MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
FUND LOGO
Semi-Annual Report
December 31, 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 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. Statements and other information herein
are as dated and are subject to change.
<PAGE>
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
As 1995 drew to a close, the pace of US
economic activity apparently slowed.
There was strong evidence of a slowing
economy by mid-year, a trend that was
quickly reversed as gross domestic
product growth rebounded to a 4.2%
pace during the third calendar quarter
of 1995. However, recent economic
releases suggest that this rate of expan-
sion has not been sustained.
<PAGE>
A number of key measures of economic
growth indicate evidence of slowing
momentum. Retail sales for November
were soft, a trend that continued
throughout the all-important holiday
season, reflecting ongoing caution on
the part of debt-burdened consumers.
At the same time, there has been an
increase in initial unemployment claims,
along with weak job and income growth.
As labor costs continue to decelerate
and commodity price pressures remain
subdued, inflationary pressures con-
tinue to be well under control.
These developments led the Federal
Reserve Board to ease its monetary
policy slightly at the December 19, 1995
Federal Open Market Committee meet-
ing. However, the Clinton Administration
and Congress have yet to reach an
agreement in their current Federal
budget deliberations. While the probable
direction of economic activity will
continue to be the primary focus of
investors in the weeks ahead, a credible
plan for reducing the Federal budget
deficit will also be an important factor
in the investment outlook.
The Municipal Market
The municipal bond market rallied
strongly over the three months ended
December 31, 1995. Long-term, tax-
exempt revenue bond yields, as
measured by the Bond Buyer Revenue
Bond Index, declined over 55 basis
points (0.55%) to end the December
quarter at 5.71%. Continued weak
economic conditions coupled with low
inflation fostered a very positive
environment for almost all fixed-income
products throughout most of the
December quarter. Long-term US
Treasury bond yields also fell approxi-
mately 55 basis points to 5.95%. Both
US Treasury and long-term tax-exempt
bond yields are now at their lowest
levels in the past two years.
<PAGE>
Given the difficulties that the municipal
bond market had to contend with for
much of 1995, its performance over
recent months was especially impres-
sive. Various tax reform proposals made
the future tax advantage of municipal
bonds uncertain. This has, at a minimum,
reduced the overall demand for tax-
exempt securities. At the same time, as
municipal bond yields declined, tax-
exempt authorities rushed to issue debt
at near historic low yield levels. During
the December 31, 1995 quarter, over $50
billion in municipal securities were
underwritten, an increase of almost
40% compared to the December 31, 1994
quarter's levels. However, as early 1995
issuance was significantly reduced, 1995
annual issuance of approximately $160
billion remained about 5% below 1994
issuance. Tax-exempt bond yields de-
clined throughout the December 31,
1995 quarter despite investor uncer-
tainty and increased supply pressures.
It is also important to note that it is
likely that the municipal market will
regain much of the technical support it
enjoyed earlier in 1995. 1995 issuance
remained significantly below levels
underwritten in 1993 when over $290
billion in long-term tax-exempt securi-
ties were issued. Also, municipal in-
vestors were expected to receive over
$25 billion in bond maturities, coupon
income and early redemptions on Janu-
ary 1, 1996. This $25 billion is almost
twice the average monthly issuance
for 1995. The amount of outstanding
municipal securities will continue to
decline throughout 1996 and into early
1997. As the uncertainties surrounding
"proposed" tax reform are resolved in
1996, the tax-exempt bond market's
renewed technical position should
provide a large measure of stability to
municipal bond prices.
<PAGE>
Many of the features that made tax-
exempt products attractive throughout
1995 remain available. Long-term,
A-rated municipal revenue bonds con-
tinue to yield well over 90% of com-
parable US Treasury bond yields.
Historically, analysts have considered
yields in excess of 82% attractive for
long-term investors. Currently available
tax-exempt bond yields continue to
generate taxable equivalent yields in
excess of 8.50%. While the uncertainties
regarding potential changes in current
tax law remain, it appears that the
long-term municipal investor is being
well compensated for the present
instability.
Looking ahead, it may be unreasonable
to expect to duplicate the double-digit
returns produced by most tax-exempt
products in 1995. Current municipal
bond yield levels would make such
duplication difficult. Municipal bond
yields would have to decline to levels
not seen since the 1960s in order to
generate such significant returns in the
coming years. While the current
economic environment may still justify
additional declines in interest rates, it
may be prudent to expect some period
of consolidation before the interest rate
decline resumes. Tax-exempt bond
market performance in 1996 is likely to
be generated more by maximizing cur-
rent income and minimizing credit risk
than by significant interest rate declines.
Fortunately, the current municipal bond
market allows the long-term investor to
purchase high-quality tax-exempt
securities at historically attractive
yield levels.
<PAGE>
Portfolio Strategy
Insured Portfolio and National Portfolio
For the Insured Portfolio, we pursued
an investment strategy aimed at pro-
viding a competitive total return and a
high level of tax-exempt income. During
the December quarter, we were neutral
on the market and shortened the
average portfolio maturity. In addition,
higher coupon, prerefunded bonds were
purchased to replace a percentage of
our more aggressive holdings. Although
the immediate backdrop for bonds
remains relatively positive, the possi-
bility for disappointments for long-term
tax-exempt securities caused us to enter
this more defensive phase early because
of growing illiquidity in the municipal
bond market at these lower interest
rates. We will continue to seek issues to
enhance current return within the
boundaries of our credit quality
standards.
For the National Portfolio, we pursued
an investment strategy aimed at
enhancing the Portfolio's current yield
within a framework of maintaining an
above-industry average credit quality
structure. The strong performance, in
terms of net asset valuation, experi-
enced during the first half of 1995 was
caused by the overall positive technical
backdrop for municipal bonds. We capi-
talized on participating in this rally by
maintaining low cash equivalent reserve
levels in the National Portfolio. In the
last six months, we took steps to "pull in
the reins" and reduce the Portfolio's
volatility to further changes in interest
rates. With the prospect of lessened
investor demand for municipal securi-
ties, we believe that a more defensive
investment strategy is warranted.
Accordingly, the Portfolio's cash equiva-
lent reserve levels were raised to nearly
10% of total assets through the sale of
securities more vulnerable to any
potential reversal or rise in the general
level of interest rates. More cushioned,
defensive-oriented positions with high
current yields replaced a percentage of
the more aggressive holdings to temper
the Fund's sensitivity to negative market
movements.
<PAGE>
Limited Maturity Portfolio
During most of the past 12 months, we
maintained an aggressive investment
posture for the Limited Maturity Port-
folio amid signs that inflation remained
subdued and economic growth appeared
anemic. The Federal Reserve Board
continued to move away from a restric-
tive to a more neutral policy stance
during the quarter ended December 31,
1995, by once again lowering the Federal
Funds rate. We maintained relatively
low cash reserves of approximately 4%
and kept the average portfolio maturity
in the 22-month--24-month range, the
maximum permitted by the Fund's
prospectus. This aggressive investment
approach benefited the Fund by allow-
ing it to participate in the continuing
bond market rally. Our purchases for
the Portfolio continued to be in the
three-year--four-year maturity range
since these offered the greatest value
relative to taxable securities along the
zero--four-year portion of the yield
curve. Credit quality and diversification
remain paramount in selecting Portfolio
investments.
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
<PAGE>
(Kenneth A. Jacob)
Kenneth A. Jacob
Vice President and
Portfolio Manager
(Peter J. Hayes)
Peter J. Hayes
Portfolio Manager
February 2, 1996
PERFORMANCE DATA
About Fund
Performance
Investors are 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.
<PAGE>
*Class D Shares incur a maximum initial sales charge of
4% and an account maintenance fee of 0.25% (but no dis-
tribution 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).
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 mainte-
nance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available
to be paid to shareholders.
PERFORMANCE DATA (continued)
Average Annual
Total Return
Insured Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/95 +17.43% +12.73%
Five Years Ended 12/31/95 + 8.59 + 7.71
Ten Years Ended 12/31/95 + 8.79 + 8.35
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/95 +16.41% +12.41%
Five Years Ended 12/31/95 + 7.75 + 7.75
Inception (10/21/88) through 12/31/95 + 7.62 + 7.62
<PAGE>
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 12/31/95 +16.50% +15.50%
Inception (10/21/94) through 12/31/95 +13.24 +13.24
[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**
Year Ended 12/31/95 +17.14% +12.46%
Inception (10/21/94) through 12/31/95 +13.88 +10.05
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
National Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/95 +17.83% +13.12%
Five Years Ended 12/31/95 + 8.82 + 7.94
Ten Years Ended 12/31/95 + 8.85 + 8.41
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/95 +17.07% +13.07%
Five Years Ended 12/31/95 + 8.01 + 8.01
Inception (10/21/88) through 12/31/95 + 7.57 + 7.57
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payments of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 12/31/95 +16.89% +15.89%
Inception (10/21/94) through 12/31/95 +12.63 +12.63
[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**
Year Ended 12/31/95 +17.65% +12.94%
Inception (10/21/94) through 12/31/95 +13.34 + 9.53
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Limited Maturity Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/95 +6.13% +5.07%
Five Years Ended 12/31/95 +4.94 +4.73
Ten Years Ended 12/31/95 +5.42 +5.32
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/95 +5.75% +4.75%
Inception (11/2/92) through 12/31/95 +3.71 +3.71
[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 % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 12/31/95 +5.92% +4.92%
Inception (10/21/94) through 12/31/95 +5.04 +5.04
[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**
Year Ended 12/31/95 +6.03% +4.97%
Inception (10/21/94) through 12/31/95 +5.13 +4.25
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
PERFORMANCE DATA (continued)
<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>
10/21/77--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 0.65 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
1995 7.43/8.25 9.40/10.44 9.77/ 9.98 0.45 0.60 0.38 +17.43 +17.83 +6.13
------ ------ -----
Total $10.99 $13.57 $9.24
Cumulative total return as of 12/31/95: +253.79%** +344.61%** +158.01%**
<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 11/02/79 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>
<PAGE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
1/1--12/31 Beginning/Ending Net Asset Value Dividends Paid* % Change**
Period Limited Limited Limited
Covered Insured National Maturity*** Insured National Maturity*** Insured National Maturity***
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/21/88--12/31/88 $7.81/7.78 $10.14/10.11 -- $0.11 $0.14 -- + 0.97% + 1.08% --
1989 7.78/7.94 10.11/10.25 -- 0.51 0.67 -- + 8.81 + 8.29 --
1990 7.94/7.86 10.25/10.09 -- 0.55(1) 0.66 -- + 6.28 + 5.05 --
1991 7.86/8.17 10.09/10.49 -- 0.54(2) 0.75(2) -- +11.10 +11.74 --
1992 8.17/8.27 10.49/10.55 $ 9.93/ 9.97 0.56(3) 0.81(3) $0.06 + 8.35 + 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
1995 7.43/8.24 9.39/10.44 9.77/ 9.98 0.39 0.52 0.34 +16.41 +17.07 +5.75
----- ----- -----
Total $3.83 $5.13 $1.09
Cumulative total return as of 12/31/95: +69.61%** +69.03%** +12.20%**
<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 deducted.
***Limited Maturity Portfolio 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>
<PAGE>
<TABLE>
Performance
Summary--
Class C 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>
10/21/94--12/31/94 $7.68/7.43 $9.85/ 9.40 $9.83/ 9.77 $0.22(1) $0.31(1) $0.07 - 0.41% - 1.39% +0.11%
1995 7.43/8.25 9.40/10.44 9.77/10.00 0.38 0.52 0.34 +16.50 +16.89 +5.92
----- ----- -----
Total $0.60 $0.83 $0.41
Cumulative total return as of 12/31/95: +16.02%** +15.27%** +6.04%**
<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 deducted.
(1)Includes capital gains of $0.141 and $0.209 for the
Insured and National Portfolios, respectively.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class D 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>
10/21/94--12/31/94 $7.68/7.43 $9.85/ 9.40 $9.83/9.77 $0.23(1) $0.32(1) $0.07 -0.30% -1.29% +0.13%
1995 7.43/8.25 9.40/10.45 9.77/9.98 0.43 0.57 0.37 +17.14 +17.65 +6.03
----- ----- -----
Total $0.66 $0.89 $0.44
Cumulative total return as of 12/31/95: +16.79%** +16.14%** +6.16%**
<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.
(1)Includes capital gains of $0.141 and $0.209 for the Insured
and National Portfolios, respectively.
</TABLE>
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month Standardized
12/31/95 9/30/95 12/31/94 % Change % Change 30-day Yield
<S> <C> <C> <C> <C> <C> <C>
Insured Portfolio Class A Shares $ 8.25 $ 7.99 $7.43 +11.04% +3.25% 4.54%
Insured Portfolio Class B Shares 8.24 7.98 7.43 +10.90 +3.26 3.98
Insured Portfolio Class C Shares 8.25 7.99 7.43 +11.04 +3.25 3.92
Insured Portfolio Class D Shares 8.25 7.99 7.43 +11.04 +3.25 4.30
National Portfolio Class A Shares 10.44 10.10 9.40 +11.06 +3.37 5.00
National Portfolio Class B Shares 10.44 10.09 9.39 +11.18 +3.47 4.46
National Portfolio Class C Shares 10.44 10.10 9.40 +11.06 +3.37 4.41
National Portfolio Class D Shares 10.45 10.10 9.40 +11.17 +3.47 4.75
Limited Maturity Portfolio Class A Shares 9.98 9.93 9.77 + 2.15 +0.50 3.61
Limited Maturity Portfolio Class B Shares 9.98 9.93 9.77 + 2.15 +0.50 3.28
Limited Maturity Portfolio Class C Shares 10.00 9.93 9.77 + 2.35 +0.70 3.13
Limited Maturity Portfolio Class D Shares 9.98 9.93 9.77 + 2.15 +0.50 3.51
Insured Portfolio Class A Shares--Total Return +17.43(1) +4.64(2)
Insured Portfolio Class B Shares--Total Return +16.41(3) +4.43(4)
Insured Portfolio Class C Shares--Total Return +16.50(5) +4.41(6)
Insured Portfolio Class D Shares--Total Return +17.14(7) +4.57(8)
National Portfolio Class A Shares--Total Return +17.83(9) +4.88(10)
National Portfolio Class B Shares--Total Return +17.07(11) +4.77(12)
National Portfolio Class C Shares--Total Return +16.89(13) +4.66(14)
National Portfolio Class D Shares--Total Return +17.65(15) +4.91(16)
Limited Maturity Portfolio Class A Shares--Total Return + 6.13(17) +1.43(18)
Limited Maturity Portfolio Class B Shares--Total Return + 5.75(19) +1.34(20)
Limited Maturity Portfolio Class C Shares--Total Return + 5.92(21) +1.46(22)
Limited Maturity Portfolio Class D Shares--Total Return + 6.03(23) +1.41(24)
<FN>
*Investment results shown do not reflect sales charges;
results shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.447 per share
ordinary income dividends.
(2)Percent change includes reinvestment of $0.119 per share
ordinary income dividends.
(3)Percent change includes reinvestment of $0.387 per share
ordinary income dividends.
(4)Percent change includes reinvestment of $0.103 per share
ordinary income dividends.
(5)Percent change includes reinvestment of $0.383 per share
ordinary income dividends.
(6)Percent change includes reinvestment of $0.101 per share
ordinary income dividends.
<PAGE>
(7)Percent change includes reinvestment of $0.427 per share
ordinary income dividends.
(8)Percent change includes reinvestment of $0.114 per share
ordinary income dividends.
(9)Percent change includes reinvestment of $0.596 per share
ordinary income dividends.
(10)Percent change includes reinvestment of $0.161 per share
ordinary income dividends.
(11)Percent change includes reinvestment of $0.520 per share
ordinary income dividends.
(12)Percent change includes reinvestment of $0.140 per share
ordinary income dividends.
(13)Percent change includes reinvestment of $0.515 per share
ordinary income dividends.
(14)Percent change includes reinvestment of $0.139 per share
ordinary income dividends.
(15)Percent change includes reinvestment of $0.571 per share
ordinary income dividends.
(16)Percent change includes reinvestment of $0.154 per share
ordinary income dividends.
(17)Percent change includes reinvestment of $0.379 per share
ordinary income dividends.
(18)Percent change includes reinvestment of $0.102 per share
ordinary income dividends.
(19)Percent change includes reinvestment of $0.343 per share
ordinary income dividends.
(20)Percent change includes reinvestment of $0.092 per share
ordinary income dividends.
(21)Percent change includes reinvestment of $0.340 per share
ordinary income dividends.
(22)Percent change includes reinvestment of $0.085 per share
ordinary income dividends.
(23)Percent change includes reinvestment of $0.370 per share
ordinary income dividends.
(24)Percent change includes reinvestment of $0.099 per share
ordinary income dividends.
