MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
[FUND LOGO]
STRATEGIC
Performance
Semi-Annual Report
December 31, 1997
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. Statements and other information herein
are as dated and are subject to change.
Merrill Lynch
Municipal Bond Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #10249 -- 12/97
[RECYCLE LOGO]
Printed on post-consumer recycled paper
MERRILL LYNCH MUNICIPAL BOND FUND, INC.
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
Peter J. Hayes, Vice President
Kenneth A. Jacob, Vice President
Walter C. O'Connor, Vice President
Gerald M. Richard, Treasurer
Barbara G. Fraser, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, NY 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1997
DEAR SHAREHOLDER
The Municipal Market Environment
During the three months ended December 31, 1997, long-term fixed-
income bond yields declined to their lowest levels in nearly four
years. A continued positive domestic inflationary environment provided
much of the support for the bond market's recent improvement through
early October 1997. However, during the last two months of 1997, the
turmoil in the world's financial markets, particularly in the Asian
equity market, has produced major declines in bond yields. Since
October 31, 1997, the US Treasury bond market has been the beneficiary
of a significant flight to quality mainly by foreign investors whose
own domestic markets have remained very volatile. Prior to the initial
decline in the Asian equity markets, yields on US Treasury and
tax-exempt bonds had been little changed. Subsequently, long-term US
Treasury bond yields have declined almost 50 basis points (0.50%) over
the last three months to end the year at 5.91%. Tax-exempt revenue
bond yields, however, have exhibited lesser declines. As measured by
the Bond Buyer Revenue Bond Index, long-term municipal bond yields
declined over 20 basis points to 5.40%, their lowest level since
October 1993.
The increase in new municipal bond issuance over the past six months
has also prevented the tax-exempt bond market from more closely
mirroring the yield declines exhibited by its taxable counterpart.
During the last six months, over $120 billion in new long-term
municipal bonds were underwritten, an increase of over 30% compared to
the same period in 1996. As interest rates have continued to decline
in recent months, new tax-exempt bond issuance has remained strong.
During the December quarter, almost $65 million in long-term municipal
securities were issued, an increase of almost 20% versus the quarter
ended December 31, 1996. During the month of December, over $21
billion in new long-term municipal securities were underwritten. This
represented an increase of 9% versus December 1996 levels and the
greatest December issuance since 1993.
In our opinion, the recent correction in world equity markets has
enhanced the near-term prospects for continued low, if not declining,
interest rates in the United States. It is likely that the recent
correction will result in slower US domestic growth in the coming
months. This decline is likely to be generated in part by reduced US
export growth. Additionally, some decline in consumer spending can
also be expected in response to reduced consumer confidence. Perhaps
more importantly, it is likely that, barring a dramatic and unexpected
resurgence in domestic growth, the Federal Reserve Board will be
unwilling to raise interest rates until the full impact of the equity
market's corrections can be established.
All these factors suggest that over the near term, interest rates,
including tax-exempt bond yields, are unlikely to rise by any
appreciable amount. It is probable, however, that municipal bond
yields will remain under some relative pressure as a result of
continued strong new-issue supply. However, the recent pace of
municipal bond issuance is likely to be unsustainable. Continued
increases in bond issuance will require lower and lower tax-exempt
bond yields to generate the economic savings necessary for additional
municipal bond refinancings. Preliminary estimates of 1998 total
municipal bond issuance are presently in the $195 billion -- $220
billion range. These estimates suggest that recent supply pressures
are likely to abate somewhat next year, or at least, exert only
minimal technical pressures during 1998. Additionally, municipal bond
investors are expected to receive approximately $23 billion in January
coupon payments, bond maturities and proceeds from early redemptions.
Such assets should serve to intensify investor demand in the near
future. With tax-exempt bond yields at already attractive yield ratios
relative to US Treasury bonds (approximately 90% at the end of
December) any further pressure on the municipal market may well
represent an attractive investment opportunity.
