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<IMS-DOCUMENT>0000900092-95-000251.txt : 19950830
<IMS-HEADER>0000900092-95-000251.hdr.sgml : 19950830
ACCESSION NUMBER: 0000900092-95-000251
CONFORMED SUBMISSION TYPE: N-30D
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950829
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MERRILL LYNCH MUNICIPAL BOND FUND INC
CENTRAL INDEX KEY: 0000225635
STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000]
IRS NUMBER: 132896246
STATE OF INCORPORATION: NJ
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: N-30D
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-02688
FILM NUMBER: 95568102
BUSINESS ADDRESS:
STREET 1: P O BOX 9011
CITY: PRINCETON
STATE: NJ
ZIP: 08543
BUSINESS PHONE: 6092822026
FORMER COMPANY:
FORMER CONFORMED NAME: ONE LIBERTY MUNICIPAL BOND FUND INC
DATE OF NAME CHANGE: 19780622
</IMS-HEADER>
<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<DESCRIPTION>ANNUAL REPORT
<TEXT>
MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
FUND LOGO
Annual Report
June 30, 1995
<PAGE>
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.
Merrill Lynch
Municipal Bond
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH MUNICIPAL BOND FUND, INC.
<PAGE>
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
Important Tax
Information
All of the net investment income distributions declared daily by Merrill
Lynch Municipal Bond Fund, Inc. during its taxable year ended June
30, 1995 qualify as tax-exempt interest dividends for Federal income
tax purposes.
Additionally, the following table summarizes the capital gains distribu-
tions declared by the National and Insured Portfolios during the year:
Long-Term
Record Payable Capital
Date Date Gains
National Portfolio 12/21/94 12/30/94 $.208516
Insured Portfolio 12/21/94 12/30/94 $.140852
<PAGE>
There were no capital gains distributions declared by the Limited
Maturity Portfolio during the year.
Please retain this information for your records.
TO OUR SHAREHOLDERS
In the June quarter economic data
showed evidence of slowing activity.
Gross domestic product growth for the
first three months of 1995 was reported
at 2.7%, the weakest showing in the
past 18 months. Other signs of a sluggish
economy included slowing growth in
the manufacturing sector in May and
June as well as three consecutive
months of declines in the Index of
Leading Economic Indicators, an occur-
rence which has often (but not always)
forecast recessions. As a result, by the
end of the June quarter concerns had
arisen that the economic "soft landing"
could turn into an actual recession.
However, at the same time there were
also expectations that a few months
of very slow or zero growth would be
followed by a pickup in economic
activity later in the year. This view
was supported by the stronger-than-
expected employment data for June
and an upward revision in May's
employment figures.
<PAGE>
Thus far in 1995, economic develop-
ments have been very positive for the
US stock and bond markets, and most
US stock market averages recently have
attained record levels. In contrast, the
US dollar has been persistently weak,
especially relative to the yen. Following
the Federal Reserve Board's cut in
short-term interest rates in early July,
continued signs of a moderating expan-
sion and well-contained inflationary
pressures could provide further assur-
ance that the peak in US interest rates
is behind us, creating a stronger
foundation for higher stock and bond
prices. On the other hand, indications
of reaccelerating growth and increasing
inflationary pressures would likely
suggest that higher interest rates are
on the horizon, a negative development
for the US financial markets.
The Municipal Market
During the three months ended
June 30, 1995, tax-exempt bond yields
remained essentially unchanged.
Initially, municipal bond yields con-
tinued their earlier decline, falling to
5.94% in early June before investor
concerns caused yields to rise to end
the quarter at 6.28%. However, US
Treasury bond yields continued to
decline, falling approximately 80 basis
points (0.80%) to 6.62% at the end of
June 1995.
Municipal bonds have underperformed
US Treasury securities for a number of
reasons. The record highs of the US
equity market have continued to attract
retail investors seeking further capital
gains. Investor demand has also dimin-
ished in recent months by the "sticker
shock" effect that periodically affects
the municipal bond market. Investors
who had become accustomed to pur-
chasing tax-exempt securities yielding
in the 6.50%--7.00% range six or seven
months ago, have demonstrated under-
standable reluctance to purchase similar
securities at current levels. The strong
fundamental structure of the municipal
bond market, however, suggests that
such hesitancy may prove costly.
<PAGE>
However, the major reason for the
tax-exempt market's recent under-
performance was the concerns regarding
the implication of municipal bonds'
tax advantage resulting from various
proposed tax-law changes (for example
flat tax, value-added tax and national
sales tax) that have reduced investor
demand for tax-exempt products. Such
concerns are likely to quickly recede as
investors realize that such, if any,
changes are unlikely to be enacted
before late 1996 at the earliest. Also,
long-term investors will recall 1986
when similar tax proposals were made
and municipal bonds initially rose to at
least 100% of taxable yields. Tax-
exempt bond yields quickly declined as
investors' fears proved to be unfounded.
The municipal bond market's strong
technical position has diminished
somewhat in recent months. New-issue
supply over the last six months has
totaled approximately $69 billion, or a
decline of over 25% versus the corre-
sponding period in 1994. In recent
months, however, municipalities issued
approximately $40 billion in new
securities, which represents only a
3% decline versus the same period a
year earlier. Investor demand has
remained muted in recent months
despite significant funds available to
investors in recent months. By the end
of July investors, both individual and
institutional, are expected to receive as
much as $80 billion from tax-exempt
bond maturities, coupon payments and
the proceeds of early bond redemptions.
Little new money has entered the
municipal market in recent months,
largely in response to the factors
mentioned above. Consequently, much
of the technical support the municipal
market enjoyed earlier this year has
evaporated causing municipal bond
yields to decline at a lower rate than
their taxable counterparts.
<PAGE>
Their recent relative underperformance
has made municipal bonds particularly
attractive to long-term investors.
Tax-exempt bonds currently yield well
over 90% of US Treasury securities.
In some instances, A-rated, long-term
revenue bonds have yielded almost 95%
of US Treasury bonds. Analysts usually
consider municipal bonds yielding over
82% of US Treasury securities to be
historically attractive. With inflation-
adjusted, "real" after-tax equivalent
tax-exempt yields of over 6.50%,
municipal securities appear to
represent considerable value.
Current tax-exempt yield levels appear
to be over-compensating for any pro-
posed changes in tax law that can be
reasonably expected to be enacted.
As Congressional hearings on this issue
will continue into 1996, and the revenue
losses resultant from such changes
become more apparent, the likelihood
of any significant changes to tax codes
and the resultant decline of municipal
bonds' inherent tax advantage should
quickly decline. Under such a scenario,
tax-exempt bond yields would quickly
decline and currently available munici-
pal bond yields would return to their
normal historic relationship.
Fiscal Year in Review
Insured Portfolio and National Portfolio
Our asset management strategies for
the Insured Portfolio and National
Portfolio were aimed at achieving the
dual purposes of returning an attractive
current yield and total return through
price appreciation. During the latter
months of 1994, it appeared that a
potentially slowing economy combined
with an extreme undervaluation of
municipal debt securities relative to
their taxable counterparts could result
in municipal bond price appreciation.
To capture the positive price action
that followed, we positioned both
Portfolios in a relatively aggressive
stance after investing cash reserves in
performance-oriented discount securi-
ties which would be most active in an
upward moving market. Our relatively
aggressive investment approach created
significant price appreciation for the
fiscal year. Since credit quality spreads
were historically narrow, this was accom-
plished by using higher-yielding revenue
bonds without any significant forfeiture
in current yield.
<PAGE>
Going forward, we will continue to seek
special credit situations to bolster cur-
rent return to the Portfolios' share-
holders within the quality limitations
defined by the Fund's prospectus. We
will also monitor the Federal Reserve
Board's actions for insight into the
direction of economic conditions and
subsequent impact on the future direc-
tion of interest rates.
<PAGE>
Limited Maturity Portfolio
For the Limited Maturity Portfolio we
maintained the relatively aggressive
investment posture that we started in
the previous quarter. Cash reserves of
approximately 5% were maintained
throughout most of the June quarter as
weakening economic data indicated a
possible reversal of Federal Reserve
Board monetary policy from restrictive
to one of easing. Although interest rates
on three-year US Treasury notes fell
approximately 100 basis points during
the June quarter, interest rates on
three-year AAA-rated municipal
securities fell approximately 45 basis
points as talk of tax reform negatively
impacted municipal bond prices. Despite
this underperformance of the municipal
bond market, our relatively aggressive
investment approach created significant
price appreciation in the June quarter.
This aggressive approach was in contrast
to most of the Fund's fiscal year in
which we maintained a very cautious
portfolio strategy. Such a strategy in a
period of dramatically rising interest
rates, which occurred throughout 1994,
greatly reduced the negative impact on
the Fund's net asset value. Additionally,
by reducing the cash reserve position
and extending the Portfolio's average
maturity in the first half of this year, we
were able to participate in the massive
bond market rally which has ensued for
most of 1995. This strategy enabled the
Portfolio to realize significant price
appreciation so far in 1995.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President and
Portfolio Manager
<PAGE>
(Kenneth A. Jacob)
Kenneth A. Jacob
Vice President and Portfolio Manager
August 15, 1995
<TABLE>
PROXY RESULTS
Insured
Portfolio
During the year ended June 30, 1995, Merrill Lynch Municipal Bond Fund,
Inc.--Insured Portfolio shareholders voted on the following proposals.
Proposals 1, 2 and 4 were approved at a special shareholders' meeting
on September 26, 1994. Proposal 3 was passed at a special shareholders'
meeting on January 31, 1995. The description of each proposal and
number of shares voted are as follows:
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <C> <C>
1. To elect the Portfolio's Board of Directors: Ronald W. Forbes 307,636,900 4,839,992
Cynthia A. Montgomery 307,502,772 4,974,120
Charles C. Reilly 307,640,133 4,836,759
Kevin A. Ryan 307,583,795 4,893,097
Richard R. West 307,640,133 4,836,759
Arthur Zeikel 307,531,142 4,945,750
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Portfolio's independent
auditors. 304,870,682 1,635,265 5,970,945
3. To approve certain changes to the Portfolio's fundamental investment
restrictions. 184,269,930 10,510,704 12,684,283
4. To amend the Portfolio's articles of incorporation to implement the
Merrill Lynch Select Pricing SM System. 275,735,602 16,978,991 19,762,299
<PAGE>
National
Portfolio
During the year ended June 30, 1995, Merrill Lynch Municipal Bond Fund,
Inc.--National Portfolio shareholders voted on the following proposals.
Proposals 1, 2 and 4 were approved at a special shareholders' meeting
on September 26, 1994. Proposal 3 was passed at a special shareholders'
meeting on January 31, 1995. The description of each proposal and number
of shares voted are as follows:
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <C> <C>
1. To elect the Portfolio's Board of Directors: Ronald W. Forbes 144,718,599 2,246,916
Cynthia A. Montgomery 144,704,520 2,260,995
Charles C. Reilly 144,726,619 2,238,896
Kevin A. Ryan 144,723,092 2,242,423
Richard R. West 144,729,957 2,235,558
Arthur Zeikel 144,661,832 2,303,683
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Portfolio's independent
auditors. 143,430,348 860,121 2,675,046
3. To approve certain changes to the Portfolio's fundamental
investment restrictions. 82,710,483 4,502,057 5,590,176
4. To amend the Portfolio's articles of incorporation to implement the
Merrill Lynch Select Pricing SM System. 130,324,677 7,293,708 9,347,130
Limited Maturity
Portfolio
During the year ended June 30, 1995, Merrill Lynch Municipal Bond Fund,
Inc.--Limited Maturity Portfolio shareholders voted on the following
proposals. Proposals 1, 2 and 4 were approved at a special shareholders'
meeting on September 26, 1994. Proposal 3 was passed at a special
shareholders' meeting on January 31, 1995. The description of each
proposal and number of shares voted are as follows:
<PAGE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <C> <C>
1. To elect the Portfolio's Board of Directors: Ronald W. Forbes 85,138,070 2,248,547
Cynthia A. Montgomery 85,138,070 2,248,547
Charles C. Reilly 85,138,070 2,248,547
Kevin A. Ryan 85,138,070 2,248,547
Richard R. West 85,082,330 2,304,287
Arthur Zeikel 85,082,330 2,304,287
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Portfolio's independent
auditors. 85,617,655 475,996 1,292,966
3. To approve certain changes to the Portfolio's fundamental
investment restrictions. 41,105,226 3,702,803 2,944,057
4. To amend the Portfolio's articles of incorporation to implement the
Merrill Lynch Select Pricing SM System. 76,405,363 4,802,472 6,178,782
</TABLE>
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been 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 mainte-
nance 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 maxi-
mum 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.
<PAGE>
*Class C Shares are subject to a distribution fee of 0.55% and an
account maintenance fee of 0.25% for Insured and National Port-
folios. 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 re-
deemed 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).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Total Return Based on a $10,000 Investment"
graphs, "Average Annual Total Return" and "Performance Summary"
tables on pages 6--10. "Aggregate Total Return" tables for Class C and
Class D Shares are presented on pages 6-8. Data for all of the Fund's
shares are presented in the "Recent Performance Results" table on
pages 10 and 11.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class A and Class B
Shares for the 12-month and 3-month periods ended June 30, 1995
and for Class C and Class D Shares for the since inception and
3-month periods ended June 30, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should be considered a representa-
tion 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)
<PAGE>
Insured Portfolio's
Class A and
Class B Shares--
Total Return
Based on a
$10,000
Investment
A line graph depicting the growth of an investment in the Fund's Class A
and Class B Shares compared to the growth of an investment in the Lehman
Brothers Municipal Bond Index. Beginning and ending values are:
6/85 6/95
Insured Portfolio++--
Class A Shares* $ 9,600 $22,463
Lehman Brothers Municipal
Bond Index++++ $10,000 $24,052
10/21/88** 6/95
Insured Portfolio++--
Class B Shares $10,000 $15,925
Lehman Brothers Municipal
Bond Index++++ $10,000 $16,951
[FN]
*Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
**Commencement of Operations.
++The Insured Portfolio invests primarily in long-term, investment-grade
bonds (bonds rated Baa or better) covered by portfolio insurance
guaranteeing the timely payment of principal at maturity and interest.
++++This unmanaged Index consists of revenue bonds, prerefunded bonds, general
obligation bonds and insured bonds, all of which mature within 30 days.
Past performance is not predictive of future performance.
<PAGE>
Insured Portfolio--
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/95 +8.60% +4.25%
Five Years Ended 6/30/95 +8.06 +7.19
Ten Years Ended 6/30/95 +8.77 +8.33
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/95 +7.91% +3.91%
Five Years Ended 6/30/95 +7.26 +7.26
Inception (10/21/88) through 6/30/95 +7.20 +7.20
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payments of applicable contingent deferred sales charge.
Insured Portfolio--
Aggregate
Total Return
% Return % Return
Class C Shares* Without CDSC With CDSC**
Inception (10/21/94) through 6/30/95 +8.83% +7.83%
[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**
Inception (10/21/94) through 6/30/95 +9.24% +4.87%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
National Portfolio's
Class A and
Class B Shares--
Total Return
Based on a
$10,000
Investment
A line graph depicting the growth of an investment in the Fund's Class A
and Class B Shares compared to the growth of an investment in the Lehman
Brothers Municipal Bond Index. Beginning and ending values are:
6/85 6/95
National Portfolio++--
Class A Shares* $ 9,600 $22,531
Lehman Brothers Municipal
Bond Index++++ $10,000 $24,052
10/21/88** 6/95
National Portfolio++--
Class B Shares $10,000 $15,813
Lehman Brothers Municipal
Bond Index++++ $10,000 $16,951
[FN]
*Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
**Commencement of Operations.
++The National Portfolio invests primarily in long-term medium- to
lower-grade municipal bonds (bonds rated Baa, bonds rated below Baa
and bonds unrated of comparable quality) offering higher yields but
subject to greater risks than investment-grade municipal bonds.
++++This unmanaged Index consists of revenue bonds, prerefunded bonds, general
obligation bonds and insured bonds, all of which mature within 30 days.
Past performance is not predictive of future performance.
<PAGE>
National Portfolio--
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/95 +7.89% +3.58%
Five Years Ended 6/30/95 +8.02 +7.14
Ten Years Ended 6/30/95 +8.91 +8.46
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/95 +7.28% +3.29%
Five Years Ended 6/30/95 +7.23 +7.23
Inception (10/21/88) through 6/30/95 +7.09 +7.09
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
National Portfolio--
Aggregate
Total Return
% Return % Return
Class C Shares* Without CDSC With CDSC**
Inception (10/21/94) through 6/30/95 +7.97% +6.97%
<PAGE>
[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**
Inception (10/21/94) through 6/30/95 +8.37% +4.04%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Limited Maturity
Portfolio's
Class A and
Class B Shares--
Total Return
Based on a
$10,000
Investment
A line graph depicting the growth of an investment in the Fund's Class A
and Class B Shares compared to the growth of an investment in the Lehman
Brothers Municipal Bond Index and the Lehman Brothers 3-Yr. General
Obligation Bond Index. Beginning and ending values are:
6/85 6/95
Limited Maturity Portfolio++--
Class A Shares* $ 9,600 $16,725
Lehman Brothers Municipal
Bond Index++++ $10,000 $24,052
Lehman Brothers 3-Yr. General
Obligation Bond Index++++++ $10,000 $16,350
<PAGE>
11/02/92** 6/95
Limited Maturity Portfolio++--
Class B Shares $10,000 $10,967
Lehman Brothers Municipal
Bond Index++++ $10,000 $12,006
Lehman Brothers 3-Yr. General
Obligation Bond Index++++++ $10,000 $10,765
[FN]
*Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
**Commencement of Operations.
++The Limited Maturity Portfolio invests primarily in investment-grade
bonds (rated Baa or better) with a maximum maturity not to exceed
4 years.
++++This unmanaged Index consists of revenue bonds, prerefunded bonds,
general obligation bonds and insured bonds, all of which mature
within 30 days.
++++++This unmanaged Index consists of state and local government obligation
bonds that mature in 3 years--4 years, rated Baa or better.
Limited Maturity
Portfolio--Average
Annual Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/95 +4.53% +3.48%
Five Years Ended 6/30/95 +5.08 +4.87
Ten Years Ended 6/30/95 +5.38 +5.28
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/95 +4.14% +3.14%
Inception (11/02/92) through 6/30/95 +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.
Limited Maturity
Portfolio--
Aggregate
Total Return
% Return % Return
Class C Shares* Without CDSC With CDSC**
Inception (10/21/94) through 6/30/95 +3.52% +2.52%
[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**
Inception (10/21/94) through 6/30/95 +3.73% +2.69%
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
Performance
Summary--
Class A Shares
<CAPTION>
1/1-12/31 Beginning/Ending Net Asset Value Dividends Paid* % Change**
Period Limited Limited Limited
Covered Insured National Maturity Insured National Maturity Insured National Maturity
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/77-12/77 $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 - 0.75 + 1.17% +0.86%
1980 8.39/6.86 9.60/ 8.54 9.88/ 9.74 0.60 0.79 0.64 - 11.44 - 3.00 +5.13
1981 6.86/5.66 8.54/ 7.34 9.74/ 9.78 0.65 0.90 0.77 - 8.51 - 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 + 12.41 +14.04 +5.57
1984 6.97/6.88 9.01/ 8.96 9.76/ 9.74 0.66 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
1/1/95-6/30/95 7.43/7.92 9.40/10.02 9.77/ 9.92 0.22 0.29 0.18 + 9.70 + 9.81 +3.54
------ ------ -----
Total $10.77 $13.26 $9.04
Cumulative total return as of 6/30/95: +230.50%** +314.34%** +151.72%**
<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 11/30/79
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>
PERFORMANCE DATA (concluded)
<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
1/1/95-6/30/95 7.43/7.92 9.39/10.02 9.77/ 9.92 0.19 0.25 0.17 + 9.30 + 9.53 +3.36
----- ----- -----
Total $3.63 $4.86 $0.92
Cumulative total return as of 6/30/95: +59.25%** +58.13%** +9.67%**
<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 deducted.