</TABLE>
<PAGE>
Portfolio
Abbreviations
To simplify the listings of
Merrill Lynch Municipal
Bond Fund, Inc.'s portfolio
holdings in the Schedules 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
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
INFLOS Inverse Floating Rate Municipal Bonds
LEVRRS Leverage Reversed Rate Securities
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
RAW Revenue Anticipation Warrants
RIB Residual Interest Bonds
SAVRS Select Auction Variable Rate Security
S/F Single-Family
TAN Tax Anticipation Notes
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--0.6% AAA Aaa $ 1,625 Alabama Water Pollution Control Authority, Revolving Fund Loan,
Series A, 6.75% due 8/15/2017(b) $ 1,843
AAA Aaa 5,000 Auburn University, Alabama, University Revenue Refunding Bonds
(General Fee), 5.25% due 6/01/2013(e) 5,033
AAA Aaa 1,250 Mobile, Alabama, GO, Refunding and Capital Improvement Bonds,
10.875% due 11/01/2007(c) 1,786
AAA Aaa 6,000 Montgomery, Alabama, Special Care Facilities Financing Authority
Revenue Bonds (Baptist Medical Center), Series A, 5.75% due
1/01/2022(h) 6,045
Alaska--0.7% Kenai Peninsula Borough, Alaska, GO(b):
AAA Aaa 6,450 8.40% due 1/01/2000 7,400
AAA Aaa 8,460 8.40% due 1/01/2001 9,935
<PAGE>
Arizona--2.0% AAA Aaa 6,750 Arizona State Municipal Financing Program, COP, Series 34,
7.25% due 8/01/2009(g) 8,266
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) 4,366
AAA Aaa 4,000 Maricopa County, Arizona, IDA, Hospital Facility, Revenue Refunding
Bonds (Samaritan Health Services), Series A, 7% due 12/01/2013(e) 4,505
AAA Aaa 7,000 Maricopa County, Arizona, Unified School District No. 097, Revenue
Bonds (Deer Valley Project), UT, 1986 Series E, 10% due 7/01/2000(h) 8,628
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 11,065
AAA Aaa 7,340 Series A-1, 7.625% due 1/01/2019 8,124
AAA Aaa 5,000 Pima County, Arizona, Unified School District No. 1 (Tucson), UT,
Series C, 6.875% due 7/01/2001(a)(e) 5,673
California--4.5% AAA Aaa 38,700 California State, RAW, Series C, 5.75% due 4/25/1996(h) 38,935
AAA Aaa 22,000 East Bay, California, Municipal Utility District, Water System
Revenue Bonds, Sub-Series, 6.375% due 12/01/2001(a)(b) 24,817
A1+ VMIG1++ 4,800 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Refunding Bonds (Proposition C--
Second Senior), VRDN, Series A, 5% due 7/01/2020(e)(f) 4,800
AAA VMIG1++ 12,900 Los Angeles County, California, Transport Commission, Sales Tax
Revenue Refunding Bonds, VRDN, Series A, 5.10% due 7/01/2012(f)(h) 12,900
AAA Aaa 8,800 Northern California Power Agency, Multiple Capital Facilities
Revenue Bonds, RIB, 8.808% due 9/02/2025(d)(e) 10,384
AAA Aaa 6,000 Oakland, California, Redevelopment Agency, Revenue Refunding Bonds,
INFLOS, 7.865% due 9/01/2019(d)(e) 6,428
University of California Revenue Bonds (Multiple Purpose Projects):
AAA Aaa 5,000 Refunding, Series C, 5.25% due 9/01/2012(b) 4,972
AAA Aaa 5,500 Refunding, Series C, 5% due 9/01/2013(b) 5,373
AAA Aaa 5,000 Series D, 6.375% due 9/01/2024(e) 5,355
Colorado--0.3% AAA Aaa 2,940 Denver, Colorado, City and County, COP, School District No. 001
(Colorado Association of Schools), Series B, 6.75% due
12/01/2002(a)(e) 3,376
AAA Aaa 4,000 La Plata County, Colorado, Revenue Bonds (School District Number 9
& R Durango), UT, 6.60% due 11/01/2017(h) 4,405
Connecticut--0.4% AAA Aaa 3,750 Connecticut State Health and Educational Facilities Authority Revenue
Bonds (Lawrence and Memorial Hospitals), Series C, 6.25% due
7/01/2002(a)(e) 4,202
Connecticut State Special Tax Obligation Revenue Bonds, Series B(h):
AAA Aaa 1,000 6% due 10/01/2009 1,070
AAA Aaa 3,490 (Transportation Infrastructure), 5.10% due 10/01/2008 3,516
AAA Aaa 4,030 (Transportation Infrastructure), 5.60% due 10/01/2013 4,171
Delaware--0.4% AAA Aaa 6,000 Delaware State, EDA, PCR, Refunding (Delmarva Power and Light
Company), Series B, 7.30% due 3/01/2014(e) 6,744
AAA Aaa 3,750 Delaware State Health Facilities Authority, Crossover Revenue
Refunding Bonds (Medical Center of Delaware), 7% due 10/01/2015(c)(e) 4,145
<PAGE>
Florida--5.1% AAA Aaa 6,100 Dade County, Florida, Water and Sewer System Revenue Refunding Bonds,
5% due 10/01/2013(h) 6,008
AAA Aaa 5,000 Florida State Division, Bond Finance Department, General Services
Revenue Bonds (Department of Natural Resource Preservation),
Series 2000-A, 6.75% due 7/01/2013(b) 5,580
AAA Aaa 9,250 Florida State Municipal Power Agency Revenue Bonds (All Requirements
Power Supply Project), 6.25% due 10/01/2002(a)(b) 10,430
AAA Aaa 3,030 Florida State Turnpike Authority, Turnpike Revenue Bonds, Series A,
6.35% due 7/01/2002(a)(h) 3,400
Jacksonville, Florida, Health Facilities Authority, Hospital Revenue
Refunding and Improvement Bonds (Baptist Medical Center Project):
AAA Aaa 500 11.50% due 10/01/2012(c) 854
AAA Aaa 26,500 Series A, 7.30% due 6/01/2019(e) 29,372
AAA Aaa 8,750 Jacksonville, Florida, Port Authority Revenue Bonds, AMT, 7.875% due
11/01/2018(g) 9,202
AAA Aaa 10,000 Lee County, Florida, Hospital Board of Directors, Hospital Revenue
Bonds, INFLOS, 9.013% due 4/01/2020(d)(e) 11,462
AAA Aaa 16,700 Martin County, Florida, PCR, Refunding (Florida Power and Light
Company Project), 7.30% due 7/01/2020(e) 18,920
AAA Aaa 11,540 Orange County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan), Series B, 7.875% due
12/01/2025(g) 12,351
AAA Aaa 3,950 Orange County, Florida, HFA, Mortgage Revenue Refunding Bonds,
Series A, 7.60% due 1/01/2024(h)(j) 4,233
AAA Aaa 2,850 South Broward, Florida, Hospital District Revenue Bonds, RIB,
Series C, 9.045% due 5/13/2021(b)(d) 3,281
AAA Aaa 1,300 Tampa, Florida, Revenue Refunding Bonds (Allegany Health System--
Saint Joseph's), 5.125% due 12/01/2023(e) 1,247
AAA Aaa 2,000 Tampa, Florida, Water and Sewer Revenue Bonds, Sub-Lien, Series A,
7.25% due 10/01/2016(b) 2,159
AAA Aaa 5,000 University Community Hospital Incorporated, Florida, Hospital Revenue
Refunding Bonds, 7.375% due 9/01/2000(a)(i) 5,768
AAA Aaa 5,500 Vero Beach, Florida, Electric Revenue Bonds, 6.55% due
12/01/2000(a)(e) 6,135
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) 3,298
Georgia--4.1% AAA Aaa 5,500 Chatam County, Georgia, School District, UT, 6.75% due 8/01/2003(a)(e) 6,382
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) 5,340
Georgia Municipal Electric Authority, Power Revenue Bonds:
AAA Aaa 12,100 Refunding, Series Z, 5.50% due 1/01/2012(h) 12,518
AAA Aaa 7,400 Refunding, Series Z, 5.50% due 1/01/2012(i) 7,655
AAA Aaa 11,545 Refunding, Series Z, 5.50% due 1/01/2020(h) 11,904
AAA Aaa 20,000 Series EE, 7% due 1/01/2025(b) 25,148
Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax
Revenue Refunding Bonds(b):
AAA Aaa 3,990 Second Indenture Series, Series A, 5.125% due 7/01/2019 3,902
AAA Aaa 18,605 Series P, 6% due 7/01/2013 20,574
AAA Aaa 9,000 Municipal Electric Authority, Georgia, Special Obligation Bonds
(Fifth Crossover Series, Project One), 6.40% due 1/01/2013(b) 10,253
</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>
Hawaii--3.1% Hawaii County, Hawaii, Revenue Refunding and Improvement Bonds,
GO, UT, Series A(h):
AAA Aaa $ 1,000 5.60% due 5/01/2012 $ 1,062
AAA Aaa 1,000 5.60% due 5/01/2013 1,064
Hawaii State Airport System Revenue Bonds:
AAA Aaa 21,795 AMT, 7.30% due 7/01/2020(b) 24,256
AAA Aaa 23,200 AMT, Second Series, 7.50% due 7/01/2020(h) 26,005
AAA Aaa 10,000 Refunding, Series 1993, 6.45% due 7/01/2013(e) 11,023
Hawaii State Department of Budget and Finance, Special Purpose
Mortgage Revenue Bonds (Hawaiian Electric Company, Inc. Project),
AMT(e):
AAA Aaa 4,340 7.625% due 12/01/2018 4,870
AAA Aaa 5,000 Series C, 7.375% due 12/01/2020 5,602
AAA Aaa 4,500 Hawaii State Harbor Capital Improvement Revenue Bonds, AMT, 7% due
7/01/2017(e) 4,935
Illinois--6.4% Chicago, Illinois, Public Building Commission, Building
Revenue Bonds(c):
AAA Aaa 25,000 (Community College District No. 508), Series B, 8.75% due
1/01/2007(g) 27,471
AAA Aaa 25,000 Series A, 7.125% due 1/01/2015(e) 28,478
AAA Aaa 11,645 Chicago, Illinois, Wastewater Transmission Revenue Bonds, 5% due
1/01/2015(h) 11,257
AAA Aaa 27,335 Chicago, Illinois, Water Revenue Bonds, 5% due 11/01/2015(h) 26,399
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 3,250 (Elmhurst Memorial Hospital), 6.625% due 1/01/2022(h) 3,511
AAA Aaa 2,000 (Methodist Health Project), RIB, 9.538% due 5/01/2021(b)(d) 2,380
AAA Aaa 10,000 (Rush-Presbyterian Saint Luke's Medical Center), INFLOS, 9.311%
due 10/01/2024(d)(e) 11,900
Illinois State, GO, Refunding Bonds, UT(h):
AAA Aaa 13,000 5.125% due 12/01/2012 12,876
AAA Aaa 13,000 5.125% due 12/01/2013 12,872
AAA Aaa 16,690 Illinois State Sales Tax Revenue Bonds, Series W, 5% due
6/15/2016(h) 16,211
AAA Aaa 6,600 Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Bonds (McCormick Place Expansion Project),
Series A, 6.50% due 6/15/2027(b) 7,198
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) 3,135
<PAGE>
Indiana--1.4% AAA Aaa 2,470 Indiana State Employment Development Commission, Environmental
Revenue Bonds (Public Service Company of Indiana, Inc.), AMT,
7.50% due 3/15/2015(e) 2,746
Indiana State Municipal Power Agency, Power Supply System Revenue
Bonds(e):
AAA Aaa 12,600 Refunding, Series B, 5.75% due 1/01/2007 13,525
AAA Aaa 4,000 Series A, 6.125% due 1/01/2019 4,213
AAA Aaa 4,040 Indianapolis, Indiana, Local Public Improvement Bond Bank, Series A,
7.90% due 2/01/2002(a)(g) 4,795
AAA Aaa 2,000 Jasper County, Indiana, PCR, Refunding (Northern Indiana Public
Service), 7.10% due 7/01/2017(e) 2,244
Rockport, Indiana, PCR, Refunding:
A-1 Aaa 100 (AEP Generating Co. Project), VRDN, Series A, 5% due
7/01/2025(b)(f) 100
AAA Aaa 3,550 (Indiana--Michigan Power), Series B, 7.60% due 3/01/2016(h) 4,102
AAA Aaa 3,000 Westfield, Indiana, High School Building Corp., First Mortgage,
5.70% due 7/15/2013(b) 3,103
Iowa--0.2% AAA Aaa 5,000 Des Moines, Iowa, Parking Facilities Revenue Bonds, Series A,
7.25% due 7/01/2015(h) 5,546
Kansas--0.5% AAA Aaa 11,175 Kansas City, Kansas, Utility System Revenue Refunding and
Improvement Bonds, 6.375% due 9/01/2023(h) 12,224
Kentucky--0.7% AAA Aaa 4,500 Boone County, Kentucky, PCR, Refunding (Cincinnati Gas and Electric),
Series A, 5.50% due 1/01/2024(e) 4,517
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) 13,779
Louisiana--1.4% Jefferson Parish, Louisiana, School Board, Sales and Use Tax Revenue
Bonds (b):
AAA Aaa 3,800 5% due 2/01/2013 3,714
AAA Aaa 4,035 5% due 2/01/2014 3,918
AAA Aaa 4,280 5% due 2/01/2015 4,152
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) 9,794
New Orleans, Louisiana, Public Improvement Bonds, UT(h):
AAA Aaa 5,890 5.90% due 11/01/2020 6,098
AAA Aaa 8,260 5.90% due 11/01/2025 8,553
<PAGE>
Maryland--1.5% Baltimore, Maryland, Revenue Refunding Bonds (Kidder Maryland Water
Projects), Series A(e):
AAA Aaa 5,000 5.60% due 7/01/2013 5,263
AAA Aaa 23,000 5.65% due 7/01/2020 24,227
Maryland State 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) 2,584
AAA Aaa 4,400 Series B, 7% due 7/01/2022 5,518
Massachusetts-- AAA Aaa 13,000 Massachusetts Bay Transportation Authority, COP, Series A, 7.65% due
5.8% 8/01/2000(a)(i) 15,080
Massachusetts Bay Transportation Authority (Massachusetts General
Transportation), Series B(b):
AAA Aaa 3,820 5% due 3/01/2005 3,893
AAA Aaa 5,660 5.25% due 3/01/2011 5,664
AAA Aaa 2,480 5.25% due 3/01/2012 2,486
AAA Aaa 17,880 5.375% due 3/01/2020 17,795
AAA Aaa 4,910 Massachusetts Educational Loan Authority, Educational Loan Revenue
Bonds, AMT, Issue D, Series A, 7.25% due 1/01/2009(e) 5,356
AAA Aaa 3,250 Massachusetts Port Authority Revenue Bonds, 13% due 7/01/2013(c) 5,669
Massachusetts State Health and Educational Facilities Authority
Revenue Bonds:
AAA Aaa 10,000 (Beth Israel), INFLOS, 8.218% due 7/01/2025(b)(d) 10,788
SP1+ VMIG1++ 5,300 (Capital Assets Program), VRDN, Series D, 5.15% due
1/01/2035(e)(f) 5,300
AAA Aaa 3,100 (Saint Elizabeth's Hospital), LEVRRS, Series E, 9.38% due
8/12/2021(d)(i) 3,677
AAA Aaa 19,755 Massachusetts State, HFA, Housing Revenue Refunding Bonds (Insured
Rental), AMT, Series A, 6.75% due 7/01/2028(b) 20,881
AAA Aaa 5,500 Massachusetts State Industrial Finance Agency Revenue Bonds
