MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
[FUND LOGO]
STRATEGIC
Performance
Quarterly Report
September 30, 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.
Merrill Lynch
Municipal Bond Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 10249 -- 9/97
[RECYCLE LOGO] Printed on post-consumer recycled paper
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
Walter C. O'Connor, Vice President
Gerald M. Richard, Treasurer
Barbara G. Fraser, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, NY 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Municipal Bond Fund, Inc., September 30, 1997
DEAR SHAREHOLDER
The Municipal Market Environment
Long-term interest rates declined significantly during the three months
ended September 30, 1997. On a weekly basis, bond yields were buffeted
by alternating strong and weak economic indicators. However, the general
financial environment has remained one of moderate economic growth with
little or no price inflation. Through July 1997, bond yields had
declined as economic growth appeared to weaken and the Federal Reserve
Board (FRB) held interest rates steady. By the end of July, US Treasury
bond yields had declined by approximately 40 basis points (0.40%) to
6.30%. Long-term municipal bond yields, as measured by the Bond Buyer
Revenue Bond Index, declined by more than 30 basis points to 5.50%.
Interest rates generally rose during August and September as investors
reacted to conflicting signs of economic weakness and potential
strength. By the end of September, US Treasury bond yields had risen to
approximately 6.40%, and long-term municipal bond yields had increased
to approximately 5.60%. During the September quarter, US Treasury bond
yields declined a total of 35 basis points, while long-term tax-exempt
bond yields fell over 20 basis points.
The tax-exempt bond market's continued underperformance as compared to
its taxable counterpart has been largely in response to its ongoing
weakening technical position. As municipal bond yields have declined,
municipalities have hurriedly rushed to refinance outstanding higher-
couponed debt with new issues financed at present low rates. During the
last six months, over $112 billion in new long-term tax-exempt issues
were underwritten, an increase of over 25% versus the comparable period
a year ago. As interest rates have continued to decline, these
refinancings have intensified municipal bond issuance. During the past
three months, over $55 billion in new long-term municipal securities
were underwritten, an increase of over 45% as compared to the quarter
ended September 30, 1996.
Additionally, there has been a recent trend toward larger bond issues.
These recent "mega-deals" have included $625 million in Massachusetts
general obligation bonds, $650 million in New York City transitional
finance authority notes, $660 million in Texas health resources
securities, $780 million in Colorado-E470 public highway issues, $1.4
billion in San Joaquin Hills, California transportation issues and $1.5
billion in Massachusetts Turnpike Authority issues. However, issues of
such magnitude usually must be attractively priced to ensure adequate
investor interest. Obviously, the yields of other municipal bond issues
are impacted by the yield premiums such large issuers have been required
to pay. Much of the municipal bond market's recent underperformance can
be traced to the market pressures such mega-deals have exerted.
The present economic situation remains attractive. The combination of
moderate economic growth and minimal inflation have fostered an
unusually positive environment for low interest rates. Continued
economic growth has generated significant tax revenues thus far this
year. Increased revenues, when combined with reduced Federal outlays,
have resulted in a steadily declining Federal budget deficit. Any
material declines in the Federal budget positively impact the size of
future Federal debt issuance. This prospect for reduced Federal debt
issuance has further enhanced the prospects for a continued low interest
rate environment. Thus far this year any significant increase in tax-
exempt bond yields has been viewed as an opportunity to purchase
attractively priced municipal issues. Despite a greater-than-expected
supply of new tax-exempt bond issuance, overall favorable market
conditions have allowed municipal bond yields to decline over 30 basis
points thus far in 1997. More importantly, it can be expected that the
current environment will limit the potential for a significant interest
rate correction in the near future.
Portfolio Strategy
Insured Portfolio and National Portfolio
During the September quarter, the municipal market and the taxable
fixed-income arena were characterized by enormous volatility within a
relatively tight trading range. Therefore, our investment strategy for
the Insured and National Portfolios remained focused on capturing this
range by purchasing long-term municipal securities as Treasury bond
yields approached 6.75%, and selling these securities in rallies toward
6.25%.