***Commenced operations on 11/02/92.
(1)Includes capital gains of $0.064 for the Insured Portfolios.
(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>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month Standardized
6/30/95 3/31/95 6/30/94++ % Change++ % Change 30-day Yield
<S> <C> <C> <C> <C> <C> <C>
Insured Portfolio Class A Shares $ 7.92 $ 7.87 $ 7.88 +2.41%(1) +0.64% 5.07%
Insured Portfolio Class B Shares 7.92 7.87 7.87 +2.54(1) +0.64 4.50
Insured Portfolio Class C Shares 7.92 7.87 7.68 +5.08(1) +0.64 4.54
Insured Portfolio Class D Shares 7.92 7.88 7.68 +5.08(1) +0.51 4.83
National Portfolio Class A Shares 10.02 9.91 10.08 +1.61(2) +1.11 5.39
National Portfolio Class B Shares 10.02 9.91 10.07 +1.71(2) +1.11 4.84
National Portfolio Class C Shares 10.03 9.91 9.85 +4.09(2) +1.21 4.79
National Portfolio Class D Shares 10.03 9.91 9.85 +4.09(2) +1.21 5.14
Limited Maturity Portfolio Class A Shares 9.92 9.85 9.87 +0.51 +0.71 3.66
Limited Maturity Portfolio Class B Shares 9.92 9.85 9.87 +0.51 +0.71 3.33
Limited Maturity Portfolio Class C Shares 9.92 9.84 9.83 +0.92 +0.81 3.49
Limited Maturity Portfolio Class D Shares 9.93 9.85 9.83 +1.02 +0.81 3.56
Insured Portfolio Class A Shares--Total Return +8.60(3) +2.05(4)
Insured Portfolio Class B Shares--Total Return +7.91(5) +1.86(6)
Insured Portfolio Class C Shares--Total Return +8.83(7) +1.85(8)
Insured Portfolio Class D Shares--Total Return +9.24(9) +1.86(10)
National Portfolio Class A Shares--Total Return +7.89(11) +2.60(12)
National Portfolio Class B Shares--Total Return +7.28(13) +2.41(14)
National Portfolio Class C Shares--Total Return +7.97(15) +2.50(16)
National Portfolio Class D Shares--Total Return +8.37(17) +2.64(18)
Limited Maturity Portfolio Class A Shares--Total Return +4.53(19) +1.68(20)
Limited Maturity Portfolio Class B Shares--Total Return +4.14(21) +1.59(22)
Limited Maturity Portfolio Class C Shares--Total Return +3.52(23) +1.72(24)
Limited Maturity Portfolio Class D Shares--Total Return +3.73(25) +1.76(26)
<PAGE>
<FN>
*Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included.
++Investment results shown for Class C and Class D Shares are since inception
(10/21/94).
(1)Percent change includes reinvestment of $0.141 per share capital gains
distributions.
(2)Percent change includes reinvestment of $0.209 per share capital gains
distributions.
(3)Percent change includes reinvestment of $0.457 per share ordinary income
dividends and $0.141 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.112 per share ordinary income
dividends.
(5)Percent change includes reinvestment of $0.397 per share ordinary income
dividends and $0.141 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.097 per share ordinary income
dividends.
(7)Percent change includes reinvestment of $0.263 per share ordinary income
dividends and $0.141 per share capital gains distributions.
(8)Percent change includes reinvestment of $0.096 per share ordinary income
dividends.
(9)Percent change includes reinvestment of $0.292 per share ordinary income
dividends and $0.141 per share capital gains distributions.
(10)Percent change includes reinvestment of $0.107 per share ordinary income
dividends.
(11)Percent change includes reinvestment of $0.603 per share ordinary income
dividends and $0.209 per share capital gains distributions.
(12)Percent change includes reinvestment of $0.148 per share ordinary income
dividends.
(13)Percent change includes reinvestment of $0.527 per share ordinary income
dividends and $0.209 per share capital gains distributions.
(14)Percent change includes reinvestment of $0.129 per share ordinary income
dividends.
(15)Percent change includes reinvestment of $0.350 per share ordinary income
dividends and $0.209 per share capital gains distributions.
(16)Percent change includes reinvestment of $0.128 per share ordinary income
dividends.
(17)Percent change includes reinvestment of $0.386 per share ordinary income
dividends and $0.209 per share capital gains distributions.
(18)Percent change includes reinvestment of $0.142 per share ordinary income
dividends.
(19)Percent change includes reinvestment of $0.387 per share ordinary income
dividends.
(20)Percent change includes reinvestment of $0.095 per share ordinary income
dividends.
(21)Percent change includes reinvestment of $0.350 per share ordinary income
dividends.
(22)Percent change includes reinvestment of $0.086 per share ordinary income
dividends.
(23)Percent change includes reinvestment of $0.241 per share ordinary income
dividends.
(24)Percent change includes reinvestment of $0.088 per share ordinary income
dividends.
(25)Percent change includes reinvestment of $0.251 per share ordinary income
dividends.
(26)Percent change includes reinvestment of $0.093 per share ordinary income
dividends.
</TABLE>
<PAGE>
Portfolio
Abbreviations
To simplify the listings of
Merrill Lynch Municipal
Bond Fund, Inc.'s portfolio
holdings in the Schedule of
Investments, we have
abbreviated the names of
many of the securities
according to the list at right.
AMT Alternative Minimum Tax (Subject to)
BAN Bond Anticipation Notes
COP Certificates of Participation
CP Commercial Paper
DATES Daily Adjustable Tax-Exempt Securities
EDA Economic Development Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
RAW Revenue Anticipation Warrants
RIB Residual Interest Bonds
SAVRS Select Auction Variable Rate Security
S/F Single-Family
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--0.6% AAA Aaa $ 1,625 Alabama Water Pollution Control Authority, Revolving Fund Loan,
Series A, 6.75% due 8/15/2017(b) $ 1,738
AAA Aaa 5,000 Auburn University, Alabama, Revenue Refunding Bonds
(General Fee), 5.25% due 6/01/2013(e) 4,622
AAA Aaa 1,250 Mobile, Alabama, GO, Refunding and Capital Improvement Bonds,
10.875% due 11/01/2007(c) 1,745
AAA Aaa 6,000 Montgomery, Alabama, Baptist Medical Center, Special Care
Facilities Financing Authority Revenue Bonds, Series A, 5.75%
due 1/01/2022(h) 5,695
Alaska--0.7% Kenai Peninsula Borough, Alaska, GO(b):
AAA Aaa 6,450 8.40% due 1/01/2000 7,391
AAA Aaa 8,460 8.40% due 1/01/2001 9,884
Arizona--2.4% AAA Aaa 6,750 Arizona State Municipal Financing Program, COP, Series 34,
7.25% due 8/01/2009(g) 7,883
AAA Aaa 3,800 Maricopa County, Arizona, IDA, Health Facilities Revenue Bonds
(Saint Joseph's Care Center Project), Series A, 7.75% due
7/01/2020(e) 4,286
AAA Aaa 4,000 Maricopa County, Arizona, IDA, Hospital Facility Revenue
Refunding Bonds (Samaritan Health Service Hospital),
Series A, 7% due 12/01/2013(e) 4,377
AAA Aaa 2,555 Maricopa County, Arizona, School District No. 38 Revenue Bonds
(Madison Elementary), UT, Series A, 5.50% due 7/01/2010(h) 2,496
AAA Aaa 7,000 Maricopa County, Arizona, Unified School District No. 97 Revenue
Bonds (Deer Valley Project), UT, 1986 Series E, 10% due
7/01/2000(h) 8,626
Mesa, Arizona, IDA, Health Care Facilities Revenue Bonds (Western
Health Network)(g):
AAA Aaa 10,000 Refunding, Series A-2, 7.625% due 1/01/2013 11,074
AAA Aaa 7,340 Series A-1, 7.625% due 1/01/2019 8,128
Phoenix, Arizona, Street and Highway User, Revenue Refunding
Bonds, Junior-Lien, Series A(h)(j)(k):
AAA Aaa 5,000 5.63% due 7/01/2012 1,756
AAA Aaa 5,000 5.63% due 7/01/2013 1,643
AAA Aaa 5,000 Pima County, Arizona, Unified School District No. 10, Revenue
Refunding Bonds (Amphitheatre), 5.75% due 7/01/2004(h) 5,174
AAA Aaa 5,250 University of Arizona Medical Center Corporation, Hospital
Revenue Refunding Bonds, 5% due 7/01/2021(e) 4,607
<PAGE>
California--4.4% AAA Aaa 38,700 California State, RAW, Series C, 5.75% due 4/25/1996(h) 39,385
AAA Aaa 12,000 Fresno, California, Sewer Revenue Bonds, Series A-1, 6.25% due
9/01/2014(b) 12,533
AAA Aaa 5,000 Los Angeles, California, Wastewater System Revenue Refunding
Bonds, Series A, 5.70% due 6/01/2013(e) 4,868
AAA Aaa 17,600 Northern California Power Agency, Multiple Capital Facilities
Revenue Bonds, 6.538% due 8/01/2025(e) 18,341
AAA Aaa 12,000 Oakland, California, Redevelopment Agency, Revenue Refunding
Bonds, 5.95% due 9/01/2019(e) 11,728
University of California Revenue Bonds (Multiple Purpose
Projects):
AAA Aaa 4,650 Refunding, Series C, 5% due 9/01/2012(b) 4,197
AAA Aaa 13,075 Refunding, Series C, 5.25% due 9/01/2016(b) 11,936
AAA Aaa 5,000 Series D, 6.375% due 9/01/2024(e) 5,102
Delaware--0.5% AAA Aaa 6,000 Delaware EDA, PCR, Refunding (Delmarva Power and Light Company),
Series B, 7.30% due 3/01/2014(e) 6,592
AAA Aaa 3,750 Delaware State Health Facilities Authority, Crossover Revenue
Refunding Bonds (Delaware Medical Center), 7% due 10/01/2015(c)(e) 4,044
Florida--6.1% AAA Aaa 4,700 Duval County, Florida, School District Revenue Refunding Bonds,
6.125% due 8/01/2004(b) 5,032
Florida Municipal Power Agency, Revenue Bonds:
AAA Aaa 7,750 (All Requirements Power Supply Project), 6.25% due
10/01/2002(a)(b) 8,571
AAA Aaa 4,500 Refunding (Saint Lucie Project), 5.25% due 10/01/2021(h) 4,073
AAA Aaa 5,000 Florida State Division, Board of Finance, Department of General
Services Revenue Bonds (Department of Natural Resource
Preservation), Series 2000-A, 6.75% due 7/01/2013(b) 5,412
Jacksonville, Florida, Health Facilities Authority, Hospital
Revenue Refunding and Improvement Bonds (Baptist Medical Center
Project):
AAA Aaa 500 11.50% due 10/01/2012(c) 819
AAA Aaa 26,500 Series A, 7.30% due 6/01/2019(e) 28,932
AAA Aaa 8,750 Jacksonville, Florida, Port Authority Revenue Bonds, AMT, 7.875%
due 11/01/2018(g) 9,295
AAA Aaa 20,000 Lee County, Florida, Hospital Board of Directors, Hospital
Revenue Bonds, 6.60% due 4/01/2020(e) 20,832
AAA Aaa 16,700 Martin County, Florida, PCR, Refunding (Florida Power and Light
Company Project), 7.30% due 7/01/2020(e) 18,370
AAA Aaa 11,570 Orange County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan), Series B, 7.875% due
12/01/2025(g) 12,464
AAA Aaa 3,950 Orange County, Florida, HFA, Mortgage Revenue Refunding Bonds,
Series A, 7.60% due 1/01/2024(h) 4,230
Palm Beach County, Florida, Criminal Justice Facilities, Revenue
Refunding Bonds(h):
AAA Aaa 11,985 5.375% due 6/01/2009 11,715
AAA Aaa 4,935 5.375% due 6/01/2010 4,809
AAA Aaa 3,500 Saint Lucie County, Florida, Sales Tax Revenue Refunding Bonds,
5% due 10/01/2023(h) 3,039
AAA Aaa 5,700 South Broward, Florida, Hospital District Revenue Bonds, 6.611%
due 5/01/2021(b) 5,994
AAA Aaa 3,300 Tampa, Florida, Revenue Bonds (Allegany Health System--
Saint Joseph's), 5.125% due 12/01/2023(e) 2,884
AAA Aaa 2,000 Tampa, Florida, Water and Sewer System Revenue Bonds, Sub-Lien,
Series A, 7.25% due 10/01/2016(b) 2,162
AAA Aaa 5,000 University Community Hospital Incorporated, Florida, Hospital
Revenue Refunding Bonds, 7.375% due 9/01/2000(a)(i) 5,720
AAA Aaa 2,240 West Coast Regional Water Supply Authority, Florida, Capital
Improvement Revenue Bonds (Hillsborough County Project), 10.40%
due 10/01/2010(a)(b) 3,131
<PAGE>
Georgia--5.4% AAA Aaa 5,500 Chatham County, Georgia, School District, UT, 6.75% due
8/01/2019(e) 5,899
AAA Aaa 5,000 Douglasville-Douglas County, Georgia, Water and Sewer Authority,
Water and Sewer Revenue Refunding Bonds, 5.625% due 6/01/2015(b) 4,863
Georgia Municipal Electric Authority, Power Revenue Bonds:
AAA Aaa 12,100 Refunding, Series Z, 5.50% due 1/01/2012(h) 11,643
AAA Aaa 7,400 Refunding, Series Z, 5.50% due 1/01/2012(i) 7,121
AAA Aaa 11,545 Refunding, Series Z, 5.50% due 1/01/2020(h) 10,809
AAA Aaa 20,000 Series EE, 7% due 1/01/2025(b) 22,781
Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax
Revenue Refunding Bonds(b):
AAA Aaa 3,990 Series A, 5.125% due 7/01/2019 3,544
AAA Aaa 10,500 Series A, 5.125% due 7/01/2020 9,305
AAA Aaa 18,605 Series P, 6% due 7/01/2013 19,017
AAA Aaa 28,165 Series P, 6.25% due 7/01/2020 29,257
AAA Aaa 9,000 Municipal Electric Authority, Georgia, Special Obligation Bonds
(Fifth Crossover Series, Project One), 6.40% due 1/01/2013(b)(c) 9,538
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Hawaii--2.9% Hawaii County, Hawaii, Revenue Refunding and Improvement Bonds,
GO, UT, Series A(h):
AAA Aaa $ 1,000 5.60% due 5/01/2012 $ 980
AAA Aaa 1,000 5.60% due 5/01/2013 976
Hawaii Department of Budget and Finance, Special Purpose Mortgage
Revenue Bonds (Hawaiian Electric Company, Inc. Project), AMT(e):
AAA Aaa 4,340 7.625% due 12/01/2018 4,766
AAA Aaa 5,000 Series C, 7.375% due 12/01/2020 5,499
AAA Aaa 4,500 Hawaii Harbor Capital Improvement Revenue Bonds, AMT, 7% due
7/01/2017(e) 4,838
Hawaii State Airport System Revenue Bonds:
AAA Aaa 21,795 AMT, 7.30% due 7/01/2020(b) 23,773
AAA Aaa 23,200 AMT, Second Series, 7.50% due 7/01/2020(h) 25,517
AAA Aaa 10,000 Refunding, Series 1993, 6.45% due 7/01/2013(e) 10,426
<PAGE>
Illinois--3.7% AAA Aaa 25,000 Chicago, Illinois, Public Building Commission Revenue Bonds
(Community College District No. 508), Series B, 8.75% due
1/01/2007(c)(g) 27,119
AAA Aaa 25,000 Chicago, Illinois, Public Building Commission Revenue Bonds,
Series A, 7.125% due 1/01/2015(c)(e) 27,297
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 3,250 (Elmhurst Memorial Hospital), 6.625% due 1/01/2022(h) 3,379
AAA Aaa 4,000 (Methodist Health Project), 6.90% due 5/01/2021(b) 4,232
AAA Aaa 20,000 (Rush-Presbyterian Saint Luke's Medical Center), 6.80% due
10/01/2024(e) 21,079
AAA Aaa 6,600 Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Bonds (McCormick Place Expansion Project),
Series A, 6.50% due 6/15/2027(b) 6,839
AAA Aaa 3,025 Northwest Suburban Municipal Joint Action Water Agency, Illinois,
Water Supply System Revenue Refunding Bonds, Series A, 5.90% due
5/01/2015(e) 2,939
Indiana--1.7% AAA Aaa 2,470 Indiana Employment Development Commission, Environmental Revenue
Bonds (Public Service Company of Indiana), AMT, 7.50% due
3/15/2015(e) 2,687
Indiana Municipal Power Agency, Power Supply System Revenue
Refunding Bonds, Series B(e):
AAA Aaa 12,600 5.75% due 1/01/2007 12,996
AAA Aaa 14,000 5.80% due 1/01/2008 14,376
AAA Aaa 4,040 Indianapolis, Indiana, Local Public Improvement Bond Bank,
Series A, 7.90% due 2/01/2002(a)(g) 4,735
AAA Aaa 2,000 Jasper County, Indiana, PCR, Refunding (Collateral--Northern
Indiana Public Service), 7.10% due 7/01/2017(e) 2,152
AAA Aaa 3,550 Rockport, Indiana, PCR, Refunding (Indiana-Michigan Power),
Series B, 7.60% due 3/01/2016(h) 3,974
Iowa--0.2% AAA Aaa 5,000 Des Moines, Iowa, Parking Facilities Revenue Bonds, Series A,
7.25% due 7/01/2015(h) 5,455
Kansas--0.5% AAA Aaa 11,175 Kansas City, Kansas, Utility System Revenue Refunding and