(Brandeis University), Series C, 6.80% due 10/01/2019(e) 6,072
AAA Aaa 5,850 Massachusetts State Turnpike Authority, Turnpike Revenue Refunding
Bonds, Series A, 5.125% due 1/01/2023(h) 5,679
Massachusetts State Water Resources Authority, General Revenue Bonds:
AAA Aaa 10,150 Refunding, Series B, 5.50% due 3/01/2017(b) 10,149
AAA Aaa 3,975 Series A, 5.70% due 8/01/2009(e) 4,168
AAA Aaa 26,980 Series B, 5% due 12/01/2016(e) 26,129
Michigan--3.7% AAA Aaa 5,500 Chippewa Valley, Michigan, School Revenue Bonds (School Building
and Sites), UT, 6.375% due 5/01/2001(a)(h) 6,113
AAA Aaa 10,900 Detroit, Michigan, Water Supply System Revenue Bonds, INFLOS,
8.461% due 7/01/2002(a)(d)(h) 13,611
A1+ VMIG1++ 600 Grand Rapids, Michigan, Water Supply Systems, Revenue Refunding
Bonds, VRDN, 4.90% due 1/01/2020(f)(h) 600
Holly, Michigan, Area School District, UT(h):
AAA Aaa 1,475 5.30% due 5/01/2009 1,495
AAA Aaa 1,500 5.30% due 5/01/2010 1,514
AAA Aaa 1,550 5.375% due 5/01/2011 1,570
AAA Aaa 1,600 5.375% due 5/01/2012 1,621
AAA Aaa 6,530 Livonia, Michigan, Public Schools District, Crossover Refunding
Bonds, UT, 5.50% due 5/01/2014(h) 6,639
A1 VMIG1++ 10,270 Michigan State Higher Education Student Loan Authority Revenue
Bonds, VRDN, AMT, Series XII-D, 5.40% due 10/01/2015(b)(f) 10,270
AAA Aaa 14,365 Michigan State Trunk Line, Series A, 5.75% due 11/15/2020(h) 14,726
Monroe County, Michigan, PCR (Detroit Edison Company Project), AMT:
AAA Aaa 16,500 (Monroe and Fermi Plants), Series 1, 7.65% due 9/01/2020(h) 18,725
AAA Aaa 9,745 Series I-B, 7.50% due 9/01/2019(b) 10,958
AAA Aaa 6,250 Muskegon, Michigan, Public Schools, UT, Series 95, 5.25% due
5/01/2012(h) 6,264
<PAGE>
Mississippi--0.1% 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) 1,817
</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>
Missouri--0.2% AAA Aaa $ 3,500 Sikeston, Missouri, Electric Revenue Refunding Bonds, 6.25% due
6/01/2012(e) $ 3,767
Montana--0.2% AAA Aaa 5,600 Montana State Health Facilities Authority, Hospital Facilities
Revenue Bonds (Deaconess Medical Center Project), SAVRS, Series A,
3.775% due 2/15/2016(b)(f) 5,600
Nebraska--0.9% Nebraska Public Power District Revenue Bonds(e):
AAA Aaa 9,000 Refunding, 6.125% due 1/01/2015 9,539
AAA Aaa 12,755 Series A, 5.50% due 1/01/2013 13,101
Nevada--2.1% AAA Aaa 5,000 Reno, Nevada, Refunding Bonds, 7.125% due 4/01/1999(a)(b) 5,547
AAA Aaa 45,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra
Pacific Power), AMT, 6.65% due 6/01/2017(e) 48,942
New Jersey--2.9% 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) 4,125
AAA Aaa 20,000 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds
(NUI Corp.), Series A, 6.35% due 10/01/2022(b) 21,825
A1+ VMIG1++ 1,100 New Jersey Sports and Exposition Authority Revenue Bonds (State
Contract), VRDN, Series C, 4.75% due 9/01/2024(e)(f) 1,100
New Jersey State Housing and Mortgage Finance Agency, Home Buyer
Revenue Bonds, AMT(e):
AAA Aaa 6,330 Series B, 7.90% due 10/01/2022 6,681
AAA Aaa 12,595 Series D, 7.70% due 10/01/2029 13,230
AAA Aaa 23,890 Series M, 7% due 10/01/2026 25,294
<PAGE>
New York--3.5% 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) 10,576
New York City, New York, GO, UT, Series I(b):
AAA Aaa 7,150 7.25% due 8/15/2013 7,971
AAA Aaa 10,130 7.25% due 8/15/2016 11,221
AAA Aaa 3,500 New York City, New York, IDA, Civic Facility Revenue Bonds (USTA
National Tennis Center Project), 6.25% due 11/15/2005(i) 3,910
New York City, New York, Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds:
AAA Aaa 1,090 Series A, 6.75% due 6/15/2014(h) 1,190
AAA Aaa 4,510 Series C, 6.20% due 6/15/2021(b) 4,775
AAA Aaa 11,000 Series F, 5.50% due 6/15/2012(b) 11,246
AAA VMIG1++ 1,300 VRDN, Series C, 4.85% due 6/15/2023(f)(h) 1,300
AAA Aaa 10,080 New York City, New York, UT, Series C, Sub-Series C--1, 6.375% due
8/01/2002(a)(e) 11,377
AAA Aaa 3,085 New York State Medical Care Facilities Finance Agency Revenue
Improvement Bonds (Mental Health Services), Series C, 7.375% due
8/15/2019(e) 3,440
AAA Aaa 5,695 New York State Thruway Authority, Highway and Bridge Trust Fund,
Series B, 5.30% due 4/01/2011(e) 5,730
AAA Aaa 6,500 New York State Urban Development Corp., Revenue Refunding Bonds
(Correctional Capital Facilities), Series A, 5.25% due 1/01/2014(i) 6,576
Niagara Falls, New York, Public Improvement Bonds, UT(e):
AAA Aaa 2,975 6.90% due 3/01/2023 3,394
AAA Aaa 3,190 6.90% due 3/01/2024 3,639
AAA Aaa 1,235 Suffolk County, New York, Water Authority, Waterworks Revenue
Refunding Bonds, 7.375% due 6/01/2012(b) 1,358
North Carolina-- AAA Aaa 3,000 Charlotte, North Carolina, COP (Convention Facility Project),
0.1% 6.75% due 12/01/2001(a)(b) 3,442
North Dakota--0.2% AAA Aaa 5,000 Williston, North Dakota, Health Facilities Revenue Refunding Bonds
(Catholic Health Corp., Mercy Hospital at Williston), 5.50% due
11/15/2014(e) 4,965
Ohio--1.7% Clermont County, Ohio, Hospital Facilities Revenue Refunding Bonds
(Mercy Health Systems):
AAA Aaa 2,710 Series A, 7.50% due 9/01/2001(a)(b) 3,147
A1+ VMIG1++ 5,734 Series B, 5.10% due 12/01/2015 5,734
AAA Aaa 12,000 Cleveland, Ohio, Public Power System Revenue Bonds, First Mortgage,
Series A, 7% due 11/15/2024(e) 13,961
Ohio State Water Development Authority, Pollution Control Facilities
Revenue Bonds (Water Control Loan Fund), Water Quality Series(e):
AAA Aaa 3,000 5.25% due 12/01/2009 3,026
AAA Aaa 8,755 5.30% due 6/01/2010 8,837
AAA Aaa 2,320 5.30% due 12/01/2010 2,342
Ohio State Water Development Authority, Revenue Bonds (Fresh Water
Series)(b):
AAA Aaa 2,890 5.80% due 12/01/2011 3,058
AAA Aaa 2,475 5.875% due 6/01/2012 2,637
<PAGE>
Oklahoma--1.7% AAA Aaa 7,500 Oklahoma State Industrial Authority, Hospital Revenue Bonds (Baptist
Medical Center), Series A, 7% due 8/15/2000(a)(b) 8,225
AAA Aaa 21,560 Tulsa, Oklahoma, Industrial Authority, Hospital Revenue Bonds (Saint
John's Medical Center, Inc.), 7.25% due 12/01/2009(e) 24,089
AAA Aaa 10,525 Tulsa, Oklahoma, Metropolitan Utility Authority, Utility Revenue
Bonds, 5.75% due 9/01/2019(e) 10,803
Oregon--0.2% AAA Aaa 4,000 Port Portland International Airport Revenue Bonds (Portland
International Airport), AMT, Series Seven-B, 7.10% due 7/01/2021(e) 4,467
Pennsylvania-- AAA Aaa 1,750 Allegheny County, Pennsylvania, Hospital Development Authority
8.6% Revenue Bonds (Mercy Hospital of Pittsburgh), 6.75% due 4/01/2021(b) 1,929
AAA Aaa 6,900 Beaver County, Pennsylvania, Hospital Authority Revenue Bonds
(Medical Center of Beaver, Pennsylvania Inc.), Series A, 6.25% due
7/01/2022(b) 7,325
AAA Aaa 3,365 Beaver County, Pennsylvania, IDA, PCR, Refunding (Ohio Edison
Company/Mansfield), Series A, 7% due 6/01/2021(h) 3,787
AAA Aaa 6,700 Berks County, Pennsylvania, GO, Revenue Bonds, 7.25% due
11/15/2000(a)(h) 7,708
Derry, Pennsylvania, Area School Districts Revenue Bonds(a):
AAA Aaa 3,185 6.50% due 2/01/2001(e) 3,507
AAA Aaa 2,345 UT, 6.20% due 3/01/2000(b) 2,524
AAA Aaa 6,500 Erie County, Pennsylvania, Prison Authority, Lease Revenue Bonds,
6.625% due 11/01/2001(a)(e) 7,283
Pennsylvania State Higher Educational Assistance Agency, Student
Loan Revenue Bonds, AMT, RIB(d):
AAA Aaa 15,000 9.492% due 9/03/2026(b) 17,194
AAA Aaa 8,000 Series B, 10.595% due 3/01/2020(e) 9,390
AAA Aaa 18,600 Series B, 8.025% due 3/01/2022(b) 19,716
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) 1,643
AAA Aaa 4,250 (Temple University), First Series, 6.50% due 4/01/2021(e) 4,584
AAA Aaa 6,000 Pennsylvania State Turnpike Commission, Turnpike Revenue Bonds,
Series J, 7.20% due 12/01/2001(a)(h) 7,005
Philadelphia, Pennsylvania, Airport Revenue Bonds, AMT(e):
AAA Aaa 8,150 7.75% due 6/15/2015 8,928
AAA Aaa 24,000 7.375% due 6/15/2018 26,085
AAA Aaa 5,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th Series B,
7% due 5/15/2020(c)(e) 6,219
AAA Aaa 5,750 Philadelphia, Pennsylvania, Parking Authority, Airport Parking
Revenue Bonds, 7.375% due 9/01/2018(b) 6,311
AAA Aaa 21,285 Philadelphia, Pennsylvania, School District, Series B, 5.50% due
9/01/2025(b) 21,221
AAA Aaa 4,610 Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds,
5.50% due 8/01/2014(e) 4,610
AAA Aaa 14,000 Pittsburgh, Pennsylvania, Revenue Refunding Bonds, Series A, 5.25%
due 3/01/2011(h) 14,020
Pittsburgh, Pennsylvania, Water and Sewer Authority, Water and
Sewer System Revenue Bonds, Series A(h):
AAA Aaa 6,485 First Lien, 5.65% due 9/01/2025 6,576
AAA Aaa 12,750 Refunding, 6% due 9/01/2001(a) 13,850
AAA Aaa 16,540 Somerset County, Pennsylvania, General Authority Commonwealth, Lease
Revenue Bonds, 6.25% due 10/15/2001(a)(h) 18,204
</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>
Rhode Island--1.2% AAA Aaa $ 3,340 Convention Center Authority, Rhode Island, Revenue Bonds,
Series A, 6.40% due 5/15/2001(a)(e) $ 3,732
AAA Aaa 6,100 Rhode Island Depositors Economic Protection Corporation, Special
Obligation Bonds, Series A, 6.625% due 8/01/2002(a)(i) 6,972
AAA Aaa 12,800 Rhode Island State Health and Educational Building Corporation
Revenue Bonds (Rhode Island Hospital), INFLOS, 9.563% due
8/15/2021(d)(h) 15,136
AAA Aaa 5,000 Rhode Island State Public Buildings Authority, Revenue Refunding
Bonds (State Public Projects), Series A, 5.25% due 2/01/2010(b) 4,985
South Carolina-- AAA Aaa 5,000 Florence County, South Carolina, Hospital Revenue Bonds (McLeod
2.7% Regional Medical Center Project), 6.75% due 11/01/2020(h) 5,496
AAA Aaa 1,750 Greenville, South Carolina, Hospital System, Hospital Facilities
Revenue Bonds, Series A, 7.50% due 5/01/2016(h) 1,806
AAA Aaa 3,500 Pickens and Richland Counties, South Carolina, Hospital Facilities
Revenue Bonds (South Carolina Baptist Hospital), Series A, 7% due
8/01/2001(a)(b) 4,026
AAA Aaa 4,000 Piedmont Municipal Power Agency, South Carolina, Electric Revenue
Refunding Bonds, 6.30% due 1/01/2022(e) 4,254
South Carolina State Public Service Authority Revenue Bonds:
AAA Aaa 9,000 (Santee Cooper), Series D, 6.50% due 7/01/2002(a)(b) 10,211
AAA Aaa 25,655 Refunding, Series A, 5.50% due 7/01/2021(e) 25,585
AAA Aaa 17,090 Refunding, Series A, 6.375% due 7/01/2021(b) 18,286
Tennessee--0.2% AAA Aaa 1,905 Jackson, Tennessee, Water and Sewer System Revenue Bonds, 10.375%
due 7/01/2012(b) 2,290
AAA Aaa 2,200 Knox County, Tennessee, Health, Educational and Housing Facilities
Board, Hospital Facilities Revenue Refunding Bonds (Mercy Health
Care System), Series A, 7.60% due 9/01/1999(a)(b) 2,499
<PAGE>
Texas--15.4% Austin, Texas, Utility System, Combined Revenue Bonds(e):
AAA Aaa 11,190 Prior Lien, 9.25% due 5/15/2004(a) 14,799
AAA Aaa 30,000 Refunding, 5.60% due 5/15/2025 30,215
Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT:
AAA Aaa 6,000 Refunding, 6.50% due 12/01/2027(b) 6,452
AAA Aaa 12,000 Series B, 6.625% due 6/01/2022(h) 12,979
AAA Aaa 13,900 Brazos River Authority, Texas, Revenue Refunding Bonds (Houston
Light and Power Co.), Series B, 7.20% due 12/01/2018(h) 15,527
AAA Aaa 20,000 Brownsville, Texas, Utility System Revenue Refunding Bonds, 6.25%
due 9/01/2014(e) 22,643
AAA Aaa 4,540 Colorado River, Texas, Municipal Water District, Water Revenue
Bonds (Water Transmission Facilities Project), Series A, 6.625% due
1/01/2001(a)(b) 5,022
A1+ VMIG1++ 100 Harris County, Texas, Health Facilities Development Corporation,
Special Facilities Revenue Bonds (Texas Medical Center Project),
VRDN, 4.95% due 2/15/2022(e)(f) 100
AAA Aaa 5,000 Harris County, Texas, Hospital District Mortgage, Revenue Refunding
Bonds, 7.40% due 2/15/2010(b) 6,205
Harris County, Texas, Toll Road Revenue Bonds, Senior Lien:
AAA Aaa 13,045 Refunding, 5.30% due 8/15/2013(b) 13,128
AAA Aaa 2,250 Refunding, 5% due 8/15/2016(h) 2,193
AAA Aaa 29,900 Refunding, 5.375% due 8/15/2020(h) 29,797
AAA Aaa 3,000 Refunding, Series A, 6.40% due 8/15/2002(a)(h) 3,392
AAA Aaa 20,430 Refunding, Series A, 6.50% due 8/15/2002(a)(b) 23,216
AAA Aaa 10,305 Refunding, Series A, 6.50% due 8/15/2002(a)(h) 11,710
AAA Aaa 2,750 Series A, 6.50% due 8/15/2017(b) 3,007
AAA Aaa 11,100 Series A, 6.375% due 8/15/2024(e) 12,058
AAA Aaa 1,695 Harris County, Texas Toll Road Revenue Bonds, Series A, 6.50% due
8/15/2011(h) 1,873
Houston, Texas, Water and Sewer System Revenue Bonds, Junior Lien:
AAA Aaa 45,960 Refunding, Series C, 5.70% due 12/01/2011(b)(k) 19,584
