MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
FUND LOGO
Quarterly Report
March 31, 1996
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
<PAGE>
DEAR SHAREHOLDER
As 1995 ended and into the first two months of 1996, it appeared
that the US economy was losing momentum. Lackluster retail sales,
increases in initial unemployment claims (along with weak job and
income growth), and evidence of slowing in the manufacturing sector
all suggested that the rate of economic growth was slowing, with
some forecasters even suggesting the possibility of an imminent
recession. With inflationary pressures well subdued, these signs of
economic weakness led the Federal Reserve Board to lower short-term
interest rates at its January Federal Open Market Committee meeting.
However, investor perceptions regarding the rate of future economic
growth changed dramatically with the report of stronger-than-
expected employment data for February and March. As a result, the
consensus outlook regarding the direction of business activity
shifted from expectations of weakness to anticipation of a revival
in growth of the economy. Long-term interest rates rose, and the
Federal Reserve Board left monetary policy on hold.
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, inflationary pressures do not seem to
be building and the manufacturing sector is still relatively weak,
which suggest that the economy is not on the verge of overheating.
Nevertheless, it is likely that any further indication of stronger
economic activity in the weeks ahead may add to investor concerns
that accelerating economic activity could lead to higher interest
rates.
The Municipal Market
Tax-exempt bond yields rose for the three months ended March 31,
1996. Long-term municipal bond yields were little changed in January
and early February. However, by late February yields began to rise
somewhat as investors began to see signs of emerging domestic
growth. The surge in US employment reported in early March appeared
to confirm investors' earlier concerns, and yields rose rapidly for
the remainder of the March quarter. As measured by the Bond Buyer
Revenue Bond Index, tax-exempt revenue bond yields rose
approximately 45 basis points (0.45%) to end the quarter at 6.15%.
However, the increase in taxable bond yields was more substantial.
Long-term US Treasury bond rates rose over 70 basis points to finish
the period at 6.67%. The March quarter saw the municipal market
reverse the trend seen throughout much of 1995 and significantly
outperform US Treasury securities.
<PAGE>
The municipal bond market's recent outperformance was largely the
result of two principal factors. First, and perhaps more
importantly, much of the earlier concern regarding proposed changes
in Federal income tax codes and their effect on the tax treatment of
tax-exempt bond income has dissipated. As the negative revenue
impact of the various proposals, such as the flat tax, became
apparent, the likelihood of immediate tax reform quickly diminished.
When the Kemp Commission dealing with Federal income tax reform
released its findings early in 1996, the obvious need for reform was
highlighted. However, no specific recommendations of a flat tax,
value-added tax or any other specific reform were made.
Consequently, fears of losing the favored tax treatment of municipal
bond income declined even further. As a percentage of Treasury bond
yields, tax-exempt bond yield ratios quickly declined from 95% to
approximately 90%. This allowed the municipal bond market to
maintain much of the gains made since early 1995.
The second major factor leading to the municipal bond market's
recent improvement was the return of a more favorable technical
environment. Over the past three months, approximately $90 billion
in municipal securities were underwritten, an increase of
approximately 35% versus the comparable period a year earlier.
However, much of this increase was biased by recent underwritings
dedicated toward refinancing. Municipal issuers sought to refinance
their existing higher-couponed debt as tax-exempt bond yields
approached their recent historic lows. Over the past three months
such refundings were estimated to represent at least 50% of total
issuance. However, at the same time investors continue to receive
significant amounts of assets derived from coupon income, bond
maturities and proceeds from early redemptions. In January and
February investors received approximately $35 billion in such
assets, nearly equal to the total amount of bonds issued during the
quarter ended March 31, 1996. These cash flows helped maintain
individual retail investor demand during recent months.
Additionally, major institutional investors, such as certain
insurance companies whose underwriting profits were cyclically high,
demonstrated significant ongoing interest in the tax-exempt bond
market, particularly on higher-quality securities. Individual and
institutional investor demand was strong enough during the quarter
ended March 31, 1996 to absorb the relative increase in bond
issuance.
Looking ahead, we believe the municipal bond market is likely to
continue to outperform the US Treasury bond market. Investor demand
should remain adequate to absorb new bond issuance. In addition, it
is unlikely that the rapid pace of issuance seen thus far in 1996
will be maintained. The recent rise in yields made further bond
refinancings economically unfeasible. Since these refinancings were
the driving force of recent bond issuance, as the amount of these
refundings decline, overall issuance should decline. This should
allow the current demand/supply balance to be easily maintained.