Portfolio Strategy
Insured Portfolio and National
Portfolio
A combination of several positive technical and economic factors have
contributed to a scenario where the fixed-income markets, and the tax-
exempt market in particular, have reached historically low levels of
nominal interest rates. Over the past six months, we held our
portfolio strategy for the Insured and National Portfolios of
maintaining a fully invested posture and using any price declines to
restructure the Portfolios more aggressively. We sought to maintain a
high level of current yield and to provide well-above industry average
tax-exempt income to shareholders.
At current interest rate levels, we expect to sell some of the
Portfolios' more aggressively structured, discounted securities, and
use the proceeds to purchase more income-oriented bonds. Although the
fundamental economic backdrop for the marketplace is still quite
supportive, we expect the municipal market to participate only
marginally in any further price gains. Therefore, we will concentrate
on enhancing the Portfolios' current returns through diligent research
to uncover higher-yielding securities within the credit quality limits
of each Portfolio as detailed in the Fund's prospectus.
Limited Maturity Portfolio
We continued to aggressively position the Limited Maturity Portfolio,
especially in view of the fact that the Asian financial crisis would
most likely prevent the Federal Reserve Board from raising interest
rates. The Portfolio maintained cash in the 1% -- 2% range for most of
the December quarter. The average life of the Portfolio was maintained
at approximately 1.8 years, close to its permissible maximum of 2
years. Purchases were concentrated in the two-year -- four-year range
to allow for maximum capital appreciation, while the focus was kept on
higher-coupon bonds in order to seek to provide a high level of
current income to shareholders. We anticipate maintaining this
strategy in the coming months as fears of slower economic growth and
deflation keep Federal Reserve Board policy on hold, with a possible
bias for monetary policy easing in the future.
In Conclusion
We appreciate your ongoing interest in the Merrill Lynch Municipal
Bond Fund, Inc., and we look forward to serving your investment needs
and objectives in the months and years to come.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/KENNETH A. JACOB
Kenneth A. Jacob
Vice President and Portfolio Manager
/S/PETER J. HAYES
Peter J. Hayes
Vice President and Portfolio Manager
/S/WALTER C. O'CONNOR
Walter C. O'Connor
Vice President and Portfolio Manager
February 13, 1998
We are pleased to announce that Walter C. O'Connor is responsible for
the day-to-day management of National Portfolio of Merrill Lynch
Municipal Bond Fund, Inc. Mr. O'Connor has been a Director of Merrill
Lynch Asset Management, L.P. (an affiliate of the Investment Adviser)
since 1997; Vice President since 1993; and Assistant Vice President
from 1991 to 1993.
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill
Lynch Select PricingSM System, which offers four pricing alternatives:
[bullet] Class A Shares incur a maximum initial sales charge (front-
end load) of 4% and bear no ongoing distribution or account
maintenance 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.
[bullet] 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
maximum 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 approximately 10
years. (There is no initial sales charge for automatic share
conversions.)
[bullet] Class C Shares are subject to a distribution fee of 0.55% and
an account maintenance fee of 0.25% for Insured and National
Portfolios. 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
redeemed within one year of purchase.
[bullet] 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).
None of the past results shown should be considered a representation
of future performance. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of all
dividends and capital gains distributions at net asset value on the
payable date. 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.