AAA Aaa 9,375 Series A, 6.375% due 12/01/2022(e) 10,083
AAA Aaa 3,500 Houston, Texas, Water Conveyance System, COP, Series J, 6.25% due
12/15/2013(b) 3,988
AAA Aaa 650 Lower Colorado River Authority, Texas, Revenue Refunding Bonds
Series B, 7% due 1/01/2001(a)(b) 740
Matagorda County, Texas, Navigation District No. 1 (Houston Light
and Power Co.):
AAA Aaa 8,250 AMT, PCR, Series D, 7.60% due 10/01/2019(h) 9,251
AAA Aaa 11,800 Refunding, Series A, 6.70% due 3/01/2027(b) 13,047
AAA Aaa 26,305 Refunding, Series C, 7.125% due 7/01/2019(h) 29,071
AAA Aaa 5,000 Matagorda County, Texas, Navigation District No. 1, PCR, AMT
(Central Power and Light Company Project), 7.50% due 3/01/2020(b) 5,591
AAA VMIG1++ 12,800 North Texas Higher Education Authority Inc., Student Loan Revenue
Refunding Bonds, VRDN, AMT, Series C, 5.25% due 4/01/2020(b)(f) 12,800
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) 15,954
Texas State Municipal Power Agency, Revenue Refunding Bonds:
AAA Aaa 2,000 5.75% due 9/01/2002(a)(e) 2,158
AAA Aaa 24,475 5% due 9/01/2010(h) 24,098
AAA Aaa 32,095 6.11% due 9/01/2016(e)(k) 10,373
AAA Aaa 3,150 Series A, 6.75% due 9/01/2012(b) 3,531
AAA Aaa 2,345 Texas State Turnpike Authority Revenue Bonds (Dallas North Thruway),
6% due 1/01/1999(a)(b) 2,474
AAA Aaa 15,875 Trinity River Authority, Texas, Regional Wastewater System Revenue
Refunding Bonds, Series A, 5% due 8/01/2016(b) 15,282
<PAGE>
Utah--1.8% A1+ VMIG1++ 10,700 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN,
5.95% due 11/01/2024(b)(f) 10,700
AAA Aaa 14,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds (IHC
Hospitals, Inc.), INFLOS, 9.287% due 5/15/2020(b)(d) 16,345
AA- Aaa 1,000 Uintah County, Utah, PCR (Deseret Generation and Transmission
Cooperative--National Rural Utilities Company), Series 1984 F-2,
10.50% due 6/15/2001(a) 1,296
Utah Associated Municipal Power System Revenue Refunding Bonds
(Hunter Project)(b):
AAA Aaa 3,500 5% due 7/01/2009 3,433
AAA Aaa 2,000 5% due 7/01/2010 1,950
Utah State Board of Regents, Student Loan Revenue Bonds, AMT(b):
AAA Aaa 2,650 Series F, 7.45% due 11/01/2008 2,912
A1+ VMIG1++ 2,500 VRDN, Series C, 5.25% due 11/01/2013(f) 2,500
Utah State Municipal Power Agency, Electric System Revenue Refunding
Bonds, Series A(h):
AAA Aaa 3,120 5.50% due 7/01/2012 3,185
AAA Aaa 3,295 5.50% due 7/01/2013 3,363
Vermont--0.8% AAA Aaa 18,950 Vermont, HFA, Home Mortgage Purchase Bonds, AMT, Series B, 7.60% due
12/01/2024(e) 20,105
Virginia--2.7% AAA Aaa 5,000 Danville, Virginia, IDA, Hospital Revenue Refunding Bonds (Danville
Regional Medical Center), 6.50% due 10/01/2019(h) 5,462
AAA Aaa 16,800 Prince William County, Virginia, Service Authority, Water and Sewer
System, Revenue Refunding Bonds, 5% due 7/01/2021(h) 16,168
AAA Aaa 11,000 Upper Occoquan Sewer Authority, Virginia, Regional Sewer Revenue
Bonds, 6% due 7/01/2001(a)(e) 11,925
Virginia State, HDA, Commonwealth Mortgage, AMT, Series A,
Sub--Series A--4(e):
AAA Aaa 5,000 6.30% due 7/01/2014 5,188
AAA Aaa 11,215 6.35% due 7/01/2018 11,567
AAA Aaa 19,000 6.45% due 7/01/2028 19,675
Washington--3.9% Clark County, Washington, Public Utility District No. 001,
Generating System Revenue Bonds(h):
AAA Aaa 10,000 5.25% due 1/01/2009 10,036
AAA Aaa 18,060 5.375% due 1/01/2010 18,220
Seattle, Washington, Metropolitan Seattle Municipality, Sewer
Revenue Bonds:
AAA Aaa 3,865 Refunding, Series Z, 5.45% due 1/01/2022(b) 3,865
AAA Aaa 2,465 Series W, 6.25% due 1/01/2022(e) 2,618
AAA Aaa 4,485 Series W, 6.25% due 1/01/2023(e) 4,754
AAA Aaa 33,535 Seattle, Washington, Municipal Light and Power Revenue Bonds,
6.625% due 7/01/2020(h) 36,903
AAA Aaa 10,000 Seattle, Washington, Solid Waste Utility, Revenue Refunding Bonds,
Series A, 6.875% due 5/01/2009(g) 10,969
AAA Aaa 3,250 University of Washington, University Revenue Bonds (Housing and
Dining), 7% due 12/01/2021(e) 3,680
AAA Aaa 7,000 Washington State Health Care Facilities Authority Revenue Bonds
(Southwest Washington Hospital--Vancouver), 7.125% due 10/01/2019(g) 7,767
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
West Virginia--3.9% AAA Aaa $ 9,270 Kanawha County, West Virginia, Building Commission Revenue
Refunding Bonds (Charleston Area Medical Center Inc.),
Series A, 7.10% due 6/01/1997(a)(e) $ 9,872
AAA Aaa 30,250 Marshall County, West Virginia, PCR, Refunding (Ohio Power
Company--Kammer Plant Project), Series B, 5.45% due 7/01/2014(e) 30,482
Pleasants County, West Virginia, PCR, Series 95-C(b):
AAA Aaa 24,500 (Monogahela Power Co.), 6.15% due 5/01/2015 26,148
AAA Aaa 12,250 (Potomac--Pleasants), 6.15% due 5/01/2015 13,074
AAA Aaa 5,250 (West Penn Power Co.), 6.15% due 5/01/2015 5,603
AAA Aaa 5,250 Putnam County, West Virginia, PCR, Refunding (Appalachian Power
Company Project), Series D, 5.45% due 6/01/2019(b) 5,250
AAA Aaa 4,000 West Virginia State Parkways Economic Development and Tourism
Authority, 5.80% due 5/15/2013(h) 4,154
AAA Aaa 3,720 West Virginia State Water Development Authority, Water Development
Revenue Refunding Bonds (Loan Program II), Series A, 5.375% due
11/01/2015(i) 3,677
Wisconsin--2.8% AAA Aaa 7,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds
(Midwest Energy Resources), Series E, 6.90% due 8/01/2021(h) 8,570
Wisconsin Public Power System Incorporated, Power Supply System
Revenue Bonds, Series A(b):
AAA Aaa 6,500 6.875% due 7/01/2001(a) 7,426
AAA Aaa 8,360 Refunding, 5.25% due 7/01/2021 8,176
Wisconsin State Health and Educational Facilities Authority
Revenue Bonds:
AAA Aaa 11,500 (Aurora Health Care), 5.25% due 8/15/2012(e) 11,336
AAA Aaa 1,500 (Saint Luke's Medical Center Project), 7.10% due 8/15/2019(e) 1,690
AAA Aaa 5,750 (Waukesha Memorial Hospital), Series B, 7.25% due 8/15/2019(b) 6,505
Wisconsin State Veterans Housing Loans, AMT, Series B(e):
AAA Aaa 7,920 6.50% due 5/01/2020 8,600
AAA Aaa 17,130 6.50% due 5/01/2025 18,199
Total Investments (Cost--$2,360,153)--100.6% 2,563,340
Liabilities in Excess of Other Assets--(0.6%) (15,419)
----------
Net Assets--100.0% $2,547,921
==========
(a)Prerefunded.
(b)AMBAC Insured.
(c)Escrowed to maturity.
(d)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, 1995.
(e)MBIA Insured.
(f)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, 1995.
(g)BIG Insured.
(h)FGIC Insured.
(i)FSA Insured.
(j)GNMA Collateralized.
(k)Represents a zero coupon bond; the interest rate shown
is the effective yield at the time of purchase by the
Portfolio.
++Highest short-term rating issued by Moody's Investors
Services, Inc.
See Notes to Financial Statements.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--0.4% AAA Aaa $ 5,000 Alabama Agricultural and Mechanical University, 6.50% due
11/01/2025(f) $ 5,527
Alaska--2.4% Valdez, Alaska, Marine Terminal Revenue Refunding Bonds:
AA- Aa3 6,000 (British Petroleum Pipeline), Series B, 7% due 12/01/2025 6,558
AA- A1 27,150 (Sohio Pipeline), 7.125% due 12/01/2025 30,002
California--7.1% NR* NR* 6,000 Antioch, California, Improvement Bond Act 1915 (Assessment
District No. 27--Lone Tree), Series E, 7.125% due 9/02/2016 6,182
AAA Aaa 20,000 California State, Department of Water Resource, Water System
Revenue Bonds (Central Valley Project), Series O, 4.75%
due 12/01/2029(f) 18,482
SP1 MIG1++ 18,000 California State, GO, RAW, Series C, 5.75% due 4/25/1996 18,110
California State Public Works Board, Lease Revenue Bonds,
Series A:
A- A 10,350 (Department of Corrections--Monterey County Soledad II),
7% due 11/01/2019 11,756
AAA Aaa 17,500 (Various University of California Projects), 6.60% due
12/01/2002(j) 20,136
NR* NR* 4,000 Long Beach, California, Special Tax Community Facilities, District
No. 3--Pine Avenue, 6.375% due 9/01/2023 3,916
A1+ VMIG1++ 8,200 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Refunding Bonds (Proposition C--
Second Senior), VRDN, Series A, 5% due 7/01/2020(a)(f) 8,200
A NR* 11,725 Palmdale, California, Civic Authority, Revenue Refunding Bonds
(Merged Redevelopment Project), Series A, 6.60% due 9/01/2034 12,809
AAA Aaa 10,000 Southern California Public Power Authority, Transmission Project
Revenue Refunding Bonds, Sub-Series A, 5% due 7/01/2022(f) 9,575
Colorado--3.5% Denver, Colorado, City and County Airport Revenue Bonds, AMT:
BB Baa 5,000 Series A, 8% due 11/15/2014 5,342
BBB Baa 3,000 Series A, 7.50% due 11/15/2023 3,353
BBB Baa 8,570 Series A, 8% due 11/15/2025 9,610
BBB Baa 13,000 Series B, 7.25% due 11/15/2023 14,153
BBB Baa 5,650 Series C, 6.75% due 11/15/2022 5,879
BBB Baa 13,150 Series D, 7.75% due 11/15/2021 14,710
Connecticut--0.4% AA- Baa1 14,550 Connecticut State Resource Recovery Authority Revenue Bonds
(American Refuse Fuel), AMT, Series A, 8% due 11/15/2015 5,041
A1 VMIG1++ 1,000 Connecticut State Special Assessment Unemployment Compensation,
Advanced Fund Revenue Bonds (Connecticut Unemployment), VRDN,
Series B, 5.40% due 11/01/2001(a) 1,000
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(j) 8,920
District of A+ A1 3,750 District of Columbia Revenue Bonds (Georgetown University), RIB,
Columbia--0.3% 8.632% due 4/01/2022(k) 4,247
Florida--2.4% AAA Aaa 6,330 Florida, HFA (Antigua Club Apartments), AMT, Series A-1, 7% due
2/01/2035(c) 6,789
NR* Aaa 9,220 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G-1, 7.90%
due 3/01/2022(m) 9,754
AA Aa3 5,000 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), Series 1991, 7.875% due 8/01/2021 5,888
AAA NR* 2,700 Leesburg, Florida, Hospital Capital Improvement Revenue Bonds
(Leesburg Regional Medical Center Project), Series 1991-A, 7.50%
due 7/01/2002(j) 3,198
AAA NR* 4,765 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT, Series A,
8.375% due 3/01/2021(m) 5,041
AAA Aaa 5,850 South Broward, Florida, Hospital District Revenue Bonds, RIB,
Series C, 9.045% due 5/13/2021(c)(k) 6,735
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Georgia--4.0% AAA Aaa $ 25,705 Atlanta, Georgia, Water and Sewer Revenue Refunding Bonds, 4.75%
due 1/01/2023(e) $ 23,966
A1 VMIG1++ 6,800 Burke County, Georgia, Development Authority, PCR (Georgia Power
Company--Plant Vogtle Project), VRDN, 3rd Series, 5% due
7/01/2024(a) 6,800
Metropolitan Atlanta, Georgia Rapid Transit Authority, Sales Tax
Revenue Bonds:
AAA Aaa 20,000 Second Indenture, Series A, 6.90% due 7/01/2020(f) 22,884
AA- A1 7,500 Series O, 6.55% due 7/01/2020 8,160
Idaho--0.2% AA NR* 2,140 Idaho Housing Agency, S/F Mortgage Revenue Bonds, AMT, Series E,
7.875% due 7/01/2024(b) 2,264
Illinois--5.0% 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 9,095
Chicago, Illinois, O'Hare International Airport, Special Facility
Revenue Bonds (United Airlines, Inc.):
BB Baa2 4,825 AMT, Series B, 8.95% due 5/01/2018 5,539
BB Baa2 14,075 Series 1984-B, 8.85% due 5/01/2018 16,163
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) 5,511
BBB NR* 3,000 Illinois Educational Facilities Authority, Revenue Refunding Bonds
(Columbia College), 6.875% due 12/01/2017 3,169
A+ Aa 5,250 Illinois HDA, Residential Mortgage Revenue Bonds, RIB, AMT, 9.436%
due 2/01/2018(k) 5,847
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 1,500 (Methodist Health Project), RIB, 9.467% due 5/01/2021(c)(k) 1,785
AAA Aaa 11,000 (Rush Presbyterian-Saint Luke's Medical Center), INFLOS,
9.311% due 10/01/2024(f)(k) 13,090
BBB NR* 2,625 Refunding (Saint Elizabeth's Hospital--Chicago), 7.75% due
7/01/2016 2,812
AAA Aaa 5,950 Regional Transportation Authority Illinois, UT, Series D, 6.75%
due 6/01/2025(e) 6,763
NR* A1 4,400 Southwestern Illinois Development Authority, Sewer Facilities
Revenue Bonds (Monsanto Company Project), AMT, 7.30% due 7/15/2015 4,836
<PAGE>
Indiana--4.1% A NR* 7,720 Indiana Bond Bank, Special Program, Series B, 5.75% due 2/01/2020 7,710
NR* Baa1 3,500 Indiana Health Facility Financing Authority, Hospital Revenue Bonds
(Riverview Hospital Project), 6.875% due 8/01/2017 3,632
NR* Aaa 9,500 Indiana State Educational Facilities Authority Revenue Bonds
(University of Notre Dame Project), 6.70% due 3/01/2025 10,603
Indianapolis, Indiana, Local Public Improvement Bond Bank:
A+ NR* 9,100 Refunding, Series D, 6.75% due 2/01/2020 9,957
NR* A1 17,445 Series C, 6.70% due 1/01/2002(j) 19,791
AA- Aa2 5,700 Petersburg, Indiana, PCR, Refunding (Indianapolis Power & Light Co.