Additionally, as a percentage of Treasury bond yields, long-term
municipal bond yields remain historically attractive. With long-
term, tax-exempt revenue bonds yielding approximately 90% of their
taxable counterparts, should taxable interest rates resume their
decline, municipal bond yields are poised to decline further.
<PAGE>
Portfolio Strategy
Insured Portfolio and National
Portfolio
During the quarter ended March 31, 1996, we structured the Insured
Portfolio and the National Portfolio to seek to generate an above-
industry average current yield, while maintaining a lower level of
sensitivity to the generally rising direction of interest rates.
Cash equivalent reserve levels in the National Portfolio were raised
to approximately 8% of total assets, and a large portion of assets
committed to longer maturities currently have coupons structured for
income rather than expectations of dramatic price appreciation. The
Insured Portfolio maintained its holdings of prerefunded bonds
totaling 12% of net assets. Prerefunded bonds generally provide
higher levels of income than cash equivalents but are not as price
sensitive to interest rate movements as long-term bonds. This more
defensive investment strategy served both Portfolios well during the
recent rise in long-term interest rates. However, the market's
recent volatility creates opportunities. Therefore, we are
monitoring the US economic backdrop and the overall valuation of
municipal rates, looking for a re-entry point at which time we would
take a more aggressive approach. We are seeking higher-yielding
investment opportunities for the National Portfolio within the
credit limits detailed by the Fund's prospectus.
Limited Maturity Portfolio
We used a somewhat aggressive investment strategy for the Limited
Maturity Portfolio during the March quarter as the Federal Reserve
Board continued its move to a more neutral monetary policy. The
Federal Funds rate was cut by 25 basis points in January 1996, the
third monetary easing move of such magnitude in the current cycle.
However, unlike previous quarters, we focused our Portfolio
investments on higher-coupon securities which hold their value
better in periods of interest rate volatility while offering a
higher level of current income. This strategy benefited the Fund
during the period of rising interest rates in late February and
March. However, the Fund was still adversely affected during this
time although the short maturity of the Fund's portfolio helped it
relative to longer-term fixed income funds. As always, credit
quality and diversity remain paramount to the Fund.
Sincerely,
<PAGE>
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Kenneth A. Jacob)
Kenneth A. Jacob
Portfolio Manager
(Peter J. Hayes)
Peter J. Hayes
Portfolio Manager
April 24, 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.
<PAGE>
* Class B Shares are subject to a maximum contingent deferred sales
charge of 4% if redeemed during the first year, decreasing 1% each
year thereafter to 0% after the fourth year for Insured and National
Portfolios. Limited Maturity Portfolio is subject to a maximum
contingent deferred sales charge of 1% if redeemed within one year
of purchase. In addition, Insured and National Portfolios are
subject to a distribution fee of 0.50% and an account maintenance
fee of 0.25%. Limited Maturity Portfolio is subject to a
distribution fee of 0.20% and an account maintenance fee of 0.15%.
All three classes of shares automatically convert to Class D Shares
after 10 years.
* Class C Shares are subject to a distribution fee of 0.55% and an
account maintenance fee of 0.25% for Insured and National
Portfolios. Limited Maturity Portfolio is subject to a distribution
fee of 0.20% and an account maintenance fee of 0.15%. In addition,
Class C Shares are subject to a 1% contingent deferred sales charge
if redeemed within one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and an
account maintenance fee of 0.25% (but no distribution fee) for
Insured and National Portfolios. Limited Maturity Portfolio incurs a
maximum initial sales charge of 1% and an account maintenance fee of
0.10% (but no distribution fee).
