MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
FUND LOGO
Quarterly Report
September 30, 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
Printed on post-consumer recycled paper
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
Peter J. Hayes, 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
<PAGE>
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
DEAR SHAREHOLDER
The Municipal Market
Environment
The tax-exempt bond market continued its relative strong performance
during the three months ended September 30, 1996. Long-term
uninsured municipal revenue bond yields, as measured by the Bond
Buyer Revenue Bond Index, declined an additional 20 basis points
(0.20%) to end the September quarter at 6.00%. The economic
environment remained little changed in recent months. Economic
growth continued to be moderate and inflation was well-contained.
The US Treasury bond market remained under greater pressure, and
bond yields only marginally improved. At September 30, 1996, the
yield on 30-year US Treasury bonds fell 4 basis points to 6.92%.
The municipal bond market improved in recent months largely because
of its increasingly strong technical position. The supply of new tax-
exempt bond issuance declined during the September quarter. Over the
last six months, less than $90 billion in new long-term municipal
securities were underwritten, an increase of just 9% versus the
comparable period a year earlier. Only $36 billion in tax-exempt
securities were issued during the September quarter, a 3% decline
compared to the September 30, 1995 quarter. The recent quarterly
issuance in some states, such as Michigan or Massachusetts, declined
by as much as 35%.
Currently, the future direction of interest rates remains unclear.
The Federal Reserve Board's decision to hold interest rates steady
in late September temporarily relieved investor fears of rising
interest rates for the remainder of 1996. Should economic growth
slow further in the upcoming quarter, as expected by the Federal
Reserve Board, and inflation remain well-contained, interest rates
are poised to decline further. Under such a scenario, municipal bond
yields are also likely to decline. Given current levels of expected
future supply, the municipal bond market could be expected to
perform very well as both retail and institutional inves-tors chase
an increasingly scarce commodity.
<PAGE>
Portfolio Strategy
Insured and National Portfolios
The Insured and National Portfolios remain committed to portfolio
management strategies aimed at achieving a dual purpose of high
current income and price stability.During the past quarter, the
taxable fixed-income arena was volatile as economic data releases
caused weekly investor mood swings. However, this volatility created
opportunity in the form of a fairly well-defined trading range
between 6.75% and 7.25% for long-term Treasury securities. Municipal
bonds conformed to a comparable range and therefore our strategy
enabled us to capitalize on trading within these price swings as we
await economic news which will provide a clearer direction for
interest rates. At this time, we are leaning toward the resolution
of ultimately higher interest rates, so as the high end of the range
approached we started selling more of our holdings and raising cash
reserves. Our purchases to keep the Portfolios invested are
generally concentrated in higher-coupon, short-term maturity, more
defensive-oriented positions aimed at seeking to protect this year's
gains to date. However, should the market maintain its present
momentum, we will look to continue the "range trade" attempting to
enhance the Fund's net asset valuations.
Limited Maturity Portfolio
Early in the quarter ended September 30, 1996, we increased the
Limited Maturity Portfolio's cash reserves and reduced its average
portfolio maturity over concerns of economic strength and the
possibility of a tighter Federal Reserve Board monetary policy.
However, by mid-August we began to extend the average portfolio
maturity and reduced cash reserves as supply of short-term municipal
bonds began to dwindle and we believed that the Federal Reserve
Board policy would remain unchanged at least through the election in
November. Portfolio purchases were focused on current coupon higher-
quality securities which tend to perform well in volatile periods.
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
<PAGE>
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Kenneth A. Jacob)
Kenneth A. Jacob
Vice President and Portfolio Manager
(Peter J. Hayes)
Peter J. Hayes
Vice President and Portfolio Manager
October 18, 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 approximately 10 years. (There is no initial sales charge for
automatic share conversions.)
* 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.