Project), 6.625% due 12/01/2024 6,260
A1 Aaa 3,900 Rockport, Indiana, PCR, Refunding (AEP Generating Co. Project),
VRDN, Series A, 5% due 7/01/2025(a)(c) 3,900
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 9,692
Kansas--0.9% AAA Aaa 12,000 Wichita, Kansas, Hospital Revenue Bonds, RIB, Series III-A, 8.743%
due 10/01/2017(f)(k) 13,815
Kentucky--2.2% A1+ VMIG1++ 7,400 Kentucky Economic Development Finance Authority Revenue Bonds
(Sisters of Charity), VRDN, 5.60% due 11/01/2020(a) 7,400
AAA Aaa 4,500 Louisville and Jefferson County, Kentucky, Metropolitan Sewer
District, Sewer and Drain System, Revenue Refunding Bonds,
Series A, 6.50% due 5/15/2024(c) 5,013
NR* VMIG1++ 9,000 Perry County, Kentucky, Healthcare System Revenue Bonds
(Appalachian Regional Hospital), VRDN, 5.25% due 8/01/2014(a) 9,000
NR* NR* 4,500 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 6/01/2024 4,689
AA Aa2 6,345 Trimble County, Kentucky, PCR (Louisville Gas and Electric
Company), AMT, Series A, 7.625% due 11/01/2020 7,147
Louisiana--3.2% NR* Baa2 37,850 Lake Charles, Louisiana, Harbor and Terminal District Port
Facilities, Revenue Refunding Bonds (Trunkline LNG Company
Project), 7.75% due 8/15/2022 43,202
BB- NR* 3,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
Company Project), 7.50% due 7/01/2013 3,206
BBB Baa2 1,100 Saint Charles Parish, Louisiana, PCR (Union Carbide Project),
AMT, 7.35% due 11/01/2022 1,177
Maine--0.3% AA- A1 3,815 Maine State Housing Authority, Mortgage Purchase, AMT, Series B-4,
6.90% due 11/15/2026 4,007
<PAGE>
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 7,823
Massachusetts-- AAA Aaa 6,000 Massachusetts Bay Transportation Authority Revenue Bonds, Series B,
5.5% 7.875% due 3/01/2001(j) 7,090
A+ A1 10,000 Massachusetts State Consolidated Loans, UT, Series B, 9.25% due
7/01/2000 11,990
Massachusetts State Health and Educational Facilities Authority
Revenue Bonds:
SP1+ VMIG1++ 2,900 (Capital Assets Program), VRDN, Series D, 5.15% due
1/01/2035(a)(f) 2,900
NR* NR* 9,420 (North Adams Regional Hospital), Series A, 9.625% due
12/01/2018 10,215
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 10,077
Massachusetts State, HFA, Residential Development(l):
AAA Aaa 5,000 Series C, 6.875% due 11/15/2011 5,369
AAA Aaa 7,500 Series C, 6.90% due 11/15/2021 7,954
AAA Aaa 2,000 Series D, 6.80% due 11/15/2012 2,123
NR* NR* 2,018 Massachusetts State Individual Finance Agency Revenue Bonds (Lower
Mills Association II L.P.), VRDN, 5% due 12/01/2020(a) 2,018
A1+ P1 3,800 Massachusetts State Port Authority Revenue Refunding Bonds, VRDN,
Series A, 4.80% due 7/01/2015(a) 3,800
AAA Aaa 20,000 Massachusetts State Water Resource Authority Revenue Bonds,
Series B, 4.75% due 12/01/2021(f) 18,459
Michigan--3.0% A+ A 1,000 Marquette, Michigan, City Hospital Finance Authority, Revenue
Refunding Bonds (Marquette General Hospital), Series C, 7.50% due
4/01/2019 1,096
Michigan State Hospital Finance Authority, Hospital Revenue Bonds
(Detroit Medical Center), Series A:
A A 3,500 7.50% due 8/15/2011 3,881
A A 6,500 Refunding (Obligation Group), 6.50% due 8/15/2018 6,783
AAA Aaa 15,000 Michigan State Hospital Finance Authority, INFLOS (Sisters of
Mercy), 8.514% due 2/15/2022(h)(k) 16,800
BBB Baa1 9,350 Monroe County, Michigan, PCR (Detroit Edison Company Project),
AMT, Series A, 7.75% due 12/01/2019 10,295
AA Aa 5,000 Royal Oaks, Michigan, Hospital Financing Authority Revenue Bonds
(William Beaumont Hospital), Series D, 6.75% due 1/01/2020 5,372
Minnesota--1.4% Minnesota State, HFA, S/F Mortgage Bonds:
AA+ Aa 6,090 AMT, Series A, 7.45% due 7/01/2022(b) 6,436
AA+ Aa 5,250 Series F, 6.30% due 7/01/2025 5,403
AAA NR* 8,705 Saint Paul, Minnesota, Housing and Redevelopment Authority, S/F
Mortgage Revenue Refunding Bonds, Series C, 6.95% due 12/01/2031(l) 9,134
Mississippi--0.7% BBB Baa 5,950 Lowndes County, Mississippi, Hospital Revenue Refunding Bonds
(Golden Triangle Medical Center), 8.50% due 2/01/2010 6,541
NR* Aaa 4,195 Mississippi Home Corporation, S/F Mortgage Revenue Bonds (Access
Program), AMT, Series A, 6.90% due 6/01/2024(m) 4,519
<PAGE>
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 12,573
Nebraska--1.4% Nebraska Investment Finance Authority, S/F Mortgage Revenue Bonds,
AMT, Series 2(o):
AAA Aaa 100 7.631% due 9/10/2030 108
AAA Aaa 4,200 RIB, 10.923% due 9/10/2030(k) 4,872
Nebraska Public Power District Revenue Bonds:
A+ A1 12,500 Refunding, Series C, 5% due 1/01/2017 11,787
AAA Aaa 4,250 Series A, 5.25% due 1/01/2022(f) 4,191
Nevada--0.9% AAA VMIG1++ 11,190 Clark County, Nevada, Airport Improvement Revenue Refunding Bonds,
VRDN, Series A, 5.15% due 7/01/2012(a)(f) 11,190
AAA Aaa 3,500 Washoe County, Nevada, Gas and Water Facilities, Revenue Refunding
Bonds (Sierra Pacific), 6.30% due 12/01/2014(c) 3,739
</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>
New Hampshire-- A+ Aa $ 3,055 New Hampshire State, HFA, S/F Residential Mortgage Bonds, AMT,
0.2% 7.875% due 1/01/2021 $ 3,227
New Jersey--2.1% New Jersey Building Authority, State Building Revenue
Refunding Bonds:
AA- Aa 5,000 5% due 6/15/2015 4,825
AA- Aa 10,000 5% due 6/15/2018 9,698
NR* NR* 6,660 New Jersey Health Care Facilities Financing Authority Revenue
Bonds (Riverwood Center Issue), Series A, 9.90% due 7/01/2021 7,579
AA A 9,500 University of Medicine and Dentistry of New Jersey Revenue Bonds,
Series C, 7.20% due 12/01/1999(j) 10,689
<PAGE>
New York--15.0% Metropolitan Transportation Authority, New York, Service Contract
Revenue Refunding Bonds (Commuter Facilities), Series 5:
BBB Baa1 2,145 6.90% due 7/01/2006 2,328
BBB Baa1 5,000 7% due 7/01/2012 5,439
AAA Aaa 5,000 Metropolitan Transportation Authority, New York, Transportation
Facilities Revenue Bonds, Series J, Series J, 6.50% due
7/01/2018(e) 5,450
New York City, New York, GO, UT:
BBB+ Baa1 3,600 Series A, 7.75% due 8/15/2016 4,072
BBB+ Baa1 4,065 Series A, 7.75% due 8/15/2017 4,598
BBB+ Baa1 5,375 Series B, 8.25% due 6/01/2006 6,637
BBB+ Baa1 2,700 Series B, 8.25% due 6/01/2007 3,336
BBB+ Baa1 10,000 Series B, 7.75% due 2/01/2011 11,336
BBB+ Baa1 4,500 Series B, 7.75% due 2/01/2012 5,101
BBB+ Baa1 2,875 Series B, 7.75% due 2/01/2013 3,259
BBB+ Baa1 1,550 Series B, 7% due 10/01/2013 1,681
BBB+ Baa1 1,650 Series B, 7.75% due 2/01/2014 1,870
BBB+ AAA 3,495 Series D, 8% due 8/01/2001(j) 4,169
BBB+ Baa1 2,000 Series D, 7.70% due 2/01/2011 2,262
BBB+ Aaa 5,495 Series F, 8.25% due 11/15/2001(j) 6,704
NR* NR* 5,000 New York City, New York, IDA, Revenue Bonds (Visy Paer Inc.
Project), AMT, 7.95% due 1/01/2028 5,104
New York City, New York, Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds:
A- A 3,440 Series A, 6.75% due 6/15/2017 3,737
A1+ VMIG1++ 3,700 VRDN, Series C, 4.85% due 6/15/2022(a)(e) 3,700
AAA VMIG1++ 11,300 VRDN, Series C, 4.85% due 6/15/2023(a)(e) 11,300
New York State Dormitory Authority Revenue Bonds (State University
Educational Facilities):
BBB+ Baa1 6,735 Refunding, Series B, 7.375% due 5/15/2014 7,541
BBB+ Baa1 2,000 Refunding, Series B, 7% due 5/15/2016 2,169
BBB+ Baa1 6,000 Series A, 7.50% due 5/15/2013 7,393
A Aa 21,500 New York State Environmental Facilities Corporation, PCR (State
Water Revolving Fund), Series E, 6.50% due 6/15/2014 23,309
New York State Local Government Assistance Corporation:
A A 15,300 Refunding, Series B, 5.50% due 4/01/2021 15,093
A A 14,000 Refunding, Series C, 5% due 4/01/2021 13,177
A A 6,000 Series A, 7% due 4/01/2012 6,809
A A 10,000 Series C, 6.25% due 4/01/2018 10,634
New York State Medical Care Facilities, Finance Agency Revenue
Bonds (New York Hospital Mortgage), Series A(b)(c):
AAA Aaa 8,400 6.75% due 8/15/2014 9,580
AAA Aaa 9,100 6.80% due 8/15/2024 10,375
New York State Power Authority, General Purpose Revenue Refunding
Bonds, Series Z:
AA- Aa 5,000 6.625% due 1/01/2012 5,497
AA- Aa 5,000 6.50% due 1/01/2019 5,424
AAA Aaa 10,000 New York State Urban Development Corporation Revenue Bonds
(Correctional Capital Facilities), Series 5, 5.50% due 1/01/2025(f) 10,025
AAA Aaa 8,000 Port Authority of New York and New Jersey, One Hundred Second
Series, 5.70% due 10/15/2020(f) 8,104
A+ Aa 1,000 Triborough Bridge and Tunnel Authority, New York, General Purpose
Revenue Bonds, Series X, 6.50% due 1/01/2019 1,079
North Carolina-- AAA Aaa 7,175 Charlotte, North Carolina, COP, Refunding (Convention Facility
0.5% Project), Series C, 5% due 12/01/2021(c) 6,834
<PAGE>
Ohio--2.4% NR* NR* 4,000 Ashtabula County, Ohio, Hospital Facilities Revenue Bonds
(Ashtabula County Medical Center Project), VRDN, 4.45% due
12/01/2007(a) 4,000
AAA Aaa 12,000 Cleveland, Ohio, Public Power System Revenue Bonds, First
Mortgage, Series A, 7% due 11/15/2024(f) 13,961
Ohio HFA, S/F Mortgage Revenue Bonds, AMT(m):
AAA Aaa 10,000 RIB, Series B-4, 9.436% due 3/31/2031(k) 11,062
AAA NR* 2,395 Series B, 8.25% due 12/15/2019 2,536
AAA NR* 4,575 Series C, 7.85% due 9/01/2021 4,842
Pennsylvania--5.0% BB Ba2 6,800 Beaver County, Pennsylvania, IDA, PCR, Refunding (Cleveland
Electric Project), 7.625% due 5/01/2025 7,276
AAA Aaa 7,000 Delaware River Port Authority, Pennsylvania and New Jersey Revenue
Bonds, Series 1995, 5.50% due 1/01/2026(e) 7,043
BBB- Baa 10,000 Pennsylvania Convention Center Authority, Revenue Refunding Bonds,
Series A, 6.75% due 9/01/2019 11,017
Pennsylvania, HFA, Revenue Refunding Bonds:
AAA Aaa 7,850 (Rental Housing), 6.50% due 7/01/2023(l) 8,082
AA Aa 8,800 RIB, AMT, Series 1991-31C, 9.661% due 10/01/2023(k) 9,790
AAA Aaa 10,000 Pennsylvania State Higher Education Assistance Agency, Student
Loan Revenue Bonds, RIB, AMT, 9.318% due 9/03/2026(c)(k) 11,462
A- Baa1 7,000 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Revenue Refunding Bonds (Temple University
Hospital), Series A, 6.625% due 11/15/2023 7,285
AAA Aaa 4,045 Philadelphia, Pennsylvania, School District, Series B, 5.50% due
9/01/2025(c) 4,033
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)(j) 5,469
AAA Aaa 2,500 York County, Pennsylvania, Hospital Authority Revenue Bonds
(York Hospital), 7% due 1/01/2001(c)(j) 2,848
Rhode Island--1.5% AAA Aaa 17,500 Convention Center Authority, Rhode Island, Revenue Refunding Bonds,
Series B, 5% due 5/15/2020(f) 16,602
AAA Aaa 5,250 Rhode Island Depositors Economic Protection Corporation, Special
Obligation Bonds, Series A, 6.95% due 8/01/2002(j) 6,097
South Carolina-- BBB Baa1 8,355 South Carolina Jobs, EDA, Economic Development Revenue Bonds (Saint
0.6% Francis Hospital--Franciscan Sisters), 7% due 7/01/2015 8,792
South Dakota--0.6% AA+ Aa1 9,085 South Dakota, HDA, Homeownership Mortgage, Series A, 7.15% due
5/01/2027 9,647
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 10,722
<PAGE>
Texas--11.1% Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series A:
BBB+ Baa2 2,095 8.25% due 1/01/2019 2,323
BBB+ Baa2 18,150 7.875% due 3/01/2021 20,366
A A2 12,350 Brazos River Authority, Texas, Revenue Refunding Bonds (Houston
Light and Power), Series 1989-A, 7.625% due 5/01/2019 13,664
AAA Aaa 10,000 Dallas, Texas, State Turnpike Authority, North Thruway Revenue
Bonds (President George Bush Turnpike), 5% due 1/01/2025(e) 9,572
Gulf Coast Waste Disposal Authority, Texas, Revenue Bonds (Champion
International Corporation), AMT:
BBB Baa1 7,250 7.45% due 5/01/2026 7,961
BBB Baa1 5,500 Series A, 6.875% due 12/01/2028 5,839
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds:
AA Aa 12,470 (Saint Luke's Episcopal Hospital Project), Series A, 6.75% due
2/15/2021 13,521
AA Aa 19,000 (Sisters of Charity), 7.10% due 7/01/2021 20,986
Harris County, Texas, Toll Road:
AAA Aaa 11,100 Senior Lien, Series A, 6.375% due 8/15/2024(f) 12,058
AA- Aa 2,000 Sub-Lien, Refunding, UT, 6.75% due 8/01/2014 2,210
</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>
Texas BBB- Ba1 $ 8,175 Jefferson County, Texas, Health Facilities Development Corporation,
(concluded) Hospital Revenue Bonds (Baptist Healthcare System Project), 8.875%
due 6/01/2021 $ 8,930
NR* Aa 12,000 North Central Texas, Health Facility Development Corporation
Revenue Bonds (Baylor University Medical Center), INFLOS,
Series A, 9.603% due 5/15/2016(k) 15,270
BB Ba 6,500 Odessa, Texas, Junior College District, Revenue Refunding Bonds,
Series A, 8.125% due 12/01/2018 7,111
AA Aa1 17,600 San Antonio, Texas, Electric and Gas Revenue Refunding Bonds,
5% due 2/01/2017 16,955
A+ Aa 6,875 Texas Housing Agency, Residential Development Mortgage Revenue
Bonds, Series A, 7.50% due 7/01/2015(m) 7,379
AA Aa 4,575 Texas State Veterans Housing Assistance, AMT, UT, Fund II,
Series A, 7% due 12/01/2025 4,747
Utah--1.0% A1+ VMIG1++ 340 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN,
5% due 7/01/2024(a)(c) 340
AA NR* 13,250 Weber County, Utah, Municipal Building Authority, Lease Revenue
Bonds, 7.50% due 12/15/2019 15,630
Virginia--0.3% AA+ Aa1 4,000 Virginia State HDA, Commonwealth Mortgage Revenue Bonds, Series A,
7.15% due 1/01/2033 4,250
<PAGE>
Washington--2.9% AAA Aaa 1,825 Washington State Health Care Facilities Authority, Revenue Refunding
Bonds (Franciscan Health-Saint Clare), 6.625% due 7/01/2020(f) 1,985
AAA NR* 18,070 Washington State Housing Finance Community, S/F Mortgage Revenue
Refunding Bonds, AMT, Series E, 7.10% due 7/01/2022(g) 18,951
Washington State Public Power Supply System, Revenue Refunding
Bonds (Nuclear Project No. 1), Series A:
AA Aa 10,250 6.50% due 7/01/2015 10,917
AA Aa 11,000 6.875% due 7/01/2017 12,022
West Virginia--1.7% AAA Aaa 11,465 Mason County, West Virginia, PCR, Refunding (Appalachian Power
Co.), Series I, 6.85% due 6/01/2022(f) 12,778
NR* NR* 4,000 Upshur County, West Virginia, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 7/15/2025 4,180
AA+ Aa1 8,400 West Virginia State, Housing Development Fund, Housing Finance,
Series D, 7.05% due 11/01/2024 8,988
Wisconsin--2.3% AA Aa 4,925 Wisconsin Housing and EDA Home Ownership Revenue Bonds, Series A,
7.10% due 3/01/2023 5,271
Wisconsin Housing and EDA Housing Revenue Bonds:
A A1 5,400 Series B, 7.05% due 11/01/2022 5,779
A A1 5,105 Series C, 7% due 5/01/2015 5,450
Wisconsin State Health and Educational Facilities Authority
Revenue Bonds, Series B:
AAA Aaa 5,500 (Novus Health Group), 6.75% due 12/15/2020(f) 6,055
AAA Aaa 11,400 (Wausau Hospitals Inc.), 6.70% due 8/15/2020(c) 12,400
Total Investments (Cost--$1,399,007)--99.7% 1,511,934
Other Assets Less Liabilities--0.3% 4,881
----------
Net Assets--100.0% $1,516,815
==========
<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, 1995.
(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)Prerefunded.
(k)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, 1995.
(l)FNMA Collateralized.
(m)GNMA Collateralized.
*Not Rated.
++Highest short-term rating issued by Moody's Investors Service, Inc.
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--0.9% NR* Aa $ 5,050 Alabama State Public School and College Authority, Refunding
Bonds, 3.70% due 12/01/1996 $ 5,056
Arizona--0.5% AA- Aa 3,000 Maricopa County, Arizona, Transportation Board, Excise Tax
Revenue Bonds, 7.10% due 7/01/1996 3,052
California--1.4% SP1 MIG1++ 8,000 California State, GO, RAW, Series C, 5.75% due 4/25/1996 8,049
Colorado--0.7% AA Baa1 3,810 Jefferson County, Colorado School District No. R--001, Revenue
Refunding Bonds, Series A, 3.65% due 12/15/1996 3,810
Connecticut--4.7% Connecticut State, GO:
AA- Aa 16,350 Refunding, Economic Recovery Notes, UT, 4.75% due 6/15/1999 16,668
AA- Aa 6,210 Series B, 5% due 10/01/1999 6,407
NR* Aa3 3,910 Connecticut State Housing Mortgage Revenue Bonds (Chestnut Hill
Apartments), 4.60% due 4/01/1997 3,915
Florida--5.4% AAA Aaa 11,900 Florida State, Board of Finance, General Services Revenue Bonds
(Department of Environmental Preservation), Series 2000-A, 5% due
7/01/1999(c) 12,278
AA Aa1 5,000 Jacksonville, Florida, Electric Authority Revenue Bonds (Electric
Systems), Series 3--B, 4% due 10/01/1998 5,006
A1+ VMIG1++ 5,800 Jacksonville, Florida, PCR, Refunding (Florida Power and Light Co.