During the past 12 months, this approach worked well for the Portfolios
on several occasions. More recently, we entered a period where positive
economic growth trends have contributed to a lowering of the US budget
deficit. This result, combined with a very bright picture of the
nation's inflation front, produces a positive backdrop for fixed-income
markets. In fact, the demand for municipal bonds has remained steady,
even in the face of historically low absolute levels at which retail
investors previously avoided municipal bonds. Thus, the effect of the
positive fundamental economic background and the tight technical picture
of steady demand/low supply has created a synergy whereby it appears
that if these factors persist, the municipal market should be insulated
from any serious price erosion, particularly on a short-term basis.
As we approach the fourth quarter of 1997, the municipal market is back
down to levels at which we would normally expect to lose our retail
support. However, the retail sector seems to be adjusting to these lower
yield levels. Therefore, we believe the appropriate strategy going
forward is to utilize any periods of market weakness as buying
opportunities to improve the structure of our existing positions and to
add discounted bonds with capital appreciation upside potential to seek
to benefit the Portfolios' performance in a period of declining interest
rates.
Limited Maturity Portfolio
We maintained the Limited Maturity Portfolio's strategy of trading
during periods of market volatility by selling when interest rates fell
(and prices rose) and buying when interest rates rose (and prices fell).
Our bias continued to be neutral-to-positive in the belief that the FRB
would continue to leave short-term interest rates unchanged.
Additionally, quality spreads have remained so narrow that the Portfolio
continued to be heavily weighted in securities rated AA or better, since
we were offered little yield reward for increasing our credit risk.
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,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/KENNETH A. JACOB
Kenneth A. Jacob
Vice President and Portfolio Manager
/S/PETER J. HAYES
Peter J. Hayes
Vice President and Portfolio Manager
November 5, 1997
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
[bullet] 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.
[bullet] 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.)
[bullet] 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.
[bullet] 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. 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 9/30/97 +8.17% +3.84%
Five Years Ended 9/30/97 +6.63 +5.77
Ten Years Ended 9/30/97 +8.58 +8.14
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/97 +7.49% +3.49%
Five Years Ended 9/30/97 +5.86 +5.86
Inception (10/21/88) through 9/30/97 +7.01 +7.01
* 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 9/30/97 +7.30% +6.30%
Inception (10/21/94) through 9/30/97 +7.90 +7.90
* 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 9/30/97 +7.90% +3.58%
Inception (10/21/94) through 9/30/97 +8.51 +7.01
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
National Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/97 +9.03% +4.67%
Five Years Ended 9/30/97 +7.15 +6.28
Ten Years Ended 9/30/97 +8.67 +8.22
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/97 +8.21% +4.21%
Five Years Ended 9/30/97 +6.35 +6.35
Inception (10/21/88) through 9/30/97 +7.21 +7.21
* 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 9/30/97 +8.16% +7.16%
Inception (10/21/94) through 9/30/97 +8.47 +8.47
* 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 9/30/97 +8.76% +4.41%
Inception (10/21/94) through 9/30/97 +9.10 +7.60
* 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 9/30/97 +4.40% +3.35%
Five Years Ended 9/30/97 +3.95 +3.74
