5% due 12/15/1997                                        19,751
                     A          A         2,160      New Jersey State Turnpike Authority, Revenue Refunding Bonds,
                                                     Series A, 5.50% due 1/01/1996                                           2,163
                     AAA        Aaa       3,265      Passaic Valley, New Jersey, Sewage Commissioners Revenue
                                                     Refunding Bonds, Series D, 5.70% due 12/01/1995(c)                      3,282


New Mexico--0.3%     AAA        Aaa       2,500      New Mexico Education Loan Assistance Foundation, Student Loan
                                                     Revenue Bonds, AMT, Series A, 5.75% due 4/01/1996(c)                    2,509

<PAGE>
New York--5.4%       AAA        Aaa       4,000      Albany County, New York, Revenue Refunding Bonds, UT,
                                                     3.30% due 10/01/1995(f)                                                 3,932
                                                     New York City, New York, GO, UT:
                     A-         Baa1      5,000          Refunding, Series A, 4.60% due 8/01/1995                            4,956
                     A-         Baa1      3,000          Series A, 7.20% due 3/15/1995(g)                                    3,018
                     A-         Aaa       6,710          Series D, 6.40% due 2/01/1995(g)                                    6,710
                     A-         Baa1      4,640          Series D, 6.40% due 2/01/1995                                       4,640
                     A1+        NR*         800      New York City, New York, IDA, Civic Facilities Revenue Bonds
                                                     (National Audobon Society), VRDN, 5% due 12/01/2014(b)                    800
                     A1+        NR*         400      New York City, New York, IDA, IDR (Japan Airlines Company Ltd. 
                                                     Project), VRDN, AMT, 4% due 11/01/2015(b)                                 400
                     SP-1+      MIG1++    4,000      New York City, New York, TAN, UT, Series A, 5% due 2/15/1995            4,000
                                                     New York State Dormitory Authority Revenue Bonds:
                     A1+        VMIG1     7,000          (New York Public Library), Series B, 3.875% due 7/01/1995           6,959
                     NR*        VMIG1     5,000          (Oxford University Press Inc.), VRDN, 5% due 7/01/2023(b)           5,000
                     A          A         2,000      New York State Local Government Assistance Corporation Revenue Bonds,
                                                     Series A, 5% due 4/01/1995                                              2,001
                     A1+        VMIG1       800      Syracuse, New York, IDA, Civic Facility Revenue Bonds (Syracuse
                                                     University Project), VRDN, 5% due 3/01/2023(b)                            800


North Carolina--1.2% NR*        VMIG1     9,300      North Carolina Educational Facilities Finance Agency Revenue Bonds
                                                     (Bowman Grey School of Medicine Project), VRDN, 5% due 9/01/2020(b)     9,300


North Dakota--0.6%   NR*        Aa        5,000      North Dakota Student Loan Revenue Refunding Bonds, Series A,
                                                     5.40% due 7/01/1996                                                     4,983


Ohio--7.5%                                           Cincinnati, Ohio, City School District:
                     A+         NR*       2,500          RAN, 5.35% due 6/15/1996                                            2,492
                     A+         NR*       7,500          TAN, 5% due 6/01/1995                                               7,495
                                                     Cleveland, Ohio, City School District, RAN, UT(c):
                     AAA        Aaa       3,000          4.20% due 6/01/1996                                                 2,942
                     AAA        Aaa      10,000          4.35% due 6/01/1997                                                 9,721
                     AAA        Aaa       2,700      Columbus, Ohio, Sewer Improvement Revenue Bonds (Waterworks Parks),
                                                         6.75% due 7/01/1995(g)                                              2,729
                     NR*        NR*       2,000      Lucas County, Ohio, BAN, 5.75% due 11/30/1995                           2,010
                                                     Ohio State Air Quality Development Authority, PCR, Refunding
                                                     (Ohio Edison Company), Series A:
                     A+         VMIG1    10,500          4.25% due 8/01/1996                                                10,240
                     A+         VMIG1     6,700          3.45% due 2/01/2015                                                 6,545
                                                     Ohio State Public Facilities Commission, Higher Education Facilities:
                     A+         A1        3,300          Capital Facilities, Series II-A, 5.30% due 12/01/1996               3,303
                     AAA        Aaa       1,995          Series II-A, 6.25% due 2/01/1996(c)                                 2,006
                     AAA        Aaa      10,250      Trumbull County, Ohio, Hospital Revenue Bonds (Trumbull Memorial
                                                     Hospital Project), 9.625% due 11/01/1995(a)(f)                         10,836

<PAGE>
Oklahoma--0.8%       A+         Aa        6,370      Oklahoma County, Oklahoma, Independent School District No. 89, UT,
                                                     6.50% due 2/01/1998                                                     6,554


Pennsylvania--0.9%   AA-        A1        4,225      Pennsylvania State, UT, Second Series, 4.70% due 7/01/1996              4,184
                     AAA        Aaa       3,000      Pittsburgh, Pennsylvania, Water and Sewer Authority, Revenue
                                                     Refunding Bonds, Series A, 3.50% due 9/01/1996(f)                       2,880


Puerto Rico--1.3%    A          Baa1      3,415      Puerto Rico Public Buildings Authority, Revenue Refunding Bonds,
                                                     Series J, 5.20% due 7/01/1995                                           3,421
                     BBB        Baa       7,065      Puerto Rico, S/F Finance Housing Agency, Revenue Refunding Bonds,
                                                     3.75% due 12/01/1995                                                    6,913
</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>
Rhode Island--1.3%   AAA        Aaa    $  4,180      Rhode Island Depositors Economic Protection Corporation,
                                                     Special Obligation Bonds, Series A, 5% due 8/01/1995(e)            $    4,173
                     NR*        A         6,000      Rhode Island State, Student Loan Authority, Student Loan Revenue
                                                     Refunding Bonds, Series A, 5.70% due 12/01/1996                         5,996


South Carolina--1.3% AA-        A1        1,000      Charleston, South Carolina, Waterworks and Sewer Improvement Revenue
                                                     Refunding Bonds, 4.45% due 1/01/1995                                    1,000
                     NR*        VMIG1     1,100      Orangeburg County, South Carolina, Solid Waste Disposal Facilities
                                                     Revenue Bonds (South Carolina Electric & Gas), VRDN, AMT,
                                                     5% due 10/01/2024(b)                                                    1,100
                     AA-        A1        4,000      South Carolina State Public Service Authority Revenue Refunding Bonds
                                                     (Electric Systems Expansion), Series A, 7.50% due 7/01/1996             4,121
                     A+         A1        5,170      South Carolina State Public Service Authority Revenue Refunding Bonds,
                                                     Series C, 3.80% due 1/01/1997                                           4,951