Project), VRDN, 5.10% due 5/01/2029(b) 5,800
NR* NR* 7,500 Martin County, Florida, School District, TAN, 4.25% due 6/08/1996 7,513
Georgia--5.6% Burke County, Georgia, Development Authority, PCR
(Plant Vogtle Project):
A-1 VMIG1++ 2,900 (Georgia Power Company), VRDN, 3rd Series, 5% due 7/01/2024(b) 2,900
A+ NR* 6,410 (Oglethorpe Power Corporation), Series B, 3.95% due 1/01/1999 6,364
Georgia State, GO:
AA+ Aaa 3,015 Refunding, UT, Series E, 4.20% due 7/01/1999 3,035
AA+ Aaa 5,000 Series C, 6.50% due 7/01/1999 5,407
AA Aa1 4,000 Gwinnett County, Georgia, School District, GO, Refunding Bonds, UT,
4.40% due 2/01/1998 4,038
A1+ VMIG1++ 10,000 Municipal Electric Authority, Georgia, General Resolution, Series C,
4.90% due 3/01/1996 10,023
<PAGE>
Illinois--12.0% AA- NR* 10,000 Chicago, Illinois, Board of Education, COP (School Reform Equipment
Acquisition), 4.60% due 12/01/1999 10,067
AAA Aaa 4,120 Chicago, Illinois, Chicago Board of Education Revenue Bonds,
Series A, 7.75% due 1/01/1999(a)(f) 4,622
Chicago, Illinois, School Financing Authority:
AA- Baa1 5,000 7.25% due 6/01/1998 5,141
AAA Aaa 4,500 Refunding, Series A, 5.80% due 6/01/1999(f) 4,736
AAA Aaa 3,000 Cook County, Illinois, High School District No. 205, Revenue
Refunding Bonds (Thornton Township), UT, 5.60% due 6/01/1998(f)(g) 3,111
Illinois State, GO, Refunding, UT:
AA- A1 4,600 3.90% due 12/01/1998 4,560
AAA Aaa 8,000 5.125% due 12/01/1998(f) 8,237
AAA Aaa 10,500 5.125% due 12/01/1999(f) 10,871
SP1+ MIG1++ 3,200 Illinois State Revenue Anticipation Certificates, 4.50% due
5/10/1996 3,211
Illinois State Toll Highway Authority, Toll Highway Priority
Revenue Refunding Bonds, Series A:
A A1 3,625 3.70% due 1/01/1996 3,625
A A1 10,000 4.10% due 1/01/1998 9,998
Iowa--0.3% A1+ NR* 1,700 Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar
River Paper Company Project), VRDN, AMT, Series A, 5.20% due
6/01/2024(b) 1,700
</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>
Kentucky--2.9% A+ A $ 13,000 Kentucky State Property and Building Commission, Revenue
Refunding Bonds (Project No. 55), 3.60% due 9/01/1996 $ 12,996
AAA Aaa 3,250 Kentucky State Turnpike Authority, Economic Development Revenue
Refunding Bonds (Revitalization Projects), 4% due 7/01/1996(c) 3,257
Louisiana--0.6% Louisiana Public Facilities Authority Revenue Bonds (Tulane
University), Series B:
A A1 3,140 6.80% due 8/15/1996 3,200
A A1 470 6.80% due 8/15/1996(g) 479
Maryland--1.7% AA Aa 10,000 Maryland State Department of Transportation, Revenue Refunding
Bonds, 3.80% due 6/15/1999 9,860
<PAGE>
Massachusetts-- BBB+ NR* 1,608 Massachusetts State, COP, GO, 5.10% due 6/30/1996 1,617
4.0% A+ A1 2,500 Massachusetts State, GO, Dedicated Income Tax, Series A, 7.25% due
6/01/1996 2,537
A+ A1 5,000 Massachusetts State, GO, Refunding, Series A, 5.50% due 7/01/1999 5,215
AAA Aaa 2,005 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (New England Medical Center), Series G, 3.80% due
7/01/1997(d) 2,002
A- A1 10,160 New England Education Loan Marketing Corporation Refunding Bonds
(Massachusetts Student Loan), Series D, 4.75% due 7/01/1998 10,267
NR* NR* 995 South Hadley, Massachusetts, Industrial Revenue Bonds (South
Hadley Health Care), AMT, Series A, 5% due 12/01/1996 995
Michigan--4.4% AAA Aaa 12,785 Detroit, Michigan, Distributable State Aid, 7.20% due
5/01/1999(a)(c) 14,241
AA- A1 10,145 Michigan State Building Authority, Revenue Refunding Bonds,
Series I, 3.90% due 10/01/1997 10,136
NR* VMIG1++ 800 Michigan State Strategic Fund, Solid Waste Disposal Revenue Bonds
(Grayling Generating Project), VRDN, AMT, 5.10% due 1/01/2014(b) 800
Minnesota--1.3% AAA Aaa 3,085 Minnesota State, HFA (Rental Housing), Series D, 4.50% due
8/01/1999(d) 3,108
A+ A1 4,425 Southern Minnesota Municipal Power Agency, Power Supply System
Revenue Refunding Bonds, Series A, 4.30% due 1/01/1999 4,451
Mississippi--3.2% NR* P1 900 Jackson County, Mississippi, PCR, Refunding (Chevron USA, Inc.
Project), VRDN, 4.90% due 6/01/2023(b) 900
Mississippi Higher Education Assistance Corporation, Student Loan
Revenue Bonds, AMT:
NR* Aaa 10,000 Series B, 4.80% due 9/01/1998 10,129
A NR* 6,000 Series C, 5.40% due 1/01/1996 6,000
NR* P1 1,300 Perry County, Mississippi, PCR, Refunding (Leaf River Forest
Project), VRDN, 4.95% due 3/01/2002(b) 1,300
Nebraska--0.6% A+ A1 3,570 Nebraska Public Power District Revenue Refunding Bonds (Power
Supply System), Series C, 3.50% due 1/01/1996 3,570
New Jersey--1.8% A- A1 2,000 Camden County, New Jersey, Improvement Authority, Solid Waste
Disposal, Revenue Refunding Bonds (Landfill Project), 4% due
7/01/1997 2,002
AAA Aaa 5,715 New Jersey State Educational Facilities Authority Revenue Bonds
(Higher Educational Facilities Trust Fund), Series A, 5.125% due
9/01/1999(c) 5,905
BBB+ Baa1 2,160 New Jersey State Turnpike Authority, Revenue Refunding Bonds,
Series A, 5.50% due 1/01/1996 2,160
New Mexico--0.4% AAA Aaa 2,315 New Mexico Educational Assistance Foundation, Student Loan Revenue
Bonds, AMT, Series A, 5.75% due 4/01/1996(c) 2,326
<PAGE>
New York--4.6% A1+ NR* 200 New York City, New York, IDA, IDR (Japan Airlines Company Ltd.
Project), VRDN, AMT, 5.10% due 11/01/2015(b) 200
SP1+ MIG1++ 1,800 New York City, New York, TAN, UT, Series A, 4.50% due 2/15/1996 1,802
A1+ VMIG1++ 1,600 New York City, New York, Trust Cultural Resource Revenue Bonds
(Soloman R. Guggenheim), VRDN, Series B, 4.90% due 12/01/2015(b) 1,600
New York State Dormitory Authority Revenue Bonds (Consolidated City
University System), Series A:
BBB Baa1 6,675 4.50% due 7/01/1998 6,706
BBB Baa1 10,885 4.75% due 7/01/1999 10,962
A1+ VMIG1++ 300 New York State Dormitory Authority Revenue Bonds (Cornell
University), VRDN, Series B, 4.90% due 7/01/2025(b) 300
AAA Aaa 4,750 New York State Thruway Authority, Highway and Bridge Trust Fund,
Series A, 4.50% due 4/01/1999(c) 4,811
North Carolina-- AAA Aaa 8,500 North Carolina State, Public Improvement Refunding Bonds, 3.70% due
1.9% 8/01/1998 8,468
A1+ NR* 2,100 Raleigh--Durham, North Carolina, Airport Authority, Special Facility
Revenue Refunding Bonds (American Airlines), VRDN, Series A, 5% due
11/01/2005(b) 2,100
North Dakota--1.7% NR* Aa 5,000 North Dakota State Student Loan Revenue Refunding Bonds, Series A,
5.40% due 7/01/1996 5,041
A2 Baa1 4,500 Oliver County, North Dakota, PCR (Minnesota Power and Light Square--
Butte Electric), Series B, 4.50% due 9/01/1996 4,531
Ohio--6.5% A- NR* 2,500 Cincinnati, Ohio, City School District, RAN, 5.35% due 6/15/1996 2,518
NR* MIG1++ 3,500 Miami Valley Regional Transport Authority, Ohio (Capital Facilities),
BAN, 4.75% due 4/15/1997 3,522
Ohio State Air Quality Development Authority, Revenue Refunding
Bonds (Ohio Edison Project), Series A:
A+ VMIG1++ 10,500 4.25% due 8/01/1996 10,554
A+ VMIG1++ 6,700 3.45% due 2/01/1996 6,699
A+ A1 3,300 Ohio State Public Facilities Commission, Higher Education, Capital
Facilities, Series II-A, 5.30% due 12/01/1996 3,348
AAA Aaa 10,000 Ohio State Public Facilities Commission, Refunding Bonds (Mental
Health Facilities), Series II-B, 4.25% due 6/01/1998(e) 10,064
Pennsylvania--1.4% A1+ P1 4,000 Beaver County, Pennsylvania, IDA, PCR, Refunding (Ohio Edison Co.),
Series A, 4.30% due 10/01/1997 4,001
A1+ VMIG1++ 900 Philadelphia, Pennsylvania, Hospital and Higher Education Facilities
Authority, Hospital Revenue Bonds (Children's Hospital of
Philadelphia), VRDN, 4.90% due 3/01/2027(b) 900
AAA Aaa 3,000 Pittsburgh, Pennsylvania, Water and Sewer Authority, Water and Sewer
System, Revenue Refunding Bonds, Series A, 3.50% due 9/01/1996(f) 2,998
Rhode Island--1.1% NR* A 6,000 Rhode Island State, Student Loan Authority, Student Loan Revenue
Refunding Bonds, Series A, 5.70% due 12/01/1996 6,087
<PAGE>
South Carolina-- NR* NR* 5,775 Georgetown County, South Carolina, Water and Sewer District,
2.7% Revenue Bonds, BAN, 6.25% due 5/07/1996 5,826
South Carolina State Public Service Authority Revenue
Refunding Bonds:
AA- Aa 4,000 (Electric Revenue and Electric Systems Expansion), Series A,
7.50% due 7/01/1996 4,076
A+ Aa 5,170 Series C, 3.80% due 1/01/1997 5,178
Tennessee--1.9% AA NR* 6,885 Clarksville, Tennessee, Public Building Authority, Revenue
Refunding Bonds (Pooled Loan Program), 4.40% due 12/01/1998 6,915
AA+ Aa 4,000 Shelby County, Tennessee, Refunding Bonds, Series A, 6.40% due
8/01/1998 4,079
Texas--7.2% 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 2,258
NR* Aaa 5,000 Series C-1, 4.75% due 6/01/1997 5,048
NR* Aa 5,215 Series C-1, 5.60% due 11/01/1997 5,351
AAA Aaa 4,680 Dallas County, Texas, GO, Refunding Bonds, Series B, 4.40% due
8/15/1999 4,736
AAA Aa1 6,865 Dallas, Texas, GO, Refunding Bonds, 4.45% due 2/15/1999 6,951
Fort Bend County, Texas, Industrial Development Corporation, Revenue
Refunding Bonds (Frito Lay Inc. Project):
NR* A1 950 IDR, 4% due 10/01/1996 951
NR* A1 3,650 PCR, 4% due 10/01/1996 3,648
A1+ NR* 800 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Methodist Hospital), VRDN, 5% due
12/01/2025(b) 800
AA- Aa 4,520 Houston, Texas, GO, Refunding, Series C, 5.50% due 4/01/1999 4,709
Panhandle--Plains, Texas, Higher Education Authority Incorporated,
Student Loan Revenue Refunding Bonds, Series C:
NR* Aaa 2,000 3.95% due 9/01/1996 2,003
NR* Aaa 2,675 4.15% due 9/01/1997 2,677
A+ A1 2,000 Texas Municipal Power Agency, Revenue Refunding Bonds, Series A,
4.25% due 9/01/1997 2,009
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Utah--9.8% NR* NR* $ 26,518 Carbon County, Utah, Solid Waste Disposal Revenue Refunding
Bonds (East Carbon Landfill Project), AMT, 6.04% due 5/01/1997 $ 27,120
A1+ VMIG1++ 2,200 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN,
5% due 11/01/2024(b)(c) 2,200
AA Aa 1,250 Intermountain Power Agency, Utah, Power Supply Revenue Refunding
Bonds, Series A, 3.90% due 7/01/1996 1,252
AAA Aaa 24,600 Utah State, Building and Highway Revenue Bonds, UT, 4.40% due
7/01/1999 24,911
<PAGE>
Virginia--3.0% AAA Aaa 4,500 Fairfax County, Virginia, Revenue Refunding Bonds, Series C, UT,
4.40% due 5/01/1999 4,550
AAA Aa2 1,900 Peninsula Ports Authority, Virginia, Revenue Refunding Bonds (Shell
Oil Company Project), VRDN, Series A, 4.95% due 12/01/2005(b) 1,900
AA+ Aa1 2,975 Virginia State HDA, Commonwealth Mortgage Revenue Bonds, AMT,
Series B, Sub-Series B-1, 5.50% due 1/01/1996 2,975
AA Aa 7,325 Virginia State Public School Authority, Revenue Refunding Bonds,
Series B, 4.40% due 1/01/1999 7,391
Washington--4.4% Washington State, GO:
AA Aa 8,460 Series C, 4.80% due 7/01/1998 8,614
AA Aa 1,800 Series R-93B, 4.40% due 10/01/1998 1,817
AAA VMIG1++ 2,425 Washington State Housing Finance Commission, AMT, Series 1A--S,
4.10% due 6/01/1996(f) 2,426
Washington State Public Power Supply System, Revenue
Refunding Bonds:
AA Aa 2,000 (Nuclear Project No. 2), Series A, 3.50% due 7/01/1996 1,998
AA Aa 4,890 (Nuclear Project No. 2), Series A, 3.75% due 7/01/1997 4,863
AA Aa 5,405 (Nuclear Project No. 3), Series C, 4% due 7/01/1997 5,399
Wisconsin--1.7% A A1 2,795 Wisconsin, Housing Revenue Refunding Bonds, Series C, 4.30% due
11/01/1997 2,812
AA Aa 7,000 Wisconsin State, GO, Refunding, UT, Series 3, 4.25% due 11/01/1999 7,037
Total Investments (Cost--$564,765)--100.3% 570,345
Liabilities in Excess of Other Assets--(0.3%) (1,821)
----------
Net Assets--100.0% $ 568,524
==========
<FN>
(a)Prerefunded.
(b)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, 1995.
(c)AMBAC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)FGIC Insured.