<TABLE>
<CAPTION>
PERFORMANCE DATA
Performance
Summary --
Class A Shares
Beginning/Ending Net Asset Value Dividends Paid* % Change**
Period Limited Limited Limited
Covered Insured National Maturity Insured National Maturity Insured National Maturity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/21/77 -- 2/31/77 $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 - 0.77 + 1.17% +0.86%
1980 8.39/6.86 9.60/8.54 9.88/9.74 0.60 0.79 0.64 -11.46 - 3.00 +5.14
1981 6.86/5.66 8.54/7.34 9.74/9.78 0.65 0.90 0.77 - 8.49 - 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 +12.20 +14.04 +5.57
1984 6.97/6.88 9.01/8.96 9.76/9.74 0.65 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
1995 7.43/8.25 9.40/10.44 9.77/9.98 0.45 0.60 0.38 +17.43 +17.83 +6.13
1996 8.25/8.07 10.44/10.33 9.98/9.94 0.45 0.60 0.40 + 3.43 + 4.93 +3.72
1997 8.07/8.30 10.33/10.67 9.94/9.96 0.45(8) 0.60 0.39 + 8.76 + 9.35 +4.21
Total $11.89 $14.77 $10.03
Cumulative total return as of 12/31/97: +297.97%** +410.16%** +178.88%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charges; results would be lower if sales charge was included.
+ For National and Limited Maturity Portfolios, period covered is from 11/02/79 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.
(8) Includes capital gains of $0.001 for the Insured Portfolio.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class B Shares
Beginning/Ending Net Asset Value Dividends Paid* % Change**
Period Limited Limited Limited
Covered Insured National Maturity*** Insured National Maturity*** Insured National Maturity***
<S> <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
1995 7.43/8.24 9.39/10.44 9.77/9.98 0.39 0.52 0.34 +16.41 +17.07 +5.75
1996 8.24/8.07 10.44/10.33 9.98/9.94 0.39 0.52 0.37 + 2.77 + 4.14 +3.35
1997 8.07/8.30 10.33/10.67 9.94/9.97 0.39(6) 0.52 0.36 + 7.94 + 8.53 +3.95
Total $4.61 $6.17 $1.82
Cumulative total return as of 12/31/97: +88.15%** +91.04%** +20.53%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charges; results would be lower if sales charge was deducted.
*** Limited Maturity Portfolio commenced operations on 11/02/92.
(1) Includes capital gains of $0.064 for the Insured Portfolio.
(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.
(6) Includes capital gains of $0.001 for the Insured Portfolio.
</TABLE>
<TABLE>
<CAPTION>
Performance
Summary --
Class C Shares
Beginning/Ending Net Asset Value Dividends Paid* % Change**
Period Limited Limited Limited
Covered Insured National Maturity Insured National Maturity Insured National Maturity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/21/94 -- 12/31/94 $7.68/7.43 $9.85/9.40 $9.83/9.77 $0.22(1) $0.31(1) $0.07 - 0.41% - 1.39% +0.11%
1995 7.43/8.25 9.40/10.44 9.77/10.00 0.38 0.52 0.34 +16.50 +16.89 +5.92
1996 8.25/8.07 10.44/10.33 10.00/9.91 0.38 0.52 0.36 + 2.59 + 4.09 +2.80
1997 8.07/8.30 10.33/10.67 9.91/9.93 0.39(2) 0.51 0.35 + 7.89 + 8.47 +3.83
Total $1.37 $1.86 $1.12
Cumulative total return as of 12/31/97: +28.41%** +30.15%** +13.19%**
* Figures may include short-term capital gains distributions.
** Figures do not reflect deduction of any sales charges; results would be lower if sales charge was deducted.
(1) Includes capital gains of $0.141 and $0.209 for the Insured and National Portfolios, respectively.
(2) Includes capital gains of $0.001 for the Insured Portfolio.
</TABLE>
<TABLE>
<CAPTION>
Summary --
Class D Shares
Beginning/Ending Net Asset Value Dividends Paid* % Change**
Period Limited Limited Limited
Covered Insured National Maturity Insured National Maturity Insured National Maturity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/21/94 -- 12/31/94 $7.68/7.43 $9.85/9.40 $9.83/9.77 $0.23(1) $0.32(1) $0.07 - 0.30% - 1.29% +0.13%
1995 7.43/8.25 9.40/10.45 9.77/9.98 0.43 0.57 0.37 +17.14 +17.65 +6.03
1996 8.25/8.07 10.45/10.34 9.98/9.94 0.43 0.58 0.39 + 3.17 + 4.67 +3.62
1997 8.07/8.30 10.34/10.67 9.94/9.97 0.43(2) 0.57 0.38 + 8.49 + 8.98 +4.21
Total $1.52 $2.04 $1.21
Cumulative total return as of 12/31/97: +30.72%** +32.47%** +14.64%**
* Figures may include short-term capital gains distributions.