Texas--9.5%          AAA        Aaa       4,880      Austin, Texas, Utility System Revenue Refunding Bonds, Series A,
                                                     Prior Lien, 4.80% due 11/15/1995(d)                                     4,861
                                                     Brazos, Texas, Higher Education Authority Incorporated, Student Loan
                                                     Revenue Refunding Bonds, AMT:
                     NR*        Aaa       2,200          Senior Lien, Series A-2, 5.45% due 6/01/1998                        2,163
                     NR*        Aaa       2,250          Series A-1, 5% due 12/01/1996                                       2,222
                     NR*        Aa        2,000          Series C-1, 5% due 11/01/1995                                       1,989
                     NR*        Aa        5,455          Series C-1, 5.60% due 11/01/1997                                    5,412
<PAGE>               NR*        A1          950      Fort Bend County, Texas, IDR, Corporate, Refunding (Frito Lay
                                                     Incorporated Project), 4% due 10/01/1996                                  923
                     NR*        A1        3,650      Fort Bend County, Texas, PCR, Corporate, IDR, Refunding (Frito Lay
                                                     Incorporated Project), 4% due 10/01/1996                                3,547
                                                     Harris County, Texas, Health Facilities Development Corporation,
                                                     Hospital Revenue Bonds, VRDN(b):
                     A1+        NR*       1,800          (Methodist Hospital), 5% due 12/01/2025                             1,800
                     A1+        NR*         200          (Saint Luke's Episcopal Hospital), Series C, 5% due 2/15/2016         200
                     AAA        Aaa       9,500      Houston, Texas, Water and Sewer System, Revenue Refunding Bonds,
                                                     Junior Lien, Series D, 5.55% due 12/01/1995 (f)                         9,522
                                                     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                                       5,990
                     NR*        Aaa       2,000          Series C, 3.95% due 9/01/1996                                       1,943
                     NR*        Aaa       2,675          Series C, 4.15% due 9/01/1997                                       2,555
                                                     San Antonio, Texas, Electric and Gas Revenue Refunding Bonds,
                                                     Junior Lien, Series A:
                     AA         Aa1       9,000          5.80% due 2/01/1995                                                 9,000
                     AA         Aa1       3,000          6% due 2/01/1996                                                    3,021
                                                     Texas State Public Finance Authority Revenue Bonds, GO:
                     AA         Aa        3,000          Series A, 6% due 10/01/1995                                         3,019
                     AA         Aa        4,445          Series B, 8% due 10/01/1997                                         4,738
                     AAA        Aaa       4,770      Texas State Public Property Finance Corporation, Revenue Refunding
                                                     Bonds (Mental and Health Retardation), 4.25% due 9/01/1995              4,723
                     SP-1+      MIG1++    6,200      Texas State, TRAN, UT, 5% due 8/31/1995                                 6,211
                     AAA        Aa        1,500      Texas Water Development Board Revenue Bonds
                                                     (State Revolving Fund--Senior Lien), 4.35% due 7/15/1995                1,491


Utah--3.9%           NR*        NR*      24,243      Carbon County, Utah, Solid Waste Disposal Revenue Refunding Bonds
                                                     (East Carbon Landfill Project), AMT, 6.04% due 5/01/1997               24,455
                                                     Intermountain Power Agency, Utah, Power Supply Revenue 
                                                     Refunding Bonds:
                     AA         Aa        1,250          Series A, 3.90% due 7/01/1996                                       1,220
                     AA         Aa        4,250          Series B, 4.60% due 7/01/1995                                       4,246
                     AA-        NR*       1,715      University of Utah, Revenue Refunding Bonds
                                                         (University Hospital Project), Series A, 5% due 5/15/1995           1,717


Virginia--2.1%       AAA        Aa2       1,500      Peninsula Ports Authority Virginia, Port Facility Revenue 
                                                     Refunding Bonds (Shell Oil Company), UPDATES, Series A, 
                                                     4.15% due 12/01/2005(b)                                                 1,500
                     NR*        Aaa       2,000      Virginia Education Loan Authority, Revenue Refunding Bonds 
                                                     (Guaranteed Student Loan Program), Senior--Series E, 4.625% 
                                                     due 3/01/1995                                                           1,995
                     AAA        Aaa       2,500      Virginia Port Authority Facilities, Revenue Refunding Bonds,
                                                     5% due 7/01/1995(c)                                                     2,505
                                                     Virginia State Housing Development Authority, Commonwealth Mortgage
                                                     Revenue Bonds, AMT, Series B, Sub Series B-1:
                     AA+        Aa1       5,400          5.30% due 1/01/1995                                                 5,400
                     AA+        Aa1       2,975          5.50% due 1/01/1996                                                 2,974
                     AA         Aa        1,500      Virginia State Public Building Authority, Building Revenue Bonds,
                                                     Series C, 3.95% due 8/01/1995                                           1,487

<PAGE>
Washington--5.2%                                     Port Seattle, Washington, Revenue Refunding Bonds:
                     AA-        A1        1,075          Series A, 4.25% due 4/01/1996                                       1,056
                     AA-        A1        3,000          Series B, 4% due 11/01/1995                                         2,959
                     AA         Aa        7,250      Washington State, GO, UT, Series R-93-B-1, 4.125% due 10/01/1997        6,957
                                                     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                         7,974
                     AA         Aa        6,275          (Nuclear Project No. 2), 4.20% due 7/01/1995(g)                     6,251
                     AA         Aa        2,000          (Nuclear Project No. 2), 3.50% due 7/01/1996                        1,916
                     AA         Aa        4,890          (Nuclear Project No. 2), 3.75% due 7/01/1997                        4,576
                     AAA        Aaa       9,200      Washington State, Refunding, UT, Series 86-D, 8% due 9/01/1996(a)       9,615


Wisconsin--2.0%      AA         Aa        3,500      Milwaukee County, Wisconsin, Metropolitan Sewer District Revenue 
                                                     Bonds, UT, Series A, 5.25% due 9/01/1995                                3,500
                     NR*        NR*       8,000      Waukensha, Wisconsin, School District, TRAN, 4.75% due 10/24/1995       7,984
                                                     Wisconsin Housing and EDA, Housing Revenue Refunding Bonds, 
                                                     Series C:
                     A          A1        2,200          3.60% due 11/01/1995                                                2,154
                     A          A1        2,795          4.30% due 11/01/1997                                                2,649

Wyoming--0.3%                                        Lincoln County, Wyoming, PCR (Exxon Project), DATES, VRDN, 
                                                     Series B(b):
                     A1+        P1        1,800          5% due 11/01/2014                                                   1,800
                     A1+        P1          900          5.10% due 11/01/2014                                                  900


                     Total Investments (Cost--$818,971)--100.7%                                                            809,888

                     Liabilities in Excess of Other Assets--(0.7%)                                                          (5,361)
                                                                                                                         ---------
                     Net Assets--100.0%                                                                                  $ 804,527
                                                                                                                         =========

                     <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
                        December 31, 1994.
                     (c)AMBAC Insured.
                     (d)MBIA Insured.
                     (e)FSA Insured.
                     (f)FGIC Insured.
                     (g)Escrowed to maturity.
                     (h)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 December 31, 1994.
                      ++Highest short-term rating by Moody's Investors Service, Inc.
                       *Not Rated.