PERFORMANCE DATA (continued)
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
1/1-12/31 Beginning/Ending Net Asset Value Dividends Paid* % Change**
<PAGE>
Period Limited Limited Limited
Covered Insured National Maturity Insured National Maturity Insured National Maturity
<S> <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--9/30/96 8.25/8.00 10.44/10.24 9.98/9.93 0.32 0.44 0.28 + 1.09 + 2.49 +2.41
------ ------ -----
Total $11.31 $14.01 $9.52
Cumulative total return as of 9/30/96: +257.64%** +335.70%** +164.24%**
<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>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
1/1-12/31 Beginning/Ending Net Asset Value Dividends Paid* % Change**
<PAGE>
Period Limited Limited Limited
Covered Insured National Maturity*** Insured National Maturity*** Insured National Maturity***
<S> <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--9/30/96 8.24/7.99 10.44/10.24 9.98/9.93 0.28 0.38 0.25 + 0.52 + 1.92 +2.14
----- ----- -----
Total $4.11 $5.51 $1.34
Cumulative total return as of 9/30/96: +70.48%** +72.27%** 14.60%**
<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>
<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
<S> <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--9/30/96 8.25/8.00 10.44/10.24 10.00/9.90 0.28 0.38 0.25 + 0.48 + 1.88 +1.60
----- ----- -----
Total $0.88 $1.21 $0.66
Cumulative total return as of 9/30/96: +16.57%** +17.43%** +7.74%**
<PAGE>
<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 (continued)
<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
<S> <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--9/30/96 8.25/8.00 10.45/10.25 9.98/9.93 0.31 0.42 0.27 + 0.90 + 2.31 +2.34
----- ----- -----
Total $0.97 $1.31 $0.71
Cumulative total return as of 9/30/96: +17.84%** +18.81%** +8.65%**
<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>
Average Annual
Total Returns
<PAGE>
Insured Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/96 +5.81% +1.58%
Five Years Ended 9/30/96 +7.10 +6.23
Ten Years Ended 9/30/96 +7.56 +7.13
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/96 +5.02% +1.02%
Five Years Ended 9/30/96 +6.27 +6.27
Inception (10/21/88) through 9/30/96 +6.94 +6.94
[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 9/30/96 +4.96% +3.96%
Inception (10/21/94) through 9/30/96 +8.20 +8.20
[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 9/30/96 +5.55% +1.33%
Inception (10/21/94) through 9/30/96 +8.81 +6.55
[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 9/30/96 +7.50% +3.20%
Five Years Ended 9/30/96 +7.59 +6.72
Ten Years Ended 9/30/96 +7.64 +7.20
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/96 +6.79% +2.80%
Five Years Ended 9/30/96 +6.78 +6.78
Inception (10/21/88) through 9/30/96 +7.09 +7.09
[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 9/30/96 +6.64% +5.64%
Inception (10/21/94) through 9/30/96 +8.61 +8.61
[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 9/30/96 +7.33% +3.04%
Inception (10/21/94) through 9/30/96 +9.27 +7.00
[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 9/30/96 +3.92% +2.88%
Five Years Ended 9/30/96 +4.42 +4.21
Ten Years Ended 9/30/96 +5.09 +4.98
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/96 +3.55% +2.55%
Inception (11/2/92) through 9/30/96 +3.55 +3.55
[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 9/30/96 +3.13% +2.13%
Inception (10/21/94) through 9/30/96 +3.91 +3.91
[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 9/30/96 +3.82% +2.78%
Inception (10/21/94) through 9/30/96 +4.36 +3.82
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
<PAGE>
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month Standardized
9/30/96 6/30/96 9/30/95 % Change % Change 30-Day Yield
<S> <C> <C> <C> <C> <C> <C>
Insured Portfolio Class A Shares $ 8.00 $ 7.91 $ 7.99 +0.13% +1.14% 4.89%
Insured Portfolio Class B Shares 7.99 7.91 7.98 +0.13 +1.01 4.34
Insured Portfolio Class C Shares 8.00 7.91 7.99 +0.13 +1.14 4.28
Insured Portfolio Class D Shares 8.00 7.91 7.99 +0.13 +1.14 4.66
National Portfolio Class A Shares 10.24 10.11 10.10 +1.39 +1.29 5.28
National Portfolio Class B Shares 10.24 10.11 10.09 +1.49 +1.29 4.74
National Portfolio Class C Shares 10.24 10.11 10.10 +1.39 +1.29 4.70
National Portfolio Class D Shares 10.25 10.12 10.10 +1.49 +1.28 5.04
Limited Maturity Portfolio Class A Shares 9.93 9.91 9.93 +0.00 +0.20 3.81
Limited Maturity Portfolio Class B Shares 9.93 9.91 9.93 +0.00 +0.20 3.50
Limited Maturity Portfolio Class C Shares 9.90 9.88 9.93 -0.30 +0.20 3.48
Limited Maturity Portfolio Class D Shares 9.93 9.91 9.93 +0.00 +0.20 3.72
Insured Portfolio Class A Shares--Total Return +5.81(1) +2.56(2)
Insured Portfolio Class B Shares--Total Return +5.02(3) +2.24(4)
Insured Portfolio Class C Shares--Total Return +4.96(5) +2.35(6)
Insured Portfolio Class D Shares--Total Return +5.55(7) +2.49(8)
National Portfolio Class A Shares--Total Return +7.50(9) +2.80(10)
National Portfolio Class B Shares--Total Return +6.79(11) +2.61(12)
National Portfolio Class C Shares--Total Return +6.64(13) +2.59(14)
National Portfolio Class D Shares--Total Return +7.33(15) +2.74(16)
Limited Maturity Portfolio Class A Shares--Total Return +3.92(17) +1.18(4)
Limited Maturity Portfolio Class B Shares--Total Return +3.55(18) +1.09(19)
Limited Maturity Portfolio Class C Shares--Total Return +3.13(20) +1.08(19)
Limited Maturity Portfolio Class D Shares--Total Return +3.82(21) +1.15(22)
<PAGE>
<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 $0.444 per share
ordinary income dividends.
