Bonds and other securities
that are issued by states, cities, and other municipalities make up
national municipal bond funds.
The underlying bonds and securities
may be from all over the country, or they may be geographically centered. Some of these bond funds invest only in high-quality bonds,
while others will invest in lower-quality, or junk, bonds. The bonds
may have a variety of maturities. The income from these funds is taxfree for federal income tax purposes