                     See Notes to Financial Statements.
</TABLE>
<PAGE>

<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>

                                                                                                                          Limited
                                                                                      Insured           National         Maturity
                   As of December 31, 1994                                           Portfolio         Portfolio        Portfolio
<S>                <C>                                                            <C>               <C>               <C>
Assets:            Investments, at value* (Note 1a)                               $2,444,912,563    $1,461,845,703    $809,887,905
                   Cash                                                                  433,069            47,412         577,762
                   Receivables:
                      Interest                                                        45,744,439        27,239,002      11,854,124
                      Capital shares sold                                              2,850,227         1,815,512         724,600
                   Prepaid registration fees and other assets (Note 1e)                   76,710            55,688          39,846
                                                                                  --------------    --------------    ------------
                   Total assets                                                    2,494,017,008     1,491,003,317     823,084,237


Liabilities:       Payables:
                      Dividends to shareholders (Note 1f)                             31,934,743        20,995,599       1,443,584
                      Capital shares redeemed                                         11,531,082         8,761,927      12,140,630
                      Securities purchased                                             5,000,000         5,015,659       4,554,193
                      Investment adviser (Note 2)                                        796,889           632,683         250,105
                      Distributor (Note 2)                                               514,834           274,868          51,266
                   Accrued expenses and other liabilities                                522,785           326,255         117,025
                                                                                  --------------    --------------    ------------
                   Total liabilities                                                  50,300,333        36,006,991      18,556,803


Net Assets:        Net assets                                                     $2,443,716,675    $1,454,996,326    $804,527,434
                                                                                  ==============    ==============    ============


Net Assets         Class A Common Stock, $0.10 par value++                           $22,560,102    $   11,091,123    $  6,536,683
Consist of:        Class B Common Stock, $0.10 par value++++                          10,134,641         4,277,522       1,605,184
                   Class C Common Stock, $0.10 par value+++                               19,212            15,516          13,708
                   Class D Common Stock, $0.10 par value+++++                            180,984           103,727          80,113
                   Paid-in capital in excess of par                                2,506,538,624     1,555,735,110     811,843,411
                   Accumulated realized capital losses--net (Note 5)                 (52,929,833)      (64,439,787)     (6,468,522)
                   Unrealized depreciation on investments--net                       (42,787,055)      (51,786,885)     (9,083,143)
                                                                                  --------------    --------------    ------------
                   Net assets                                                     $2,443,716,675    $1,454,996,326    $804,527,434
                                                                                  ==============    ==============    ============

<PAGE>
Net Asset          Class A:
Value:                Net assets                                                  $1,676,326,319    $1,042,031,353    $638,537,386
                                                                                  ==============    ==============    ============
                      Shares outstanding                                             225,601,022       110,911,231      65,366,838
                                                                                  ==============    ==============    ============
                      Net asset value and redemption price per share              $         7.43    $         9.40    $       9.77
                                                                                  ==============    ==============    ============
                   Class B:
                      Net assets                                                  $  752,513,580    $  401,760,721    $156,825,209
                                                                                  ==============    ==============    ============
                      Shares outstanding                                             101,346,414        42,775,225      16,051,844
                                                                                  ==============    ==============    ============
                      Net asset value and redemption price per share              $         7.43    $         9.39    $       9.77
                                                                                  ==============    ==============    ============
                   Class C:
                      Net assets                                                  $    1,427,438    $    1,457,962    $  1,338,824
                                                                                  ==============    ==============    ============
                      Shares outstanding                                                 192,123           155,164         137,078
                                                                                  ==============    ==============    ============
                      Net asset value and redemption price per share              $         7.43    $         9.40    $       9.77
                                                                                  ==============    ==============    ============
                   Class D:
                      Net assets                                                  $   13,449,338    $    9,746,290    $  7,826,015
                                                                                  ==============    ==============    ============
                      Shares outstanding                                               1,809,838         1,037,270         801,133
                                                                                  ==============    ==============    ============
                      Net asset value and redemption price per share              $         7.43    $         9.40    $       9.77
                                                                                  ==============    ==============    ============


              <FN>
                  *Identified cost                                                $2,487,699,618    $1,513,632,588    $818,971,048
                 ++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
                +++Authorized shares--Class C                                        375,000,000       375,000,000     150,000,000
              +++++Authorized shares--Class D                                        500,000,000       375,000,000     150,000,000


                   See Notes to Financial Statements.
</TABLE>


<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
<PAGE>                                                                                                                   Limited
                                                                                      Insured           National         Maturity
                   For the Six Months Ended December 31, 1994                        Portfolio         Portfolio        Portfolio
<S>                <S>                                                            <C>               <C>               <C>
Investment         Interest and amortization of premium and discount earned       $   84,372,133    $   52,903,524    $ 19,331,164
Income                                                                            --------------    --------------    ------------
(Note 1d):


Expenses:          Investment advisory fees (Note 2)                                   4,856,153         3,838,274       1,506,902
                   Distribution fees--Class B (Note 2)                                 3,126,059         1,661,882         273,887
                   Transfer agent fees--Class A (Note 2)                                 329,441           258,927         101,134
                   Transfer agent fees--Class B (Note 2)                                 181,085           118,525          29,486
                   Custodian fees                                                        108,865            77,672          39,840
                   Accounting services (Note 2)                                           86,147            73,090          49,762
                   Printing and shareholder reports                                       89,800            53,516          27,325
                   Registration fees (Note 1e)                                            37,158            41,925          42,892
                   Professional fees                                                      34,660            30,263          12,397
                   Pricing services                                                       21,223            16,242          14,832
                   Portfolio insurance                                                    16,196             8,468           2,344
                   Directors' fees and expenses                                           11,562             9,857           3,596
                   Account maintenance fees--Class D (Note 2)                              1,412             2,668             729
                   Distribution fees--Class C (Note 2)                                     1,022             1,144             195
                   Other                                                                   4,682             5,630              --
                   								  --------------    --------------    ------------
		   Total expenses                                                      8,905,465         6,198,083       2,105,321
                                                                                  --------------    --------------    ------------
                   Investment income--net                                             75,466,668        46,705,441      17,225,843
                                                                                  --------------    --------------    ------------





Realized &         Realized loss on investments                                      (52,929,371)      (60,693,788)     (1,274,753)
Unrealized Gain    Change in unrealized appreciation/depreciation on                 
(Loss) on          investments--net                                                  (55,102,989)      (15,325,599)     (7,695,549)
Investments--Net    			 					  --------------    --------------    ------------
(Notes 1b,         Net Increase (Decrease) in Net Assets                
1d & 3):           Resulting from Operations    		                  $  (32,565,692)   $  (29,313,946)   $  8,255,541
										  ==============    ==============    ============