Improvement Bonds, 6.375% due 9/01/2023(h) 11,539
Kentucky--0.7% AAA Aaa 4,500 Boone County, Kentucky, PCR, Refunding (Collateral--Cincinnati
Gas and Electric), Series A, 5.50% due 1/01/2024(e) 4,183
AAA Aaa 11,470 Kentucky Development Finance Authority, Hospital Revenue
Refunding and Improvement Bonds (Saint Elizabeth Medical
Center), Series A, 9% due 11/01/2000(h) 13,761
Louisiana--0.4% AAA Aaa 8,700 Louisiana Public Facilities Authority, Health and Education
Capital Facilities Revenue Bonds (Our Lady of the Lake Regional
Medical Center), Series C, 8.20% due 12/01/2015(g)(c) 9,768
<PAGE>
Maryland--1.4% Baltimore, Maryland, Revenue Refunding Bonds (Kidder Maryland
Water Projects), Series A(e):
AAA Aaa 5,000 5.60% due 7/01/2013 4,906
AAA Aaa 23,000 5.65% due 7/01/2020 22,312
Maryland Health and Higher Educational Facilities Authority
Revenue Bonds (University of Maryland Medical Systems)(h):
AAA Aaa 2,250 Series A, 7% due 7/01/2001(a) 2,551
AAA Aaa 4,400 Series B, 7% due 7/01/2022(c) 5,017
Massachusetts-- AAA Aaa 13,000 Massachusetts Bay Transportation Authority Revenue Bonds, COP,
3.1% Series A, 7.65% due 8/01/2000(a)(i) 14,960
AAA Aaa 5,215 Massachusetts Educational Loan Authority Revenue Bonds, AMT,
Issue D, Series D, 7.25% due 1/01/2009(e) 5,610
AAA Aaa 3,250 Massachusetts Port Authority Revenue Bonds, 13% due 7/01/2013(c) 5,585
AAA Aaa 10,055 Massachusetts State Consolidated Loan, Series B, 5.50% due
7/01/2012(b) 9,616
AAA Aaa 6,200 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds, 6.70% due 8/15/2021(i) 6,569
AAA Aaa 19,755 Massachusetts State, HFA, Housing Revenue Refunding Bonds
(Insured Rental), AMT, Series A, 6.75% due 7/01/2028(b) 20,390
AAA Aaa 5,500 Massachusetts State Industrial Finance Agency Revenue Bonds
(Brandeis University), Series C, 6.80% due 10/01/2019(e) 5,894
AAA Aaa 4,500 Massachusetts State Turnpike Authority, Turnpike Revenue Refunding
Bonds, Series A, 5.125% due 1/01/2023(h) 3,935
AAA Aaa 3,975 Massachusetts State Water Resource Authority, General Revenue
Bonds, Series A, 5.70% due 8/01/2009(e) 3,967
Michigan--3.8% Chippewa Valley, Michigan, Schools Revenue Bonds, UT, Series Q(h):
AAA Aaa 5,500 6.375% due 5/01/2001(a) 6,025
AAA Aaa 10,500 Refunding, 5% due 5/01/2021 9,117
AAA Aaa 10,000 Grand Rapids, Michigan, Water Supply Systems, Revenue Refunding
Bonds, 5.75% due 1/01/2018(h) 9,574
AAA Aaa 4,225 Lake Orion, Michigan, Community School District, Refunding, UT,
5.50% due 5/01/2020(b) 3,918
Michigan State Trunk Line, Series A(h):
AAA Aaa 14,365 5.75% due 11/15/2020 13,701
AAA Aaa 26,120 5.80% due 11/15/2024 25,156
Monroe County, Michigan, PCR (Detroit Edison Company Project),
AMT:
AAA Aaa 16,500 Project 1, 7.65% due 9/01/2020(h) 18,396
AAA Aaa 9,745 Series I-B, 7.50% due 9/01/2019(b) 10,741
<PAGE>
Mississippi--0.6% AAA Aaa 1,320 Harrison County, Mississippi, Wastewater Management District,
Revenue Refunding Bonds, Wastewater Treatment Facilities,
Series A, 8.50% due 2/01/2013(h) 1,703
AAA Aaa 13,000 Mississippi Hospital Equipment and Facilities Authority, Revenue
Refunding and Improvement Bonds (North Mississippi Health
Services), 5.75% due 5/15/2016(b) 12,421
Missouri--0.1% AAA Aaa 3,500 Sikeston, Missouri, Electric Revenue Refunding Bonds, 6.25% due
6/01/2012(e) 3,611
Montana--0.2% AAA Aaa 5,600 Montana Health Facilities Authority, Hospital Facilities Revenue
Bonds (Deaconess Medical Center Project), SAVRS, Series A, 4.06%
due 2/15/2016(b)(f) 5,600
Nebraska--0.5% AAA Aaa 12,755 Nebraska Public Power District Revenue Bonds, Series A, 5.50%
due 1/01/2013(e) 12,283
Nevada--2.0% AAA Aaa 2,200 Nevada Housing Dividend, S/F Program, AMT, Issue C, 6.35% due
10/01/2012(b) 2,207
AAA Aaa 45,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra
Pacific Power), AMT, 6.65% due 6/01/2017(e) 47,253
New Jersey--3.8% AAA Aaa 3,350 Cape May County, New Jersey, Industrial Pollution Control
Financing Authority, Revenue Refunding Bonds (Atlantic City
Electric Company), Series A, 6.80% due 3/01/2021(e) 3,741
AAA Aaa 9,635 Essex County, New Jersey, Refunding Bonds, Series A-1, 5.375%
due 9/01/2010 9,197
AAA Aaa 4,750 Jersey City, New Jersey, Sewer Authority Revenue Refunding Bonds,
6.25% due 1/01/2014(b) 4,990
AAA Aaa 20,000 New Jersey EDA, Natural Gas Facilities, Revenue Refunding Bonds
(NUI Corp.), Series A, 6.35% due 10/01/2022(b) 20,417
New Jersey State Housing and Mortgage Finance Agency Revenue
Bonds (Home Buyer), AMT(e):
AAA Aaa 6,640 Series B, 7.90% due 10/01/2022 7,147
AAA Aaa 12,785 Series D, 7.70% due 10/01/2029 13,560
AAA Aaa 23,890 Series M, 7% due 1/01/2026 25,498
AAA Aaa 8,055 New Jersey State Turnpike Authority, Turnpike Revenue Bonds,
Series A, 6% due 1/01/2005(e) 8,459
AAA VMIG1++ 6,000 New Jersey State Turnpike Authority, Turnpike Revenue Refunding
Bonds, VRDN, Series D, 3.85% due 1/01/2018(f) 6,000
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New York--6.0% AAA Aaa $ 9,650 Metropolitan Transportation Authority, New York, Service Contract
Revenue Refunding Bonds (Transportation Facilities), Series L,
7.50% due 7/01/2017(b) $ 10,567
New York City, New York, GO, UT, Series I(b):
AAA Aaa 4,505 7.25% due 8/15/2013 4,969
AAA Aaa 2,645 7.25% due 8/15/2013 2,885
AAA Aaa 10,130 7.25% due 8/15/2016 11,050
AAA Aaa 3,500 New York City, New York, IDA, Civic Facilities Revenue Bonds
(USTA National Tennis Center Project), 6.25% due 11/15/2005(i) 3,771
New York City, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds:
AAA Aaa 50,000 5.20% due 6/15/2008(e) 48,397
AAA Aaa 12,075 Refunding, Series A, 5.75% due 6/15/2018(h) 11,570
AAA Aaa 1,090 Series A, 6.75% due 6/15/2014(h) 1,145
AAA Aaa 9,600 Series B, 5.375% due 6/15/2007(b) 9,504
AAA Aaa 4,510 Series C, 6.20% due 6/15/2021(b) 4,553
AAA Aaa 16,000 Series F, 5.50% due 6/15/2023(e) 14,860
New York State Medical Care Facilities Finance Agency Revenue
Bonds (Mental Health Services):
AAA Aaa 3,085 Series C, 7.375% due 8/15/2019(e) 3,402
AAA Aaa 11,500 Series D, 5.90% due 8/15/2022(b) 11,196
Niagara Falls, New York, Public Improvement Bonds, UT(e):
AAA Aaa 2,975 6.90% due 3/01/2023 3,214
AAA Aaa 3,190 6.90% due 3/01/2024 3,446
Suffolk County, New York, Water Authority, Waterworks Revenue
Refunding Bonds(b):
AAA Aaa 1,235 7.375% due 6/01/2012 1,353
AAA Aaa 7,345 Series C, 5.75% due 6/01/2013 7,224
North Carolina-- AAA VMIG1++ 200 Charlotte, North Carolina, Airport Revenue Refunding Bonds, VRDN,
0.0% Series A, 4.20% due 7/01/2016(e)(f) 200
<PAGE>
Ohio--1.6% AAA Aaa 2,710 Clermont County, Ohio, Hospital Facilities Revenue Refunding
Bonds (Mercy Health Systems), Series A, 7.50% due 9/01/2001(a)(b) 3,110
AAA Aaa 12,000 Cleveland, Ohio, Public Power System Revenue Bonds, First
Mortgage, Series A, 7% due 11/15/2024(e) 13,744
AAA Aaa 6,700 Ohio Municipal Electric Generation Agency, Joint Ventures, COP,
5.375% due 2/15/2013(b) 6,289
AAA Aaa 3,500 Ohio State Air Quality Development Authority, Revenue Refunding
Bonds (Cincinnati Gas and Electric), Series B, 5.45% due
1/01/2024(e) 3,275
Ohio State Water Development Authority Revenue Bonds (Fresh Water
Series)(b):
AAA Aaa 2,890 5.80% due 12/01/2011 2,900
AAA Aaa 2,475 5.875% due 6/01/2012 2,491
AAA Aaa 9,000 5.90% due 12/01/2015 8,894
Oklahoma--1.2% AAA Aaa 7,500 Oklahoma Industrial Authority, Hospital Revenue Bonds (Baptist
Medical Center), Series A, 7% due 8/15/2014(b) 8,047
AAA Aaa 21,560 Tulsa, Oklahoma, Industrial Authority, Hospital Revenue Bonds
(Saint John's Medical Center, Inc.), 7.25% due 12/01/2009(e) 23,423
Oregon--0.2% AAA Aaa 4,000 Port Portland, Oregon, Portland International Airport, Airport
Revenue Bonds, AMT, Series 7-B, 7.10% due 7/01/2021(e) 4,331
Pennsylvania-- AAA Aaa 1,750 Allegheny County, Pennsylvania, Hospital Development Authority
7.1% Revenue Bonds (Mercy Hospital of Pittsburgh), 6.75% due
4/01/2021(b) 1,849
AAA Aaa 6,900 Beaver County, Pennsylvania, Hospital Authority Revenue Bonds
(Medical Center of Beaver, Pennsylvania Incorporated), Series A,
6.25% due 7/01/2022(b) 6,959
AAA Aaa 3,365 Beaver County, Pennsylvania, IDA, PCR, Refunding (Ohio Edison
Company/Mansfield), Series A, 7% due 6/01/2021(h) 3,659
AAA Aaa 2,110 Berks County, Pennsylvania, Municipal Authority, Hospital Revenue
Bonds (Reading Hospital Medical Center Project), 5.70% due
10/01/2014(e) 2,047
AAA Aaa 4,425 Hazleton, Pennsylvania, Area School District, UT, Series B, 6.25%
due 3/01/2017(h)(j)(k) 1,156
Pennsylvania Higher Educational Assistance Agency, Student Loan
Revenue Bonds, AMT:
AAA Aaa 16,000 7.437% due 3/01/2020(e) 17,047
AAA Aaa 3,200 6.031% due 3/01/2022(b) 3,154
AAA Aaa 34,000 6.172% due 3/01/2022(b) 33,515
AAA Aaa 30,000 6.854% due 9/03/2026(b) 31,182
Pennsylvania State Higher Educational Facilities Authority,
College and University Revenue Bonds:
AAA Aaa 1,500 (Bryn Mawr College), 6.50% due 12/01/2009(h) 1,584
AAA Aaa 4,250 (Temple University), First Series, 6.50% due 4/01/2021(e) 4,425
AAA Aaa 10,390 Pennsylvania Turnpike Commission, Turnpike Revenue Bonds,
Series L, 6.25% due 6/01/2011(b) 10,623
Philadelphia, Pennsylvania, Airport Revenue Bonds, AMT(e):
AAA Aaa 8,150 7.75% due 6/15/2015 8,926
AAA Aaa 24,000 7.375% due 6/15/2018 25,944
AAA Aaa 5,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th
Series B, 7% due 5/15/2020(c)(e) 5,895
AAA Aaa 5,750 Philadelphia, Pennsylvania, Parking Authority, Airport Parking
Revenue Bonds, 7.375% due 9/01/2018(b) 6,295
AAA Aaa 7,500 Philadelphia, Pennsylvania, School District Revenue Refunding
Bonds, Series A, 5.375% due 7/01/2005(e) 7,503
Philadelphia, Pennsylvania, Water and Wastewater Revenue
Refunding Bonds(b):
AAA Aaa 4,250 5.50% due 6/15/2006 4,292
AAA Aaa 3,000 5.50% due 6/15/2007 3,002
<PAGE>
Rhode Island--3.3% Rhode Island Depositors Economic Protection Corporation, Special
Obligation Bonds, Series A(i):
AAA Aaa 6,100 6.625% due 8/01/2002(a) 6,841
AAA Aaa 35,000 Refunding, 5.75% due 8/01/2019 33,461
AAA Aaa 16,520 Refunding, 5.50% due 8/01/2020 15,254
AAA Aaa 25,600 Rhode Island Health and Educational Building Corporation Revenue
Bonds (Rhode Island Hospital), 6.85% due 8/15/2021(h) 27,352
South Carolina-- AAA Aaa 7,000 Charleston, South Carolina, Waterworks and Sewer Revenue
4.6% Refunding and Improvement Bonds, 6% due 1/01/2016(b) 6,919
AAA Aaa 5,000 Florence County, South Carolina, Hospital Revenue Bonds (McLeod
Regional Medical Center Project), 6.75% due 11/01/2020(h) 5,305
AAA Aaa 1,750 Greenville, South Carolina, Hospital System, Hospital Facilities
Revenue Bonds, Series A, 7.50% due 5/01/2016(h) 1,834
AAA Aaa 2,410 Myrtle Beach, South Carolina, Water and Sewer System Revenue
Refunding Bonds, 5.25% due 3/01/2020(e) 2,176
AAA Aaa 3,500 Pickens and Richland Counties, South Carolina, Hospital
Facilities Revenue Bonds (Baptist Hospital), Series A, 7% due
8/01/2001(a)(b) 3,972
Piedmont Municipal Power Agency, South Carolina, Electric
Revenue Refunding Bonds:
AAA Aaa 4,000 6.30% due 1/01/2022(e) 4,063
AAA Aaa 20,750 Series A, 7.40% due 1/01/2018(b) 22,347
AAA Aaa 29,100 South Carolina Jobs, EDA, Hospital Facilities Revenue Bonds,
5.55% due 8/01/2021(b) 26,951
South Carolina State Public Service Authority, Revenue
Refunding Bonds:
AAA Aaa 14,005 Series A, 5.50% due 7/01/2021(e) 12,899
AAA Aaa 17,090 Series A, 6.375% due 7/01/2021(b) 17,382
AAA Aaa 4,000 Series B, 6.10% due 7/01/2027(b) 3,956
AAA Aaa 2,750 Series C, 5% due 1/01/2014(b) 2,454
Tennessee--0.2% AAA Aaa 1,905 Jackson, Tennessee, Water and Sewer System Revenue Bonds, 10.375%
due 7/01/2012(b) 2,315
AAA Aaa 2,200 Knox County, Tennessee, Health, Educational and Housing Facilities
Board, Hospital Facilities Crossover Revenue Refunding Bonds
(Mercy Health Care System), Series A, 7.60% due 9/01/1999(a)(b) 2,495
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Texas--16.2% Austin, Texas, Utility System Revenue Bonds(e):
AAA Aaa $ 11,190 Prior Lien, 9.25% due 5/15/2004(a) $ 14,573
AAA Aaa 3,000 Refunding, 5.50% due 5/15/2007 3,002
AAA Aaa 3,500 Refunding, 5.50% due 5/15/2008 3,465
AAA Aaa 3,500 Refunding, 5.50% due 5/15/2009 3,427
AAA Aaa 2,000 Refunding, 5.50% due 5/15/2010 1,933
AAA Aaa 3,500 Refunding, 5.50% due 5/15/2011 3,367
AAA Aaa 4,000 Refunding, 5.50% due 5/15/2012 3,826
AAA Aaa 2,000 Refunding, 5.50% due 5/15/2013 1,904
AAA Aaa 14,825 Refunding, Series A, Prior Lien, 6.067% due 11/15/2011(j)(k) 5,437
Brazos River Authority, Texas, PCR (Collateral--Texas Utilities
Electric Company Project), AMT:
AAA Aaa 6,000 Refunding, 6.50% due 12/01/2027(b) 6,152
AAA Aaa 12,000 Series B, 6.625% due 6/01/2022(h) 12,419
Brazos River Authority, Texas, Revenue Refunding Bonds
(Collateral--Houston Light and Power Co.):
AAA Aaa 12,700 5.60% due 12/01/2017(e) 11,988
AAA Aaa 13,900 Series B, 7.20% due 12/01/2018(h) 15,299
AAA Aaa 20,000 Brownsville, Texas, Utility System Revenue Refunding Bonds,
6.25% due 9/01/2014(e) 20,913
A1+ VMIG1++ 1,100 Harris County, Texas, Health Facilities Development Corporation,
Special Facilities Revenue Bonds (Texas Medical Center Project),
VRDN, 4.20% due 2/15/2022(f)(e) 1,100
AAA Aaa 5,000 Harris County, Texas, Hospital District, Mortgage Revenue
Refunding Bonds, 7.40% due 2/15/2010(b) 5,776
AAA Aaa 1,695 Harris County, Texas, Toll Road Revenue Bonds, Series A,
6.50% due 8/15/2011(h) 1,779
Harris County, Texas, Toll Road, Revenue Senior Lien Bonds:
AAA Aaa 13,045 Refunding, 5.30% due 8/15/2013(b) 12,263
AAA Aaa 8,250 Refunding, 5% due 8/15/2016(h) 7,251
AAA Aaa 21,650 Refunding, 5.375% due 8/15/2020(h) 19,721
AAA Aaa 5,755 Refunding, 5.50% due 8/15/2021(h) 5,327
AAA Aaa 10,305 Refunding, Series A, 6.50% due 8/15/2002(a)(h) 11,485
AAA Aaa 15,250 Refunding, Series A, 6.50% due 8/15/2002(a)(b) 16,996
AAA Aaa 2,750 Series A, 6.50% due 8/15/2017(b) 2,857
AAA Aaa 11,100 Series A, 6.375% due 8/15/2024(e) 11,379
AAA Aaa 8,375 Houston, Texas, Water and Sewer System Revenue Bonds,
Junior Lien, Series A, 6.375% due 12/01/2022(e) 8,562
Houston, Texas, Water and Sewer System, Revenue
Refunding Bonds, Junior Lien, Series C(b):
AAA Aaa 12,700 5.70% due 12/01/2010(j)(k) 4,961
AAA Aaa 45,960 5.70% due 12/01/2011(j)(k) 16,811
AAA Aaa 53,850 5.78% due 12/01/2012(j)(k) 18,433
AAA Aaa 18,400 5.75% due 12/01/2015 17,736
<PAGE>
AAA Aaa 3,500 Houston, Texas, Water Conveyance System Contract,
COP, Series J, 6.25% due 12/15/2013(b) 3,677
Lower Colorado River Authority, Texas, Revenue
Refunding Bonds:
AAA Aaa 4,415 5.60% due 1/01/2009(c)(e)(j)(k) 2,027
AAA Aaa 22,480 Junior Lien, 5.40% due 1/01/2007(i) 22,121
