MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
FUND LOGO
Quarterly Report
September 30, 1995
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
representaion 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
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
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
DEAR SHAREHOLDER
After losing momentum through the second calendar quarter of 1995,
it now appears that the US economy has resumed a moderate growth
trend. Gross domestic product (GDP) growth for the three months
ended June 30 was revised to show that the economy expanded at a
1.1% pace, rather than the 0.5% rate that was originally reported.
The employment report for August exceeded consensus expectations,
although most of the new jobs created were in the service sector,
reflecting the ongoing sluggishness in manufacturing. However,
durable goods orders rebounded somewhat in August, supported by
stronger automobile sales. Reflecting the trend of renewed economic
growth--and continued containment of inflationary pressures--the
Federal Reserve Board signaled no shift in monetary policy following
its September meeting.
One of the major developments during the September quarter was the
strengthening of the US dollar relative to the yen and the
Deutschemark. Improving interest rate differentials favoring the US
currency, combined with coordinated central bank intervention and
more positive investor sentiment, have helped to bolster the dollar
in foreign exchange markets. Other factors that appear to be
improving the US dollar's outlook in the near term are a pick-up in
capital flows to the United States and the prospect of increased
capital outflows from Japan. However, it remains to be seen in the
US dollar's strengthening trend can continue without significant
improvements in the US budget and trade deficits.
In the weeks ahead, investor interest will continue to focus on US
economic activity. Clear signs of a moderate, noninflationary
expansion would further benefit the US stock and bond markets. In
addition, should the current Federal budget deficit reduction
efforts now underway in Washington prove successful, the
implications would likely be positive for the US financial markets.
The Municipal Market
Tax-exempt bond yields remained essentially unchanged during the
three months ended September 30, 1995. As measured by the Bond Buyer
Revenue Bond Index, long-term uninsured municipal revenue bond
yields ended the September quarter at 6.27%. Long-term tax-exempt
bonds have traded at this general level for much of the last six
months. However, municipal bond yields have exhibited considerable
volatility on a week-to-week basis. Throughout the September
quarter, municipal bond yields fluctuated by as much as 20 basis
points (0.20%) on a weekly basis. US Treasury bond yields displayed
similar volatility, but continued to decline during the quarter. By
the end of the September quarter, long-term US Treasury bond yields
had fallen approximately 10 basis points to 6.50%. Proposed Federal
tax restructuring continued to weigh heavily on the tax-exempt bond
market. Thus far in 1995, US Treasury bond yields declined over 135
basis points. Tax-exempt bond yields fell approximately 70 basis
points as the uncertainty surrounding changes to the existing
Federal income tax structure prevented the municipal bond market
from rallying as strongly as its taxable counterpart.
A general view of a moderately expanding domestic economy, supported
by a very favorable inflationary environment, allowed interest rates
to significantly decline from their recent highs in November 1994.
However, this decline was not a smooth downward curve. Conflicting
economic indicators were released during recent months that have
prevented a clear consensus regarding the near-term direction of
interest rates from being reached. The resultant uncertainty
promoted a saw-toothed pattern as interest rate declines were
repeatedly interrupted by indications of stronger-than-expected
economic growth. As these concerns were overcome by subsequent
weaker economic releases, interest rate declines resumed. These
periods of volatility are likely to continue for the remainder of
1995, or until proposed Federal budget deficit reduction packages
are resolved and any resultant responses by the Federal Reserve
Board have occurred.
However, the municipal bond market's technical position remained
supportive throughout recent quarters. Approximately $35 billion in
long-term municipal securities were issued during the September 30,
1995 quarter. While this issuance is virtually identical to
underwritings during the September 30, 1994 quarter, tax-exempt bond
issuance over the last 12 months remained more than 25% below
comparable 1994 levels. The municipal bond market should maintain
this positive technical position well into 1996. Annual issuance for
1995 is now projected to be approximately $140 billion,
significantly less than last year's already low level of $162
billion. Projected maturities and early redemptions for the
remainder of 1995 and throughout 1996 will lead to a continued
decline in the total outstanding municipal bond supply throughout
1996 and, perhaps into 1998, should new bond issuance remain at
historically low levels. Despite the municipal bond market's
relative underperformance compared to the US Treasury market thus
far in 1995, the extent of the tax-exempt bond market's rally was
nonetheless quite impressive. Municipal bond yields fell 110 basis
points from the highs reached in November 1994, and municipal bond
prices rose accordingly. Most tax-exempt products recouped almost
all of the losses incurred in 1994 and are well on their way to
posting double digit total returns for 1995. This relative
underperformance so far in 1995 provided long-term investors with
the rare opportunity to purchase tax-exempt securities at
essentially taxable yield levels.