                   See Notes to Financial Statements.
</TABLE>

<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
                                             Insured Portfolio              National Portfolio          Limited Maturity Portfolio
                                         For the  Six       For the       For the Six      For the      For the Six     For the
              Increase (Decrease)        Months Ended     Year Ended     Months Ended     Year Ended    Months Ended   Year Ended
              in Net Assets:            Dec. 31, 1994   June 30, 1994    Dec. 31, 1994  June 30, 1994  Dec. 31, 1994 June 30, 1994
<S>           <C>                       <C>             <C>             <C>             <C>             <C>           <C>   
Operations:   Investment income--net    $   75,466,668  $  163,942,349  $  46,705,441   $   98,848,832  $ 17,225,843  $ 36,430,985
              Realized gain (loss) on
                investments--net           (52,929,371)     80,935,129    (60,693,788)      62,008,845    (1,274,753)     (968,336)
              Change in unrealized
                appreciation/deprecia-
                tion on investments--net   (55,102,989)   (275,252,365)   (15,325,599)    (172,722,080)   (7,695,549)  (13,063,534)
                                        --------------  --------------  -------------   --------------  ------------  ------------
              Net increase (decrease)
                in net assets resulting
                from operations            (32,565,692)    (30,374,887)   (29,313,946)     (11,864,403)    8,255,541    22,399,115
                                        --------------  --------------  -------------   --------------  ------------  ------------


Dividends &   Investment income--net:
Distribu-       Class A                    (54,388,789)   (119,441,701)   (35,013,271)     (75,680,507)  (14,464,308)  (31,987,779)
tions to        Class B                    (21,037,707)    (44,500,648)   (11,618,503)     (23,168,325)   (2,728,823)   (4,443,206)
Shareholders    Class C                         (6,803)             --         (8,025)              --        (4,885)           --
(Note 1f):      Class D                        (33,369)             --        (65,642)              --       (27,827)           --
              Realized gain on 
              investments--net:
                Class A                    (31,614,511)    (57,171,047)    (23,097,818)    (36,128,677)           --            --
                Class B                    (14,155,831)    (24,972,443)     (8,776,286)    (12,798,152)           --            --
                Class C                        (23,608)             --         (30,111)             --            --            --
                Class D                       (104,611)             --        (194,503)             --            --            --
                                        --------------  --------------  -------------   --------------  ------------  ------------
              Net decrease in net 
              assets resulting from 
              dividends and distri-
              butions to shareholders     (121,365,229)   (246,085,839)    (78,804,159)   (147,775,661)  (17,225,843)  (36,430,985)
                                        --------------  --------------   -------------  --------------  ------------  ------------


Capital Share Net increase (decrease)  
Transactions  in net assets derived 
(Note 4):     from capital share 
              transactions                (210,286,665)    (52,099,956)    (99,235,469)     44,114,517  (122,179,033)    7,793,356
                                        --------------  --------------   -------------  --------------  ------------  ------------


Net Assets:   Total decrease in net
              assets                      (364,217,586)   (328,560,682)   (207,353,574)   (115,525,547) (131,149,335)   (6,238,514)
              Beginning of period        2,807,934,261   3,136,494,943   1,662,349,900   1,777,875,447   935,676,769   941,915,283
                                        --------------  --------------   -------------  --------------  ------------  ------------
              End of period             $2,443,716,675  $2,807,934,261  $1,454,996,326  $1,662,349,900  $804,527,434  $935,676,769
                                        ==============  ==============  ==============  ==============  ============  ============



              See Notes to Financial Statements.
</TABLE>
<PAGE>

<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>


                                                                                            Insured Portfolio
                                                                                                 Class A
                   The following per share data and ratios          For the Six
                   have been derived from information provided        Months
                   in the financial statements.                       Ended
                                                                     Dec. 31,            For the Year Ended June 30,
                   Increase (Decrease) in Net Asset Value:             1994        1994         1993         1992         1991
<S>                <S>                                             <C>          <C>          <C>          <C>          <C> 
Per Share          Net asset value, beginning of period            $      7.88  $      8.64  $      8.26  $      7.92  $      7.86
Operating                                                          -----------  -----------  -----------  -----------  -----------
Performance:       Investment income--net                                  .24          .47          .50          .52          .54
                   Realized and unrealized gain (loss) on 
                   investments--net                                       (.31)        (.53)         .49          .41          .12
                                                                   -----------  -----------  -----------  -----------  -----------
                   Total from investment operations                       (.07)        (.06)         .99          .93          .66
                                                                   -----------  -----------  -----------  -----------  -----------
                   Less dividends and distributions:
                     Investment income--net                               (.24)        (.47)        (.50)        (.52)        (.54)
                     Realized gain on investments--net                    (.14)        (.23)        (.11)        (.07)        (.06)
                                                                   -----------  -----------  -----------  -----------  -----------
                   Total dividends and distributions                      (.38)        (.70)        (.61)        (.59)        (.60)
                                                                   -----------  -----------  -----------  -----------  -----------
                   Net asset value, end of period                  $      7.43  $      7.88  $      8.64  $      8.26  $      7.92
                                                                   ===========  ===========  ===========  ===========  ===========

Total Investment   Based on net asset value per share                   (1.00%)+++   (1.08%)      12.43%       12.11%        8.84%
Return:**                                                          ===========  ===========  ===========  ===========  ===========


Ratios to Average  Expenses                                                42%*        .42%         .42%         .44%         .45%
Net Assets:                                                        ===========  ===========  ===========  ===========  ===========
                   Investment income--net                                5.80%*       5.53%        5.94%        6.44%        6.90%
                                                                   ===========  ===========  ===========  ===========  ===========


Supplemental       Net assets, end of period (in thousands)        $ 1,676,326  $ 1,941,741  $ 2,225,188  $ 2,062,591  $ 1,984,307
Data:                                                              ===========  ===========  ===========  ===========  ===========
                   Portfolio turnover                                   14.83%       28.34%       43.86%       22.50%       33.12%
                                                                   ===========  ===========  ===========  ===========  ===========


<PAGE>
<CAPTION>
                                                                                            Insured Portfolio
                                                                                                 Class B
                   The following per share data and ratios          For the Six
                   have been derived from information provided        Months
                   in the financial statements.                       Ended
                                                                     Dec. 31,            For the Year Ended June 30,
                   Increase (Decrease) in Net Asset Value:             1994        1994         1993         1992         1991
<S>                <S>                                              <C>          <C>          <C>          <C>          <C> 