AAA Aaa 650 Series B, 7% due 1/01/2001(a)(b) 731
Matagorda County, Texas, Navigation District
No. 1, PCR, AMT:
AAA Aaa 5,000 (Collateralized--Central Power and Light Company Project),
7.50% due 3/01/2020(b) 5,482
AAA Aaa 8,250 (Collateralized--Houston Light and Power), Series D,
7.60% due 10/01/2019(h) 9,062
Matagorda County, Texas, Navigational District No. 1,
Revenue Refunding Bonds
(Collateralized--Houston Light and Power):
AAA Aaa 11,800 Series A, 6.70% due 3/01/2027(b) 12,556
AAA Aaa 26,305 Series C, 7.125% due 7/01/2019(h) 28,733
AAA Aaa 6,470 Series E, 7.20% due 12/01/2018(h) 7,129
AAA Aaa 15,000 Southwest Higher Education Authority Incorporated,
Texas, Revenue Refunding Bonds (Southern Methodist
University), Series B, 6.25% due 10/01/2022(h) 15,166
Texas Municipal Power Agency, Revenue Refunding Bonds:
AAA Aaa 10,000 5.50% due 9/01/2010(e) 9,768
AAA Aaa 2,900 Series A, 6.75% due 9/01/2012(b) 3,157
Texas State Public Finance Authority, Building Revenue
Capital Appreciation Refunding Bonds(e)(j)(k):
AAA Aaa 7,000 5.80% due 2/01/2009 3,102
AAA Aaa 2,890 6.10% due 2/01/2011 1,112
AAA Aaa 8,500 5.81% due 2/01/2012 3,063
AAA Aaa 15,875 Trinity River Authority, Texas, Regional Wastewater System
Revenue Refunding Bonds, Series A, 5% due 8/01/2016(b) 14,023
Utah--1.6% AAA Aaa 28,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds
(IHC Hospitals, Incorporated), 6.75% due 5/15/2020(b)(c) 29,603
AA- Aaa 1,000 Uintah County, Utah, PCR (Desert Generation and Transmission
Cooperative--National Rural Utilities Company), Series 1984
F-2, 10.50% due 6/15/2001(a) 1,295
AAA Aaa 2,650 Utah Board of Regents, Student Loan Revenue Bonds, AMT,
Series F, 7.45% due 11/01/2008(b) 2,870
Utah Municipal Power Agency, Electric System Revenue Refunding
Bonds, Series A(h):
AAA Aaa 3,120 5.50% due 7/01/2012 2,984
AAA Aaa 3,295 5.50% due 7/01/2013 3,136
<PAGE>
Vermont--0.8% AAA Aaa 18,950 Vermont, HFA, Revenue Bonds (Home Mortgage Purchase),
AMT, Series B, 7.60% due 12/01/2024(e) 20,212
Virginia--2.4% AAA Aaa 5,000 Danville, Virginia, IDA, Hospital Revenue Refunding Bonds
(Danville Regional Medical Center), 6.50% due 10/01/2019(h) 5,247
AAA Aaa 16,800 Prince William County, Virginia, Service Authority,
Water and Sewer System Revenue Refunding Bonds, 5% due
7/01/2021(h) 14,562
AAA Aaa 5,000 Upper Occoquan Sewer Authority, Virginia, Regional Sewer
Revenue Refunding Bonds, 5% due 7/01/2021(h) 4,334
Virginia State, HDA, Commonwealth Mortgage, AMT, Series A,
Sub Series A-4(e):
AAA Aaa 5,000 6.30% due 7/01/2014 5,039
AAA Aaa 11,215 6.35% due 7/01/2018 11,244
AAA Aaa 21,000 6.45% due 7/01/2028 21,161
Washington--3.0% AAA Aaa 33,535 Seattle, Washington, Municipal Light and Power Revenue Bonds,
6.625% due 7/01/2020(h) 35,552
Seattle, Washington, Municipality, Metropolitan Seattle, Sewer
Revenue Bonds:
AAA Aaa 3,000 Refunding, Series X, 5.30% due 1/01/2008(h) 2,917
AAA Aaa 6,560 Refunding, Series Y, 5.70% due 1/01/2015(h) 6,245
AAA Aaa 3,315 Refunding, Series Y, 5.70% due 1/01/2016(h) 3,152
AAA Aaa 3,865 Refunding, Series Z, 5.45% due 1/01/2022(b) 3,504
AAA Aaa 2,465 Series W, 6.25% due 1/01/2022(e) 2,481
AAA Aaa 4,485 Series W, 6.25% due 1/01/2023(e) 4,514
AAA Aaa 10,000 Seattle, Washington, Solid Waste Utility, Revenue Refunding
Bonds, Series A, 6.875% due 5/01/2009(g) 10,732
AAA Aaa 3,250 University of Washington Revenue Bonds (Housing and Dining),
7% due 12/01/2021(e) 3,582
AAA Aaa 7,000 Washington Health Care Facilities Authority Revenue Bonds
(Southwest Washington Hospital--Vancouver), 7.125% due
10/01/2019(g) 7,556
D NR* 719 Washington Public Power Supply System, Generating Facilities
Revenue Bonds (Nuclear Project, Numbers 4 & 5), Series D,
12.50% due 7/01/2010(b) 719
<PAGE>
West Virginia--2.8% AAA Aaa 9,270 Kanawha County, West Virginia, Building Commission Revenue
Refunding Bonds (Charleston Area Medical Center Inc.), Series A,
7.10% due 6/01/2013(e) 9,827
Pleasants County, West Virginia, PCR, Series 95-C(b):
AAA Aaa 24,500 (Monogahela Power Co.), 6.15% due 5/01/2015 24,744
AAA Aaa 12,250 (Potomac Pleasants), 6.15% due 5/01/2015 12,372
AAA Aaa 5,250 (West Penn Power Co.), 6.15% due 5/01/2015 5,302
AAA Aaa 7,600 Putnam County, West Virginia, PCR, Refunding (Appalachian Power
Company Project), Series D, 5.45% due 6/01/2019(b) 6,920
AAA Aaa 5,600 West Virginia School Building Authority Revenue Bonds (Capital
Improvement), Series B, 6.75% due 7/01/2010(e) 5,953
AAA Aaa 4,000 West Virginia State Parkways, Economic Development and Tourism
Authority, 5.80% due 5/15/2013(h) 3,896
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concludued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Wisconsin--2.2% AAA Aaa $ 7,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds
(Midwest Energy Resources), Series E, 6.90% due 8/01/2021(h) $ 7,815
Wisconsin Health and Educational Facilities Authority
Revenue Bonds:
AAA Aaa 1,500 (Saint Luke's Medical Center Project), 7.10% due 8/15/2019(e) 1,610
AAA Aaa 5,750 (Waukesha Memorial Hospital), Series B, 7.25% due 8/15/2019(b) 6,273
Wisconsin Public Power System Incorporated, Power Supply System
Revenue Bonds, Series A(b):
AAA Aaa 6,500 6.875% due 7/01/2001(a) 7,327
A1+ Aaa 8,360 Refunding, 5.25% due 7/01/2021 7,449
Wisconsin State (Veterans Housing Loans), AMT, Series B(e):
AAA Aaa 7,920 6.50% due 5/01/2020 8,210
AAA Aaa 17,130 6.50% due 5/01/2025 17,809
Total Investments (Cost--$2,390,477)--98.9% 2,494,466
Other Assets Less Liabilities--1.1% 28,118
----------
Net Assets--100.0% $2,522,584
==========
<PAGE>
<FN>
(a)Prerefunded.
(b)AMBAC Insured.
(c)Escrowed to maturity.
(d)The interest rate is subject to change periodically and inversely based upon
the prevailing market rate. The interest rate shown is the rate in effect at
June 30, 1995.
(e)MBIA Insured.
(f)The interest rate is subject to change periodically based upon the
prevailing market rate. The interest rate shown is the rate in effect at
June 30, 1995.
(g)BIG Insured.
(h)FGIC Insured.
(i)FSA Insured.
(j)Principal only securities which are traded on a discount basis and are
amortized to maturity.
(k)The interest rate shown represents the yield to maturity.
*Not Rated.
++Highest short-term rating issued by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--0.6% AAA Aaa $ 9,000 Alabama Agricultural and Mechanical University, 6.50% due
11/01/2025(f) $ 9,347
Alaska--2.4% Valdez, Alaska, Marine Terminal Revenue Refunding Bonds:
AA- A1 6,000 (British Petroleum Pipeline), Series B, 7% due 12/01/2025 6,417
AA- A1 27,150 (Sohio Pipeline), 7.125% due 12/01/2025 29,344
Arizona--0.3% AA A1 4,640 Arizona State University, Revenue Refunding Bonds, Series A,
5.50% due 7/01/2019 4,375
<PAGE>
California--5.9% NR* NR* 6,000 Antioch, California, Improvement Bond Act 1915 (Assessment
District No. 27--Lone Tree), Series E, 7.125% due 9/02/2016 6,075
SP-1 MIG1++ 18,000 California State, GO, RAW, Series C, 5.75% due 4/25/1996 18,316
California State, Public Works Board, Lease Revenue Bonds:
A- A 10,350 (Department of Corrections--Monterey County), Series A, 7%
due 11/01/2019 10,964
AAA Aaa 2,800 (Various University of California Projects), Series A, 6.40%
due 12/01/2016(c) 2,859
A- A1 1,000 (Various University of California Projects), Series B, 6.625%
due 12/01/2019 1,021
NR* NR* 4,000 Long Beach, California, Special Tax Community Facilities,
District No. 3--Pine Avenue, 6.375% due 9/01/2023 3,698
AA Aa 5,500 Los Angeles County, California, Department of Water and Power
Waterworks Revenue Bonds, Second Issue, 6.40% due 11/01/2031 5,567
AA- Aaa 10,705 Los Angeles County, California, Transportation Commission, Sales
Tax Revenue Bonds, Series A, 6.90% due 7/01/2001(k) 12,129
A NR* 11,725 Palmdale, California, Civic Authority, Revenue Refunding Bonds
(Merged Redevelopment Project), Series A, 6.60% due 9/01/2034 12,008
A+ Aaa 5,385 Sacramento, California, City Financing Authority Revenue Bonds,
6.80% due 11/01/2001(k) 6,101
AAA Aaa 10,000 University of California Revenue Bonds, Multiple Purpose
Projects, Series D, 6.25% due 9/01/2013(f) 10,230
Colorado--3.5% Denver, Colorado, City and County Airport Revenue Bonds, AMT:
BB Baa 5,000 Series A, 8% due 11/15/2017 5,258
BB Baa 3,000 Series A, 7.50% due 11/15/2023 3,171
BB Baa 8,570 Series A, 8% due 11/15/2025 9,197
BB Baa 13,000 Series B, 7.25% due 11/15/2023 13,427
BB Baa 5,650 Series C, 6.75% due 11/15/2022 5,552
BB Baa 13,150 Series D, 7.75% due 11/15/2021 14,081
A1 NR* 2,800 Pitkin County, Colorado, IDR, Refunding (Aspen Skiing Co.
Project), VRDN, Series A, 4.65% due 4/01/2016(a) 2,800
Connecticut--0.3% AA- Baa1 4,550 Connecticut State Resource Recovery Authority Revenue Bonds
(American Refuse Fuel), AMT, Series A, 8% due 11/15/2015 5,015
<PAGE>
Delaware--0.6% AAA NR* 7,500 Delaware State Health Facilities Authority, Revenue Refunding
Bonds (Beebe Medical Center Project), 8.50% due 6/01/2000(k) 8,876
District of A+ A1 3,750 District of Columbia Revenue Bonds, RIB (Georgetown University),
Columbia--0.3% 8.632% due 4/01/2022(m) 3,956
Florida--2.7% AAA Aaa 6,330 Florida, HFA (Antigua Club Apartments), AMT, Series A-1, 7% due
2/01/2035(c) 6,579
NR* Aaa 9,400 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G-1, 7.90%
due 3/01/2022(l) 10,104
AA Aa3 5,000 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), Series 1991, 7.875% due 8/01/2021 5,803
NR* NR* 2,700 Leesburg, Florida, Hospital Capital Improvement Revenue Bonds
(Leesburg Regional Medical Center Project), Series 1991-A, 7.50%
due 7/01/2002(k) 3,150
A1+ VMIG1++ 1,000 Martin County, Florida, PCR, Refunding (Florida Power and Light
Company Project), VRDN, 4.20% due 9/01/2024(a) 1,000
AAA NR* 4,765 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT,
Series A, 8.375% due 3/01/2021(l) 5,145
A1 VMIG1++ 1,500 Saint Lucie County, Florida, PCR, Refunding (Florida Power and
Light Company Project), VRDN, 4.20% due 1/01/2026(a) 1,500
AAA Aaa 5,850 South Broward, Florida, Hospital District Revenue Bonds, RIB,
Series C, 8.629% due 5/13/2021(c)(m) 6,450
AAA Aaa 2,000 Tampa, Florida, Revenue Bonds (Alleghany Health System-Saint
Joseph's), 5.125% due 12/01/2023 1,748
Georgia--3.9% AA- Aa 25,705 Atlanta, Georgia, Water and Sewer Revenue Refunding Bonds, 4.75%
due 1/01/2023 21,194
A+ A 8,375 Georgia Municipal Electric Authority Power, Revenue Refunding
Bonds, Series Z, 5.50% due 1/01/2020 7,651
Metropolitan Atlanta, Georgia Rapid Transit Authority, Sales Tax
Revenue Bonds:
AAA Aaa 20,000 Second Indenture, Series A, 6.90% due 7/01/2020(f) 21,854
AA- A1 7,500 Series O, 6.55% due 7/01/2020 7,807
Idaho--0.2% AA NR* 2,380 Idaho Housing Agency, S/F Mortgage Revenue Bonds, AMT, Series E,
7.875% due 7/01/2024(b) 2,526
<PAGE>
Illinois--5.0% AA- Aa3 8,000 Chicago, Illinois, Gas Supply Revenue Bonds (Peoples Gas, Light
& Coke Company Project), AMT, Series A, 8.10% due 5/01/2020 8,995
Chicago, Illinois, O'Hare International Airport, Special
Facilities Revenue Bonds (United Airlines, Inc.):
BB Baa2 4,825 AMT, Series B, 8.95% due 5/01/2018 5,404
BB Baa2 14,075 Series 1984-B, 8.85% due 5/01/2018 15,838
AAA Aaa 5,015 Chicago, Illinois, Public Building Commission Revenue Bonds
(Community College District No. 508), Series B, 8.75% due
1/01/2007(d)(i) 5,440
BBB NR* 3,000 Illinois Educational Facilities Authority, Revenue Refunding
Bonds (Columbia College), 6.875% due 12/01/2017 3,019
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Illinois Illinois Health Facilities Authority Revenue Bonds:
(concluded) AAA Aaa $ 1,500 (Methodist Health Project), RIB, 9.724% due 5/01/2021(c)(m) $ 1,673
BBB- NR* 2,625 Refunding (Saint Elizabeth's Hospital--Chicago), 7.75% due
7/01/2016 2,703
AAA Aaa 11,000 (Rush Presbyterian-Saint Luke's Medical Center), INFLOS,
9.057% due 10/01/2014(f)(m) 12,183
A+ Aa 5,250 Illinois Housing Development Authority, Residential Mortgage
Revenue Bonds, RIB, AMT, 9.188% due 2/01/2018(m) 5,624
AAA Aaa 2,000 Illinois State, Dedicated Tax Revenue Civic Center, Series A,
7.35% due 12/15/2005(c) 2,246
AAA Aaa 5,950 Regional Transportation Authority Illinois, UT, Series D,
6.75% due 6/01/2025(e) 6,338
NR* A1 4,000 Southwestern Illinois, Development Authority, Sewer Facilities
Revenue Bonds (Monsanto Company Project), AMT, 7.30% due 7/15/2015 4,233
Indiana--2.1% Indiana Health Facilities Financing Authority, Hospital Revenue
Bonds:
AAA Aaa 1,000 (Community Hospital Project), 6.85% due 7/01/2022(f) 1,053
NR* Baa1 3,500 (Riverview Hospital Project), 6.875% due 8/01/2017 3,403
NR* Aaa 9,500 Indiana State Educational Facilities Authority Revenue Bonds
(University of Notre Dame Project), 6.70% due 3/01/2025 10,149
A+ NR* 9,100 Indianapolis, Indiana, Local Public Improvement Refunding Bond
Bank, Series D, 6.75% due 2/01/2020 9,477
NR* Aa 1,500 Marion County, Indiana, Hospital Authority, Hospital Facility
Revenue Bonds (Daughters of Charity--Saint Vincent's Hospital
Project), 10.125% due 11/01/2015 1,559
AA- Aa2 5,700 Petersburg, Indiana, PCR, Refunding (Indianapolis Power & Light
Co. Project), 6.625% due 12/01/2024 5,905
<PAGE>
Iowa--0.6% NR* NR* 9,000 Iowa Finance Authority, Health Care Facilities Revenue Bonds
(Mercy Health Initiatives Project), 9.95% due 7/01/2019 9,572
Kansas--0.8% AAA Aaa 12,000 Wichita, Kansas, Hospital Revenue Bonds, RIB, Series III-A, 8.475%
due 10/01/2017(f)(m) 12,735
Kentucky--1.1% AAA Aaa 4,500 Louisville and Jefferson County, Kentucky, Metropolitan Sewer
District, Sewer and Drain System, Revenue Refunding Bonds,
Series A, 6.50% due 5/15/2024(c) 4,759
NR* NR* 4,500 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 6/01/2024 4,503
AA Aa2 6,345 Trimble County, Kentucky, PCR (Louisville Gas and Electric
Company), AMT, Series A, 7.625% due 11/01/2020 7,006
Louisiana--3.1% NR* Baa3 37,850 Lake Charles, Louisiana, Harbor and Terminal District Port
Facilities, Revenue Refunding Bonds (Trunkline LNG Company
Project), 7.75% due 8/15/2022 41,665
BB- NR* 3,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
Company Project), 7.50% due 7/01/2013 3,055
BBB Baa2 1,100 Saint Charles Parish, Louisiana, PCR (Union Carbide Project),
AMT, 7.35% due 11/01/2022 1,142
Maine--0.3% AA- A1 3,815 Maine State, Housing Authority, Mortgage Purchase, AMT,
Series B-4, 6.90% due 11/15/2026 3,932
Maryland--0.5% AA- Aa 7,000 Maryland State Stadium Authority, Sports Facilities Lease Revenue
Bonds, AMT, Series D, 7.60% due 12/15/2019 7,646