** Figures do not include sales charges; results would be lower if sales charge was included.
(1) Includes capital gains of $0.141 and $0.209 for the Insured and National Portfolios, respectively.
(2) Includes capital gains of $0.001 for the Insured Portfolio.
</TABLE>
Average Annual
Total Returns
Insured Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/97 +8.76% +4.41%
Five Years Ended 12/31/97 +6.80 +5.94
Ten Years Ended 12/31/97 +8.25 +7.81
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/97 +7.94% +3.94%
Five Years Ended 12/31/97 +6.00 +6.00
Inception (10/21/88) through
12/31/97 +7.12 +7.12
* Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
** Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 12/31/97 +7.89% +6.89%
Inception (10/21/94) through
12/31/97 +8.14 +8.14
* 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**
Year Ended 12/31/97 +8.49% +4.15%
Inception (10/21/94) through
12/31/97 +8.75 +7.37
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
National Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/97 +9.35% +4.98%
Five Years Ended 12/31/97 +7.30 +6.43
Ten Years Ended 12/31/97 +8.49 +8.05
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/97 +8.53% +4.53%
Five Years Ended 12/31/97 +6.50 +6.50
Inception (10/21/88) through
12/31/97 +7.29 +7.29
* Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
** Assuming payments of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 12/31/97 +8.47% +7.47%
Inception (10/21/94) through
12/31/97 +8.60 +8.60
* 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**
Year Ended 12/31/97 +8.98% +4.62%
Inception (10/21/94) through
12/31/97 +9.20 +7.81
* Maximum sales charge is 4%.
** Assuming maximum sales charge.
Limited Maturity Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/97 +4.21% +3.17%
Five Years Ended 12/31/97 +3.93 +3.72
Ten Years Ended 12/31/97 +5.15 +5.05
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/97 +3.95% +2.95%
Five Years Ended 12/31/97 +3.59 +3.59
Inception (11/2/92) through
12/31/97 +3.68 +3.68
* Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
** Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 12/31/97 +3.83% +2.83%
Inception (10/21/94) through
12/31/97 +3.95 +3.95
* 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**
Year Ended 12/31/97 +4.21% +3.17%
Inception (10/21/94) through
12/31/97 +4.37 +4.04
* Maximum sales charge is 1%.
** Assuming maximum sales charge.
<TABLE>
<CAPTION>
Recent
Performance
Results*
12 Month 3 Month Standardized
12/31/97 9/30/97 12/31/96 % Change % Change 30-Day Yield
<S> <C> <C> <C> <C> <C> <C>
Insured Portfolio Class A Shares $8.30 $8.19 $8.07 +2.86%(1) +1.35%(1) 4.57%
Insured Portfolio Class B Shares 8.30 8.19 8.07 +2.86(1) +1.35(1) 4.00
Insured Portfolio Class C Shares 8.30 8.19 8.07 +2.86(1) +1.35(1) 3.95
Insured Portfolio Class D Shares 8.30 8.19 8.07 +2.86(1) +1.35(1) 4.33
National Portfolio Class A Shares 10.67 10.54 10.33 +3.29 +1.23 4.57
National Portfolio Class B Shares 10.67 10.54 10.33 +3.29 +1.23 4.00
National Portfolio Class C Shares 10.67 10.54 10.33 +3.29 +1.23 3.95
National Portfolio Class D Shares 10.67 10.55 10.34 +3.19 +1.14 4.34
Limited Maturity Portfolio Class A Shares 9.96 9.95 9.94 +0.20 +0.10 3.67
Limited Maturity Portfolio Class B Shares 9.97 9.95 9.94 +0.30 +0.20 3.35
Limited Maturity Portfolio Class C Shares 9.93 9.93 9.91 +0.20 +0.00 3.35
Limited Maturity Portfolio Class D Shares 9.97 9.96 9.94 +0.30 +0.10 3.57
