MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
FUND LOGO
Quarterly Report
March 31, 1997
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
<PAGE>
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
The Municipal Market
Environment
Long-term tax-exempt bonds traded in a relatively narrow range
during the three-month period ended March 31, 1997 with yields
closing the quarter moderately higher. Long-term municipal revenue
bond yields, as measured by the Bond Buyer Revenue Bond Index, rose
approximately 15 basis points (0.15%) to 6.09% for the three months
ended March 31, 1997. Most of the recent rise in interest rates
occurred during March as a series of increasingly strong economic
indicators culminated in an increase in short-term interest rates by
the Federal Reserve Board. During the three months ended March 31,
1997, however, US Treasury bond yields reacted far more negatively
to recent economic strength. By March 31, 1997, US Treasury bond
yields increased over 45 basis points to approximately 7.10%.
As in recent quarters, the municipal bond market's relative
outperformance compared to the US Treasury bond market was the
result of the tax-exempt bond market's very strong technical
position. During the six months ended March 31, 1997, approximately
$92 billion in long-term municipal bonds was issued, a decline of
nearly 3% compared to the corresponding period a year earlier. In
the three months ended March 31, 1997, new-issue supply declined at
a far more significant rate. During the March 31, 1997 quarter,
approximately $38 billion in new long-term tax-exempt bonds was
underwritten, representing a decrease of nearly 10% compared to the
March 31, 1996 quarter. No immediate increase in new-issue supply is
evident. The recent increase in interest rates had the effect of
freezing many issuers who remain both uncertain regarding the near-
term direction of interest rates and unable to refinance existing
debt since the required savings have disappeared.
<PAGE>
While overall investor demand declined from levels seen early last
year, it remained strong enough to easily absorb the volume seen in
recent quarters. Individual retail demand increased in recent weeks
as tax-exempt bond yields rose above 6% and the allure of the US
equity market diminished. Property/casualty insurance companies
remained a particularly visible source of demand in the 15-year--20-
year maturity sector. Additionally, while institutional investors
were not especially active in recent quarters, managed portfolios
appeared reticent to raise large cash reserve positions. Given
current supply conditions, the ability to reinvest such large
reserves, in a timely fashion, would be very difficult.
Going forward, the extent of which interest rates continue to rise
depends upon how quickly the increase in interest rates seen thus
far in 1997, compounded by the recent Federal Reserve Board action,
impacts the domestic economy. In recent years, US economy activity
slowed whenever long-term US Treasury bond yields remained above 7%
for any appreciable time. While it is difficult to gauge when
interest rates will begin to decline, it is likely that little
additional increase in bond yields will be necessary to return
economic growth to levels acceptable by the Federal Reserve Board.
The tax-exempt bond market's technical position is likely to remain
strong enough to dampen further interest rate volatility, as it has
in recent quarters. This suggests that, in the near term, municipal
bonds may continue to trade in a relatively narrow range, rewarding
neither an overly aggressive nor defensive portfolio strategy.
Portfolio Strategy
Insured Portfolio and
National Portfolio
The Insured Portfolio and National Portfolio remain committed to
portfolio management strategies aimed at seeking to achieve high
current income and price appreciation. During the March 31, 1997
quarter, we witnessed a volatile fixed-income arena where weekly
market swings emerged based on the most recent economic data
releases. However, the volatility created opportunity in the form of
a fairly well-defined trading range. Long-term municipal bonds
traded in a range that yielded between 5.50%--6.00%. Therefore, our
strategy has been to capitalize on trading these price swings until
economic news leads us to believe that we may break out one way or
the other. We expected a short-term resolution that interest rates
would move slightly higher. This scenario occurred as the Federal
Reserve Board raised interest rates and above-consensus economic
growth raised long-term Treasury securities to a more than 7% yield.
We are becoming more aggressive in the bond market, extending
duration by purchasing discount securities that will perform in an
eventual market recovery and declining interest rate environment.