Per Share          Net asset value, beginning of period            $      7.87  $      8.63  $      8.26  $      7.92  $      7.86
Operating                                                          -----------  -----------  -----------  -----------  -----------
Performance:       Investment income--net                                  .21          .40          .44          .46          .48
                   Realized and unrealized gain (loss) on
                   investments--net                                       (.30)        (.53)         .48          .41          .12
                                                                   -----------  -----------  -----------  -----------  -----------
                   Total from investment operations                       (.09)        (.13)         .92          .87          .60
                                                                   -----------  -----------  -----------  -----------  -----------
                   Less dividends and distributions:
                     Investment income--net                               (.21)        (.40)        (.44)        (.46)        (.48)
                     Realized gain on investments--net                    (.14)        (.23)        (.11)        (.07)        (.06)
                                                                   -----------  -----------  -----------  -----------  -----------
                   Total dividends and distributions                      (.35)        (.63)        (.55)        (.53)        (.54)
                                                                   -----------  -----------  -----------  -----------  -----------
                   Net asset value, end of period                  $      7.43  $      7.87  $      8.63  $      8.26  $      7.92
                                                                   -----------  -----------  -----------  -----------  -----------


Total Investment   Based on net asset value per share                   (1.28%)+++   (1.81%)      11.45%       11.27%        8.02%
Return:**                                                          ===========  ===========  ===========  ===========  ===========


Ratios to Average  Expenses, excluding distribution and
Net Assets:        account maintenance fees                               .43%*        .42%         .43%         .44%         .45%
                                                                   ===========  ===========  ===========  ===========  ===========
                   Expenses                                              1.18%*       1.17%        1.18%        1.19%        1.20%
                                                                   ===========  ===========  ===========  ===========  ===========
                   Investment income--net                                5.05%*       4.78%        5.17%        5.69%        6.13%
                                                                   ===========  ===========  ===========  ===========  ===========


Supplemental       Net assets, end of period
Data:              (in thousands)                                  $   752,514  $   866,193  $   911,307  $   706,016  $   537,755
                                                                   ===========  ===========  ===========  ===========  ===========
                   Portfolio turnover                                   14.83%       28.34%       43.86%       22.50%       33.12%
                                                                   ===========  ===========  ===========  ===========  ===========

                <FN>
                  *Annualized.
                 **Total investment returns exclude the effects of sales loads.
                +++Aggregate total investment return.


                   See Notes to Financial Statements.
</TABLE>
<PAGE>

<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
                                                                                                           Insured Portfolio
                   The following per share data and ratios have been derived                                 For the Period
                   from information provided in the financial statements.                                October 21, 1994++ to
                                                                                                           December 31, 1994
                   Increase (Decrease) in Net Asset Value:                                                Class C     Class D
                   <S>                                                                                 <C>          <C>     
Per Share          Net asset value, beginning of period                                                $      7.68  $      7.68
Operating                                                                                              -----------  -----------
Performance:       Investment income--net                                                                      .08          .08
                   Realized and unrealized gain (loss) on investments--net                                    (.11)        (.11)
                                                                                                       -----------  -----------
                   Total from investment operations                                                           (.03)        (.03)
                                                                                                       -----------  -----------
                   Less dividends and distributions:
                     Investment income--net                                                                   (.08)        (.08)
                     Realized gain on investments--net                                                        (.14)        (.14)
                                                                                                       -----------  -----------
                   Total dividends and distributions                                                          (.22)        (.22)
                                                                                                       -----------  -----------
                   Net asset value, end of period                                                      $      7.43  $      7.43
                                                                                                       ===========  ===========


Total Investment   Based on net asset value per share                                                        (.41%)+++    (.30%)+++
Return:**                                                                                              ===========  ===========


Ratios to Average  Expenses, excluding distribution and account maintenance fees                              .45%*        .43%*
Net Assets:                                                                                            ===========  ===========
                   Expenses                                                                                  1.25%*        .68%*
                                                                                                       ===========  ===========
                   Investment income--net                                                                    5.32%*       5.91%*
                                                                                                       ===========  ===========


Supplemental       Net assets, end of period (in thousands)                                            $     1,427  $    13,449
Data:                                                                                                  ===========  ===========
                   Portfolio turnover                                                                       14.83%       14.83%
                                                                                                       ===========  ===========


<PAGE>
<CAPTION>
                                                                                            National Portfolio
                                                                                                 Class A
                   The following per share data and ratios          For the Six
                   have been derived from information provided        Months
                   in the financial statements.                       Ended
                                                                     Dec. 31,            For the Year Ended June 30,
                   Increase (Decrease) in Net Asset Value:             1994        1994         1993         1992         1991
<S>                <S>                                             <C>          <C>          <C>          <C>          <C> 
Per Share          Net asset value, beginning of period            $     10.08  $     11.02  $     10.64  $     10.17  $     10.12
Operating                                                          -----------  -----------  -----------  -----------  -----------
Performance:       Investment income--net                                  .30          .62          .67          .71          .73
                   Realized and unrealized gain (loss) on
                   investments--net                                       (.47)        (.64)         .57          .58          .05
                                                                   -----------  -----------  -----------  -----------  -----------
                   Total from investment operations                       (.17)        (.02)        1.24         1.29          .78
                                                                   -----------  -----------  -----------  -----------  -----------
                   Less dividends and distributions:
                     Investment income--net                               (.30)        (.62)        (.67)        (.71)        (.73)
                     Realized gain on investments--net                    (.21)        (.30)        (.19)        (.11)          --
                                                                   -----------  -----------  -----------  -----------  -----------
                   Total dividends and distributions                      (.51)        (.92)        (.86)        (.82)        (.73)
                                                                   -----------  -----------  -----------  -----------  -----------
                   Net asset value, end of period                  $      9.40  $     10.08  $     11.02  $     10.64  $     10.17
                                                                   ===========  ===========  ===========  ===========  ===========


Total Investment   Based on net asset value per share                   (1.74%)+++    (.47%)      12.21%       13.09%        7.94%
Return:**                                                          ===========  ===========  ===========  ===========  ===========


Ratios to Average  Expenses                                               .56%*        .55%         .55%         .55%         .55%
Net Assets:                                                        ===========  ===========  ===========  ===========  ===========
                   Investment income--net                                6.00%*       5.72%        6.23%        6.80%        7.20%
                                                                   ===========  ===========  ===========  ===========  ===========


Supplemental       Net assets, end of period (in thousands)        $ 1,042,031  $ 1,203,181  $ 1,353,805  $ 1,278,055  $ 1,255,820
Data:                                                              ===========  ===========  ===========  ===========  ===========
                   Portfolio turnover                                   34.26%       73.33%       65.43%       50.94%       75.25%
                                                                   ===========  ===========  ===========  ===========  ===========

<PAGE>
<CAPTION>
                                                                                            National Portfolio
                                                                                                 Class B
                   The following per share data and ratios          For the Six
                   have been derived from information provided        Months
                   in the financial statements.                       Ended
                                                                     Dec. 31,            For the Year Ended June 30,
                   Increase (Decrease) in Net Asset Value:             1994        1994         1993         1992         1991
<S>                <S>                                             <C>          <C>          <C>          <C>          <C> 