Insured Portfolio Class A Shares -- Total Return +8.76(2) +2.87(3)
Insured Portfolio Class B Shares -- Total Return +7.94(4) +2.68(5)
Insured Portfolio Class C Shares -- Total Return +7.89(6) +2.67(7)
Insured Portfolio Class D Shares -- Total Return +8.49(8) +2.81(9)
National Portfolio Class A Shares -- Total Return +9.35(10) +2.68(11)
National Portfolio Class B Shares -- Total Return +8.53(12) +2.48(13)
National Portfolio Class C Shares -- Total Return +8.47(14) +2.47(15)
National Portfolio Class D Shares -- Total Return +8.98(16) +2.52(17)
Limited Maturity Portfolio Class A Shares -- Total Return +4.21(18) +1.10(19)
Limited Maturity Portfolio Class B Shares -- Total Return +3.95(20) +1.11(21)
Limited Maturity Portfolio Class C Shares -- Total Return +3.83(22) +0.90(21)
Limited Maturity Portfolio Class D Shares -- Total Return +4.21(23) +1.07(24)
* Investment results shown do not reflect sales charges; results shown would be lower if a sales charge was included.
(1) Percent change includes reinvestment of $0.001 per share capital gains distributions.
(2) Percent change includes reinvestment of $0.453 per share ordinary income dividends and $0.001 per share capital gains
distributions.
(3) Percent change includes reinvestment of $0.133 per share ordinary income dividends and $0.001 per share capital gains
distributions.
(4) Percent change includes reinvestment of $0.391 per share ordinary income dividends and $0.001 per share capital gains
distributions.
(5) Percent change includes reinvestment of $0.116 per share ordinary income dividends and $0.001 per share capital gains
distributions.
(6) Percent change includes reinvestment of $0.387 per share ordinary income dividends and $0.001 per share capital gains
distributions.
(7) Percent change includes reinvestment of $0.115 per share ordinary income dividends and $0.001 per share capital gains
distributions.
(8) Percent change includes reinvestment of $0.433 per share ordinary income dividends and $0.001 per share capital gains
distributions.
(9) Percent change includes reinvestment of $0.127 per share ordinary income dividends and $0.001 per share capital gains
distributions.
(10) Percent change includes reinvestment of $0.596 per share ordinary income dividends.
(11) Percent change includes reinvestment of $0.164 per share ordinary income dividends.
(12) Percent change includes reinvestment of $0.516 per share ordinary income dividends.
(13) Percent change includes reinvestment of $0.142 per share ordinary income dividends.
(14) Percent change includes reinvestment of $0.511 per share ordinary income dividends.
(15) Percent change includes reinvestment of $0.140 per share ordinary income dividends.
(16) Percent change includes reinvestment of $0.570 per share ordinary income dividends.
(17) Percent change includes reinvestment of $0.157 per share ordinary income dividends.
(18) Percent change includes reinvestment of $0.391 per share ordinary income dividends.
(19) Percent change includes reinvestment of $0.107 per share ordinary income dividends.
(20) Percent change includes reinvestment of $0.355 per share ordinary income dividends.
(21) Percent change includes reinvestment of $0.097 per share ordinary income dividends.
(22) Percent change includes reinvestment of $0.353 per share ordinary income dividends.
(23) Percent change includes reinvestment of $0.381 per share ordinary income dividends.
(24) Percent change includes reinvestment of $0.105 per share ordinary income dividends.