Quality remains a concern with any purchases concentrated in higher-
rated securities because of extremely tight credit quality spreads.
<PAGE>
Limited Maturity Portfolio
During the March 31, 1997 quarter, the Limited Maturity Portfolio
became more defensively positioned as concerns arose over an
imminent change in the Federal Reserve Board monetary policy. We
raised cash reserves from slightly over 5% to approximately 15% of
the Portfolio by the beginning of March, and reduced the average
portfolio maturity from 22 months to approximately 18 months. Also,
we concentrated purchases on higher-quality securities because of
tighter quality spreads, as well as higher-coupon securities which
tend to outperform lower-coupon securities in periods of rising
interest rates.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Municipal Bond
Fund, Inc., and we look forward to serving your investment needs in
the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Kenneth A. Jacob)
Kenneth A. Jacob
Vice President and
Portfolio Manager
(Peter J. Hayes)
Peter J. Hayes
Vice President and
Portfolio Manager
<PAGE>
April 22, 1997
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 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).
<PAGE>
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of
all dividends and capital gains distributions at net asset value on
the payable date. 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 3/31/97 +4.54% +0.35%
Five Years Ended 3/31/97 +6.67 +5.81
Ten Years Ended 3/31/97 +7.04 +6.60
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 3/31/97 +3.75% -0.20%
Five Years Ended 3/31/97 +5.87 +5.87
Inception (10/21/88) through 3/31/97 +6.64 +6.64
[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 3/31/97 +3.69% +2.71%
Inception (10/21/94) through 3/31/97 +6.86 +6.86
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 3/31/97 +4.28% +0.11%
Inception (10/21/94) through 3/31/97 +7.46 +5.68
[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 3/31/97 +6.26% +2.01%
Five Years Ended 3/31/97 +7.22 +6.35
Ten Years Ended 3/31/97 +7.14 +6.70
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 3/31/97 +5.56% +1.56%
Five Years Ended 3/31/97 +6.42 +6.42
Inception (10/21/88) through 3/31/97 +6.88 +6.88
[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 3/31/97 +5.41% +4.41%
Inception (10/21/94) through 3/31/97 +7.56 +7.56
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 3/31/97 +6.10% +1.85%
Inception (10/21/94) through 3/31/97 +8.20 +6.40
[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 3/31/97 +3.75% +2.71%
Five Years Ended 3/31/97 +4.21 +4.00
Ten Years Ended 3/31/97 +4.98 +4.88
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 3/31/97 +3.38% +2.38%
Inception (11/2/92) through 3/31/97 +3.53 +3.53
[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 3/31/97 +3.25% +2.26%
Inception (10/21/94) through 3/31/97 +3.80 +3.80
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 3/31/97 +3.64% +2.61%
Inception (10/21/94) through 3/31/97 +4.22 +3.79
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
PERFORMANCE DATA (continued)
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
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>
10/21/77--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
1996 8.25/8.07 10.44/10.33 9.98/9.94 0.45 0.60 0.40 + 3.43 + 4.93 +3.72
1/1/97--3/31/97 8.07/7.88 10.33/10.16 9.94/9.90 0.10 0.14 0.09 - 1.01 - 0.23 +0.57
------ ------ -----
Total $11.54 $14.31 $9.73
<PAGE>
Cumulative total return as of 3/31/97: +262.22%** +365.46%** +169.14%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures 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>
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>