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Average Annual
Total Returns
Insured Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 3/31/96 +7.03% +2.74%
Five Years Ended 3/31/96 +7.70 +6.82
Ten Years Ended 3/31/96 +7.62 +7.18
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 3/31/96 +6.09% +2.09%
Five Years Ended 3/31/96 +6.87 +6.87
Inception (10/21/88) through 3/31/96 +7.03 +7.03
[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 3/31/96 +6.17% +5.17%
Inception (10/21/94) through 3/31/96 +9.13 +9.13
[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 3/31/96 +6.63% +2.36%
Inception (10/21/94) through 3/31/96 +9.74 +6.68
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
National Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 3/31/96 +8.48% +4.14%
Five Years Ended 3/31/96 +8.10 +7.22
Ten Years Ended 3/31/96 +7.70 +7.26
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 3/31/96 +7.56% +3.56%
Five Years Ended 3/31/96 +7.29 +7.29
Inception (10/21/88) through 3/31/96 +7.05 +7.05
[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 3/31/96 +7.61% +6.61%
Inception (10/21/94) through 3/31/96 +9.07 +9.07
[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 3/31/96 +8.21% +3.88%
Inception (10/21/94) through 3/31/96 +9.66 +6.61
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
<PAGE>
Limited Maturity Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 3/31/96 +4.83% +3.78%
Five Years Ended 3/31/96 +4.70 +4.49
Ten Years Ended 3/31/96 +5.19 +5.08
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 3/31/96 +4.45% +3.45%
Inception (11/2/92) through 3/31/96 +3.58 +3.58
[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 3/31/96 +4.29% +3.29%
Inception (10/21/94) through 3/31/96 +4.21 +4.21
[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 3/31/96 +4.62% +3.57%
Inception (10/21/94) through 3/31/96 +4.56 +3.83
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
<PAGE>
PERFORMANCE DATA (continued)
<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
1/1/96--3/31/96 8.25/7.97 10.44/10.14 9.98/9.94 0.10 0.14 0.09 - 2.03 - 1.47 +0.58
------ ------ -----
Total $11.09 $13.71 $9.33
Cumulative total return as of 3/31/96: +246.61%** +338.06%** +159.51%**
<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
1/1/96--3/31/96 8.24/7.96 10.44/10.13 9.98/9.94 0.09 0.12 0.08 - 2.20 - 1.74 +0.50
----- ----- -----
Total $3.92 $5.25 $1.17
Cumulative total return as of 3/31/96: +65.87%** +66.08%** +12.76%**
<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
1/1/96--3/31/96 8.25/7.97 10.44/10.14 10.00/9.92 0.09 0.12 0.08 - 2.21 - 1.66 +0.08
----- ----- -----
Total $0.69 $0.95 $0.49
Cumulative total return as of 3/31/96: +13.45%** +13.36%** +6.13%**
<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
1/1/96--3/31/96 8.25/7.97 10.45/10.14 9.98/9.94 0.10 0.13 0.09 - 2.09 - 1.62 +0.46
----- ----- -----
Total $0.76 $1.02 $0.53
Cumulative total return as of 3/31/96: +14.36%** + 8.21%** +6.65%**
<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
3/31/96 12/31/95 3/31/95 % Change % Change 30-Day Yield
<S> <C> <C> <C> <C> <C> <C>
Insured Portfolio Class A Shares $ 7.97 $ 8.25 $7.87 +1.27% -3.39% 4.86%
Insured Portfolio Class B Shares 7.96 8.24 7.87 +1.14 -3.40 4.30
Insured Portfolio Class C Shares 7.97 8.25 7.87 +1.27 -3.39 4.25
Insured Portfolio Class D Shares 7.97 8.25 7.88 +1.14 -3.39 4.62
National Portfolio Class A Shares 10.14 10.44 9.91 +2.32 -2.87 5.07
National Portfolio Class B Shares 10.13 10.44 9.91 +2.22 -2.97 4.51
National Portfolio Class C Shares 10.14 10.44 9.91 +2.32 -2.87 4.46
National Portfolio Class D Shares 10.14 10.45 9.91 +2.32 -2.97 4.83
Limited Maturity Portfolio Class A Shares 9.94 9.98 9.85 +0.91 -0.40 3.56
Limited Maturity Portfolio Class B Shares 9.94 9.98 9.85 +0.91 -0.40 3.24
Limited Maturity Portfolio Class C Shares 9.92 10.00 9.84 +0.81 -0.80 3.17
Limited Maturity Portfolio Class D Shares 9.94 9.98 9.85 +0.91 -0.40 3.46
Insured Portfolio Class A Shares--Total Return +7.03(1) -2.03(2)
Insured Portfolio Class B Shares--Total Return +6.09(3) -2.20(4)
Insured Portfolio Class C Shares--Total Return +6.17(5) -2.21(6)
Insured Portfolio Class D Shares--Total Return +6.63(7) -2.09(8)
National Portfolio Class A Shares--Total Return +8.48(9) -1.47(10)
National Portfolio Class B Shares--Total Return +7.56(11) -1.74(12)
National Portfolio Class C Shares--Total Return +7.61(13) -1.66(14)
National Portfolio Class D Shares--Total Return +8.21(15) -1.62(16)
Limited Maturity Portfolio Class A Shares--Total Return +4.83(17) +0.58(18)
Limited Maturity Portfolio Class B Shares--Total Return +4.45(19) +0.50(20)
Limited Maturity Portfolio Class C Shares--Total Return +4.29(21) +0.08(22)
Limited Maturity Portfolio Class D Shares--Total Return +4.62(23) +0.46(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 $0.446 per share
ordinary income dividends.