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C> <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) $1,821
Jefferson County, Alabama, Sewer Revenue
Bonds (h):
AAA Aaa 3,500 Refunding, Series A, 5.375% due 2/01/2027 3,529
AAA Aaa 4,000 Series D, 5.75% due 2/01/2022 4,227
AAA Aaa 1,250 Mobile, Alabama, GO, Refunding and Capital
Improvement Bonds, 10.875% due 11/01/2007 (c) 1,772
Alaska -- 0.8% Kenai Peninsula Borough, Alaska, GO (b):
AAA Aaa 6,450 8.40% due 1/01/2000 6,991
AAA Aaa 8,460 8.40% due 1/01/2001 9,481
Arizona -- 1.2% AAA Aaa 6,750 Arizona State Municipal Financing Program, COP,
Series 34, 7.25% due 8/01/2009 (g) 8,404
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) 4,176
AAA Aaa 4,000 Maricopa County, Arizona, IDA, Hospital Facility
Revenue Refunding Bonds (Samaritan Health
Services), Series A, 7% due 12/01/2013 (e) 4,358
AAA Aaa 7,000 Maricopa County, Arizona, Unified School District
No. 097 (Deer Valley Project 1986), UT, Series E,
10% due 7/01/2000 (h) 7,992
California -- 1.1% AAA Aaa 8,800 Northern California Power Agency, Multiple Capital
Facilities Revenue Bonds, RIB, 8.756% due 9/02/2025
(d) (e) 10,659
AAA Aaa 5,900 Oakland, California, Redevelopment Agency, Refunding
Bonds, INFLOS, 8.067% due 9/01/2019 (d) (e) 6,630
AAA Aaa 5,000 University of California Revenue Bonds (Multiple
Purpose Projects), Series D, 6.375% due 9/01/2002
(a) (e) 5,563
Colorado -- 2.7% Denver, Colorado, City and County Airport, Revenue
Bonds (e):
AAA Aaa 25,790 Refunding, Series E, 5.25% due 11/15/2023 25,788
AAA Aaa 11,325 Series A, 5.70% due 11/15/2025 11,900
AAA Aaa 590 La Plata County, Colorado, School District Number
9 (R Durango), UT, 6.60% due 11/01/2017 (h) 649
Municipal Subdistrict Northern Colorado, Water
Conservancy District, Revenue Refunding Bonds, Series
F (b):
AAA Aaa 4,470 6.15% due 12/01/2005 5,030
AAA Aaa 4,250 6.25% due 12/01/2006 4,852
AAA Aaa 5,055 6.35% due 12/01/2007 5,849
Florida -- 2.1% AAA Aaa 5,000 Florida State Division, Board of Finance, Department
of General Services Revenue Bonds (Department of
Natural Resourse Preservation), Series 2000-A, 6.75%
due 7/01/2001 (a) (b) 5,522
AAA Aaa 500 Jacksonville, Florida, Health Facilities Authority,
Hospital Revenue Refunding and Improvement Bonds
(Baptist Medical Center Project), 11.50% due
10/01/2012 (c) 850
AAA Aaa 10,000 Lee County, Florida, Hospital Board of Directors,
Hospital Revenue Bonds, INFLOS, 9.266% due 4/01/2001
(a) (d) (e) 11,875
AAA Aaa 3,950 Orange County, Florida, HFA, Mortgage Revenue
Refunding Bonds, Series A, 7.60% due 1/01/2024 (h)
(j) 4,236
AAA Aaa 5,790 Orange County, Florida, Health Facilities Authority
Revenue Bonds (Hospital -- Orlando Regional Healthcare),
Series A, 6.25% due 10/01/2006 (e) 6,581
AAA Aaa 2,000 Port Saint Lucie, Florida, Special Assignment Revenue
Bonds, Assessment District No.1, Phase II, 5.40% due
10/01/2016 (e) 2,052