(g)Escrowed to maturity.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
Limited
Insured National Maturity
As of December 31, 1995 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Assets: Investments, at value* (Note 1a) $2,563,340,454 $1,511,933,917 $570,344,967
Cash 232,346 1,409,832 48,961
Receivables:
Interest 44,797,182 25,541,362 8,099,697
Securities sold 884,410 25,704,551 --
Capital shares sold 1,232,021 916,449 512,764
Prepaid registration fees and other assets (Note 1e) 71,615 55,061 64,153
-------------- -------------- ------------
Total assets 2,610,558,028 1,565,561,172 579,070,542
-------------- -------------- ------------
Liabilities: Payables:
Securities purchased 49,866,324 37,803,364 7,030,616
Dividends to shareholders (Note 1f) 8,212,094 5,101,664 1,009,182
Capital shares redeemed 2,740,016 4,677,221 2,122,663
Investment adviser (Note 2) 794,913 631,493 169,117
Distributor (Note 2) 527,331 288,082 29,193
Accrued expenses and other liabilities 496,079 244,179 185,416
-------------- -------------- ------------
Total liabilities 62,636,757 48,746,003 10,546,187
-------------- -------------- ------------
Net Assets: Net assets $2,547,921,271 $1,516,815,169 $568,524,355
============== ============== ============
Net Assets Class A Common Stock, $0.10 par value++ $ 20,712,012 $ 10,114,981 $ 4,688,875
Consist of: Class B Common Stock, $0.10 par value++++ 9,553,766 4,021,972 814,934
Class C Common Stock, $0.10 par value+++ 171,260 89,675 550
Class D Common Stock, $0.10 par value+++++ 452,148 298,921 192,984
Paid-in capital in excess of par 2,348,224,673 1,459,645,351 563,502,558
Accumulated realized capital losses on investments--net (Note 5) (34,380,394) (66,536,867) (6,255,156)
Accumulated distributions in excess of realized capital gains on
investments--net -- (3,745,999) --
Unrealized appreciation on investments--net 203,187,806 112,927,135 5,579,610
-------------- -------------- ------------
Net assets $2,547,921,271 $1,516,815,169 $568,524,355
============== ============== ============
<PAGE>
Net Asset Class A:
Value: Net assets $1,708,824,695 $1,056,326,071 $467,868,452
============== ============== ============
Shares outstanding 207,120,115 101,149,810 46,888,746
============== ============== ============
Net asset value and redemption price per share $ 8.25 $ 10.44 $ 9.98
============== ============== ============
Class B:
Net assets $ 787,654,333 $ 419,896,735 $ 81,334,039
============== ============== ============
Shares outstanding 95,537,663 40,219,723 8,149,337
============== ============== ============
Net asset value and redemption price per share $ 8.24 $ 10.44 $ 9.98
============== ============== ============
Class C:
Net assets $ 14,126,163 $ 9,366,123 $ 54,984
============== ============== ============
Shares outstanding 1,712,595 896,748 5,501
============== ============== ============
Net asset value and redemption price per share $ 8.25 $ 10.44 $ 10.00
============== ============== ============
Class D:
Net assets $ 37,316,080 $ 31,226,240 $ 19,266,880
============== ============== ============
Shares outstanding 4,521,484 2,989,210 1,929,839
============== ============== ============
Net asset value and redemption price per share $ 8.25 $ 10.45 $ 9.98
============== ============== ============
<FN>
*Identified cost $2,360,152,648 $1,399,006,782 $564,765,357
============== ============== ============
++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>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
Limited
Insured National Maturity
For the Six Months Ended December 31, 1995 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned $ 74,921,312 $ 48,507,506 $ 13,163,950
Income
(Note 1d):
Expenses: Investment advisory fees (Note 2) 4,509,420 3,565,741 1,021,614
Account maintenance and distribution fees--Class B (Note 2) 2,884,432 1,550,654 175,197
Transfer agent fees--Class A (Note 2) 321,969 217,914 104,807
Transfer agent fees--Class B (Note 2) 181,735 106,060 29,204
Accounting services (Note 2) 98,781 92,176 48,497
Custodian fees 98,781 68,737 35,383
Registration fees (Note 1e) 44,900 68,874 78,943
Printing and shareholder reports 89,801 50,246 34,893
Professional fees 35,920 37,530 13,717
Account maintenance fees--Class D (Note 2) 40,862 33,893 7,907
Account maintenance and distribution fees--Class C (Note 2) 39,134 27,656 1,949
Pricing services 26,940 14,572 12,699
Portfolio insurance 8,980 -- --
Directors' fees and expenses 8,980 8,111 6,142
Transfer agent fees--Class D (Note 2) 6,205 5,657 3,351
Transfer agent fees--Class C (Note 2) 2,663 1,748 817
Other 8,980 15,741 8,365
-------------- -------------- ------------
Total expenses 8,408,483 5,865,310 1,583,485
-------------- -------------- ------------
Investment income--net 66,512,829 42,642,196 11,580,465
-------------- -------------- ------------
Realized & Realized gain on investments--net 3,705,340 10,775,607 699,588
Unrealized Change in unrealized appreciation on investments--net 99,199,541 51,050,934 2,756,343
Gain on -------------- -------------- ------------
Investments-- Net Increase in Net Assets Resulting from Operations $ 169,417,710 $ 104,468,737 $ 15,036,396
Net (Notes ============== ============== ============
1b, 1d & 3):
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 Year For the Six For the Year For the Six For the Year
Months Ended Ended Months Ended Ended Months Ended Ended
Increase (Decrease) in Net Assets: Dec. 31, 1995 June 30, 1995 Dec. 31, 1995 June 30, 1995 Dec. 31, 1995 June 30, 1995
<S> <S> <C> <C> <C> <C> <C> <C>
Operations: Investment income--net $ 66,512,829 $ 145,464,480 $ 42,642,196 $ 90,299,833 $ 11,580,465 $ 31,100,101
Realized gain (loss)
on investments--net 3,705,340 (38,085,273) 10,775,607 (77,312,475) 699,588 (1,760,975)
Change in unrealized
appreciation/depreciation
on investments--net 99,199,541 91,672,331 51,050,934 98,337,487 2,756,343 4,210,861
-------------- -------------- -------------- -------------- -------------- --------------
Net increase in net assets
resulting from operations 169,417,710 199,051,538 104,468,737 111,324,845 15,036,396 33,549,987
-------------- -------------- -------------- -------------- -------------- --------------
Dividends & Investment income--net:
Distributions Class A (47,028,350) (104,032,884) (31,039,073) (67,078,481) (9,534,178) (25,771,957)
to Class B (18,390,137) (40,656,294) (10,662,053) (22,561,653) (1,728,058) (5,094,228)
Shareholders Class C (230,473) (120,450) (176,075) (90,229) (23,635) (45,930)
(Note 1f): Class D (863,869) (654,852) (764,995) (569,470) (294,594) (187,986)
Realized gain on
investments--net:
Class A -- (31,614,511) -- (20,402,246) -- --
Class B -- (14,155,831) -- (7,752,072) -- --
Class C -- (23,608) -- (26,597) -- --
Class D -- (104,611) -- (171,804) -- --
In excess of realized gain
on investments--net:
Class A -- -- -- (2,695,572) -- --
Class B -- -- -- (1,024,214) -- --
Class C -- -- -- (3,514) -- --
Class D -- -- -- (22,699) -- --
-------------- -------------- -------------- -------------- -------------- --------------
Net decrease in net assets
resulting from dividends
and distributions
to shareholders (66,512,829) (191,363,041) (42,642,196) (122,398,551) (11,580,465) (31,100,101)
-------------- -------------- -------------- -------------- -------------- --------------
Capital Share Net decrease in net assets
Transactions derived from capital
(Note 4): share transactions (77,567,317) (293,039,051) (49,234,431) (147,053,135) (116,209,940) (256,848,291)
-------------- -------------- -------------- -------------- -------------- --------------
Net Assets: Total increase (decrease)
in net assets 25,337,564 (285,350,554) 12,592,110 (158,126,841) (112,754,009) (254,398,405)
Beginning of period 2,522,583,707 2,807,934,261 1,504,223,059 1,662,349,900 681,278,364 935,676,769
-------------- -------------- -------------- -------------- -------------- --------------
End of period $2,547,921,271 $2,522,583,707 $1,516,815,169 $1,504,223,059 $ 568,524,355 $ 681,278,364
============== ============== ============== ============== ============== ==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derive For the Insured Portfolio
from information provided in the financial statements. Six Months Class A
Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1995 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 7.92 $ 7.88 $ 8.64 $ 8.26 $ 7.92
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .22 .46 .47 .50 .52
Realized and unrealized gain (loss) on
investments--net .33 .18 (.53) .49 .41
----------- ----------- ----------- ----------- -----------
Total from investment operations .55 .64 (.06) .99 .93
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.22) (.46) (.47) (.50) (.52)
Realized gain on investments--net -- (.14) (.23) (.11) (.07)
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.22) (.60) (.70) (.61) (.59)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 8.25 $ 7.92 $ 7.88 $ 8.64 $ 8.26
=========== =========== =========== =========== ===========
Total Based on net asset value per share 7.05%+++ 8.60% (1.08%) 12.41% 12.11%
Investment =========== =========== =========== =========== ===========
Return:**
Ratios to Expenses .43%* .43% .42% .42% .44%
Average =========== =========== =========== =========== ===========
Net Assets: Investment income--net 5.53%* 5.78% 5.53% 5.94% 6.44%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $ 1,708,825 $ 1,706,064 $ 1,941,741 $ 2,225,188 $ 2,062,591
Data: =========== =========== =========== =========== ===========
Portfolio turnover 33.18% 35.61% 28.34% 43.86% 22.50%
=========== =========== =========== =========== ===========
<PAGE>
<CAPTION>
The following per share data and ratios have been derive For the Insured Portfolio
from information provided in the financial statements. Six Months Class B
Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1995 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 7.92 $ 7.87 $ 8.63 $ 8.26 $ 7.92
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .19 .40 .40 .44 .46
Realized and unrealized gain (loss) on
investments--net .32 .19 (.53) .48 .41
----------- ----------- ----------- ----------- -----------
Total from investment operations .51 .59 (.13) .92 .87
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.19) (.40) (.40) (.44) (.46)
Realized gain on investments--net -- (.14) (.23) (.11) (.07)
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.19) (.54) (.63) (.55) (.53)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 8.24 $ 7.92 $ 7.87 $ 8.63 $ 8.26
=========== =========== =========== =========== ===========
Total Based on net asset value per share 6.50%+++ 7.91% (1.81%) 11.44% 11.27%
Investment =========== =========== =========== =========== ===========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .44%* .44% .42% .43% .44%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.19%* 1.19% 1.17% 1.18% 1.19%
=========== =========== =========== =========== ===========
Investment income--net 4.77%* 5.03% 4.78% 5.17% 5.69%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $ 787,654 $ 782,749 $ 866,193 $ 911,307 $ 706,016
Data: =========== =========== =========== =========== ===========
Portfolio turnover 33.18% 35.61% 28.34% 43.86% 22.50%
=========== =========== =========== =========== ===========
<PAGE>
<CAPTION>
Insured Portfolio
The following per share data and ratios have been derived Class C Class D
from information provided in the financial statement. For the Six For the Period For the Six For the Period
Months Ended Oct. 21, 1994++ to Months Ended Oct. 21, 1994++ to
Increase (Decrease) in Net Asset Value: Dec. 31, 1995 June 30, 1995 Dec. 31, 1995 June 30, 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 7.92 $ 7.68 $ 7.92 $ 7.68
Operating ---------- ---------- ---------- ----------
Performance: Investment income--net .19 .27 .21 .29
Realized and unrealized gain on
investments--net .33 .38 .33 .38
---------- ---------- ---------- ----------
Total from investment operations .52 .65 .54 .67
---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.19) (.27) (.21) (.29)
Realized gain on investments--net -- (.14) -- (.14)
---------- ---------- ---------- ----------
Total dividends and distributions (.19) (.41) (.21) (.43)
---------- ---------- ---------- ----------
Net asset value, end of period $ 8.25 $ 7.92 $ 8.25 $ 7.92
========== ========== ========== ==========
Total Based on net asset value per share 6.60%+++ 8.83%+++ 6.91%+++ 9.24%+++
Investment ========== ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .44%* .43%* .43%* .43%*
Net Assets: ========== ========== ========== ==========
Expenses 1.24%* 1.23%* .68%* .68%*
========== ========== ========== ==========
Investment income--net 4.70%* 4.93%* 5.27%* 5.50%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 14,126 $ 7,756 $ 37,316 $ 26,015
Data: ========== ========== ========== ==========
Portfolio turnover 33.18% 35.61% 33.18% 35.61%
========== ========== ========== ==========
<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 (continued)
<CAPTION>
The following per share data and ratios have been derived For the National Portfolio
from information provided in the financial statements. Six Months Class A
Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1995 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.02 $ 10.08 $ 11.02 $ 10.64 $ 10.17
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .30 .60 .62 .67 .71
Realized and unrealized gain (loss) on
investments--net .42 .15 (.64) .57 .58
----------- ----------- ----------- ----------- -----------
Total from investment operations .72 .75 (.02) 1.24 1.29
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.30) (.60) (.62) (.67) (.71)
Realized gain on investments--net -- (.19) (.30) (.19) (.11)
In excess of realized gain on investments--net -- (.02) -- -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.30) (.81) (.92) (.86) (.82)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 10.44 $ 10.02 $ 10.08 $ 11.02 $ 10.64
=========== =========== =========== =========== ===========
Total Based on net asset value per share 7.31%+++ 7.89% (.47%) 12.19% 13.09%
Investment =========== =========== =========== =========== ===========
Return:**
Ratios to Expenses .56%* .56% .55% .55% .55%
Average =========== =========== =========== =========== ===========
Net Assets: Investment income--net 5.90%* 6.01% 5.72% 6.23% 6.80%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $ 1,056,326 $ 1,059,440 $ 1,203,181 $ 1,353,805 $ 1,278,055
Data: =========== =========== =========== =========== ===========
Portfolio turnover 46.50% 103.65% 73.33% 65.43% 50.94%
=========== =========== =========== =========== ===========
<PAGE>
<CAPTION>
The following per share data and ratios have been derived For the National Portfolio
from information provided in the financial statements. Six Months Class B
Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1995 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.02 $ 10.07 $ 11.02 $ 10.63 $ 10.16
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .26 .52 .54 .59 .63
Realized and unrealized gain (loss) on
investments--net .42 .16 (.65) .58 .58
----------- ----------- ----------- ----------- -----------
Total from investment operations .68 .68 (.11) 1.17 1.21
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.26) (.52) (.54) (.59) (.63)
Realized gain on investments--net -- (.19) (.30) (.19) (.11)
In excess of realized gain on investments--net -- (.02) -- -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.26) (.73) (.84) (.78) (.74)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 10.44 $ 10.02 $ 10.07 $ 11.02 $ 10.63
=========== =========== =========== =========== ===========
Total Based on net asset value per share 6.89%+++ 7.28% (1.39%) 11.45% 12.25%
Investment =========== =========== =========== =========== ===========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .57%* .57% .55% .56% .56%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.32%* 1.32% 1.30% 1.31% 1.31%
=========== =========== =========== =========== ===========
Investment income--net 5.14%* 5.25% 4.97% 5.46% 6.03%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $ 419,897 $ 419,933 $ 459,169 $ 424,071 $ 286,375
Data: =========== =========== =========== =========== ===========
Portfolio turnover 46.50% 103.65% 73.33% 65.43% 50.94%
=========== =========== =========== =========== ===========
<PAGE>
<CAPTION>
National Portfolio
Class C Class D
For the For the
The following per share data and ratios have been derived For the Period For the Period
from information provided in the financial statements. Six Months Oct. 21, 1994++ Six Months Oct. 21, 1994++
Ended to June 30, Ended to June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1995 1995 Dec. 31, 1995 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.03 $ 9.85 $ 10.03 $ 9.85
Operating --------- --------- --------- ---------
Performance: Investment income--net .26 .36 .29 .40
Realized and unrealized gain on investments--net .41 .39 .42 .39
--------- --------- --------- ---------
Total from investment operations .67 .75 .71 .79
--------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.26) (.36) (.29) (.40)
Realized gain on investments--net -- (.19) -- (.19)
In excess realized gain on investments--net -- (.02) -- (.02)
--------- --------- --------- ---------
Total dividends and distributions (.26) (.57) (.29) (.61)
--------- --------- --------- ---------
Net asset value, end of period $ 10.44 $ 10.03 $ 10.45 $ 10.03
========= ========= ========= =========
Total Based on net asset value per share 6.76%+++ 7.97%+++ 7.17%+++ 8.37%+++
Investment ========= ========= ========= =========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .57%* .57%* .56%* .56%*
Net Assets: ========= ========= ========= =========
Expenses 1.37%* 1.37%* .81%* .81%*
========= ========= ========= =========
Investment income--net 5.08%* 5.21%* 5.63%* 5.78%*
========= ========= ========= =========
Supplemental Net assets, end of period (in thousands) $ 9,366 $ 5,195 $ 31,226 $ 19,656
Data: ========= ========= ========= =========
Portfolio turnover 46.50% 103.65% 46.50% 103.65%
========= ========= ========= =========
<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>
Limited Maturity Portfolio
Class A
The following per share data and ratios have been derived For the
from information provided in the financial statements. Six Months
Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1995 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.92 $ 9.87 $ 10.01 $ 9.91 $ 9.75
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .19 .38 .37 .41 .50
Realized and unrealized gain (loss) on
investments--net .06 .05 (.14) .10 .16
----------- ----------- ----------- ----------- -----------
Total from investment operations .25 .43 .23 .51 .66
----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net (.19) (.38) (.37) (.41) (.50)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 9.98 $ 9.92 $ 9.87 $ 10.01 $ 9.91
=========== =========== =========== =========== ===========
Total Based on net asset value per share 2.50%+++ 4.53% 2.30% 5.28% 6.93%
Investment =========== =========== =========== =========== ===========
Return:**
Ratios to Expenses .45%* .41% .40% .41% .40%
Average =========== =========== =========== =========== ===========
Net Assets: Investment income--net 3.81%* 3.86% 3.68% 4.13% 5.02%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $ 467,868 $ 536,474 $ 790,142 $ 846,736 $ 613,407
Data: =========== =========== =========== =========== ===========
Portfolio turnover 52.19% 37.33% 45.67% 65.43% 96.32%
=========== =========== =========== =========== ===========
<PAGE>
<CAPTION>
Limited Maturity Portfolio
Class B
For the
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. Six Months Nov. 2, 1992++
Ended For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1995 1995 1994 1993
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.92 $ 9.87 $ 10.01 $ 9.93
Operating ---------- ---------- ---------- ----------
Performance: Investment income--net .17 .35 .33 .24
Realized and unrealized gain (loss) on
investments--net .06 .05 (.14) .08
---------- ---------- ---------- ----------
Total from investment operations .23 .40 .19 .32
---------- ---------- ---------- ----------
Less dividends from investment income--net (.17) (.35) (.33) (.24)
---------- ---------- ---------- ----------
Net asset value, end of period $ 9.98 $ 9.92 $ 9.87 $ 10.01
========== ========== ========== ==========
Total Based on net asset value per share 2.31%+++ 4.14% 1.98% 3.26%+++
Investment ========== ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .47%* .43% .41% .41%*
Net Assets: ========== ========== ========== ==========
Expenses .82%* .78% .76% .76%*
========== ========== ========== ==========
Investment income--net 3.44%* 3.50% 3.33% 3.60%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 81,334 $ 129,581 $ 145,534 $ 95,179
Data: ========== ========== ========== ==========
Portfolio turnover 52.19% 37.33% 45.67% 65.43%
========== ========== ========== ==========
<PAGE>
<CAPTION>
Limited Maturity Portfolio
Class C Class D
For the For the
The following per share data and ratios have been derived For the Period For the Period
from information provided in the financial statements. Six Months Oct. 21, 1994++ Six Months Oct. 21, 1994++
Ended to Ended to
Increase (Decrease) in Net Asset Value: Dec. 31, 1995 June 30, 1995 Dec 31, 1994 June 30, 1995
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.92 $ 9.83 $ 9.93 $ 9.83
Operating ---------- ---------- ---------- ----------
Performance: Investment income--net .16 .25 .19 .26
Realized and unrealized gain on investments--net .08 .09 .05 .10
---------- ---------- ---------- ----------
Total from investment operations .24 .34 .24 .36
---------- ---------- ---------- ----------
Less dividends from investment income--net (.16) (.25) (.19) (.26)
---------- ---------- ---------- ----------
Net asset value, end of period $ 10.00 $ 9.92 $ 9.98 $ 9.93
========== ========== ========== ==========
Total Based on net asset value per share 2.44%+++ 3.52%+++ 2.34%+++ 3.73%+++
Investment ========== ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .53%* .49%* .45%* .43%*
Net Assets: ========== ========== ========== ==========
Expenses .81%* .70%* .55%* .53%*
========== ========== ========== ==========
Investment income--net 3.43%* 3.61%* 3.72%* 3.78%*
========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $ 55 $ 3,965 $ 19,267 $ 11,258
Data: ========== ========== ========== ==========
Portfolio turnover 52.19% 37.33% 52.19% 37.33%
========== ========== ========== ==========
<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>
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 financial state-
ments reflect all adjustments which are, in the opinion of manage-
ment, 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 mainte-
nance of such shares, and Class B and Class C Shares also bear cer-
tain 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
and options thereon, which are traded on exchanges, are valued at
closing prices as of the close of such exchanges. 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. The procedures of the pricing service and
its valuations are reviewed by the officers of the Fund under the
general supervision of the Board of Directors.