10/21/88--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
1996 8.24/8.07 10.44/10.33 9.98/9.94 0.39 0.52 0.37 + 2.77 + 4.14 +3.35
1/1/97--3/31/97 8.07/7.87 10.33/10.16 9.94/9.90 0.09 0.12 0.08 - 1.32 - 0.41 +0.48
----- ----- -----
Total $4.31 $5.77 $1.54
Cumulative total return as of 3/31/97: +72.01%** +75.30%** +16.52%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures 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>
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
1996 8.25/8.07 10.44/10.33 10.00/9.91 0.38 0.52 0.36 + 2.59 + 4.09 +2.80
1/1/97--3/31/97 8.07/7.88 10.33/10.16 9.91/9.87 0.09 0.12 0.08 - 1.21 - 0.43 +0.48
----- ----- -----
Total $1.07 $1.47 $0.85
Cumulative total return as of 3/31/97: +17.59%** +19.47%** +9.54%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures 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)
<PAGE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
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
1996 8.25/8.07 10.45/10.34 9.98/9.94 0.43 0.58 0.39 + 3.17 + 4.67 +3.62
1/1/97--3/31/97 8.07/7.88 10.34/10.17 9.94/9.90 0.10 0.13 0.09 - 1.07 - 0.29 +0.55
------ ------ ------
Total $1.19 $1.60 $0.92
Cumulative total return as of 3/31/97: +19.20%** +21.21%** +10.61%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures 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>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month Standardized
3/31/97 12/31/96 3/31/96 % Change % Change 30-Day Yield
<S> <C> <C> <C> <C> <C> <C>
Insured Portfolio Class A Shares $ 7.88 $ 8.07 $ 7.97 -1.13% -2.35% 4.92%
Insured Portfolio Class B Shares 7.87 8.07 7.96 -1.13 -2.48 4.36
Insured Portfolio Class C Shares 7.88 8.07 7.97 -1.13 -2.35 4.31
Insured Portfolio Class D Shares 7.88 8.07 7.97 -1.13 -2.35 4.68
National Portfolio Class A Shares 10.16 10.33 10.14 +0.20 -1.65 5.03
National Portfolio Class B Shares 10.16 10.33 10.13 +0.30 -1.65 4.46
National Portfolio Class C Shares 10.16 10.33 10.14 +0.20 -1.65 4.41
National Portfolio Class D Shares 10.17 10.34 10.14 +0.30 -1.64 4.78
Limited Maturity Portfolio Class A Shares 9.90 9.94 9.94 -0.40 -0.40 3.66
Limited Maturity Portfolio Class B Shares 9.90 9.94 9.94 -0.40 -0.40 3.34
Limited Maturity Portfolio Class C Shares 9.87 9.91 9.92 -0.50 -0.40 3.32
Limited Maturity Portfolio Class D Shares 9.90 9.94 9.94 -0.40 -0.40 3.56
Insured Portfolio Class A Shares--Total Return +4.54(1) -1.01(2)
Insured Portfolio Class B Shares--Total Return +3.75(3) -1.32(4)
Insured Portfolio Class C Shares--Total Return +3.69(5) -1.21(6)
Insured Portfolio Class D Shares--Total Return +4.28(7) -1.07(8)
National Portfolio Class A Shares--Total Return +6.26(9) -0.23(10)
National Portfolio Class B Shares--Total Return +5.56(11) -0.41(12)
National Portfolio Class C Shares--Total Return +5.41(13) -0.43(14)
National Portfolio Class D Shares--Total Return +6.10(15) -0.29(16)
Limited Maturity Portfolio Class A Shares--Total Return +3.75(17) +0.57(18)
Limited Maturity Portfolio Class B Shares--Total Return +3.38(19) +0.48(20)
Limited Maturity Portfolio Class C Shares--Total Return +3.25(21) +0.48(20)
Limited Maturity Portfolio Class D Shares--Total Return +3.64(22) +0.55(4)
<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 $0.445 per share
ordinary income dividends.
(2)Percent change includes reinvestment of $0.101 per share
ordinary income dividends.
(3)Percent change includes reinvestment of $0.384 per share
ordinary income dividends.
(4)Percent change includes reinvestment of $0.087 per share
ordinary income dividends.
(5)Percent change includes reinvestment of $0.380 per share
ordinary income dividends.
(6)Percent change includes reinvestment of $0.086 per share
ordinary income dividends.
