MERRILL LYNCH MUNICIPAL BOND FUND, INC.
Supplement dated April 1, 1996 to the
Prospectus dated October 31, 1995
As of the date hereof, the Insured Portfolio may engage
in transactions in financial futures contracts for hedging
purposes. Accordingly, the disclosure set forth in the Prospectus
is modified as follows:
The third paragraph of "INVESTMENT OBJECTIVE AND POLICIES" on
page 19 of the Prospectus is deleted and replaced by the following:
Certain instruments in which the Fund may invest may be
characterized as derivative instruments. The Insured Portfolio,
the National Portfolio and the Limited Maturity Portfolio are
authorized to engage in transactions in financial futures contracts
for hedging purposes. For a more complete description of futures
transactions, see "Financial Futures Contracts and Derivatives"
below and the Statement of Additional Information.
The first paragraph of "INVESTMENT POLICIES OF THE
PORTFOLIOS--Financial Futures Contracts and Derivatives" on page 25
of the Prospectus is deleted and replaced by the following:
The Insured Portfolio, the National Portfolio and the Limited
Maturity Portfolio (collectively, the "Portfolios") are authorized
to purchase and sell certain financial futures contracts ("futures
contracts") and options on such futures contracts solely for the
purpose of hedging their investments in Municipal Bonds against
declines in value and to hedge against increases in the cost of
securities the Portfolios intend to purchase. A financial futures
contract obligates the seller of a contract to deliver and the
purchaser of a contract to take delivery of the type of financial
instrument covered by the contract or, in the case of index-based
futures contracts, to make and accept a cash settlement, at a
specific future time for a specified price. A sale of financial
futures contracts may provide a hedge against a decline in the
value of portfolio securities because such depreciation may be
offset, in whole or in part, by an increase in the value of the
position in the futures contracts. A purchase of financial futures
contracts may provide a hedge against an increase in the cost of
securities intended to be purchased, because such appreciation may
be offset, in whole or in part, by an increase in the value of the
position in the futures contracts.
The fifth paragraph of "INVESTMENT POLICIES OF THE
PORTFOLIOS--Financial Futures Contracts and Derivatives" on page 27
of the Prospectus is deleted and replaced by the following:
When a Portfolio purchases a futures contract, it will
maintain an amount of cash, cash equivalents or commercial paper or
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other short-term high grade fixed income securities in a segregated
account with the Fund's custodian, so that the amount so segregated
plus the amount of initial margin and option premiums held in the
account of its broker equals the value represented by the futures
contract, as reflected by its daily settlement price, thereby
ensuring that the use of such futures contract is unleveraged. It
is not anticipated that transactions in futures contracts will have
the effect of increasing portfolio turnover.
Code # 10051-1095 ALL-1
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