<PAGE>
(b) Derivative financial instrument--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 pro-
vision is required.
(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
determined on the identified cost basis.
(e) Prepaid registration fees--Prepaid registration fees are charged
to expenses as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates. Distributions in excess
of realized capital gains are due primarily to differing tax treatments
for futures transactions and post-October losses.
<PAGE>
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement
with Fund Asset Management, L.P. ("FAM"). 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-
sidary 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
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 fees are accrued daily and
paid monthly at annual rates based upon the average daily net
assets of the shares as follows:
<PAGE>
Account Maintenance Fees Distribution Fees
Limited Limited
Insured National Maturity Insured National Maturity
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, 1995, MLFD earned under-
writing discounts and direct commissions and MLPF&S earned
dealer concessions on sales of the Fund's Class A Shares as follows:
Insured National Limited Maturity
Portfolio Portfolio Portfolio
Class A Shares:
MLFD $ 16,054 $ 11,154 $ 1,209
MLPF&S 131,764 95,402 12,272
Class D Shares:
MLFD 6,708 6,227 1,651
MLPF&S 46,134 56,472 14,236
For the six months ended December 31, 1995, MLPF&S received
contingent deferred sales charges of $1,106,209 relating to
transactions in Class B Shares, amounting to $551,394
$474,154 and $80,661 in the Insured, National and Limited Maturity
Portfolios, respectively, and $3,456 relating to transactions in Class
C Shares, amounting to $2,224, $951 and $281 in the Insured,
National and Limited Maturity Portfolios, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
<PAGE>
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, MLFD, MLFDS, MLPF&S, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for six months ended December 31, 1995 were as follows:
Purchases Sales
Insured Portfolio $ 762,602,396 $ 977,638,883
National Portfolio 660,760,488 728,902,428
Limited Maturity Portfolio 284,292,652 399,685,229
NOTES TO FINANCIAL STATEMENTS (continued)
Net realized and unrealized gains (losses) as of December 31, 1995
were as follows:
Realized Unrealized
Insured Portfolio Gains (Losses) Gains
Long-term investments $ 5,483,874 $ 203,065,543
Short-term investments (1,778,534) 122,263
------------- -------------
Total $ 3,705,340 $ 203,187,806
============= =============
Realized Unrealized
National Portfolio Gains (Losses) Gains
Long-term investments $ 11,167,909 $ 112,815,050
Short-term investments 1,948 112,085
Financial future contracts on options (394,250) --
------------- -------------
Total $ 10,775,607 $ 112,927,135
============= =============
Realized Unrealized
Limited Maturity Portfolio Gains Gains
Long-term investments $ 580,861 $ 5,495,155
Short-term investments 118,727 84,455
------------- -------------
Total $ 699,588 $ 5,579,610
============= =============
<PAGE>
As of December 31, 1995 net unrealized appreciation/depreciation
for Federal income tax purposes were as follows:
Gross Gross
Unrealized Unrealized Net Unrealized
Appreciation Depreciation Appreciation
Insured Portfolio $203,195,361 $ (7,555) $ 203,187,806
National Portfolio 114,862,704 (1,935,569) 112,927,135
Limited Maturity
Portfolio 5,618,995 (39,385) 5,579,610
The aggregate cost of investments at December 31, 1995 for Federal
income tax purposes was $2,360,152,648 for the Insured Portfolio,
$1,399,006,782 for the National Portfolio, and $564,765,357 for the
Limited Maturity Portfolio.
4. Capital Share Transactions:
Net decrease on net assets derived from capital share transactions
for the six months ended December 31, 1995 and the year ended
June 30, 1995 was $77,567,317 and $293,039,051, respectively,
for the Insured Portfolio; $49,234,431 and $147,053,135,
respectively, for the National Portfolio and ($116,209,940) and
$256,848,291, respectively, for the Limited Maturity Portfolio.
Transactions in capital shares for each class were as follows:
Insured Portfolio
Class A Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 3,252,053 $ 26,137,113
Shares issued to shareholders in
reinvestment of dividends 2,626,781 21,108,512
------------- -------------
Total issued 5,878,834 47,245,625
Shares redeemed (14,132,632) (113,668,638)
------------- -------------
Net decrease (8,253,798) $ (66,423,013)
============= =============
<PAGE>
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 17,244,995 $ 133,588,440
Shares issued to shareholders in
reinvestment of dividends and
distributions 5,993,847 46,501,518
------------- -------------
Total issued 23,238,842 180,089,958
Shares redeemed (54,299,693) (419,430,676)
------------- -------------
Net decrease (31,060,851) $(239,340,718)
============= =============
Insured Portfolio
Class B Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 7,978,131 $ 64,242,372
Shares issued to shareholders in
reinvestment of dividends 1,209,831 9,719,843
------------- -------------
Total issued 9,187,962 73,962,215
Automatic conversion of shares (86,360) (698,515)
Shares redeemed (12,448,858) (99,873,992)
------------- -------------
Net decrease (3,347,256) $ (26,610,292)
============= =============
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 16,066,095 $ 123,787,819
Shares issued to shareholders in
reinvestment of dividends and
distributions 2,730,539 21,164,361
------------- -------------
Total issued 18,796,634 144,952,180
Automatic conversion of shares (8,999) (69,008)
Shares redeemed (29,913,866) (230,944,682)
------------- -------------
Net decrease (11,126,231) $ (86,061,510)
============= =============
<PAGE>
Insured Portfolio
Class C Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 958,717 $ 7,705,084
Shares issued to shareholders in
reinvestment of dividends 19,912 160,761
------------- -------------
Total issued 978,629 7,865,845
Shares redeemed (245,315) (1,964,976)
------------- -------------
Net increase 733,314 $ 5,900,869
============= =============
Insured Portfolio
Class C Shares for the Period Dollar
October 21, 1994++ to June 30, 1995 Shares Amount
Shares sold 1,136,288 $ 8,839,400
Shares issued to shareholders in
reinvestment of dividends and
distributions 10,357 81,730
------------- -------------
Total issued 1,146,645 8,921,130
Shares redeemed (167,364) (1,318,478)
------------- -------------
Net increase 979,281 $ 7,602,652
============= =============
[FN]
++Commencement of Operations.
Insured Portfolio
Class D Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 7,206,629 $ 57,923,929
Automatic conversion of shares 53,997 698,515
Shares issued to shareholders in
reinvestment of dividends 86,292 434,623
------------- -------------
Total issued 7,346,918 59,057,067
Shares redeemed (6,108,482) (49,491,948)
------------- -------------
Net increase 1,238,436 $ 9,565,119
============= =============
<PAGE>
Insured Portfolio
Class D Shares for the Period Dollar
October 21, 1994++ to June 30, 1995 Shares Amount
Shares sold 5,713,054 $ 43,851,761
Automatic conversion of shares 8,988 69,008
Shares issued to shareholders in
reinvestment of dividends and
distributions 41,138 324,130
------------- -------------
Total issued 5,763,180 44,244,899
Shares redeemed (2,480,132) (19,484,374)
------------- -------------
Net increase 3,283,048 $ 24,760,525
============= =============
[FN]
++Commencement of Operations.
National Portfolio
Class A Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 978,750 $ 9,942,883
Shares issued to shareholders in
reinvestment of dividends 1,513,232 15,380,093
------------- -------------
Total issued 2,491,982 25,322,976
Shares redeemed (7,029,170) (71,395,631)
------------- -------------
Net decrease (4,537,188) $ (46,072,655)
============= =============
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 3,950,018 $ 38,999,667
Shares issued to shareholders in
reinvestment of dividends and
distributions 4,615,676 44,866,990
------------- -------------
Total issued 8,565,694 83,866,657
Shares redeemed (22,289,533) (218,456,423)
------------- -------------
Net decrease (13,723,839) $(134,589,766)
============= =============
<PAGE>
National Portfolio
Class B Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 3,171,052 $ 32,250,035
Shares issued to shareholders in
reinvestment of dividends 506,438 5,146,423
------------- -------------
Total issued 3,677,490 37,396,458
Automatic conversion of shares (26,103) (264,621)
Shares redeemed (5,335,536) (54,134,216)
------------- -------------
Net decrease (1,684,149) $ (17,002,379)
============= =============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 8,878,807 $ 87,702,076
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,612,526 15,637,171
------------- -------------
Total issued 10,491,333 102,709,247
Automatic conversion of shares (2,817) (44,533)
Shares redeemed (14,168,055) (139,040,527)
------------- -------------
Net decrease (3,679,539) $ (36,375,813)
============= =============
NOTES TO FINANCIAL STATEMENTS (concluded)
National Portfolio
Class C Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 428,670 $ 4,373,403
Shares issued to shareholders in
reinvestment of dividends 8,425 85,911
------------- -------------
Total issued 437,095 4,459,314
Shares redeemed (58,487) (596,298)
------------- -------------
Net increase 378,608 $ 3,863,016
============= =============
<PAGE>
National Portfolio
Class C Shares for the Period Dollar
October 21, 1994++ to June 30, 1995 Shares Amount
Shares sold 658,356 $ 6,451,126
Shares issued to shareholders in
reinvestment of dividends and
distributions 5,456 53,279
------------- -------------
Total issued 663,812 6,504,405
Shares redeemed (145,672) (1,433,070)
------------- -------------
Net increase 518,140 $ 5,071,335
============= =============
[FN]
++Commencement of Operations.
National Portfolio
Class D Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 7,954,844 $ 81,335,078
Automatic conversion of shares 26,078 264,621
Shares issued to shareholders in
reinvestment of dividends 32,902 336,705
------------- -------------
Total issued 8,013,824 81,936,404
Shares redeemed (6,985,081) (71,958,817)
------------- -------------
Net increase 1,028,743 $ 9,977,587
============= =============
National Portfolio
Class D Shares for the Period Dollar
October 21, 1994++ to June 30, 1995 Shares Amount
Shares sold 5,900,638 $ 57,599,450
Automatic conversion of shares 2,818 44,533
Shares issued to shareholders in
reinvestment of dividends and
distributions 32,362 314,401
------------- -------------
Total issued 5,935,818 57,958,384
Shares redeemed (3,975,351) (39,117,275)
------------- -------------
Net increase 1,960,467 $ 18,841,109
============= =============
[FN]
++Commencement of Operations.
<PAGE>
Limited Maturity Portfolio
Class A Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 745,550 $ 7,416,341
Shares issued to shareholders in
reinvestment of dividends 604,491 6,012,512
------------- -------------
Total issued 1,350,041 13,428,853
Shares redeemed (8,530,005) (84,815,615)
------------- -------------
Net decrease (7,179,964) $ (71,386,762)
============= =============
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 5,989,549 $ 58,950,508
Shares issued to shareholders in
reinvestment of dividends 1,619,597 15,934,105
------------- -------------
Total issued 7,609,146 74,884,613
Shares redeemed (33,605,286) (330,320,109)
------------- -------------
Net decrease (25,996,140) $(255,435,496)
============= =============
Limited Maturity Portfolio
Class B Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 1,134,714 $ 11,283,572
Shares issued to shareholders in
reinvestment of dividends 114,363 1,137,337
------------- -------------
Total issued 1,249,077 12,420,909
Automatic conversion of shares (1,550) (15,411)
Shares redeemed (6,155,548) (61,222,113)
------------- -------------
Net decrease (4,908,021) $ (48,816,615)
============= =============
<PAGE>
Limited Maturity Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 8,960,577 $ 88,112,911
Shares issued to shareholders in
reinvestment of dividends 364,664 3,587,539
------------- -------------
Total issued 9,325,241 91,700,450
Automatic conversion of shares (447) (4,387)
Shares redeemed (11,012,352) (108,188,416)
------------- -------------
Net decrease (1,687,558) $ (16,492,353)
============= =============
Limited Maturity Portfolio
Class C Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 806,810 $ 8,020,174
Shares issued to shareholders in
reinvestment of dividends 1,364 13,553
------------- -------------
Total issued 808,174 8,033,727
Shares redeemed (1,202,364) (11,950,984)
------------- -------------
Net decrease (394,190) $ (3,917,257)
============= =============
Limited Maturity Portfolio
Class C Shares for the Period Dollar
October 21, 1994++ to June 30, 1995 Shares Amount
Shares sold 1,018,221 $ 10,034,099
Shares issued to shareholders in
reinvestment of dividends 3,599 35,474
------------- -------------
Total issued 1,021,820 10,069,573
Shares redeemed (622,129) (6,135,873)
------------- -------------
Net increase 399,691 $ 3,933,700
============= =============
[FN]
++Commencement of Operations.
<PAGE>
Limited Maturity Portfolio
Class D Shares for the Six Months Dollar
Ended December 31, 1995 Shares Amount
Shares sold 3,330,959 $ 33,125,406
Automatic conversion of shares 1,548 15,411
Shares issued to shareholders in
reinvestment of dividends 17,054 169,680
------------- -------------
Total issued 3,349,561 33,310,497
Shares redeemed (2,553,941) (25,399,803)
------------- -------------
Net increase 795,620 $ 7,910,694
============= =============
Limited Maturity Portfolio
Class D Shares for the Period Dollar
October 21, 1994++ to June 30, 1995 Shares Amount
Shares sold 2,889,627 $ 28,392,515
Automatic conversion of shares 447 4,387
Shares issued to shareholders in
reinvestment of dividends 12,056 118,733
------------- -------------
Total issued 2,902,130 28,515,635
Shares redeemed (1,767,911) (17,369,777)
------------- -------------
Net increase 1,134,219 $ 11,145,858
============= =============
[FN]
++ Commencement of Operations.
5. Capital Loss Carryforward:
At June 30, 1995, the Fund had a net capital loss carryforward as
follows: approximately $38,085,000 in the Insured Portfolio, all of
which expires in 2003; approximately $37,909,000 in the National
Portfolio, all of which expires in 2003; and approximately $6,271,000
in the Limited Maturity Portfolio, of which $1,416,000 expires in
1997, $2,787,000 expires in 1998, $22,000 expires in 1999, $25,000
expires in 2002 and $2,021,000 expires in 2003. These will be
available to offset like amounts of any future taxable gains.