Additionally, many of the factors that led to the relative
underperformance of the tax-exempt bond market thus far in 1995,
namely investor concern regarding budget deficit reduction and
proposed changes in the Federal income tax structure, are nearing
resolution. The Federal budget reconciliation process has already
begun and is expected to be essentially completed by year end.
Recent public opinion polls suggest that the majority of American
taxpayers prefer the existing Federal income tax system compared to
proposed changes, such as flat tax or national sales tax. In an
upcoming election year, neither party is likely to advocate a
clearly unpopular position, particularly one that can be expected to
negatively impact the Federal budget deficit reduction program
through reduced tax revenues. As these factors are resolved, much of
the resistance that the municipal bond market met this year should
dissipate. This should allow municipal bond yields to significantly
decline from current levels in order to return to more normal
historic yield relationships.
Portfolio Strategy
Insured Portfolio and National
Portfolio
At the beginning of the quarter ended September 30, 1995, it became
apparent that a mixed economic picture, combined with a fairly
valued market for municipal debt securities relative to their
taxable counterparts, could result in a somewhat positive tone for
municipal bond prices. The price action that ensued during the
period proved to be slightly positive. We positioned both Portfolios
in a relatively aggressive stance, since cash reserves were invested
in blocks of performance-oriented discount securities which would be
most active in an upward moving market. Our investment approach
created significant price appreciation for the September quarter.
Since credit quality spreads were historically narrow, this could be
accomplished using higher-rated revenue bonds without any
significant forfeiture in current yield.
Looking ahead, we will continue to work closely with our municipal
research staff to uncover special credit situations to bolster
current return to shareholders within the quality constraints
detailed in the Fund's prospectus. We will monitor the Federal
Reserve Board's actions for indicators regarding the direction of
economic conditions and the future direction of interest rates.
Significant pullbacks in municipal yields will be used as
opportunities to enter the market with a more aggressive investment
stance.
Limited Maturity Portfolio
We continued to aggressively position the Limited Maturity Portfolio
during the three-month period ended September 30, 1995. The Federal
Reserve Board's lowering of key interest rates in early July
signaled a change in monetary policy from a restrictive to a more
neutral stance. We maintained lower cash reserves of about 4% while
holding the average portfolio maturity at approximately 20 months,
which is relatively unchanged from the end of the previous quarter.
This investment approach enabled us to take advantage of any fall in
interest rates through the price appreciation of municipal bonds.
Purchases for the Fund were focused in the three-year--four-year
maturity spectrum since this offered the greatest value relative to
securities along the zero to four-year portion of the yield curve.
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 the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Kenneth A. Jacob)
Kenneth A. Jacob
Vice President and Portfolio Manager
(Peter J. Hayes)
Peter J. Hayes
Portfolio Manager
October 20, 1995
We are pleased to announce that Kenneth A. Jacob is responsible for
the day-to-day management of the Insured and National Portfolios. He
has served as Vice President and Portfolio Manager of Merrill Lynch
Asset Management since 1984.
We are also pleased to announce that Peter J. Hayes is responsible
for the day-to-day management of the Limited Maturity Portfolio. He
has served as Vice President of Merrill Lynch Asset Management since
1989 and Assistant Vice President from 1987 to 1989. Prior to that
he was Assistant Vice President of Shawmut Bank, N.A. from 1985 to
1987.
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 maintenance
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 maximum
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
Portfolios. 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 redeemed within one year of purchase.
* Class D Shares incur a maximum 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 "Average Annual Total Return" and "Performance
Summary" tables on pages 5--7. "Aggregate Total Return" tables for
Class C and D Shares are presented on page 6. Data for all of the
Fund's shares, including Class C and Class D Shares, are presented
in the "Recent Performance Results" table on pages 8 and 9.