(7)Percent change includes reinvestment of $0.425 per share
ordinary income dividends.
(8)Percent change includes reinvestment of $0.096 per share
ordinary income dividends.
(9)Percent change includes reinvestment of $0.600 per share
ordinary income dividends.
(10)Percent change includes reinvestment of $0.135 per share
ordinary income dividends.
(11)Percent change includes reinvestment of $0.522 per share
ordinary income dividends.
(12)Percent change includes reinvestment of $0.118 per share
ordinary income dividends.
(13)Percent change includes reinvestment of $0.517 per share
ordinary income dividends.
(14)Percent change includes reinvestment of $0.117 per share
ordinary income dividends.
(15)Percent change includes reinvestment of $0.574 per share
ordinary income dividends.
(16)Percent change includes reinvestment of $0.130 per share
ordinary income dividends.
(17)Percent change includes reinvestment of $0.405 per share
ordinary income dividends.
(18)Percent change includes reinvestment of $0.089 per share
ordinary income dividends.
(19)Percent change includes reinvestment of $0.369 per share
ordinary income dividends.
(20)Percent change includes reinvestment of $0.081 per share
ordinary income dividends.
(21)Percent change includes reinvestment of $0.366 per share
ordinary income dividends.
(22)Percent change includes reinvestment of $0.395 per share
ordinary income dividends.
</TABLE>
<PAGE>
PORTFOLIO COMPOSITION
For the Quarter Ended March 31, 1997
Insured
Portfolio
Top Ten States*
Illinois 15.59%
Texas 12.93
New York 9.90
Pennsylvania 5.06
Massachusetts 4.65
Georgia 4.40
Wisconsin 4.30
Virginia 3.48
New Jersey 3.43
Hawaii 3.41
-------
Total Top Ten 67.15
Total Others 32.85
-------
Total Portfolio 100.00%
=======
Net assets as of March 31, 1997 were $2,069,922,909.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart depicting quality ratings of the fund's investments.
AAA/Aaa 96%
Other++ 4%
[FN]
*Based on total market value of the Portfolio as of March 31, 1997.
++Temporary investments in short-term municipal securities.
National
Portfolio
<PAGE>
Top Ten States*
Texas 17.21%
New York 10.59
Florida 6.10
Georgia 5.27
Massachusetts 5.10
Pennsylvania 4.75
Illinois 4.48
Louisiana 4.38
Washington 4.33
California 3.81
-------
Total Top Ten 66.02
Total Others 33.98
-------
Total Portfolio 100.00%
=======
Net assets as of March 31, 1997 were $1,486,527,471.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart depicting quality ratings of the fund's investments.
AAA/Aaa 49%
AA/Aa 19%
A/A 7%
BBB/Baa 16%
BB/Ba 2%
B/B 1%
Other++ 2%
NR+++ 8%
[FN]
*Based on total market value of the Portfolio as of March 31, 1997.
++Temporary investments in short-term municipal securities.
+++Not Rated.
Limited Maturity
Portfolio
<PAGE>
Top Ten States*
Ohio 12.38%
Illinois 10.88
New York 10.73
Utah 7.66
Texas 6.41
Wisconsin 5.98
Louisiana 5.50
Michigan 4.47
Washington 4.32
Pennsylvania 3.81
-------
Total Top Ten 72.14
Total Others 27.86
-------
Total Portfolio 100.00%
=======
Net assets as of March 31, 1997 were $444,433,059.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart depicting quality ratings of the fund's investments.
MIG++1/SP-1 2%
AAA/Aaa 33%
AA/AA 30%
A/A 16%
BBB/Baa 4%
Other++++ 8%
NR+++ 7%
[FN]
*Based on total market value of the Portfolio as of March 31, 1997.
++Highest short-term rating by Moody's Investors Service, Inc.
++++Temporary investments in short-term municipal securities.
+++Not Rated.