Per Share          Net asset value, beginning of period            $     10.07  $     11.02  $     10.63  $     10.16  $     10.11
Operating                                                          -----------  -----------  -----------  -----------  -----------
Performance:       Investment income--net                                  .26          .54          .59          .63          .65
                   Realized and unrealized gain (loss)
                   on investments--net                                    (.47)        (.65)         .58          .58          .05
                                                                   -----------  -----------  -----------  -----------  -----------
                   Total from investment operations                       (.21)        (.11)        1.17         1.21          .70
                                                                   -----------  -----------  -----------  -----------  -----------
                   Less dividends and distributions:
                     Investment income--net                               (.26)        (.54)        (.59)        (.63)        (.65)
                     Realized gain on investments--net                    (.21)        (.30)        (.19)        (.11)          --
                                                                   -----------  -----------  -----------  -----------  -----------
                   Total dividends and distributions                      (.47)        (.84)        (.78)        (.74)        (.65)
                                                                   -----------  -----------  -----------  -----------  -----------
                   Net asset value, end of period                  $      9.39  $     10.07  $     11.02  $     10.63  $     10.16
                                                                   ===========  ===========  ===========  ===========  ===========


Total Investment   Based on net asset value per share                    (2.05%)+++  (1.39%)      11.47%       12.25%        7.14%
Return:**                                                          ===========  ===========  ===========  ===========  ===========


Ratios to Average  Expenses, excluding distribution and
Net Assets:        account maintenance fees                               .57%*        .55%         .56%         .56%         .56%
                                                                   ===========  ===========  ===========  ===========  ===========
                   Expenses                                              1.32%*       1.30%        1.31%        1.31%        1.31%
                                                                   ===========  ===========  ===========  ===========  ===========
                   Investment income--net                                5.24%*       4.97%        5.46%        6.03%        6.43%
                                                                   ===========  ===========  ===========  ===========  ===========

Supplemental       Net assets, end of period (in thousands)        $   401,761  $   459,169  $   424,071  $   286,375  $   213,581
Data:                                                              ===========  ===========  ===========  ===========  ===========
                   Portfolio turnover                                   34.26%       73.33%       65.43%       50.94%       75.25%
                                                                   ===========  ===========  ===========  ===========  ===========


                <FN>
                  *Annualized.
                 **Total investment returns exclude the effects of sales loads.
                 ++Commencement of Operations.
                +++Aggregate total investment return.


                   See Notes to Financial Statements.
</TABLE>
<PAGE>

<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>

                                                                                                            National Portfolio
                   The following per share data and ratios have been derived                                  For the Period
                   from information provided in the financial statements.                                 October 21, 1994++ to
                                                                                                            December 31, 1994
                   Increase (Decrease) in Net Asset Value:                                                Class C     Class D

Per Share
Operating
Performance:       Net asset value, beginning of period                                                $     9.85   $     9.85
                   Investment income--net                                                                     .10          .11
                   Realized and unrealized gain (loss) on investments--net                                   (.24)        (.24)
                   Total from investment operations                                                          (.14)        (.13)
                   Less dividends and distributions:
                     Investment income--net                                                                  (.10)        (.11)
                     Realized gain on investments--net                                                       (.21)        (.21)
                   Total dividends and distributions                                                         (.31)        (.32)
                   Net asset value, end of period                                                      $     9.40   $     9.40

Total Investment
Return:**          Based on net asset value per share                                                       (1.39%)++++ (1.29%)++++

Ratios to Average
Net Assets:        Expenses, excluding distribution and account maintenance fees                              .58%*        .57%*
                   Expenses                                                                                  1.38%*        .82%*
                   Investment income--net                                                                    5.61%*       6.15%*

Supplemental
Data:              Net assets, end of period (in thousands)                                            $    1,458   $    9,746
                   Portfolio turnover                                                                       34.26%       34.26%



<CAPTION>
                                                                                       Limited Maturity Portfolio
                                                                                                 Class A
                   The following per share data and ratios          For the Six
                   have been derived from information provided        Months
                   in the financial statements.                       Ended
                                                                     Dec. 31,            For the Year Ended June 30,
                   Increase (Decrease) in Net Asset Value:             1994        1994         1993         1992         1991
<S>                <S>                                             <C>          <C>          <C>          <C>          <C> 
Per Share          Net asset value, beginning of period            $      9.87  $     10.01  $      9.91  $      9.75  $      9.71
Operating                                                          -----------  -----------  -----------  -----------  -----------
Performance:       Investment income--net                                  .19          .37          .41          .50          .57
                   Realized and unrealized gain (loss)
                     on investments--net                                  (.10)        (.14)         .10          .16          .04 
<PAGE>                                                             -----------  -----------  -----------  -----------  -----------
                   Total from investment operations                        .09          .23          .51          .66          .61
                                                                   -----------  -----------  -----------  -----------  -----------
                   Less dividends:
                     Investment income--net                               (.19)        (.37)        (.41)        (.50)        (.57)
                                                                   -----------  -----------  -----------  -----------  -----------
                   Net asset value, end of period                  $      9.77  $      9.87  $     10.01  $      9.91  $      9.75
                                                                   ===========  ===========  ===========  ===========  ===========


Total Investment   Based on net asset value per share                     .95%+++     2.30%        5.28%        6.93%        6.45%
Return:**                                                          ===========  ===========  ===========  ===========  ===========


Ratios to Average  Expenses                                               .40%*        .40%         .41%         .40%         .40%
Net Assets:                                                        ===========  ===========  ===========  ===========  ===========
                   Investment income--net                                3.84%*       3.68%        4.13%        5.02%        5.88%
                                                                   ===========  ===========  ===========  ===========  ===========


Supplemental       Net assets, end of period (in thousands)        $   638,537  $   790,142  $   846,736  $   613,407  $   350,549
Data:                                                              ===========  ===========  ===========  ===========  ===========
                   Portfolio turnover                                   10.00%       45.67%       65.43%       96.32%       93.06%
                                                                   ===========  ===========  ===========  ===========  ===========


<CAPTION>
                                                                                        Limited Maturity Portfolio
                                                                                  Class B
                   The following per share data and ratios         For the Six    For the      For the
                   have been derived from information                Months        Year        Period          For the Period
                   provided in the financial statements.              Ended        Ended    Nov. 2, 1992++    October 21, 1994++
                                                                     Dec. 31,     June 30,    to June 30,    to December 31, 1994
                   Increase (Decrease) in Net Asset Value:             1994         1994         1993        Class C       Class D
<S>                <S>                                             <C>          <C>          <C>          <C>          <C> 
Per Share          Net asset value, beginning of period            $      9.87  $     10.01  $      9.93  $      9.83  $      9.83
Operating                                                          -----------  -----------  -----------  -----------  -----------
Performance:       Investment income--net                                  .17          .33          .24          .07          .07
                   Realized and unrealized gain (loss)
                   on investments--net                                    (.10)        (.14)         .08         (.06)        (.06)
                                                                   -----------  -----------  -----------  -----------  -----------
                   Total from investment operations                        .07          .19          .32          .01          .01
                                                                   -----------  -----------  -----------  -----------  -----------
                   Less dividends:
                     Investment income--net                               (.17)        (.33)        (.24)        (.07)        (.07)
                                                                   -----------  -----------  -----------  -----------  -----------
                   Net asset value, end of period                  $      9.77  $      9.87  $     10.01  $      9.77  $      9.77
                                                                   ===========  ===========  ===========  ===========  ===========