Ten Years Ended 9/30/97 +5.20 +5.09
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/97 +4.02% +3.02%
Inception (11/2/92) through 9/30/97 +3.64 +3.64
* 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 9/30/97 +4.11% +3.11%
Inception (10/21/94) through 9/30/97 +3.98 +3.98
* 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 9/30/97 +4.40% +3.35%
Inception (10/21/94) through 9/30/97 +4.37 +4.02
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
<TABLE>
<CAPTION>
Performance Summary -- Class A Shares
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 -- 9/30/97 8.07/8.19 10.33/10.54 9.94/9.95 0.32 0.43 0.28 + 5.72 + 6.50 +3.08
Total $11.76 $14.60 $9.92
Cumulative total return as of 9/30/97: +286.85% +396.85%** 175.85%**
* 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 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>
<CAPTION>
Performance Summary -- Class B Shares
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-- 9/30/97 8.07/8.19 10.33/10.54 9.94/9.95 0.28 0.37 0.26 + 5.13 + 5.90 +2.81
Total $4.50 $6.02 $1.72
Cumulative total return as of 9/30/97: +83.24%** +86.41%** +19.21%**
* 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>
<CAPTION>
Performance Summary -- Class C Shares
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 -- 9/30/97 8.07/8.19 10.33/10.54 9.91/9.93 0.27 0.37 0.26 + 5.09 + 5.86 +2.90
Total $1.25 $1.72 $1.03
Cumulative total return as of 9/30/97: +25.08%** +27.01%** +12.17%**
* 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>
<TABLE>
<CAPTION>
Performance Summary -- Class D Shares
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 -- 9/30/97 8.07/8.19 10.34/10.55 9.94/9.96 0.31 0.41 0.28 + 5.52 + 6.30 +3.11
Total $1.40 $1.88 $1.11
Cumulative total return as of 9/30/97: +27.15%** +29.22%** +13.42%**
* 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>
<CAPTION>
Recent Performance Results*
12 Month 3 Month Standardized
9/30/97 6/30/97 9/30/96 % Change % Change 30-Day Yield
<S> <C> <C> <C> <C> <C> <C>
Insured Portfolio Class A Shares $8.19 $8.06 $8.00 +2.38% +1.61% 4.62%
Insured Portfolio Class B Shares 8.19 8.05 7.99 +2.50 +1.74 4.05
Insured Portfolio Class C Shares 8.19 8.06 8.00 +2.38 +1.61 4.00
Insured Portfolio Class D Shares 8.19 8.06 8.00 +2.38 +1.61 4.37
National Portfolio Class A Shares 10.54 10.38 10.24 +2.93 +1.54 4.79
National Portfolio Class B Shares 10.54 10.37 10.24 +2.93 +1.64 4.22
National Portfolio Class C Shares 10.54 10.38 10.24 +2.93 +1.54 4.18
National Portfolio Class D Shares 10.55 10.39 10.25 +2.93 +1.54 4.54
Limited Maturity Portfolio Class A Shares 9.95 9.93 9.93 +0.20 +0.20 3.69
Limited Maturity Portfolio Class B Shares 9.95 9.94 9.93 +0.20 +0.10 3.37
Limited Maturity Portfolio Class C Shares 9.93 9.91 9.90 +0.30 +0.20 3.36
Limited Maturity Portfolio Class D Shares 9.96 9.94 9.93 +0.30 +0.20 3.59
Insured Portfolio Class A Shares -- Total Return +8.17(1) +2.98(2)
Insured Portfolio Class B Shares -- Total Return +7.49(3) +2.91(4)
Insured Portfolio Class C Shares -- Total Return +7.30(5) +2.77(6)
Insured Portfolio Class D Shares -- Total Return +7.90(7) +2.92(8)
National Portfolio Class A Shares -- Total Return +9.03(9) +2.98(10)
National Portfolio Class B Shares -- Total Return +8.21(11) +2.89(12)
National Portfolio Class C Shares -- Total Return +8.16(13) +2.77(14)
National Portfolio Class D Shares -- Total Return +8.76(15) +2.92(16)
Limited Maturity Portfolio Class A Shares -- Total Return +4.40(17) +1.18(18)
Limited Maturity Portfolio Class B Shares -- Total Return +4.02(19) +0.98(20)
Limited Maturity Portfolio Class C Shares -- Total Return +4.11(21) +1.08(22)
Limited Maturity Portfolio Class D Shares -- Total Return +4.40(23) +1.15(4)
* 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 $0.443 per share ordinary income dividends.
(2) Percent change includes reinvestment of $0.108 per share ordinary income dividends.