Massachusetts--6.1% AAA Aaa 6,000 Massachusetts Bay Transportation Authority Revenue Bonds,
Series B, 7.875% due 3/01/2001(k) 7,027
A+ A1 10,000 Massachusetts State, Consolidated Loans, UT, Series B, 9.25%
due 7/01/2000 11,998
Massachusetts State, Health and Educational Facilities Authority
Revenue Bonds:
SP-1+ VMIG1++ 8,000 (Capital Asset Program), VRDN, Series D, 4.15% due
1/01/2035(a) 8,000
NR* NR* 9,520 (North Adams Regional Hospital), Series A, 9.625% due
12/01/2018 9,966
NR* Ba 12,350 Massachusetts State, Health and Educational Facilities Authority,
Revenue Refunding Bonds (New England Memorial Hospital), Series B,
6.25% due 7/01/2023 9,846
Massachusetts State, HFA, Residential Development(n):
AAA Aaa 5,000 Series C, 6.875% due 11/15/2011 5,273
AAA Aaa 7,500 Series C, 6.90% due 11/15/2021 7,843
AAA Aaa 2,000 Series D, 6.80% due 11/15/2012 2,086
A A 31,015 Massachusetts State, Water Resource Authority, Refunding,
Series B, 5.50% due 11/01/2015 28,758
<PAGE>
Michigan--4.8% A1+ VMIG1++ 2,600 Grand Rapids, Michigan, Water Supply Systems Revenue Refunding
Bonds, VRDN, 4.10% due 1/01/2020(a)(e) 2,600
A+ A 1,000 Marquette, Michigan, City Hospital Finance Authority, Revenue
Refunding Bonds (Marquette General Hospital), Series C, 7.50%
due 4/01/2019 1,082
AA A1 1,250 Michigan Municipal Bond Authority, Revenue Refunding Bonds (Local
Government-Qualified School), Series A, 6.50% due 5/01/2016 1,303
AA- A 14,000 Michigan State Building Authority Revenue Bonds, Series II, 6.25%
due 10/01/2020 13,875
Michigan State Hospital Finance Authority, Hospital Revenue Bonds
(Detroit Medical Center), Series A:
A A 3,500 7.50% due 8/15/2011 3,791
A A 6,500 Refunding, Obligation Group, 6.50% due 8/15/2018 6,509
AA- A1 30,000 Michigan State Trunk Line, GO, Series A, 5.50% due 10/01/2021 27,400
BBB Baa1 9,350 Monroe County, Michigan, PCR (Detroit Edison Company Project),
AMT, Series A, 7.75% due 12/01/2019 10,064
AA Aa 5,000 Royal Oaks, Michigan, Hospital Financing Authority Revenue Bonds
(William Beaumont Hospital), Series D, 6.75% due 1/01/2020 5,169
Minnesota--1.4% Minnesota State, HFA, S/F Mortgage Bonds:
AA+ Aa 6,090 AMT, Series A, 7.45% due 7/01/2022(b) 6,489
AA+ Aa 5,250 Series F, 6.30% due 7/01/2025 5,306
AAA NR* 8,870 Saint Paul, Minnesota, Housing and Redevelopment Authority, S/F
Mortgage Revenue Refunding Bonds, Series C, 6.95% due
12/01/2031(n) 9,142
Mississippi--0.7% BBB Baa 5,950 Lowndes County, Mississippi, Hospital Revenue Refunding Bonds
(Golden Triangle Medical Center), 8.50% due 2/01/2010 6,430
NR* Aaa 4,195 Mississippi Home Corporation, S/F Mortgage Revenue Bonds (Access
Program), AMT, Series A, 6.90% due 6/01/2024(l) 4,418
Missouri & BBB+ NR* 11,400 Bi-State Development Agency, Missouri and Illinois, Metropolitan
Illinois--0.8% No. 5, Revenue Refunding Bonds (American Commonwealth), 7.75% due
6/01/2010 12,377
Nebraska--0.9% Nebraska Investment Finance Authority, S/F Mortgage Revenue Bonds,
Series 2(1):
AAA Aaa 100 AMT, 7.631% due 9/10/2030 107
AAA Aaa 4,400 RIB, 11.126% due 9/10/2030(m) 5,022
A+ A1 10,000 Nebraska Public Power District Revenue Bonds, Series C, 5% due
1/01/2017 8,746
<PAGE>
Nevada--0.6% AAA Aaa 3,500 Clark County, Nevada, Passenger Facility Charge Revenue Bonds
(Las Vegas/Macarran International Airport), AMT, Series A, 5.75%
due 7/01/2023(f) 3,224
AA Aa 2,500 Nevada State, GO (Colorado River Community), 6.20% due 7/01/2007 2,640
AAA Aaa 3,500 Washoe County, Nevada, Gas and Water Facilities, Revenue Refunding
Bonds (Sierra Pacific), 6.30% due 12/01/2014(c) 3,558
New Hampshire-- AAA Aa 3,185 New Hampshire State, HFA, S/F Residential Mortgage Bonds, AMT,
1.1% 7.90% due 7/01/2022(c) 3,351
New Hampshire State, IDA, PCR (Public Service Co. of New Hampshire
Project), AMT:
BB+ Baa3 4,850 Series A, 7.65% due 5/01/2021 5,109
BB+ Baa3 8,500 Series C, 7.65% due 5/01/2021 8,953
New Jersey--2.7% New Jersey Building Authority, State Building Revenue Refunding
Bonds:
AA- Aa 14,600 5% due 6/15/2015 12,976
AA- Aa 10,000 5% due 6/15/2018 8,819
NR* NR* 6,700 New Jersey Health Care Facilities Financing Authority Revenue
Bonds (Riverwood Center Issue), Series A, 9.90% due 7/01/2021 7,452
AA A 9,500 University Medicine and Dentistry of New Jersey Revenue Bonds,
Series C, 7.20% due 12/01/2019 10,377
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
<PAGE>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New York--13.6% Metropolitan Transportation Authority, New York, Service
Contract Revenue Refunding Bonds (Commuter Facilities), Series 5:
BBB Baa1 $ 2,145 6.90% due 7/01/2006 $ 2,244
BBB Baa1 5,000 7% due 7/01/2012 5,246
Metropolitan Transportation Authority, New York, Transportation
Facilities Revenue Bonds:
AAA Aaa 23,150 Series 6, 7.125% due 7/01/2001(k) 26,498
AAA Aaa 5,000 Series J, 6.50% due 7/01/2018(e) 5,172
New York City, New York, GO, UT:
A- Baa1 3,600 Series A, 7.75% due 8/15/2016 3,921
A- Baa1 4,065 Series A, 7.75% due 8/15/2017 4,428
A- Baa1 5,375 Series B, 8.25% due 6/01/2006 6,275
A- Baa1 2,700 Series B, 8.25% due 6/01/2007 3,169
A- Baa1 10,000 Series B, 7.75% due 2/01/2011 10,905
A- Baa1 4,500 Series B, 7.75% due 2/01/2012 4,907
A- Baa1 2,875 Series B, 7.75% due 2/01/2013 3,143
A- Baa1 1,650 Series B, 7.75% due 2/01/2014 1,804
A- Baa1 3,495 Series D, 8% due 8/01/2001(k) 4,128
A- Baa1 2,000 Series D, 7.70% due 2/01/2011 2,176
A- Aaa 5,495 Series F, 8.25% due 11/15/2001(k) 6,643
A- A 3,440 New York City, New York, Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds, Series A, 6.75% due 6/15/2017 3,599
A- A 2,000 New York State, GO (Environmental Quality), 6.50% due 12/01/2014 2,103
New York State Dormitory Authority Revenue Bonds (State University
Educational Facilities):
BBB+ Baa1 4,660 Refunding, Series B, 7.50% due 5/15/2011 5,281
BBB+ Baa1 6,735 Refunding, Series B, 7.375% due 5/15/2014 7,189
BBB+ Baa1 2,000 Refunding, Series B, 7% due 5/15/2016 2,081
BBB+ Baa1 5,000 Series A, 7.50% due 5/15/2013 5,672
A Aa 21,500 New York State Environmental Facilities Corporation, PCR (State
Water Revolving Fund), Series E, 6.50% due 6/15/2014 22,630
New York State Local Government Assistance Corporation:
A A 6,000 Series A, 7% due 4/01/2002(k) 6,545
A A 10,000 Series C, 6.25% due 4/01/2018 10,059
New York State Medical Care Facilities, Finance Agency Revenue
Bonds:
AAA Aaa 4,630 (Mental Health Services), Series C, 7.30% due 8/15/2001(k) 5,352
AAA Aaa 1,665 (Mental Health Services), Series E, 6.50% due 8/15/2024(j) 1,719
AAA Aaa 8,400 (New York Hospital Management), Series A, 6.75% due
8/15/2014(c) 8,943
AAA Aaa 9,100 (New York Hospital Mortgage), Series A, 6.80% due
8/15/2024(b)(c) 9,765
New York State Power Authority, General Purpose Revenue Refunding
Bonds, Series Z:
AA- Aa 5,000 6.625% due 1/01/2012 5,308
AA- Aa 5,000 6.50% due 1/01/2019 5,236
AAA Aaa 14,595 New York State Urban, Development Corporation, Revenue Refunding
Bonds (Correctional Capital Facilities), Series A, 6.50% due
1/01/2010(h) 15,737
A+ Aa 1,000 Triborough Bridge and Tunnel Authority, New York, General Purpose
Revenue Bonds, Series X, 6.50% due 1/01/2019 1,044
<PAGE>
Ohio--2.2% AAA Aaa 12,000 Cleveland, Ohio, Public Power System Revenue Bonds, First
Mortgage, Series A, 7% due 11/15/2024(f) 13,744
Ohio HFA, S/F Mortgage Revenue Bonds, AMT (1):
AAA Aaa 10,750 RIB, Series B-4, 9.294% due 3/31/2031(m) 11,489
AAA NR* 2,605 Series B, 8.25% due 12/15/2019 2,791
AAA NR* 4,730 Series C, 7.85% due 9/01/2021 5,016
Oregon--0.1% A1 VMIG1++ 600 Medford, Oregon, Hospital Facilities Authority Revenue Bonds
(Gross-Rogue Valley Health Services), VRDN, 4.30% due
10/01/2016(a) 600
A1+ VMIG1++ 1,600 Port Saint Helens, Oregon, PCR (Portland General Electric
Company), VRDN, Series A, 4.25% due 4/01/2010(a) 1,600
Pennsylvania--4.6% BB Ba2 6,800 Beaver County, Pennsylvania, IDA, PCR, Refunding (Cleveland
Electric Project), 7.625% due 5/01/2025 6,870
Emmaus, Pennsylvania, General Authority, Revenue Bonds, VRDN (a):
A1 NR* 2,700 (Local Government), Series H, 4.15% due 3/01/2024 2,700
NR* NR* 3,600 Sub-Series D-10, 4.15% due 3/01/2024 3,600
BBB- Baa 10,000 Pennsylvania Convention Center Authority, Revenue Refunding Bonds,
Series A, 6.75% due 9/01/2019 10,140
Pennsylvania, HFA, Revenue Refunding Bonds:
AAA Aaa 8,850 6.50% due 7/01/2023(n) 9,025
AA Aa 8,800 RIB, AMT, Series 1991-31C, 9.377% due 10/01/2023(m) 9,548
AAA Aaa 6,570 Pennsylvania Intergovernmental Co-op Authority, Split Tax Revenue
(Philadelphia Funding Project), 5.60% due 6/15/2015 6,252
2,000 Pennsylvania State, GO, UT, Third Series, 6.40% due 11/15/2006(e) 2,168
AAA Aaa 10,000 Pennsylvania State Higher Education Assistance Agency, Student
Loan Revenue Bonds, RIB, AMT, 9.413% due 9/03/2026(c)(m) 10,788
AAA Aaa 4,800 Pittsburgh, Pennsylvania Water and Sewer Authority, Water and
Sewer System Revenue Refunding Bonds, Series A, 6.75% due
9/01/2001(e)(k) 5,391
AAA Aaa 2,500 York County, Pennsylvania, Hospital Authority Revenue Bonds (York
Hospital), 7% due 1/01/2001(c)(k) 2,813
Rhode Island--2.8% Rhode Island Depositors Economic Protection Corporation, Special
Obligation Bonds, Series A:
AAA Aaa 5,250 6.95% due 8/01/2002(k) 5,989
AAA Aaa 30,000 Refunding, 6.25% due 8/01/2016(f) 30,852
AAA Aaa 5,000 Rhode Island State, GO, Refunding, Series A, 6.25% due
6/15/2007(e) 5,266
South Carolina--0.6% BBB Baa1 8,355 South Carolina Jobs, EDA, Economic Development Revenue Bonds
(Saint Francis Hospital--Franciscan Sisters), 7% due 7/01/2015 8,346
<PAGE>
South Dakota--0.6% AA+ Aa1 9,085 South Dakota, HDA, Homeownership Mortgage, Series A, 7.15% due
5/01/2027 9,487
Tennessee--0.7% NR* NR* 10,000 Knox County, Tennessee, Health, Educational and Housing Facilities
Board, Hospital Facilities Revenue Bonds (Baptist Health System of
East Tennessee), 8.60% due 4/15/2016 10,781
Texas--10.3% Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series A:
BBB Baa2 2,095 8.25% due 1/01/2019 2,301
BBB Baa2 18,150 7.875% due 3/01/2021 20,032
A A2 12,350 Brazos River Authority, Texas, Revenue Refunding Bonds (Houston
Light and Power), Series 1989-A, 7.625% due 5/01/2019 13,429
AAA Aaa 1,780 Brazos River Authority, Texas, Special Facilities Revenue
Refunding Bonds, 5.50% due 8/15/2021(e) 1,639
AA- Aa3 9,105 Guadalupe Blanco River Authority, Texas, Industrial Development
Corporation, PCR (E.I. du Pont), 6.35% due 7/01/2022 9,266
BBB Baa1 7,250 Gulf Coast Waste Disposal Authority, Texas, Revenue Bonds
(Champion International Corporation), AMT, 7.45% due 5/01/2026 7,673
AA Aa 2,400 Harris County, Texas, Certificates of Obligation, Tax and Revenue
Bonds, 10% due 10/01/2001 3,073
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds:
AA Aa 12,470 (Saint Luke's Episcopal Hospital Project), Series A, 6.75%
due 2/15/2021 12,919
AA Aa 18,000 (Sisters of Charity), 7.10% due 7/01/2021 19,238
AAA Aaa 11,100 Harris County, Texas, Senior Lien Toll Road, Series A, 6.375%
due 8/15/2024(f) 11,379
BBB- Ba1 8,175 Jefferson County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Baptist Healthcare System
Project), 8.875% due 6/01/2021 8,878
AA Aa 12,000 North Central Texas, Health Facilities Development Corporation
Revenue Bonds (Baylor University Medical Center), INFLOS,
Series A, 9.563% due 5/15/2016(m) 13,080
BB Ba 6,500 Odessa, Texas, Junior College District, Revenue Refunding Bonds,
Series A, 8.125% due 12/01/2018 6,539
A+ Aa 8,475 Texas Housing Agency, Residential Development Mortgage Revenue
Bonds, Series A, 7.50% due 7/01/2015(l) 8,957
AA Aa 14,000 Texas State Veterans Housing Assistance, AMT, UT, Fund II,
Series A, 7% due 12/01/2025 14,569
Utah--1.0% AA NR* 13,250 Weber County, Utah, Municipal Building Authority, Lease Revenue
Bonds, 7.50% due 12/15/2019 14,789
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Virginia--1.2% A1 Aaa $ 4,200 Lynchburg, Virginia, IDA, Hospital Facilities, First Mortgage
Revenue Bonds (Mid Atlantic/Capital), VRDN, Series G, 4.20% due
12/01/2025(a)(c) $ 4,200
AA A1 8,800 Richmond, Virginia, Public Improvement, Refunding, UT, Series B,
6.25% due 1/15/2018 8,863
AA+ Aa1 4,000 Virginia State HDA, Commonwealth Mortgage Revenue Bonds,
Series A, 7.15% due 1/01/2033 4,189
Washington--2.5% AAA Aaa 1,825 Washington State Health Care Facilities Authority, Revenue
Refunding Bonds, 6.625% due 7/01/2020(f) 1,897
AAA NR* 14,425 Washington State Housing Finance Community, S/F Mortgage Revenue
Refunding Bonds, AMT, Series E, 7.10% due 7/01/2022(g) 15,019
Washington State Public Power Supply System, Revenue Refunding
Bonds:
AA Aa 2,450 (Nuclear Project No. 1), Series A, 7% due 7/01/2011 2,603
AA Aa 10,250 (Nuclear Project No. 1), Series A, 6.50% due 7/01/2015 10,375
AA Aa 5,000 (Nuclear Project No. 1), Series A, 6.875% due 7/01/2017 5,230
AA Aa 3,000 (Nuclear Project No. 2), Series B, 7% due 7/01/2012 3,173
West Virginia--1.4% AAA Aaa 11,465 Mason County, West Virginia, PCR, Refunding (Appalachian
Power Co.), Series I, 6.85% due 6/01/2022(f) 12,317
AA+ Aa1 8,400 West Virginia State, Housing Development Fund, Housing Finance,
Series D, 7.05% due 11/01/2024 8,786
Wisconsin--2.3% Wisconsin Housing and EDA, Housing Revenue Bonds:
A A1 5,400 Series B, 7.05% due 11/01/2022 5,613
A A1 5,105 Series C, 7% due 5/01/2015 5,325
AA Aa 4,925 Wisconsin Housing, EDA, Home Ownership Revenue Bonds, Series A,
7.10% due 3/01/2023 5,159
Wisconsin State Health and Educational Facilities Authority
Revenue Bonds:
AAA Aaa 5,500 (Novus Health Group), Series B, 6.75% due 12/15/2020(f) 5,800
AAA Aaa 11,400 (Wausau Hospitals Inc.), Series B, 6.70% due 8/15/2020(c) 11,938
<PAGE>
Puerto Rico--0.6% A Baa1 2,360 Puerto Rico Commonwealth, Highway Authority, Highway Revenue
Refunding Bonds, Series R, 6.75% due 7/01/2005 2,524
A Baa1 5,750 Puerto Rico Commonwealth, UT, 6.45% due 7/01/2017 5,873
Total Investments (Cost--$1,409,585)--97.8% 1,471,461
Other Assets Less Liabilities--2.2% 32,762
----------
Net Assets--100.0% $1,504,223
==========
<FN>
(a)The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at June 30, 1995.
(b)FHA Insured.
(c)AMBAC Insured.
(d)BIG Insured.
(e)FGIC Insured.
(f)MBIA Insured.
(g)GNMA/FNMA Collateralized.
(h)FSA Insured.
(i)Escrowed to Maturity.
(j)Capital Guaranty.
(k)Prerefunded.
(l)GNMA Collateralized.
(m)The interest rate is subject to change periodically and inversely based upon
prevailing market rates. The interest rate shown is the rate in effect at
June 30, 1995.
(n)FNMA Collateralized.
++Highest short-term rating issued by Moody's Investors Service, Inc.