(2)Percent change includes reinvestment of $0.110 per share
ordinary income dividends.
(3)Percent change includes reinvestment of $0.383 per share
ordinary income dividends.
(4)Percent change includes reinvestment of $0.095 per share
ordinary income dividends.
(5)Percent change includes reinvestment of $0.379 per share
ordinary income dividends.
(6)Percent change includes reinvestment of $0.094 per share
ordinary income dividends.
(7)Percent change includes reinvestment of $0.424 per share
ordinary income dividends.
(8)Percent change includes reinvestment of $0.105 per share
ordinary income dividends.
(9)Percent change includes reinvestment of $0.598 per share
ordinary income dividends.
(10)Percent change includes reinvestment of $0.150 per share
ordinary income dividends.
(11)Percent change includes reinvestment of $0.521 per share
ordinary income dividends.
(12)Percent change includes reinvestment of $0.131 per share
ordinary income dividends.
(13)Percent change includes reinvestment of $0.516 per share
ordinary income dividends.
(14)Percent change includes reinvestment of $0.130 per share
ordinary income dividends.
(15)Percent change includes reinvestment of $0.573 per share
ordinary income dividends.
(16)Percent change includes reinvestment of $0.144 per share
ordinary income dividends.
(17)Percent change includes reinvestment of $0.382 per share
ordinary income dividends.
(18)Percent change includes reinvestment of $0.346 per share
ordinary income dividends.
(19)Percent change includes reinvestment of $0.086 per share
ordinary income dividends.
(20)Percent change includes reinvestment of $0.335 per share
ordinary income dividends.
(21)Percent change includes reinvestment of $0.372 per share
ordinary income dividends.
(22)Percent change includes reinvestment of $0.093 per share
ordinary income dividends.
</TABLE>
<PAGE>
PORTFOLIO COMPOSITION
For the Quarter Ended September 30, 1996
Insured
Portfolio
Top Ten States*
Texas 15.71%
Illinois 10.41
Pennsylvania 9.28
Florida 5.14
New York 4.95
Georgia 4.76
New Jersey 4.20
Massachusetts 4.19
Washington 3.55
Indiana 3.44
-------
Total Top Ten 65.63
Total Others 34.37
-------
Total Portfolio 100.00%
=======
Net assets as of September 30, 1996 were $2,332,634,384.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 90%
Other++ 8%
[FN]
*Based on total market value of the Portfolio as of September 30, 1996.
++Temporary investments in short-term municipal securities.
PORTFOLIO COMPOSITION (concluded)
<PAGE>
National
Portfolio
Top Ten States*
New York 14.23%
Texas 11.58
Illinois 6.34
Massachusetts 5.14
California 4.72
Pennsylvania 4.36
Michigan 4.01
Florida 3.42
Georgia 3.34
Colorado 3.31
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Total Top Ten 60.45
Total Others 39.55
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Total Portfolio 100.00%
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Net assets as of September 30, 1996 were $1,444,468,460.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 38%
AA/Aa 23%
A/A 7%
BBB/Baa 20%
BB/Ba 2%
B/B 1%
Other++ 4%
NR+++ 5%
[FN]
*Based on total market value of the Portfolio as of September 30, 1996.
++Temporary investments in short-term municipal securities.
+++Not Rated.
Limited Maturity
Portfolio
Top Ten States*
Illinois 9.63%
Ohio 8.33
Georgia 7.93
Utah 7.73
Massachusetts 7.39
Wisconsin 6.67
Texas 5.94
Connecticut 5.65
New York 5.48
Michigan 4.01
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Total Top Ten 68.76
Total Others 31.24
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Total Portfolio 100.00%
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Net assets as of September 30, 1996 were $485,908,469.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illusrating the following percentates:
MIG1++/SP-1 2%
AAA/Aaa 34%
AA/Aa 22%
A/A 11%
BBB/Baa 4%
Other++++ 21%
NR+++ 6%
[FN]
*Based on total market value of the Portfolio as of September 30, 1996.
++Highest short-term rating by Moody's Investors Service, Inc.
++++Temporary investments in short-term municipal securities.
+++Not Rated.