(2)Percent change includes reinvestment of $0.104 per share
ordinary income dividends.
(3)Percent change includes reinvestment of $0.385 per share
ordinary income dividends.
(4)Percent change includes reinvestment of $0.090 per share
ordinary income dividends.
(5)Percent change includes reinvestment of $0.381 per share
ordinary income dividends.
(6)Percent change includes reinvestment of $0.089 per share
ordinary income dividends.
<PAGE>
(7)Percent change includes reinvestment of $0.426 per share
ordinary income dividends.
(8)Percent change includes reinvestment of $0.099 per share
ordinary income dividends.
(9)Percent change includes reinvestment of $0.596 per share
ordinary income dividends.
(10)Percent change includes reinvestment of $0.138 per share
ordinary income dividends.
(11)Percent change includes reinvestment of $0.519 per share
ordinary income dividends.
(12)Percent change includes reinvestment of $0.119 per share
ordinary income dividends.
(13)Percent change includes reinvestment of $0.514 per share
ordinary income dividends.
(14)Percent change includes reinvestment of $0.118 per share
ordinary income dividends.
(15)Percent change includes reinvestment of $0.571 per share
ordinary income dividends.
(16)Percent change includes reinvestment of $0.132 per share
ordinary income dividends.
(17)Percent change includes reinvestment of $0.379 per share
ordinary income dividends.
(18)Percent change includes reinvestment of $0.088 per share
ordinary income dividends.
(19)Percent change includes reinvestment of $0.343 per share
ordinary income dividends.
(20)Percent change includes reinvestment of $0.080 per share
ordinary income dividends.
(21)Percent change includes reinvestment of $0.337 per share
ordinary income dividends.
(22)Percent change includes reinvestment of $0.078 per share
ordinary income dividends.
(23)Percent change includes reinvestment of $0.369 per share
ordinary income dividends.
(24)Percent change includes reinvestment of $0.086 per share
ordinary income dividends.
</TABLE>
<PAGE>
PORTFOLIO COMPOSITION
For the Quarter Ended March 31, 1996
Insured
Portfolio
Top Ten States*
Texas 17.06%
Pennsylvania 8.88
Illinois 6.53
Massachusetts 5.87
Florida 4.93
Georgia 4.12
New York 4.00
West Virginia 3.55
Utah 3.52
New Jersey 3.48
-------
Total Top Ten 61.94
Total Others 38.06
-------
Total Portfolio 100.00%
=======
Net assets as of March 31, 1996 were $2,421,772,231.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 96%
Other++ 4%
[FN]
*Based on total market value of the Portfolio as of March 31, 1996.
++Temporary investments in short-term municipal securities.
<PAGE>
National
Portfolio
Top Ten States*
New York 14.71%
Texas 11.22
Massachusetts 7.59
California 4.89
Illinois 4.82
Pennsylvania 4.45
Georgia 3.74
Colorado 3.64
Indiana 3.51
Michigan 3.45
-------
Total Top Ten 62.02
Total Others 37.98
-------
Total Portfolio 100.00%
=======
Net assets as of March 31, 1996 were $1,457,579,399.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 33%
AA/Aa 20%
A/A 12%
BBB/Baa 21%
BB/Ba 2%
B/B 1%
Other++ 7%
NR+++ 4%
[FN]
*Based on total market value of the Portfolio as of March 31, 1996.
++Temporary investments in short-term municipal securities.
+++Not Rated.
<PAGE>
Limited Maturity
Portfolio
Top Ten States*
Illinois 12.14%
Ohio 10.32
Utah 10.00
Georgia 7.94
Michigan 5.91
Massachusetts 5.78
Texas 5.41
Connecticut 5.06
Washington 4.75
New York 3.96
-------
Total Top Ten 71.27
Total Others 28.73
-------
Total Portfolio 100.00%
=======
Net assets as of March 31, 1996 were $534,828,279.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
MIG1++/SP-1 2%
AAA/Aaa 31%
AA/Aa 30%
A/A 20%
BBB/Baa 4%
Other++++ 6%
NR+++ 7%
<PAGE>
[FN]
*Based on total market value of the Portfolio as of March 31, 1996.
++Temporary investments in short-term municipal securities.
+++Not Rated.
*Based on total market value of the Portfolio as of March 31, 1996.
++Highest short-term rating by Moody's Investors Service, Inc.
++++Temporary investments in short-term municipal securities.
+++Not Rated.