AAA Aaa 4,900 Saint John's River, Florida, Water Management District,
Revenue Refunding Bonds (Land Acquisition), 5.125%
due 7/01/2016 (i) 4,917
AAA Aaa 2,850 South Broward Hospital District, Florida, Hospital
Revenue Bonds, RIB, Series C, 9.237% due 5/01/2001 (a)
(b) (d) 3,399
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) 3,291
Georgia -- 2.0% AAA Aaa 4,000 Chatham County, Georgia, School District, UT, 6.75%
due 8/01/2003 (a) (e) 4,555
AAA Aaa 20,000 Georgia Municipal Electric Authority, Power Revenue
Bonds, Series EE, 7% due 1/01/2025 (b) 25,927
AAA Aaa 9,000 Georgia Municipal Electric Authority, Special
Obligation Bonds (Fifth Crossover Series, Project One),
6.40% due 1/01/2013 (b) 10,454
Hawaii -- 3.7% Hawaii State Airport System Revenue Bonds:
AAA Aaa 21,795 AMT, 7.30% due 7/01/2020 (b) 23,586
AAA Aaa 23,200 AMT, Second Series, 7.50% due 7/01/2020 (h) 25,215
AAA Aaa 10,000 Refunding, Series 1993, 6.45% due 7/01/2013 (e) 11,046
AAA Aaa 5,000 Hawaii State Department of Budget and Finance, Special
Purpose Mortgage Revenue Bonds (Hawaiian Electric
Company), AMT, Series C, 7.375% due 12/01/2020 (e) 5,469
Hawaii State, GO (h):
AAA Aaa 2,000 Series CN, 5.25% due 3/01/2017 2,018
AAA Aaa 2,920 UT, Series CH, 6% due 11/01/2005 3,237
AAA Aaa 4,500 Hawaii State Harbor Capital Improvement Revenue Bonds,
AMT, 7% due 7/01/2017 (e) 4,838
Illinois -- 15.8% AAA Aaa 32,990 Chicago, Illinois, Board of Education (Chicago School
Reform), UT, Series A, 5.25% due 12/01/2027 (b) 32,841
AAA Aaa 28,200 Chicago, Illinois, GO, Series A-1, 5.125% due
1/01/2025 (b) 27,734
AAA Aaa 2,000 Chicago, Illinois, O'Hare International Airport
Revenue Bonds (Passenger Facilities Charge), Series A,
5.625% due 1/01/2015 (b) 2,097
AAA Aaa 52,085 Chicago, Illinois, Refunding, Series B, 5.125% due
1/01/2025 (h) 51,225
AAA Aaa 24,000 Chicago, Illinois, Wastewater Transmission Revenue
Refunding Bonds, 5.125% due 1/01/2025 (h) 23,604
Chicago, Illinois, Water Revenue Bonds (h):
AAA Aaa 3,000 5% due 11/01/2015 2,959
AAA Aaa 12,595 5% due 11/01/2025 12,226
AAA Aaa 25,850 Refunding, 5.25% due 11/01/2027 25,732
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 3,250 (Elmhurst Memorial Hospital), 6.625% due 1/01/2022 (h) 3,530
AAA Aaa 2,000 (Methodist Health Project), RIB, 9.365% due 5/01/2021
(b) (d) 2,365
AAA Aaa 28,900 Refunding (Sinai Health System), 6% due 2/15/2024 (b)
(l) 31,029
AAA Aaa 10,000 (Rush Presbyterian -- Saint Luke's Medical Center),
INFLOS, 9.615% due 10/01/2024 (d) (e) 11,925
AAA Aaa 3,000 Illinois State, GO, 5.75% due 5/01/2021 (e) 3,162
Metropolitan Pier and Exposition Authority, Illinois,
Dedicated State Tax Revenue Bonds (McCormick Place
Expansion Project):
AAA Aaa 6,070 Refunding, Series A, 6% due 12/15/2006 (b) 6,783
AAA Aaa 10,000 Refunding, Series A, 6.10% due 12/15/2015 (e) (k) 4,006
AAA Aaa 8,330 Refunding, Series A, 6.10% due 12/15/2016 (e) (k) 3,148
