are second only to those investing in government securities. In addition, the interest income earned form these securities are exempt from federal taxes and in many cases from state taxes as well.

Below we will share with you the 5 highest yielding Zacks #1 ranked municipal bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all municipal bond funds, then click here.

Mutual Fund	Yield
Invesco Van Kampen High Yield Mutual A	6.73%
Oppenheimer AMT-Free Municipals A	6.68%
Invesco High Income Municipal A	6.00%
Blackrock High Yield Municipal A	5.33%
American Century High Yield Municipal	5.07%

Invesco Van Kampen High Yield Municipal A (ACTHX) invests a large proportion of its assets in municipal securities. The fund focuses on acquiring instruments of medium and low quality. The municipal bond mutual fund returned 6.57% in the last one year period.

The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.76% compared to a category average of 1.00%.

Oppenheimer AMT-Free Municipals A (OPTAX) seeks high current income free from federal income taxes. The fund primarily invests in municipal securities exempt from federal individual income tax. At least 25% of its assets are used to purchase securities below investment grade. The municipal bond mutual fund has a ten year annualized return of 2.13%.

The Fund Manager is Daniel G. Loughran and he has managed this municipal bond mutual fund since 2002.

Invesco High Income Municipal A (NASDAQ:AHMAX - News) invests in a diversified portfolio of municipal securities. The majority of the fund's assets are invested in municipal bond securities that are rated BBB/Baa or lower by Standard & Poor's Ratings Services or other nationally renowned rating firms. The municipal bond mutual fund returned 6.04% in the last one year period.

As of September 2010, this municipal bond mutual fund held 620 issues, with 0.91% of its total assets invested in Illinois Fin Auth 6.875%.

BlackRock High Yield Municipal A (MDYHX) seeks high income exempt from federal income taxes. The fund invests primarily in municipal bonds. At least 65$ of its assets are utilized to purchase bonds of medium to low quality. The municipal bond mutual fund has a three year annualized return of 13.54%.

The municipal bond mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.99% compared to a category average of 1.00%.

American Century High-Yield Municipal (NASDAQ:ABHYX - News) invests a large portion of its assets in municipal securities, interest payments from which are not subject to federal income taxes. The fund focuses on acquiring high yield securities. The municipal bond mutual fund is non-diversified and returned 7.24% over the last one year period.

The Fund Manager is Steven Permut and he has managed this municipal bond mutual fund since 1998.

To view the Zacks Rank and past performance of all municipal bond funds, then click here.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.

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• Read the analyst report on ACTHX