Total Investment   Based on net asset value per share                     .75%+++     1.98%        3.26%+++      .11%+++    .13%+++
Return:**                                                          ===========  ===========  ===========  ===========  ===========


Ratios to Average  Expenses, excluding distribution and
Net Assets:        account maintenance fees                               .41%*        .41%         .41%*        .44%*        .41%*
                                                                   ===========  ===========  ===========  ===========  ===========
                   Expenses                                               .76%*        .76%         .76%*        .59%*        .51%*
                                                                   ===========  ===========  ===========  ===========  ===========
                   Investment income--net                                3.49%*       3.33%        3.60%*       3.76%*       3.82%*
                                                                   ===========  ===========  ===========  ===========  ===========


Supplemental       Net assets, end of period (in thousands)        $   156,825  $   145,534  $    95,179  $     1,339  $     7,826
Data:                                                              ===========  ===========  ===========  ===========  ===========
                   Portfolio turnover                                   10.00%       45.67%       65.43%       10.00%       10.00%
                                                                   ===========  ===========  ===========  ===========  ===========

                <FN>
                  *Annualized.
                 **Total investment returns exclude the effects of sales loads.
                +++Aggregate total investment return.
                 ++Commencement of Operations.

                   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. These unaudited interim finan-
cial statements reflect all adjustments which are, in the opinon of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. The Fund's Portfolios offer four classes of shares
under the Merrill Lynch Select Pricing SM System. Shares of Class A
and Class D are sold with a front-end sales charge. Shares of Class B
and Class C may be subject to a contingent deferred sales charge. All
classes of shares have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except that Class B,
Class C and Class D Shares bear certain expenses related to the
account maintenance of such shares, and Class B and Class C Shares
also bear certain expenses related to the distribution of such shares.
Each class has exclusive voting rights with respect to matters relating
to its account maintenance and 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.

(b) Derivative financial instruments--The Fund may engage in
various portfolio strategies to seek to increase its return by hedging
its portfolio against adverse movements in the debt markets. Losses
may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.

* 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 securities 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 require-
ments of the Internal Revenue Code applicable to regulated invest-
ment companies and to distribute substantially all of its taxable
income to its shareholders. Therefore, no Federal income tax
provision is required.
<PAGE>
(d) Security transactions and investment income--Security trans-
actions 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 deter-
mined on the identified cost basis.

(e) Prepaid registration fees--Prepaid registration fees are charged
to expense 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.

2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement
with Fund Asset Management, L.P. ("FAM"). The general partner of
FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned sub-
sidiary of Merrill Lynch Group, 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 operation 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        .40 %         .50 %           .40 %
In excess of $250 million
but not exceeding $400 million    .375          .475            .375
In excess of $400 million
but not exceeding $550 million    .375          .475            .35
In excess of $550 million
but not exceeding $1.5 billion    .375          .475            .325
In excess of $1.5 billion         .35           .475            .325

<PAGE>
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 extra-
ordinary 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.

Pursuant to the distribution plans ("the Distribution Plans") adopted
by the Fund in accordance with Rule 12b-1 under the Investment
Company Act of 1940, the Fund pays the Distributor ongoing account
maintenance and distribution fees. The Distributor voluntarily did
not collect any Class C distribution fees in the Limited Maturity
Portfolio until January 10, 1995. The fees are accrued daily and
paid monthly at annual rates based upon the average daily net
assets of the shares as follows:


                 Account Maintenance Fees            Distribution Fees
             Insured     National    Limited    Insured    National   Limited
            Portfolio   Portfolio   Portfolio  Portfolio  Portfolio  Portfolio


Class B       .25%        .25%        .15%       .50%       .50%       .20%
Class C       .25%        .25%        .15%       .55%       .55%       .20%
Class D       .25%        .25%        .10%        --         --         --


Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services
to Class B, Class C and Class D shareholders. The ongoing distribu-
tion fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.

For the six months ended December 31, 1994, MLFD earned under-
writing discounts and MLPF&S earned dealer concessions on sales
of the Fund's Class A and Class D Shares as follows:

<PAGE>
                           Insured    National     Limited Maturity
                          Portfolio   Portfolio        Portfolio

Class A Shares:
MLFD                       $ 16,247   $ 13,417         $ 7,816
MLPF&S                      161,996    130,295          55,464

Class D Shares:
MLFD                          3,095      2,490             185
MLPF&S                       26,295     18,678           3,059


MLPF&S received contingent deferred sales charges of $1,905,750
relating to transactions in Class B Shares, amounting to $1,134,503
$544,622 and $226,625 in the Insured, National and Limited
Maturity Portfolios, respectively, and $2,061 relating to transactions
in Class C Shares, amounting to $29 and $2,032 in the Insured 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, MLFD, FDS, PSI, MLPF&S, and/or ML & Co.

3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended December 31, 1994, were as follows:


                                          Purchases              Sales

Insured Portfolio                       $359,152,104         $546,666,207
National Portfolio                       493,515,857          506,375,476
Limited Maturity Portfolio                75,732,547          260,120,677


Net realized and unrealized losses as of December 31, 1994 were
as follows:

                                           Realized            Unrealized
Insured Portfolio                           Losses               Losses

Long-term investments                   $(52,929,371)        $(42,109,448)
Short-term investments                            --             (677,607)
                                        ------------         ------------
Total                                   $(52,929,371)        $(42,787,055)
                                        ============         ============

<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)


                                           Realized            Unrealized
National Portfolio                          Losses               Losses

Long-term investments                   $(52,714,560)        $(51,732,490)
Short-term investments                      (481,478)             (54,395)
Financial future contracts                (7,497,750)                  --
                                        ------------         ------------
Total                                   $(60,693,788)        $(51,786,885)
                                        ============         ============


                                           Realized            Unrealized
Limited Maturity Portfolio                  Losses               Losses

Long-term investments                   $ (1,166,165)        $ (8,597,523)
Short-term investments                      (108,588)            (485,620)
                                        ------------         ------------
Total                                   $ (1,274,753)        $ (9,083,143)
                                        ============         ============


As of December 31, 1994, net unrealized appreciation/depreciation
for Federal income tax purposes were as follows:


                                 Gross               Gross              Net
                               Unrealized          Unrealized       Unrealized
                              Appreciation        Depreciation     Depreciation

Insured Portfolio              $52,924,554      $(95,711,609)    $ (42,787,055)
National Portfolio              19,897,972       (71,684,857)      (51,786,885)
Limited Maturity Portfolio         538,975        (9,622,118)       (9,083,143)


The aggregate cost of investments at December 31, 1994 for Federal
income tax purposes was $2,487,699,618 for the Insured Portfolio,
$1,513,632,588 for the National Portfolio, and $818,971,048 for the
Limited Maturity Portfolio.