*Not Rated.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--2.6% NR* Aa $ 5,050 Alabama State Public School and College Authority, Refunding
Bonds, 3.70% due 12/01/1996 $ 5,038
A1+ NR* 300 Birmingham, Alabama, Medical Clinic Board Revenue Bonds
(U.A.H.S.F.), VRDN, 4.60% due 12/01/2026(b) 300
A2 A3 12,880 Mobile, Alabama, IDB, PCR (International Paper Co.), VRDN,
6.30% due 4/15/2004(b) 12,867
Alaska--1.1% A+ Aa 1,700 Alaska State Housing Finance Corporation, GO, Series A, 4.20%
due 12/01/1995 1,701
AAA Aaa 5,000 Anchorage, Alaska, GO, Refunding Bonds, UT, 4.85% due 7/01/1995(d) 5,000
NR* P1 400 Valdez, Alaska, Marine Term Revenue Bonds (Exxon Pipeline Co.,
Project), DATES, CP, 4.20% due 10/01/2025(h) 400
Arizona--0.8% SP-1 MIG2 2,000 Maricopa County, Arizona, CP, TAN, UT, 5% due 7/28/1995 2,001
A+ A1 3,000 Maricopa County, Arizona, Transportation Board, Excise Tax Revenue
Bonds, 7.10% due 7/01/1996 3,099
California--9.6% NR* VMIG1++ 5,850 California Higher Education Loan Authority, Student Loan Revenue
Refunding Bonds, Senior Lien, Series A-1, 3.90% due 7/01/1995 5,850
SP-1 MIG1++ 9,900 California State, GO, RAW, Series C, 5.75% due 4/25/1996 10,074
A A1 10,000 California State Various Purpose Bonds, GO, 4% due 10/01/1995 10,008
AA Aa 5,005 California Statewide Communities Development Authority, Revenue
Refunding Bonds, COP (Saint Joseph Health Systems), 4.10% due
7/01/1997 4,948
NR* MIG1++ 30,000 Fresno County, California, TRAN, 4.25% due 7/13/1995 29,998
SP-1+ MIG1++ 4,000 Santa Clara County, California, TRAN, UT, 4.25% due 7/07/1995 4,000
Colorado--2.1% NR* NR* 10,000 Denver, Colorado, City and County Airport Revenue Bonds,
Sub-Series B, 4.25% due 12/01/2025 9,975
AA Baa1 3,810 Jefferson County, Colorado, School District No. R-001, Revenue
Refunding Bonds, Series A, 3.65% due 12/15/1996 3,797
<PAGE>
Connecticut--3.7% Connecticut State, GO:
AA- Aa 11,680 Series A, 5.25% due 3/15/1999 12,015
AA- Aa 6,705 UT, Series B, 4.90% due 11/15/1995 6,739
NR* Aa3 3,930 Connecticut State Housing Mortgage Revenue Bonds (Chestnut Hill
Apartments), 4.60% due 4/01/1997 3,913
AAA Aaa 2,000 Stratford, Connecticut, GO, UT, 3.50% due 11/01/1996(f) 1,990
Florida--4.2% A Aa 2,000 Dade County, Florida, Aviation Revenue Refunding Bonds, Series X,
4.10% due 10/01/1995 2,002
AAA Aaa 5,000 Florida State Division, Board of Finance Revenue Bonds (Department
of Natural Resources Preservation 2000), Series A, 6.10% due
7/01/1995(c) 5,000
A+ A 1,495 Florida State, GO, COP (Construction Equipment Financing Program),
5.75% due 11/15/1995 1,505
AAA Aaa 2,375 Florida State Turnpike Authority, Turnpike Revenue Bonds, Series A,
5% due 7/01/1995(f) 2,375
AA Aa1 5,000 Jacksonville, Florida, Electric Authority Revenue Bonds (Electric
Systems), Series 3-B, 4% due 10/01/1998 4,977
AA Aaa 4,000 Jacksonville, Florida, Electric Authority, Revenue Refunding Bonds
(Saint John's River Park Power), Issue II, Series 4, 6.90% due
10/01/1995(a) 4,093
A-1 VMIG1++ 400 Martin County, Florida, PCR, Refunding (Florida Power and
Light Co., Project), VRDN, 4.20% due 9/01/2024(b) 400
NR* NR* 7,500 Martin County, Florida, School District, TAN, 4.25% due 6/08/1996 7,506
A-1 VMIG1++ 1,300 Saint Lucie County, Florida, PCR, Refunding (Florida Power and
Lighting Co. Project), VRDN, 4.20% due 1/01/2026(b) 1,300
Georgia--3.0% AA Aa1 2,000 Gwinnett County, Georgia, COP (Water and Sewer), 7.60% due
8/01/1995 2,007
AA Aa1 4,000 Gwinnett County, Georgia, School District, Refunding, UT,
4.40% due 2/01/1998 4,025
AAA Aaa 3,965 Metropolitan Atlanta, Georgia, Rapid Transit Authority, Sales Tax
Revenue Refunding Bonds, Series P, 4.75% due 7/01/1995(c) 3,965
A-1 VMIG1++ 10,000 Municipal Electric Authority, Georgia, General Resolution,
Series C, 4.90% due 3/01/1996 10,065
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Illinois--8.8% Chicago, Illinois, Metropolitan Water Reclamation District,
Greater Chicago Revenue Refunding Bonds:
AA Aa $ 5,000 4% due 12/01/1996 $ 5,020
AA Aa 3,100 UT, 4.10% due 12/01/1995 3,105
AA Aa 3,000 UT, 4.50% due 12/01/1996 3,027
AAA Aaa 4,120 Chicago, Illinois, Public Commerce Building Revenue Bonds
(Chicago Board of Education), Series A, 7.75% due 1/01/1999(a)(f) 4,623
AAA Aaa 4,500 Chicago, Illinois, Refunding, Series A, 4.40% due 1/01/1999(d) 4,473
AA- Baa1 5,000 Chicago, Illinois, School Financing Authority, 7.25% due
6/01/1998 5,166
A1+ VMIG1++ 7,500 Chicago, Illinois, Tender Notes, Series A-1, 3.10% due 10/31/1995 7,471
AAA Aaa 3,000 Cook County, Illinois, High School District No. 205, Revenue
Refunding Bonds (Thornton Township), UT, 5.60% due 6/01/1998(f)(g) 3,117
NR* VMIG1++ 4,900 Illinois Health Facilities Authority Revenue Bonds (Resurrection
Health Care System), VRDN, 4.65% due 5/01/2011(b) 4,900
AA- A1 4,600 Illinois State, GO, UT, Refunding, 3.90% due 12/01/1998 4,525
Illinois State Toll and Highway Authority, Revenue Refunding
Bonds, Series A:
A A1 3,625 3.70% due 1/01/1996 3,620
A A1 10,000 4.10% due 1/01/1998 9,927
Indiana--2.6% NR* VMIG1++ 13,280 Indiana State, HFA, S/F Mortgage Revenue Bonds, Series D, 4.30%
due 7/03/1995(i) 13,280
AA- Aa 4,800 Purdue University, Indiana, University Revenue Bonds, Student
Fees, Series J, 4.15% due 7/01/1996 4,820
Kentucky--2.4% A+ A 13,000 Kentucky State Property and Building Community, Revenue Refunding
Bonds (Project No. 55), 3.60% due 9/01/1996 12,918
AAA Aaa 3,250 Kentucky State Turnpike Authority, Economic Development Road,
Revenue Refunding Bonds (Revitalization Projects), 4% due
7/01/1996(c) 3,266
Louisiana--1.3% A A1 3,610 Louisiana Public Facilities Authority Revenue Bonds (Tulane
University), Series B, 6.80% due 8/15/1996 3,724
A A3 5,410 Louisiana State Offshore Terminal Authority, Revenue Refunding
Bonds (Deepwater Port), First Stage, Series B, 4.60% due 9/01/1995 5,405
Maine--0.8% AA+ Aa 5,255 Maine State General Purpose Bonds, GO, 4.10% due 9/01/1995 5,260
Maryland--0.7% A+ A1 4,535 Maryland State Transportation Authority Revenue Bonds
(Transportation Facilities Project), 6% due 7/01/1995 4,535
<PAGE>
Massachusetts-- BBB+ NR* 2,131 Massachusetts State, COP, GO, 5.10% due 6/30/1996 2,149
2.6% A+ A1 2,500 Massachusetts State, GO, Dedicated Income Tax, Series A, 7.25%
due 6/01/1996 2,577
AAA Aaa 2,005 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (New England Medical Center Hospitals), Series G,
3.80% due 7/01/1997(d) 1,993
A- A1 10,160 New England Education Loan Marketing Corporation, Massachusetts,
Student Loan, Series D, 4.75% due 7/01/1998 10,126
NR* NR* 995 South Hadley, Massachusetts, IDR (South Hadley Health Care), AMT,
Series A, 5% due 12/01/1996 992
Michigan--6.6% AAA Aaa1 12,785 Detroit, Michigan, Distributable State Aid, 7.20% due
5/01/1999(a)(c) 14,213
NR* VMIG1++ 1,000 Detroit, Michigan, Downtown Development Authority, Revenue
Refunding Bonds (Millender Center Project), VRDN, 4.10% due
12/01/2010(b) 1,000
SP-1 MIG1++ 5,075 Detroit, Michigan, GO, Notes, 3.80% due 7/01/1995 5,075
A1+ VMIG1++ 6,100 Grand Rapids, Michigan, Water Supply Systems, Revenue Refunding
Bonds, VRDN, 4.10% due 1/01/2020(b)(f) 6,100
AAA NR* 5,475 Michigan State, Hospital Finance Authority Revenue Bonds
(Harper-Grace & Huron Valley Hospitals), Series A, 10% due
10/01/1995(a) 5,670
AA- A 2,700 Michigan State Building Authority Revenue Bonds (Equipment
Program), Series A, 4.55% due 10/01/1998 2,714
AA- A 10,145 Michigan State Building Authority, Revenue Refunding Bonds,
Series I, 3.90% due 10/01/1997 10,095
NR* VMIG1++ 800 Michigan State Strategic Fund, Solid Waste Disposal Revenue Bonds
(Grayling Generating Project), VRDN, AMT, 4.25% due 1/01/2014(b) 800
Minnesota--2.9% AAA Aaa 3,225 Hennepin County, Minnesota, Capital Improvement Bonds, UT,
Series B, 3.25% due 12/01/1995 3,221
Minnesota State, HFA, S/F Mortgage:
A1+ VMIG1++ 4,755 AMT, Series U, 4.95% due 12/14/1995 4,759
A1+ VMIG1++ 7,265 AMT, Series V, 4.95% due 12/01/1995 7,271
A1+ VMIG1++ 4,105 Series T, 4.85% due 12/14/1995 4,109
Mississippi--1.0% NR* Aa 2500 Jackson County, Mississippi, Individual Sewer Facilities Revenue
Bonds (Chevron USA, Inc. Project), VRDN, 4.35% due 12/15/2024(b) 500
A NR* 6,000 Mississippi Higher Education Assistance Corporation, Student Loan
Revenue Refunding Bonds, AMT, Series C, 5.40% due 1/01/1996 6,032
Missouri--2.1% SP1+ NR* 14,500 Missouri State Environmental Improvement and Energy Resource
Authority, Water, PCR (State Revolving Fund Program), Series A,
3.90% due 9/01/1996 14,455
<PAGE>
Nebraska--1.5% Nebraska Public Power District Revenue Bonds:
A+ A1 7,000 (Nuclear Facility), 4% due 7/01/1995 7,000
A+ A1 3,570 Refunding (Power Supply System), Series C, 3.50% due 1/01/1996 3,563
Nevada--1.8% AAA Aaa 5,635 Clark County, Nevada, School District, Series A, 4.25% due
6/15/1998(d) 5,633
AAA Aaa 7,000 Washoe County, Nevada, Airport Authority, Airport Systems
Improvement Revenue Bonds, AMT, Series A, 3.90% due 7/01/1995(d) 7,000
New Jersey--3.3% Camden County, New Jersey, Improvement Authority (Solid Waste
Disposal), Revenue Refunding Bonds (Landfill Project):
A- A1 1,125 3.55% due 7/01/1995 1,125
A- A1 2,000 4% due 7/01/1997 1,997
AA+ Aaa 4,500 Middlesex County, New Jersey, Refunding Bonds, UT, 3.60% due
7/15/1996 4,497
AAA Aaa 5,000 New Jersey EDA, Market Transition Facility Revenue Bonds, Senior
Lien--Series A, 4.80% due 7/01/1998(d) 5,067
A+ NR* 3,765 New Jersey State Housing and Mortgage Finance Agency, Revenue
Refunding Bonds, Series 1, 4.50% due 11/01/1995 3,771
A A 2,160 New Jersey State Turnpike Authority, Revenue Refunding Bonds,
Series A, 5.50% due 1/01/1996 2,178
AAA Aaa 3,265 Passaic Valley, New Jersey, Sewage Commissioners Revenue Refunding
Bonds, Series D, 5.70% due 12/01/1995(c) 3,295
New Mexico--0.3% AAA Aaa 2,340 New Mexico Education Loan Assistance Foundation, Student Loan
Revenue Bonds, AMT, Series A, 5.75% due 4/01/1996(c) 2,364
New York--2.3% AAA Aaa 4,000 Albany County, New York, Revenue Refunding Bonds, UT, 3.30% due
10/01/1995(f) 3,998
A- Baa1 5,000 New York City, New York, GO, UT, Refunding, Series A, 4.60% due
8/01/1995 5,002
A1+ VMIG1++ 7,000 New York State Dormitory Authority Revenue Bonds (New York Public
Library), Series B, 3.875% due 7/01/1995 6,998
A1+ VMIG1++ 100 Syracuse, New York, IDA, Civic Facility Revenue Bonds (Multi-Modal
Syracuse University Project), VRDN, 4.35% due 3/01/2023(b) 100
North Carolina-- North Carolina State, Clean Water, Series B:
2.1% AAA Aaa 10,000 4.25% due 6/01/1997 10,054
AAA Aaa 5,000 4.25% due 6/01/1998 5,037
North Dakota--0.7% NR* Aa 5,000 North Dakota Student Loan Revenue Refunding Bonds, Series A, 5.40%
due 7/01/1996 5,060
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Ohio--8.7% A- NR* $ 2,500 Cincinnati, Ohio, City School District, RAN, 5.35% due 6/15/1996 $ 2,533
Cleveland, Ohio, City School District, RAN, UT(c):
AAA Aaa 3,000 4.20% due 6/01/1996 3,016
AAA Aaa 10,000 4.35% due 6/01/1997 10,066
AAA Aaa 2,500 Columbus, Ohio, Limited Tax, 4.25% due 6/15/1998 2,513
NR* Aaa 2,700 Columbus, Ohio, Sewer Improvement Revenue Bonds (Waterworks
Parks), 6.75% due 7/01/1995(g) 2,700
NR* VMIG1++ 2,100 Cuyahoga County, Ohio, Hospital Improvement Revenue Bonds
(Cleveland University Hospital), VRDN, 4.20% due 1/01/2016(b) 2,100
NR* NR* 2,000 Lucas County, Ohio, BAN, 5.75% due 11/30/1995 2,015
NR* MIG1++ 3,500 Miami Valley Regional Transport Authority, Ohio (Capital
Facilities), BAN, 4.75% due 4/15/1997 3,539
Ohio State Air Quality Development Authority, Revenue Refunding
Bonds (Ohio Edison Project), Series A:
A+ VMIG1++ 10,500 4.25% due 8/01/1996 10,477
A+ VMIG1++ 6,700 3.45% due 2/01/2015 6,646
A+ A1 3,300 Ohio State Public Facilities Commission, Higher Education
Facilities, Capital Facilities, Series II-A, 5.30% due 12/01/1996 3,358
AAA Aaa 10,000 Ohio State Public Facilities Commission, Refunding (Mental Health
Facilities), Series II-B, 4.25% due 6/01/1998(e) 10,032
Oklahoma--1.0% A+ Aa 6,370 Oklahoma County, Oklahoma, Independent School District No. 89, UT,
6.50% due 2/01/1998 6,712
Pennsylvania--1.3% Pennsylvania State Higher Educational Facilities Authority, Revenue
Refunding Bonds, Series A:
AA Aa 2,750 (College and Universities), 4.80% due 9/01/1998 2,798
A+ Aa 3,000 (Thomas Jefferson University), 5.75% due 8/15/1998 3,123
AAA Aaa 3,000 Pittsburgh, Pennsylvania, Water and Sewer Authority, Revenue
Refunding Bonds, Series A, 3.50% due 9/01/1996(f) 2,984
Rhode Island--1.5% AAA Aaa 4,180 Rhode Island Depositors Economic Protection Corporation, Special
Obligation Bonds, Series A, 5% due 8/01/1995(e) 4,184
NR* A 6,000 Rhode Island State, Student Loan Authority, Student Loan Revenue
Refunding Bonds, Series A, 5.70% due 12/01/1996 6,104
<PAGE>
South Carolina NR* NR* 5,775 Georgetown County, South Carolina, Water and Sewer District Revenue
- --2.3% Bonds, BAN, 6.25% due 5/07/1996 5,808
South Carolina State Public Service Authority Revenue Refunding
Bonds:
AA- A1 4,000 (Electric Systems Expansion), Series A, 7.50% due 7/01/1996 4,145
A+ A1 5,170 Series C, 3.80% due 1/01/1997 5,138
Tennessee-- AA NR* 2,885 Clarksville, Tennessee, Public Building Authority, Revenue
1.0% Refunding Bonds (Pooled Loan Program), 4.40% due 12/01/1998 2,861
AA+ Aa 4,000 Shelby County, Tennessee, Refunding, Series A, 6.40% due
8/01/1998 4,124
Texas--3.8% Brazos, Texas, Higher Education Authority Incorporated, Student
Loan Revenue Refunding Bonds, AMT:
NR* Aaa 2,200 Senior Lien, Series A-2, 5.45% due 6/01/1998 2,244
NR* Aa 2,000 Series C-1, 5% due 11/01/1995 2,007
NR* Aa 5,455 Series C-1, 5.60% due 11/01/1997 5,581
NR* A1 950 Fort Bend County, Texas, IDR, Corporate Refunding (Frito Lay
Incorporated Project), 4% due 10/01/2011 940
NR* A1 3,650 Fort Bend County, Texas, PCR, Corporate IDR, Refunding (Frito Lay
Incorporated Project), 4% due 10/01/2011 3,613
A1+ NR* 3,300 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Methodist Hospital), VRDN, 4.50% due
12/01/2025(b) 3,300
Panhandle-Plains, Texas, Higher Education Authority Incorporated,
Student Loan Revenue Refunding Bonds, Series C:
NR* Aaa 2,000 3.95% due 9/01/1996 1,994
NR* Aaa 2,675 4.15% due 9/01/1997 2,653
AA Aa 3,000 Texas State Public Finance Authority Revenue Bonds, Series A,
6% due 10/01/1995 3,018
AAA Aa 1,500 Texas Water Development Board Revenue Bonds (State Revolving
Fund--Senior Lien), 4.35% due 7/15/1995 1,500
Utah--3.6% NR* NR* 18,774 Carbon County, Utah, Solid Waste Disposal Revenue Refunding Bonds
(East Carbon Landfill Project), AMT, 6.04% due 5/01/1997 19,110
Intermountain Power Agency, Utah, Power Supply Revenue
Refunding Bonds:
AA Aa 1,250 Series A, 3.90% due 7/01/1996 1,252
AA Aa 4,250 Series B, 4.60% due 7/01/1995 4,250
Virginia--1.0% AAA Aaa 2,500 Virginia Port Authority Facilities, Revenue Refunding Bonds,
5% due 7/01/1995(c) 2,500
AA+ Aa1 2,975 Virginia State Housing Development Authority, Commonwealth
Mortgage Revenue Bonds, AMT, Series B, Sub-Series B-1, 5.50%
due 1/01/1996 2,992
AA Aa 1,500 Virginia State Public Building Authority, Building Revenue Bonds,
Series C, 3.95% due 8/01/1995 1,500
<PAGE>
Washington--6.1% AA- A1 3,000 Port Seattle, Washington, Revenue Refunding Bonds, Series B,
4% due 11/01/1995 3,003
Washington State, GO:
AA Aa 1,800 Refunding, Series R-93B, 4.40% due 10/01/1998 1,810
AA Aa 8,460 Series C, 4.80% due 7/01/1998 8,590
AA Aa 7,250 Series R-93-B-1, UT, 4.125% due 10/01/1997 7,275
Washington State Public Power Supply System, Revenue Refunding
Bonds:
AA Aa 8,000 (Nuclear Project No. 1), Series A, 4.20% due 7/01/1995 8,000
AA Aa 2,000 (Nuclear Project No. 2), Series A, 3.50% due 7/01/1996 1,982
AA Aa 4,890 (Nuclear Project No. 2), Series A, 3.75% due 7/01/1997 4,796
AA Aa 5,405 (Nuclear Project No. 3), Series C, 4% due 7/01/1997 5,341
Wisconsin--3.9% AA Aa 3,500 Milwaukee County, Wisconsin, Metropolitan Sewer District Revenue
Bonds, UT, Series A, 5.25% due 9/01/1995 3,509
AA- A1 10,000 Milwaukee County, Wisconsin, UT, Refunding, Series A, 4.80% due
9/01/1997 10,143
NR* NR* 8,000 Waukensha, Wisconsin, School District, TRAN, 4.75% due
10/24/1995 8,023
Wisconsin Housing and EDA, Housing Revenue Refunding Bonds,
Series C:
A A1 2,200 3.60% due 11/01/1995 2,196
A A1 2,795 4.30% due 11/01/1997 2,766
Puerto Rico--1.5% A Baa1 3,415 Puerto Rico Public Buildings Authority, Revenue Refunding Bonds,
Series J, 5.20% due 7/01/1995 3,415
BBB Baa 7,065 Puerto Rico, S/F Finance Housing Agency, Revenue Refunding Bonds,
3.75% due 12/01/1995 7,054
Total Investments (Cost--$723,214)--106.6% 726,038
Liabilities in Excess of Other Assets--(6.6%) (44,760)
----------
Net Assets--100.0% $ 681,278
==========
<PAGE>
<FN>
(a)Prerefunded.