(3) Percent change includes reinvestment of $0.382 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.093 per share ordinary income dividends.
(5) Percent change includes reinvestment of $0.378 per share ordinary income dividends.
(6) Percent change includes reinvestment of $0.092 per share ordinary income dividends.
(7) Percent change includes reinvestment of $0.423 per share ordinary income dividends.
(8) Percent change includes reinvestment of $0.103 per share ordinary income dividends.
(9) Percent change includes reinvestment of $0.596 per share ordinary income dividends.
(10) Percent change includes reinvestment of $0.147 per share ordinary income dividends.
(11) Percent change includes reinvestment of $0.518 per share ordinary income dividends.
(12) Percent change includes reinvestment of $0.127 per share ordinary income dividends.
(13) Percent change includes reinvestment of $0.513 per share ordinary income dividends.
(14) Percent change includes reinvestment of $0.126 per share ordinary income dividends.
(15) Percent change includes reinvestment of $0.571 per share ordinary income dividends.
(16) Percent change includes reinvestment of $0.141 per share ordinary income dividends.
(17) Percent change includes reinvestment of $0.407 per share ordinary income dividends.
(18) Percent change includes reinvestment of $0.096 per share ordinary income dividends.
(19) Percent change includes reinvestment of $0.372 per share ordinary income dividends.
(20) Percent change includes reinvestment of $0.087 per share ordinary income dividends.
(21) Percent change includes reinvestment of $0.369 per share ordinary income dividends.
(22) Percent change includes reinvestment of $0.086 per share ordinary income dividends.
(23) Percent change includes reinvestment of $0.397 per share ordinary income dividends.
</TABLE>
PORTFOLIO COMPOSITION
Insured Portfolio
For the Quarter Ended September 30, 1997
Top Ten States*
Texas 12.65%
New York 11.96
Illinois 11.35
New Jersey 7.06
Pennsylvania 6.05
Massachusetts 5.44
Hawaii 3.71
Wisconsin 3.17
Nevada 3.11
Washington 2.96
------
Total Top Ten 67.46
Total Others 32.54
------
Total Portfolio 100.00%
======
Net assets as of September 30, 1997 were $2,050,337,849.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 95%
Other+ 5%
* Based on total market value of the Portfolio as of September 30, 1997.
+ Temporary investments in short-term municipal securities.
National Portfolio
Top Ten States*
Texas 16.44%
New York 11.53
Massachusetts 7.76
California 5.89
Colorado 4.95
Illinois 4.84
Florida 4.33
Utah 4.07
Louisiana 4.06
Pennsylvania 3.97
------
Total Top Ten 67.84
Total Others 32.16
------
Total Portfolio 100.00%
======
Net assets as of September 30, 1997 were $1,497,711,101.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
AAA/Aaa 53%
AA/Aa 15%
A/A 10%
BBB/Baa 12%
BB/Ba 2%
B/B 1%
Other+ 4%
NR++++ 3%
* Based on total market value of the Portfolio as of September 30,
1997.
+ Temporary investments in short-term municipal securities.
++++ Not Rated.
Limited Maturity Portfolio
Top Ten States*
New York 12.45%
Ohio 8.63
California 6.79
Illinois 6.65
Louisiana 6.18
Wisconsin 6.10
Texas 6.06
Michigan 3.69
Washington 3.65
New Jersey 3.32
------
Total Top Ten 63.52
Total Others 36.48
------
Total Portfolio 100.00%
======
Net assets as of September 30, 1997 were $403,230,113.
Quality Ratings*
(Based on Nationally Recognized Rating Services)
A pie chart illustrating the following percentages:
MIG1+/SP-1 5%
AAA/Aaa 39%
AA/Aa 26%
A/A 15%
BBB/Baa 4%
Other++ 11%
* Based on total market value of the Portfolio as of September 30,
1997.
+ Highest short-term rating by Moody's Investors Service, Inc.
++ Temporary investments in short-term municipal securities.