4. Capital Share Transactions:
Net increase (decrease) on net assets derived from capital share
transactions for the six months December 31, 1994 and the year
ended June 30, 1994 was $(210,286,665) and $(52,099,956),
respectively, for the Insured Portfolio; $(99,235,469) and $44,114,517,
respectively, for the National Portfolio and $(122,179,033) and
$7,793,356, respectively, for the Limited Maturity Portfolio.
<PAGE>
Transactions in capital shares for each class were as follows:


Insured Portfolio

Class A Shares for the Six Months                               Dollar
Ended December 31, 1994                      Shares             Amount

Shares sold                               12,102,677        $  93,473,833
Shares issued to shareholders in
reinvestment of dividends and
distributions                              2,591,184           20,001,276
                                        ------------        -------------
Total issued                              14,693,861          113,475,109
Shares redeemed                          (35,527,603)        (272,240,723)
                                        ------------        -------------
Net decrease                             (20,833,742)       $(158,765,614)
                                        ============        =============


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 B Shares for the Six Months                               Dollar
Ended December 31, 1994                      Shares             Amount

Shares sold                                8,741,451        $  66,638,227
Shares issued to shareholders in
reinvestment of dividends and
distributions                              1,168,556            9,008,862
                                        ------------        -------------
Total issued                               9,910,007           75,647,089
Shares redeemed                          (18,574,743)        (142,049,092)
                                        ------------        -------------
Net decrease                              (8,664,736)       $ (66,402,003)
                                        ============        =============

<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 C Shares for the Period                                   Dollar
October 21, 1994++ to December 31, 1994      Shares             Amount

Shares sold                                  202,260        $   1,508,277
Shares issued to shareholders in
reinvestment of dividends and
distributions                                    146                1,054
                                        ------------        -------------
Total issued                                 202,406            1,509,331
Shares redeemed                              (10,283)             (76,602)
                                        ------------        -------------
Net increase                                 192,123        $   1,432,729
                                        ============        =============

[FN]
++Commencement of Operations.

Insured Portfolio

Class D Shares for the Period                                   Dollar
October 21, 1994++ to December 31, 1994      Shares             Amount

Shares sold                                2,055,423        $  15,282,618
Shares issued to shareholders in
reinvestment of dividends and
distributions                                    160                1,157
                                        ------------        -------------
Total issued                               2,055,583           15,283,775
Shares redeemed                             (245,745)          (1,835,552)
                                        ------------        -------------
Net increase                               1,809,838        $  13,448,223
                                        ============        =============
<PAGE>
[FN]
++Commencement of Operations.

National Portfolio

Class A Shares for the Six Months                               Dollar
Ended December 31, 1994                      Shares             Amount

Shares sold                                2,529,048        $  25,012,714
Shares issued to shareholders in
reinvestment of dividends and
distributions                              3,095,773           29,798,313
                                        ------------        -------------
Total issued                               5,624,821           54,811,027
Shares redeemed                          (14,124,427)        (137,698,253)
                                        ------------        -------------
Net decrease                              (8,499,606)       $ (82,887,226)
                                        ============        =============

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)
                                        ============        =============


National Portfolio

Class B Shares for the Six Months                               Dollar
Ended December 31, 1994                      Shares             Amount

Shares sold                                4,509,969        $  43,999,400
Shares issued to shareholders in
reinvestment of dividends and
distributions                              1,107,106           10,631,219
                                        ------------        -------------
Total issued                               5,617,075           54,630,619
Shares redeemed                           (8,425,261)         (82,333,730)
                                        ------------        -------------
Net decrease                              (2,808,186)       $ (27,703,111)
                                        ============        =============

<PAGE>
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 C Shares for the Period                                   Dollar
October 21, 1994++ to December 31, 1994      Shares             Amount

Shares sold                                  175,071        $   1,660,808
Shares issued to shareholders in
reinvestment of dividends and
distributions                                  2,023               19,010
                                        ------------        -------------
Total issued                                 177,094            1,679,818
Shares redeemed                              (21,930)            (208,212)
                                        ------------        -------------
Net increase                                 155,164        $   1,471,606
                                        ============        =============

[FN]
++Commencement of Operations.


NOTES TO FINANCIAL STATEMENTS (concluded)

National Portfolio

Class D Shares for the Period                                   Dollar
October 21, 1994++ to December 31, 1994      Shares             Amount

Shares sold                                1,612,258        $  15,334,320
Shares issued to shareholders in
reinvestment of dividends and
distributions                                 14,577              132,307
                                        ------------        -------------
Total issued                               1,626,835           15,466,627
Shares redeemed                             (589,565)          (5,583,365)
                                        ------------        -------------
Net increase                               1,037,270        $   9,883,262
                                        ============        =============
<PAGE>
[FN]
++Commencement of Operations.


Limited Maturity Portfolio

Class A Shares for the Six Months                               Dollar
Ended December 31, 1994                      Shares             Amount

Shares sold                                4,068,657        $  40,048,103
Shares issued to shareholders in
reinvestment of dividends                    948,926            9,325,191
                                        ------------        -------------
Total issued                               5,017,583           49,373,294
Shares redeemed                          (19,715,595)        (193,595,791)
                                        ------------        -------------
Net decrease                             (14,698,012)       $(144,222,497)
                                        ============        =============


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 and 
distributions                              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 B Shares for the Six Months                               Dollar
Ended December 31, 1994                      Shares             Amount

Shares sold                                6,171,696        $  60,642,960
Shares issued to shareholders in
reinvestment of dividends                    203,733            2,001,205
                                        ------------        -------------
Total issued                               6,375,429           62,644,165
Shares redeemed                           (5,068,501)         (49,783,332)
                                        ------------        -------------
Net increase                               1,306,928        $  12,860,833
                                        ============        =============

<PAGE>
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 and 
distributions                                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        $   2,312,024
                                        ============        =============


Limited Portfolio

Class C Shares for the Period
October 21, 1994++ to                                             Dollar
December 31, 1994                            Shares               Amount

Shares sold                                  158,212        $   1,548,098
Shares issued to shareholders in
reinvestment of dividends                        400                3,908
                                        ------------        -------------
Total issued                                 158,612            1,552,006
Shares redeemed                              (21,534)            (210,399)
                                        ------------        -------------
Net increase                                 137,078        $   1,341,607
                                        ============        =============

[FN]
++Commencement of Operations.


Limited Portfolio

Class D Shares for the Period
October 21, 1994++ to                                          Dollar
December 31, 1994                            Shares            Amount

Shares sold                                1,182,373        $  11,569,137
Shares issued to shareholders in
reinvestment of dividends                      1,658               16,205
                                        ------------        -------------
Total issued                               1,184,031           11,585,342
Shares redeemed                             (382,898)          (3,744,318)
                                        ------------        -------------
Net increase                                 801,133        $   7,841,024

<PAGE>
[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.



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