The "Recent Performance Results" table 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 September 30, 1995
and for Class C and Class D Shares for the since inception and 3-
month periods ended September 30, 1995. 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 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. 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 9/30/95 +10.84% +6.40%
Five Years Ended 9/30/95 + 8.70 +7.81
Ten Years Ended 9/30/95 + 9.08 +8.63
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/95 +10.01% +6.01%
Five Years Ended 9/30/95 + 7.86 +7.86
Inception (10/21/88) through 9/30/95 + 7.23 +7.23
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
National Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/95 +10.11% +5.70%
Five Years Ended 9/30/95 + 8.58 +7.70
Ten Years Ended 9/30/95 + 9.19 +8.74
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/95 +9.29% +5.29%
Five Years Ended 9/30/95 +7.75 +7.75
Inception (10/21/88) through 9/30/95 +7.13 +7.13
[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 9/30/95 +4.76% +3.71%
Five Years Ended 9/30/95 +5.03 +4.82
Ten Years Ended 9/30/95 +5.44 +5.33
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/95 +4.38% +3.38%
Inception (11/2/92) through 9/30/95 +3.56 +3.56
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
PERFORMANCE DATA (continued)
Aggregate
Total Return
Insured Portfolio
% Return % Return
Class C Shares* Without CDSC With CDSC**
Inception (10/21/94) through 9/30/95 +11.11% +10.11%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 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 9/30/95 +11.69% +7.22%
[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 9/30/95 +10.14% +9.14%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 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 9/30/95 +10.70% +6.27%
[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 9/30/95 +4.52% +3.52%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 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 9/30/95 +4.69% +3.64%
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
<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>
10/21/77--12/31/77 $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 - 0.77 + 1.17% +0.86%
1980 8.39/6.86 9.60/8.54 9.88/9.74 0.60 0.79 0.64 -11.46 - 3.00 +5.14
1981 6.86/5.66 8.54/7.34 9.74/9.78 0.65 0.90 0.77 - 8.49 - 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 +12.20 +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 + 9.04 + 9.35 +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
1/1/95--9/30/95 7.43/7.99 9.40/10.10 9.77/9.93 0.33 0.43 0.28 +12.23 +12.35 +4.63
------ ------ -----
Total $10.88 $13.40 $9.14
Cumulative total return as of 9/30/95: +238.11%** +323.93%** +154.36%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
reflect deduction of any sales charges; results would be lower if
sales charge was included.
++For National and Limited Maturity Portfolios, period covered is
from 11/02/79 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>
<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 + 8.35 + 8.53 +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
1/1/95--9/30/95 7.43/7.98 9.39/10.09 9.77/9.93 0.28 0.38 0.25 +11.47 +11.74 +4.35
----- ----- -----
Total $3.72 $4.99 $1.00
Cumulative total return as of 9/30/95: +62.41%** +61.33%** +10.72%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
***Commenced operations on 11/02/92.
(1)Includes capital gains of $0.064 for the Insured Portfolio.
(2)Includes capital gains of $0.058 and $0.060 for the Insured and
National Portfolios, respectively.
(3)Includes capital gains of $0.084 and $0.130 for the Insured and
National Portfolios, respectively.
(4)Includes capital gains of $0.181 and $0.157 for the Insured and
National Portfolios, respectively.
(5)Includes capital gains of $0.141 and $0.209 for the Insured and
National Portfolios, respectively.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month Standardized
9/30/95 6/30/95 9/30/94++ % Change++ % Change 30-Day Yield
<C> <C> <C> <C> <C> <C> <C>
Insured Portfolio Class A Shares $ 7.99 $ 7.92 $7.78 + 4.65%(1) +0.88% 4.85%
Insured Portfolio Class B Shares 7.98 7.92 7.77 + 4.65(1) +0.76 4.29%
Insured Portfolio Class C Shares 7.99 7.92 7.68 + 6.01(1) +0.88 4.23%
Insured Portfolio Class D Shares 7.99 7.92 7.68 + 6.01(1) +0.88 4.62%
National Portfolio Class A Shares 10.10 10.02 9.96 + 3.66(2) +0.80 5.42%
National Portfolio Class B Shares 10.09 10.02 9.95 + 3.66(2) +0.70 4.89%
National Portfolio Class C Shares 10.10 10.03 9.85 + 4.81(2) +0.70 4.84%
National Portfolio Class D Shares 10.10 10.03 9.85 + 4.81(2) +0.70 5.18%
Limited Maturity Portfolio Class A Shares 9.93 9.92 9.85 + 0.81 +0.10 3.64%
Limited Maturity Portfolio Class B Shares 9.93 9.92 9.85 + 0.81 +0.10 3.31%
Limited Maturity Portfolio Class C Shares 9.93 9.92 9.83 + 1.02 +0.10 3.26%
Limited Maturity Portfolio Class D Shares 9.93 9.93 9.83 + 1.02 +0.00 3.54%
Insured Portfolio Class A Shares--Total Return +10.84(3) +2.31(4)
Insured Portfolio Class B Shares--Total Return +10.01(5) +1.98(6)
Insured Portfolio Class C Shares--Total Return +11.11(7) +2.10(8)
Insured Portfolio Class D Shares--Total Return +11.69(9) +2.24(10)
National Portfolio Class A Shares--Total Return +10.11(11) +2.31(12)
National Portfolio Class B Shares--Total Return + 9.29(13) +2.02(14)
National Portfolio Class C Shares--Total Return +10.14(15) +2.01(16)
National Portfolio Class D Shares--Total Return +10.70(17) +2.15(18)
Limited Maturity Portfolio Class A Shares--Total Return + 4.76(19) +1.05(20)
Limited Maturity Portfolio Class B Shares--Total Return + 4.38(21) +0.96(22)
Limited Maturity Portfolio Class C Shares--Total Return + 4.52(23) +0.97(24)
Limited Maturity Portfolio Class D Shares--Total Return + 4.69(25) +0.92(26)
<FN>
*Investment results shown do not reflect 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 $0.449 per share ordinary
income dividends and $0.141 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.111 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.389 per share ordinary
income dividends and $0.141 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.096 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.357 per share ordinary
income dividends and $0.141 per share capital gains distributions.