(b)The interest rate is subject to change periodically based upon the prevailing
market rate. The interest rate shown is the rate in effect at June 30, 1995.
(c)AMBAC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)FGIC Insured.
(g)Escrowed to maturity.
(h)The interest rate is subject to change periodically and inversely based upon
prevailing market rates. The interest rate shown is the rate in effect at
June 30, 1995.
(i)GNMA/FNMA Collateralized.
++Highest short-term rating by Moody's Investors Service, Inc.
*Not Rated.
Rating of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
Limited
Insured National Maturity
As of June 30, 1995 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Assets: Investments, at value* (Note 1a) $2,494,465,694 $1,471,461,312 $726,037,534
Cash 99,421 -- --
Receivables:
Interest 45,726,555 28,831,308 11,938,731
Securities sold -- 23,282,169 28,293
Capital shares sold 1,574,288 967,199 356,466
Prepaid registration fees and other assets (Note 1e) 71,615 53,547 63,464
-------------- -------------- ------------
Total assets 2,541,937,573 1,524,595,535 738,424,488
-------------- -------------- ------------
Liabilities: Payables:
Securities purchased 9,996,595 12,808,429 40,267,587
Capital shares redeemed 5,404,811 2,200,851 1,799,740
Dividends to shareholders (Note 1f) 2,256,454 1,420,326 401,295
Investment adviser (Note 2) 812,054 638,536 199,507
Distributor (Note 2) 536,063 288,096 41,178
Accrued expenses and other liabilities 347,889 3,016,238 14,436,817
-------------- -------------- ------------
Total liabilities 19,353,866 20,372,476 57,146,124
-------------- -------------- ------------
Net Assets: Net assets $2,522,583,707 $1,504,223,059 $681,278,364
============== ============== ============
<PAGE>
Net Assets Class A Common Stock, $0.10 par value++ $ 21,537,391 $ 10,568,700 $ 5,406,871
Consist of: Class B Common Stock, $0.10 par value++++ 9,888,492 4,190,387 1,305,736
Class C Common Stock, $0.10 par value+++ 97,928 51,814 39,969
Class D Common Stock, $0.10 par value+++++ 328,305 196,047 113,422
Paid-in capital in excess of par 2,424,829,060 1,508,398,383 678,543,843
Accumulated realized capital losses on investments--net (Note 5) (38,085,734) (77,312,474) (6,954,744)
Accumulated distributions in excess of realized capital gains on
investments-net -- (3,745,999) --
Unrealized appreciation on investments--net 103,988,265 61,876,201 2,823,267
-------------- -------------- ------------
Net assets $2,522,583,707 $1,504,223,059 $681,278,364
============== ============== ============
Net Asset Class A:
Value: Net assets $1,706,064,230 $1,059,440,068 $536,474,423
============== ============== ============
Shares outstanding 215,373,913 105,686,998 54,068,710
============== ============== ============
Net asset value and redemption price per share $ 7.92 $ 10.02 $ 9.92
============== ============== ============
Class B:
Net assets $ 782,748,268 $ 419,932,544 $129,580,505
============== ============== ============
Shares outstanding 98,884,919 41,903,872 13,057,358
============== ============== ============
Net asset value and redemption price per share $ 7.92 $ 10.02 $ 9.92
============== ============== ============
Class C:
Net assets $ 7,755,939 $ 5,194,514 $ 3,964,961
============== ============== ============
Shares outstanding 979,281 518,140 399,691
============== ============== ============
Net asset value and redemption price per share $ 7.92 $ 10.03 $ 9.92
============== ============== ============
Class D:
Net assets $ 26,015,270 $ 19,655,933 $ 11,258,475
============== ============== ============
Shares outstanding 3,283,048 1,960,467 1,134,219
============== ============== ============
Net asset value and redemption price per share $ 7.92 $ 10.03 $ 9.93
============== ============== ============
<PAGE>
<FN>
*Identified cost $2,390,477,429 $1,409,585,111 $723,214,267
============== ============== ============
++Authorized shares--Class A 500,000,000 375,000,000 150,000,000
============== ============== ============
++++Authorized shares--Class B 375,000,000 375,000,000 150,000,000
============== ============== ============
+++Authorized shares--Class C 375,000,000 375,000,000 150,000,000
============== ============== ============
+++++Authorized shares--Class D 500,000,000 375,000,000 150,000,000
============== ============== ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
Limited
Insured National Maturity
For the Year Ended June 30, 1995 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned $ 162,836,631 $ 102,352,831 $ 35,037,639
Income
(Note 1d):
Expenses: Investment advisory fees (Note 2) 9,408,013 7,415,203 2,712,662
Account maintenance and distribution fees--Class B (Note 2) 6,068,445 3,222,144 509,545
Transfer agent fees--Class A (Note 2) 644,746 492,073 229,485
Transfer agent fees--Class B (Note 2) 361,606 230,543 71,068
Custodian fees 196,723 139,502 75,289
Accounting services (Note 2) 179,937 112,483 91,455
Printing and shareholder reports 185,551 130,785 66,926
Registration fees (Note 1e) 102,874 135,468 101,323
Professional fees 59,240 58,390 26,854
Pricing services 38,685 28,033 25,903
Account maintenance fees--Class D (Note 2) 29,774 24,626 4,973
Portfolio insurance 33,397 16,034 9,463
Directors' fees and expenses 27,936 16,026 6,655
Account maintenance and distribution fees--Class C (Note 2) 19,066 13,868 2,688
Transfer agent fees--Class D (Note 2) 4,430 4,446 2,063
Transfer agent fees--Class C (Note 2) 1,326 884 1,186
Other 10,402 12,490 --
-------------- -------------- ------------
Total expenses 17,372,151 12,052,998 3,937,538
-------------- -------------- ------------
Investment income--net 145,464,480 90,299,833 31,100,101
-------------- -------------- ------------
<PAGE>
Realized & Realized loss on investments--net (38,085,273) (77,312,475) (1,760,975)
Unrealized Change in unrealized appreciation/depreciation on investments--net 91,672,331 98,337,487 4,210,861
Gain (Loss)on -------------- -------------- ------------
Investments-- Net Increase in Net Assets Resulting from Operations $ 199,051,538 $ 111,324,845 $ 33,549,987
Net(Notes 1b, ============== ============== ============
1d & 3):
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Insured Portfolio National Portfolio
For the Year Ended June 30, For the Year Ended June 30,
Increase (Decrease) in Net Assets: 1995 1994 1995 1994
<S> <S> <C> <C> <C> <C>
Operations: Investment income--net $ 145,464,480 $ 163,942,349 $ 90,299,833 $ 98,848,832
Realized gain (loss) on investments
--net (38,085,273) 80,935,129 (77,312,475) 62,008,845
Change in unrealized appreciation/
depreciation on investments--net 91,672,331 (275,252,365) 98,337,487 (172,722,080)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations 199,051,538 (30,374,887) 111,324,845 (11,864,403)
-------------- -------------- -------------- --------------
Dividends & Investment income--net:
Distributions Class A (104,032,884) (119,441,701) (67,078,481) (75,680,507)
to Share- Class B (40,656,294) (44,500,648) (22,561,653) (23,168,325)
holders Class C (120,450) -- (90,229) --
(Note 1f): Class D (654,852) -- (569,470) --
Realized gain on investments--net:
Class A (31,614,511) (57,171,047) (20,402,246) (36,128,677)
Class B (14,155,831) (24,972,443) (7,752,072) (12,798,152)
Class C (23,608) -- (26,597) --
Class D (104,611) -- (171,804) --
In excess of realized gain on investments
--net:
Class A -- -- (2,695,572) --
Class B -- -- (1,024,214) --
Class C -- -- (3,514) --
Class D -- -- (22,699) --
-------------- -------------- -------------- --------------
Net decrease in net assets resulting
from dividends and distributions
to shareholders (191,363,041) (246,085,839) (122,398,551) (147,775,661)
-------------- -------------- -------------- --------------
<PAGE>
Capital Share Net increase (decrease) in net assets
Transactions derived from capital share
(Note 4): transactions (293,039,051) (52,099,956) (147,053,135) 44,114,517
-------------- -------------- -------------- --------------
Net Assets: Total decrease in net assets (285,350,554) (328,560,682) (158,126,841) (115,525,547)
Beginning of year 2,807,934,261 3,136,494,943 1,662,349,900 1,777,875,447
-------------- -------------- -------------- --------------
End of year $2,522,583,707 $2,807,934,261 $1,504,223,059 $1,662,349,900
============== ============== ============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<CAPTION>
Limited Maturity Portfolio
For the Year Ended June 30,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 31,100,101 $ 36,430,985
Realized gain (loss) on investments
--net (1,760,975) (968,336)
Change in unrealized appreciation/
depreciation on investments--net 4,210,861 (13,063,534)
-------------- --------------
Net increase (decrease) in net assets
resulting from operations 33,549,987 22,399,115
-------------- --------------
<PAGE>
Dividends & Investment income--net:
Distributions Class A (25,771,957) (31,987,779)
to Share- Class B (5,094,228) (4,443,206)
holders Class C (45,930) --
(Note 1f): Class D (187,986) --
Realized gain on investments--net:
Class A -- --
Class B -- --
Class C -- --
Class D -- --
In excess of realized gain on
investments--net:
Class A -- --
Class B -- --
Class C -- --
Class D -- --
-------------- --------------
Net decrease in net assets resulting
from dividends and distributions
to shareholders (31,100,101) (36,430,985)
-------------- --------------
Capital Share Net increase (decrease) in net assets
Transactions derived from capital share
(Note 4): transactions (256,848,291) 7,793,356
-------------- --------------
Net Assets: Total decrease in net assets (254,398,405) (6,238,514)
Beginning of year 935,676,769 941,915,283
-------------- --------------
End of year $ 681,278,364 $ 935,676,769
============== ==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios
have been derived from information provided Insured Portfolio
in the financial statements. Class A
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 7.88 $ 8.64 $ 8.26 $ 7.92 $ 7.86
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .46 .47 .50 .52 .54
Realized and unrealized gain (loss) on
investments--net .18 (.53) .49 .41 .12
----------- ----------- ----------- ----------- -----------
Total from investment operations .64 (.06) .99 .93 .66
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.46) (.47) (.50) (.52) (.54)
Realized gain on investments--net (.14) (.23) (.11) (.07) (.06)
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.60) (.70) (.61) (.59) (.60)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 7.92 $ 7.88 $ 8.64 $ 8.26 $ 7.92
=========== =========== =========== =========== ===========
Total Based on net asset value per share 8.60% (1.08%) 12.43% 12.11% 8.84%
Investment =========== =========== =========== =========== ===========
Return:**
Ratios to Expenses .43% .42% .42% .44% .45%
Average =========== =========== =========== =========== ===========
Net Assets: Investment income--net 5.78% 5.53% 5.94% 6.44% 6.90%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in thousands) $ 1,706,064 $ 1,941,741 $ 2,225,188 $ 2,062,591 $ 1,984,307
Data: =========== =========== =========== =========== ===========
Portfolio turnover 35.61% 28.34% 43.86% 22.50% 33.12%
=========== =========== =========== =========== ===========
<CAPTION>
The following per share data and ratios
have been derived from information Insured Portfolio
provided in the financial statements. For the Period
Class B October 21, 1994++ to
Increase (Decrease) in Net Asset Value: For the Year Ended June 30, June 30, 1995
1995 1994 1993 1992 1991 Class C Class D
<S> <S> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 7.87 $ 8.63 $ 8.26 $ 7.92 $ 7.86 $ 7.68 $ 7.68
Operating --------- --------- --------- --------- --------- -------- --------
Performance: Investment income--net .40 .40 .44 .46 .48 .27 .29
Realized and unrealized gain (loss)
on investments--net .19 (.53) .48 .41 .12 .38 .38
--------- --------- --------- --------- --------- -------- --------
Total from investment operations .59 (.13) .92 .87 .60 .65 .67
--------- --------- --------- --------- --------- -------- --------
Less dividends and distributions:
Investment income--net (.40) (.40) (.44) (.46) (.48) (.27) (.29)
Realized gain on investments--net (.14) (.23) (.11) (.07) (.06) (.14) (.14)
--------- --------- --------- --------- --------- -------- --------
Total dividends and distributions (.54) (.63) (.55) (.53) (.54) (.41) (.43)
--------- --------- --------- --------- --------- -------- --------
Net asset value, end of period $ 7.92 $ 7.87 $ 8.63 $ 8.26 $ 7.92 $ 7.92 $ 7.92
========= ========= ========= ========= ========= ======== ========
<PAGE>
Total Based on net asset value per share 7.91% (1.81%) 11.45% 11.27% 8.02% 8.83%+++ 9.24%+++
Investment ========= ========= ========= ========= ========= ======== ========
Return:**
Ratios to Expenses, excluding account
Average maintenance and distribution fees .44% .42% .43% .44% .45% .43%* .43%*
Net Assets: ========= ========= ========= ========= ========= ======== ========
Expenses 1.19% 1.17% 1.18% 1.19% 1.20% 1.23%* .68%*
========= ========= ========= ========= ========= ======== ========
Investment income--net 5.03% 4.78% 5.17% 5.69% 6.13% 4.93%* 5.50%*
========= ========= ========= ========= ========= ======== ========
Supplemental Net assets, end of period (in
Data: thousands) $ 782,748 $ 866,193 $ 911,307 $ 706,016 $ 537,755 $ 7,756 $ 26,015
========= ========= ========= ========= ========= ======== ========
Portfolio turnover 35.61% 28.34% 43.86% 22.50% 33.12% 35.61% 35.61%
========= ========= ========= ========= ========= ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
The following per share data and ratios
have been derived from information provided National Portfolio
in the financial statements. Class A
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.08 $ 11.02 $ 10.64 $ 10.17 $ 10.12
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .60 .62 .67 .71 .73
Realized and unrealized gain (loss) on
investments--net .15 (.64) .57 .58 .05
----------- ----------- ----------- ----------- -----------
Total from investment operations .75 (.02) 1.24 1.29 .78
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.60) (.62) (.67) (.71) (.73)
Realized gain on investments--net (.19) (.30) (.19) (.11) --
In excess of realized gain on
investments--net (.02) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.81) (.92) (.86) (.82) (.73)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 10.02 $ 10.08 $ 11.02 $ 10.64 $ 10.17
=========== =========== =========== =========== ===========
Total Based on net asset value per share 7.89% (.47%) 12.21% 13.09% 7.94%
Investment =========== =========== =========== =========== ===========
Return:*
Ratios to Expenses .56% .55% .55% .55% .55%
Average =========== =========== =========== =========== ===========
Net Assets: Investment income--net 6.01% 5.72% 6.23% 6.80% 7.20%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in thousands) $ 1,059,440 $ 1,203,181 $ 1,353,805 $ 1,278,055 $ 1,255,820
Data: =========== =========== =========== =========== ===========
Portfolio turnover 103.65% 73.33% 65.43% 50.94% 75.25%
=========== =========== =========== =========== ===========
<PAGE>
<CAPTION>
The following per share data and ratios
have been derived from information provided National Portfolio
in the financial statements. Class B
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.07 $ 11.02 $ 10.63 $ 10.16 $ 10.11
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .52 .54 .59 .63 .65
Realized and unrealized gain (loss) on
investments--net .16 (.65) .58 .58 .05
----------- ----------- ----------- ----------- -----------
Total from investment operations .68 (.11) 1.17 1.21 .70
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income--net (.52) (.54) (.59) (.63) (.65)
Realized gain on investments--net (.19) (.30) (.19) (.11) --
In excess of realized gain on
investments--net (.02) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.73) (.84) (.78) (.74) (.65)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 10.02 $ 10.07 $ 11.02 $ 10.63 $ 10.16
=========== =========== =========== =========== ===========
Total Based on net asset value per share 7.28% (1.39%) 11.47% 12.25% 7.14%
Investment =========== =========== =========== =========== ===========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .57% .55% .56% .56% .56%
Net Assets: =========== =========== =========== =========== ===========
Expenses 1.32% 1.30% 1.31% 1.31% 1.31%
=========== =========== =========== =========== ===========
Investment income--net 5.25% 4.97% 5.46% 6.03% 6.43%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in thousands) $ 419,933 $ 459,169 $ 424,071 $ 286,375 $ 213,581
Data: =========== =========== =========== =========== ===========
Portfolio turnover 103.65% 73.33% 65.43% 50.94% 75.25%
=========== =========== =========== =========== ===========
<PAGE>
<CAPTION>
The following per share data and ratios have been derived National Portfolio
from information provided in the financial statements. For the Period Oct. 21, 1994++
to June 30, 1995
Increase (Decrease) in Net Asset Value: Class C Class D
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 9.85 $ 9.85
Operating ----------- -----------
Performance: Investment income--net .36 .40
Realized and unrealized gain on investments--net .39 .39
----------- -----------
Total from investment operations .75 .79
----------- -----------
Less dividends and distributions:
Investment income--net (.36) (.40)
Realized gain on investments--net (.19) (.19)
In excess of realized gain on investments--net (.02) (.02)
----------- -----------
Total dividends and distributions (.57) (.61)
----------- -----------
Net asset value, end of period $ 10.03 $ 10.03
=========== ===========
Total Based on net asset value per share 7.97%+++ 8.37%+++
Investment =========== ===========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .57%* .56%*
Net Assets: =========== ===========
Expenses 1.37%* .81%*
=========== ===========
Investment income--net 5.21%* 5.78%*
=========== ===========
Supplemental Net assets, end of period (in thousands) $ 5,195 $ 19,656
Data: =========== ===========
Portfolio turnover 103.65% 103.65%
=========== ===========
<PAGE>
<CAPTION>
The following per share data and ratios
have been derived from information provided Limited Maturity Portfolio
in the financial statements. Class A
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 9.87 $ 10.01 $ 9.91 $ 9.75 $ 9.71
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .38 .37 .41 .50 .57
Realized and unrealized gain (loss) on
investments--net .05 (.14) .10 .16 .04
----------- ----------- ----------- ----------- -----------
Total from investment operations .43 .23 .51 .66 .61
----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net (.38) (.37) (.41) (.50) (.57)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 9.92 $ 9.87 $ 10.01 $ 9.91 $ 9.75
=========== =========== =========== =========== ===========
Total Based on net asset value per share 4.53% 2.30% 5.28% 6.93% 6.45%
Investment =========== =========== =========== =========== ===========
Return:**
Ratios to Expenses .41% .40% .41% .40% .40%
Average =========== =========== =========== =========== ===========
Net Assets: Investment income--net 3.86% 3.68% 4.13% 5.02% 5.88%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of year (in thousands) $ 536,474 $ 790,142 $ 846,736 $ 613,407 $ 350,549
Data: =========== =========== =========== =========== ===========
Portfolio turnover 37.33% 45.67% 65.43% 96.32% 93.06%
=========== =========== =========== =========== ===========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Limited Maturity Portfolio
The following per share data and ratios Class B
have been derived from information provided For the Period For the Period
in the financial statements. Nov. 2, 1992++ October 21, 1994++
For the Year Ended June 30, to June 30, to June 30, 1995
Increase (Decrease) in Net Asset Value: 1995 1994 1993 Class C Class D
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.87 $ 10.01 $ 9.93 $ 9.83 $ 9.83
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income--net .35 .33 .24 .25 .26
Realized and unrealized gain (loss) on
investments--net .05 (.14) .08 .09 .10
----------- ----------- ----------- ----------- -----------
Total from investment operations .40 .19 .32 .34 .36
----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net (.35) (.33) (.24) (.25) (.26)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 9.92 $ 9.87 $ 10.01 $ 9.92 $ 9.93
=========== =========== =========== =========== ===========
<PAGE>
Total Based on net asset value per share 4.14% 1.98% 3.26%+++ 3.52%+++ 3.73%+++
Investment =========== =========== =========== =========== ===========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .43% .41% .41%* .49%* .43%*
Net Assets: =========== =========== =========== =========== ===========
Expenses .78% .76% .76%* .70%* .53%*
=========== =========== =========== =========== ===========
Investment income--net 3.50% 3.33% 3.60%* 3.61%* 3.78%*
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $ 129,581 $ 145,534 $ 95,179 $ 3,965 $ 11,258
Data: =========== =========== =========== =========== ===========
Portfolio turnover 37.33% 45.67% 65.43% 37.33% 37.33%
=========== =========== =========== =========== ===========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Municipal Bond Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund's Portfolios offer four
classes of shares under the Merrill Lynch Select Pricing SM System.
