• Municipal bonds and closed-end funds, or CEFs, are a popular investment combination. The CEF structure allow funds to leverage their assets for greater investment payouts, and many single-state municipal bond closed-end funds are available to maximize the tax-free income for investors in high-income-tax states. CEF shares are purchased on the major stock exchanges.
  
  

Nuveen Select Maturities Muni Fund

• The Nuveen Select Maturities Muni Fund, symbol NIM, has been the best performing, conservative, national municipal bond CEF. National funds can hold munis from any state and this fund does not use any leverage to enhance the dividend and also increase the risk. Through March 2010 the fund had a 3-year return on net asset value, or NAV, of 4.65%, and the current dividend yield was 4.07%.
  
  

Western Asset Managed Muni Fund

• The Western Asset Managed Muni Fund, ticker MMU, has been the best performing leveraged or aggressive national muni CEF. The 3-year NAV return was 7.01%, and the current yield in March 2010 was 6.28%. Leveraged funds work best when short-term rates are low, as they were in 2009. Rising short-term rates would cause trouble for this type of fund.
  
  

Nuveen California Quality Income Municipal Fund

• The Nuveen California Quality Income Municipal Fund, symbol NUC, has been the best performing California-specific municipal CEF for the three years up until March 2010. The fund had an annual NAV gain of 3.8% and the current yield was 6.52%. A California-only muni CEF pays interest that is exempt from California income tax, as well as federal income tax.
  
  

Nuveen New York Performance Plus Municipal Fund

• The Nuveen New York Performance Plus Municipal Fund, ticker NNP, takes the 3-year return honors for funds that only hold New York state municipal debt. The NAV average return for the 3 years was 4.7%, and the distribution yield was 5.66% in March 2010. Interest income from this fund will be exempt from both New York state and federal income taxes.
  
  

Neuberger Berman Intermediate Municipal Fund

• The Neuberger Berman Intermediate Municipal Fund, symbol NBH, is for municipal investors worried about an increase in long-term rates. Any fund holding intermediate-term bonds will not fall in value as much as funds holding long-term bonds if interest rates increase, especially long-term rates. This fund has had a 3-year NAV return of 4.0%, and the current distribution yield was 5.23% in March 2010.