(8)Percent change includes reinvestment of $0.095 per share ordinary
income dividends.
(9)Percent change includes reinvestment of $0.398 per share ordinary
income dividends and $0.141 per share capital gains distributions.
(10)Percent change includes reinvestment of $0.106 per share
ordinary income dividends.
(11)Percent change includes reinvestment of $0.596 per share
ordinary income dividends and $0.209 per share capital gains
distributions.
(12)Percent change includes reinvestment of $0.150 per share
ordinary income dividends.
(13)Percent change includes reinvestment of $0.522 per share
ordinary income dividends and $0.209 per share capital gains
distributions.
(14)Percent change includes reinvestment of $0.131 per share
ordinary income dividends.
(15)Percent change includes reinvestment of $0.479 per share
ordinary income dividends and $0.209 per share capital gains
distributions.
(16)Percent change includes reinvestment of $0.130 per share
ordinary income dividends.
(17)Percent change includes reinvestment of $0.530 per share
ordinary income dividends and $0.209 per share capital gains
distributions.
(18)Percent change includes reinvestment of $0.144 per share
ordinary income dividends.
(19)Percent change includes reinvestment of $0.379 per share
ordinary income dividends.
(20)Percent change includes reinvestment of $0.094 per share
ordinary income dividends.
(21)Percent change includes reinvestment of $0.343 per share
ordinary income dividends.
(22)Percent change includes reinvestment of $0.085 per share
ordinary income dividends.
(23)Percent change includes reinvestment of $0.327 per share
ordinary income dividends.
(24)Percent change includes reinvestment of $0.086 per share
ordinary income dividends.
(25)Percent change includes reinvestment of $0.343 per share
ordinary income dividends.
(26)Percent change includes reinvestment of $0.091 per share
ordinary income dividends.
</TABLE>
PORTFOLIO COMPOSITION
For the Quarter Ended September 30, 1995
Insured
Portfolio
Top Ten States*
Texas 15.68%
Pennsylvania 7.55
Florida 7.05
Georgia 5.21
Michigan 5.09
South Carolina 4.62
New York 3.99
Illinois 3.82
California 3.79
Massachusetts 3.49
-------
Total Top Ten 60.29
Total Others 39.71
-------
Total Portfolio 100.00%
=======
Net assets as of September 30, 1995 were $2,490,202,292.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
AAA/Aaa 91%
Other++ 9%
[FN]
*Based on total market value of the Portfolio as of September 30,
1995.
++Temporary investments in short-term municipal securities.
National
Portfolio
Top Ten States*
New York 13.91%
Texas 11.12
Massachusetts 6.49
California 6.28
Illinois 5.41
Colorado 4.35
Pennsylvania 3.91
Indiana 3.68
Michigan 3.62
Georgia 3.56
-------
Total Top Ten 62.33
Total Others 37.67
-------
Total Portfolio 100.00%
=======
Net assets as of September 30, 1995 were $1,479,029,604.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
AAA/Aaa 29%
AA/Aa 26%
A/A 14%
BBB/Baa 21%
BB/Ba 2%
Other++ 4%
NR+++ 4%
[FN]
*Based on total market value of the Portfolio as of September 30,
1995.
++Temporary investments in short-term municipal securities.
+++Not Rated.
Limited Maturity
Portfolio
Top Ten States*
Illinois 9.27%
Utah 8.60
Ohio 8.29
Texas 6.61
Florida 5.60
Michigan 4.96
Washington 4.78
Wisconsin 3.74
California 3.73
Massachusetts 3.73
-------
Total Top Ten 59.31
Total Others 40.69
-------
Total Portfolio 100.00%
=======
Net assets as of September 30, 1995 were $610,523,779.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
MIG1++/SP-1 4%
AAA/Aaa 25%
AA/Aa 28%
A/A 24%
BBB/Baa 2%
Other++++ 12%
NR+++ 5%
[FN]
*Based on total market value of the Portfolio as of September 30,
1995.
++Highest short-term rating by Moody's Investors Service, Inc.
++++Temporary investments in short-term municipal securities.
+++Not Rated.