Shares of Class A and Class D are sold with a front-end sales charge.
Shares of Class B and Class C may be subject to a contingent
deferred sales charge. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and
conditions, except that Class B, Class C and Class D Shares bear
certain expenses related to the account maintenance of such shares,
and Class B and Class C Shares also bear certain expenses related to
the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its account maintenance
and distribution expenditures. The following is a summary of
significant accounting policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Insured Portfolio: Where bonds in the
Portfolio have not been insured pursuant to policies obtained by the
issuer, the Fund has obtained insurance with respect to the payment
of interest and principal of each bond. Such insurance is valid as
long as the bonds are held by the Fund.
All Portfolios: Municipal bonds and money market securities are
traded primarily in the over-the-counter markets and are valued at
the most recent bid price or yield equivalent as obtained from dealers
that make markets in such securities. Positions in futures contracts,
and options thereon, are valued at closing prices as of the close of
such exchanges. Assets for which market quotations are not readily
available are valued at fair value on a consistent basis using
methods determined in good faith by the Fund's Board of Directors,
including valuations furnished by a pricing service retained by the
Fund, which may utilize a matrix system for valuations.
(b) Derivative financial instruments--The Fund may engage in
various portfolio strategies to seek to increase its return by hedging
its portfolio against adverse movements in the debt markets. Losses
may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The National and Limited Maturity
Portfolios ("the Portfolios") may purchase or sell interest rate
futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and
at a specific price or yield. Upon entering into a contract, the
Portfolios deposit and maintain as collateral such initial margin
as required by the exchange on which the transaction is effected.
Pursuant to the contract, the Portfolios agree to receive from or
pay to the broker an amount of cash equal to the daily fluctuation
in value of the contract. Such receipts or payments are known as
variation margin and are recorded by the Portfolios as unrealized
gains or losses. When the contract is closed, the Portfolios record
a realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the
time it was closed.
(c) Income taxes--It is the Fund's policy to comply with the re-
quirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income
tax provision is required.
<PAGE>
(d) Security transactions and investment income--Security trans-
actions are recorded on the dates the transactions are entered into
(the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Prepaid registration fees--Prepaid registration fees are charged
to expenses as the related shares are issued.
(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates. Distributions in excess
of realized capital gains are due primarily to differing tax treatment,
for futures transactions and post-October losses.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement
with Fund Asset Management, L.P. ("FAM"). The general partner of
FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner. The Fund has also entered into a Distribution
Agreement and Distribution Plans with Merrill Lynch Funds
Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned sub-
sidary of Merrill Lynch Group, Inc.
FAM is responsible for the management of the Fund's portfolios
and provides the necessary personnel, facilities, equipment and
certain other services necessary to the operation of the Fund. For
such services, FAM receives at the end of each month a fee with
respect to each Portfolio at the annual rates set forth below which
are based upon the average daily value of the Fund's net assets.
Rate of Advisory Fee
Aggregate of Average Daily Limited
Net Assets of the Three Insured National Maturity
Combined Portfolios Portfolio Portfolio Portfolio
Not exceeding $250 million .40 % .50 % .40 %
In excess of $250 million
but not exceeding $400 million .375 .475 .375
In excess of $400 million
but not exceeding $550 million .375 .475 .35
In excess of $550 million
but not exceeding $1.5 billion .375 .475 .325
In excess of $1.5 billion .35 .475 .325
<PAGE>
The Investment Advisory Agreement obligates FAM to reimburse the
Fund to the extent that the Fund's expenses (excluding interest,
taxes, distribution fees, brokerage fees and commissions and extra-
ordinary items) exceed 2.5% of the Fund's first $30 million of average
daily net assets, 2.0% of the Fund's next $70 million of average daily
net assets, and 1.5% of the average daily net assets in excess thereof.
No fee payment will be made to FAM with respect to any Portfolio
during any fiscal year which will cause the expenses of such Portfolio
to exceed the pro rata expense limitation applicable to such Portfolio
at the time of such payment.
NOTES TO FINANCIAL STATEMENTS (continued)
Pursuant to the distribution plans ("the Distribution Plans") adopted
by the Fund in accordance with Rule 12b-1 under the Investment
Company Act of 1940, the Fund pays the Distributor ongoing account
maintenance and distribution fees. The Distributor voluntarily did
not collect any Class C distribution fees in the Limited Maturity
Portfolio until January 10, 1995. The fees are accrued daily and
paid monthly at annual rates based upon the average daily net
assets of the shares as follows:
Account Maintenance Feees Distribution Fees
Limited Limited
Insured National Maturity Insured National Maturity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Class B .25% .25% .15% .50% .50% .20%
Class C .25% .25% .15% .55% .55% .20%
Class D .25% .25% .10% -- -- --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the Dis-
tributor and MLPF&S for providing account maintenance services
to Class B, Class C and Class D shareholders. The ongoing distribu-
tion fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
<PAGE>
For the year ended June 30, 1995, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
Insured National Limited Maturity
Portfolio Portfolio Portfolio
Class A Shares:
MLFD $ 32,899 $ 21,667 $ 8,782
MLPF&S 316,110 214,728 70,749
Class D Shares:
MLFD 10,320 6,515 635
MLPF&S 102,688 114,904 11,439
MLPF&S received contingent deferred sales charges of $3,263,991
relating to transactions in Class B Shares, amounting to $1,840,608,
$1,036,339 and $387,044 in the Insured, National and Limited
Maturity Portfolios, respectively, and $11,241 relating to transactions
in Class C Shares, amounting to $5,361, $3,219 and $2,661 in the
Insured, National and Limited Maturity Portfolios, respectively.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, MLFD, MLFDS, MLPF&S, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for year ended June 30, 1995 were as follows:
Purchases Sales
Insured Portfolio $ 855,727,565 $1,063,660,912
National Portfolio 1,479,315,535 1,555,712,973
Limited Maturity Portfolio 257,607,605 487,390,324
<PAGE>
Net realized and unrealized gains (losses) as of June 30, 1995 were
as follows:
Realized Unrealized
Insured Portfolio Losses Gains
Long-term investments $ (37,976,407) $ 103,596,361
Short-term investments (108,866) 391,904
-------------- --------------
Total $ (38,085,273) $ 103,988,265
============== ==============
Realized Unrealized
National Portfolio Losses Gains
Long-term investments $ (65,507,359) $ 61,575,207
Short-term investments (502,522) 300,994
Financial future contracts
on options (11,302,594) --
-------------- --------------
Total $ (77,312,475) $ 61,876,201
============== ==============
Realized Unrealized
Limited Maturity Portfolio Losses Gains
Long-term investments $ (1,605,058) $ 2,574,173
Short-term investments (155,917) 249,094
-------------- --------------
Total $ (1,760,975) $ 2,823,267
============== ==============
As of June 30, 1995 net unrealized appreciation/depreciation for
Federal income tax purposes were as follows:
Gross Gross
Unrealized Unrealized Net Unrealized
Appreciation Depreciation Appreciation
Insured Portfolio $127,141,738 $ 23,153,473 $103,988,265
National Portfolio 67,325,412 5,449,211 61,876,201
Limited Maturity
Portfolio 3,787,995 964,728 2,823,267
<PAGE>
The aggregate cost of investments at June 30, 1995 for Federal
income tax purposes was $2,390,477,429 for the Insured Portfolio,
$1,409,585,111 for the National Portfolio, and $723,214,267 for the
Limited Maturity Portfolio.
4. Capital Share Transactions:
Net increase (decrease) on net assets derived from capital share
transactions for the years ended June 30, 1995 and June 30, 1994 was
$(293,039,051) and $(52,099,956), respectively, for the Insured
Portfolio; $(147,053,135) and $44,114,517, respectively, for the
National Portfolio and $(256,848,291) and $7,793,356, respectively,
for the Limited Maturity Portfolio.
Transactions in capital shares for each class were as follows:
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 17,244,995 $ 133,588,440
Shares issued to shareholders in
reinvestment of dividends and
distributions 5,993,847 46,501,518
------------- -------------
Total issued 23,238,842 180,089,958
Shares redeemed (54,299,693) (419,430,676)
------------- -------------
Net decrease (31,060,851) $(239,340,718)
============= =============
<PAGE>
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 33,131,876 $ 280,935,110
Shares issued to shareholders in
reinvestment of dividends and
distributions 9,445,296 80,198,475
------------- -------------
Total issued 42,577,172 361,133,585
Shares redeemed (53,818,184) (453,958,624)
------------- -------------
Net decrease (11,241,012) $ (92,825,039)
============= =============
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 16,066,095 $ 123,787,819
Shares issued to shareholders in
reinvestment of dividends and
distributions 2,730,539 21,164,361
------------- -------------
Total issued 18,796,634 144,952,180
Automatic conversion of shares (8,999) (69,008)
Shares redeemed (29,913,866) (230,944,682)
------------- -------------
Net decrease (11,126,231) $ (86,061,510)
============= =============
<PAGE>
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 21,671,550 $ 184,351,353
Shares issued to shareholders in
reinvestment of dividends and
distributions 4,290,552 36,402,265
------------- -------------
Total issued 25,962,102 220,753,618
Shares redeemed (21,552,384) (180,028,535)
------------- -------------
Net increase 4,409,718 $ 40,725,083
============= =============
Insured Portfolio
Class C Shares for the Period Dollar
October 21, 1994++ to June 30, 1995 Shares Amount
Shares sold 1,136,288 $ 8,839,400
Shares issued to shareholders in
reinvestment of dividends and
distributions 10,357 81,730
------------- -------------
Total issued 1,146,645 8,921,130
Shares redeemed (167,364) (1,318,478)
------------- -------------
Net increase 979,281 $ 7,602,652
============= =============
[FN]
++Commencement of Operations.
Insured Portfolio
Class D Shares for the Period Dollar
October 21, 1994++ to June 30, 1995 Shares Amount
Shares sold 5,713,054 $ 43,851,761
Automatic conversion of shares 8,988 69,008
Shares issued to shareholders in
reinvestment of dividends and
distributions 41,138 324,130
------------- -------------
Total issued 5,763,180 44,244,899
Shares redeemed (2,480,132) (19,484,374)
------------- -------------
Net increase 3,283,048 $ 24,760,525
============= =============
<PAGE>
[FN]
++Commencement of Operations.
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 3,950,018 $ 38,999,667
Shares issued to shareholders in
reinvestment of dividends and
distributions 4,615,676 44,866,990
------------- -------------
Total issued 8,565,694 83,866,657
Shares redeemed (22,289,533) (218,456,423)
------------- -------------
Net decrease (13,723,839) $(134,589,766)
============= =============
NOTES TO FIINANCIAL STATEMENTS (concluded)
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 8,490,083 $ 92,184,282
Shares issued to shareholders in
reinvestment of dividends and
distributions 5,189,718 56,058,472
------------- -------------
Total issued 13,679,801 148,242,754
Shares redeemed (17,141,264) (182,785,636)
------------- -------------
Net decrease (3,461,463) $ (34,542,882)
============= =============
<PAGE>
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 8,878,807 $ 87,072,076
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,612,526 15,637,171
------------- -------------
Total issued 10,491,333 102,709,247
Automatic conversion of shares (2,817) (44,533)
Shares redeemed (14,168,055) (139,040,527)
------------- -------------
Net decrease (3,679,539) $ (36,375,813)
============= =============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 14,847,862 $ 161,270,898
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,710,325 18,453,990
------------- -------------
Total issued 16,558,187 179,724,888
Shares redeemed (9,473,731) (101,067,489)
------------- -------------
Net increase 7,084,456 $ 78,657,399
============= =============
National Portfolio
Class C Shares for the Period Dollar
October 21, 1994++ to June 30, 1995 Shares Amount
Shares sold 658,356 $ 6,451,126
Shares issued to shareholders in
reinvestment of dividends and
distributions 5,456 53,279
------------- -------------
Total issued 663,812 6,504,405
Shares redeemed (145,672) (1,433,070)
------------- -------------
Net increase 518,140 $ 5,071,335
============= =============
[FN]
++Commencement of Operations.
<PAGE>
National Portfolio
Class D Shares for the Period Dollar
October 21, 1994++ to June 30, 1995 Shares Amount
Shares sold 5,900,638 $ 57,599,450
Automatic conversion of shares 2,818 44,533
Shares issued to shareholders in
reinvestment of dividends and
distributions 32,362 314,401
------------- -------------
Total issued 5,935,818 57,958,384
Shares redeemed (3,975,351) (39,117,275)
------------- -------------
Net increase 1,960,467 $ 18,841,109
============= =============
[FN]
++Commencement of Operations.
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 5,989,549 $ 58,950,508
Shares issued to shareholders in
reinvestment of dividends 1,619,597 15,934,105
------------- -------------
Total issued 7,609,146 74,884,613
Shares redeemed (33,605,286) (330,320,109)
------------- -------------
Net decrease (25,996,140) $(255,435,496)
============= =============
<PAGE>
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 37,619,639 $ 375,440,124
Shares issued to shareholders in
reinvestment of dividends and
distributions 1,983,800 19,748,994
------------- -------------
Total issued 39,603,439 395,189,118
Shares redeemed (44,144,662) (439,707,786)
------------- -------------
Net decrease (4,541,223) $ (44,518,668)
============= =============
Limited Maturity Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1995 Shares Amount
Shares sold 8,960,577 $ 88,112,911
Shares issued to shareholders in
reinvestment of dividends 364,664 3,587,539
------------- -------------
Total issued 9,325,241 91,700,450
Automatic conversion of shares (447) (4,387)
Shares redeemed (11,012,352) (108,188,416)
------------- -------------
Net decrease (1,687,558) $ (16,492,353)
============= =============
Limited Maturity Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1994 Shares Amount
Shares sold 10,622,252 $ 105,858,053
Shares issued to shareholders in
reinvestment of dividends and
distributions 284,833 2,836,330
------------- -------------
Total issued 10,907,085 108,694,383
Shares redeemed (5,671,375) (56,382,359)
------------- -------------
Net increase 5,235,710 $ 52,312,024
============= =============
<PAGE>
Limited Maturity Portfolio
Class C Shares for the Period
October 21, 1994++ to Dollar
June 30, 1995 Shares Amount
Shares sold 1,018,221 $ 10,034,099
Shares issued to shareholders in
reinvestment of dividends 3,599 35,474
------------- -------------
Total issued 1,021,820 10,069,573
Shares redeemed (622,129) (6,135,873)
------------- -------------
Net increase 399,691 $ 3,933,700
============= =============
[FN]
++Commencement of Operations.
Limited Maturity Portfolio
Class D Shares for the Period
October 21, 1994++ to Dollar
June 30, 1995 Shares Amount
Shares sold 2,889,627 $ 28,392,515
Automatic conversion of shares 447 4,387
Shares issued to shareholders in
reinvestment of dividends 12,056 118,733
------------- -------------
Total issued 2,902,130 28,515,635
Shares redeemed (1,767,911) (17,369,777)
------------- -------------
Net increase 1,134,219 $ 11,145,858
============= =============
[FN]
++Commencement of Operations.
5. Capital Loss Carryforward:
At June 30, 1995, the Fund's Portfolios had a capital loss carry-
forward as follows: Approximately $38,085,000 in the Insured
Portfolio, all of which expires in 2003; approximately $37,909,000
in the National Portfolio, all of which expires in 2003; and approxi-
mately $6,271,000 in the Limited Maturity Portfolio, of which
$1,416,000 expires in 1997, $2,787,000 expires in 1998, $22,000
expires in 1999, $25,000 expires in 2002 and $2,021,000 expires in
2003. These will be available to offset like amounts of any future
taxable gains.
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Municipal Bond Fund, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the Insured, National and
Limited Maturity Portfolios of Merrill Lynch Municipal Bond Fund, Inc.
as of June 30, 1995, the related statements of operations for the year
then ended and changes in net assets for each of the years in the two-
year period then ended, and the financial highlights for each of the
years in the five-year period then ended. These financial statements
and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and the financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned at June 30, 1995, by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by manage-
ment, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of the
Insured, National and Limited Maturity Portfolios of Merrill Lynch
Municipal Bond Fund, Inc. as of June 30, 1995, the results of their
operations, the changes in their net assets, and the financial highlights
for the respective stated periods in conformity with generally accepted
accounting principles.
<PAGE>
Deloitte & Touche LLP
Princeton, New Jersey
August 15, 1995
</AUDIT-REPORT>
</TEXT>
</DOCUMENT>
</IMS-DOCUMENT>
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