AAA Aaa 13,550 Refunding, Series A, 6.03% due 12/15/2022 (e) (k) 3,709
AAA Aaa 49,575 Refunding, Series A, 6.09% due 12/15/2023 (e) (k) 12,883
AAA Aaa 14,305 Refunding, Series A, 6.24% due 6/15/2024 (e) (k) 3,622
AAA Aaa 6,260 Refunding, Series A, 6.02% due 6/15/2025 (e) (k) 1,505
AAA Aaa 10,000 Refunding, Series A, 5.25% due 6/15/2027 (b) 9,940
AAA Aaa 40,750 Refunding, Series B, 5.50% due 6/15/2029 (h) (k) 7,922
AAA Aaa 6,600 Series A, 6.50% due 6/15/2003 (a) (b) 7,421
AAA Aaa 26,000 Regional Transportation Authority, Illinois, Series A,
6.25% due 6/01/2024 (b) 28,564
Indiana -- 2.2% AAA Aaa 8,040 Indiana Health Facilites Financing Authority, Hospital
Revenue Refunding Bonds (Sisters of St. Francis
Health), Series A, 5.125% due 11/01/2017 (e) 7,926
AAA Aaa 2,470 Indiana State Employment Development Commission,
Environmental Revenue Bonds (Public Service Company
of Indiana, Inc.), AMT, 7.50% due 3/15/2015 (e) 2,666
AAA Aaa 4,040 Indianapolis, Indiana, Local Public Improvement Bond
Bank, Series A, 7.90% due 2/01/2002 (a) (g) 4,606
AAA Aaa 4,340 Jasper County, Indiana, PCR, Refunding (Northern
Indiana Public Service), 7.10% due 7/01/2017 (e) 4,761
AAA Aaa 6,275 Marion County, Indiana, Convention and Recreational
Facilities Authority, Excise Tax Revenue Bonds
(Lease Rental), Series A, 5% due 6/01/2027 (e) 6,041
AAA Aaa 4,510 Munster, Indiana, School Building Corp. (First
Mortgage), 5.75% due 1/15/2021 (e) 4,721
AAA Aaa 5,000 Penn, Indiana, High School Building Corp. (First
Mortgage), 6.125% due 1/15/2016 (e) 5,437
Rockport, Indiana, PCR, Refunding:
A1+ Aaa 200 (AEP Generating Co. Project), VRDN, Series A, 4.25%
due 7/01/2025 (b) (f) 200
A1+ Aaa 1,100 (AEP Generating Co. Project), VRDN, Series B, 4.25%
due 7/01/2025 (b) (f) 1,100
AAA Aaa 5,800 (Indiana -- Michigan Power), Series B, 7.60% due
3/01/2016 (h) 6,407
Kentucky -- 0.6% 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) 12,978
Maryland -- 0.4% Maryland State 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) 2,501
AAA Aaa 4,400 Series B, 7% due 7/01/2022 5,609
Massachusetts -- 7.5% AAA Aaa 13,000 Massachusetts Bay Transportation Authority, COP,
Series A, 7.65% due 8/01/2000 (a) (i) 14,379
Massachusetts Bay Transportation Authority
(Massachusetts General Transportation Systems),
Series A (h):
AAA Aaa 4,325 6% due 3/01/2006 4,816
AAA Aaa 4,610 6% due 3/01/2007 5,154
AAA Aaa 6,000 5% due 3/01/2023 5,857
AAA Aaa 4,520 Massachusetts Educational Loan Authority, Education
Loan Revenue Bonds, AMT, Issue D , Series A, 7.25%
due 1/01/2009 (e) 4,866
Massachusetts State Consolidated Loan:
AAA Aaa 5,000 Series C, 5.375% due 9/01/2012 (e) 5,213
AAA Aaa 5,420 Series D, 5% due 11/01/2016 (b) 5,362
AAA Aaa 12,250 Massachusetts State, HFA, M/F Housing Revenue
Refunding Bonds, Series A, 6.15% due 7/01/2018 (e) 12,944
Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (d):
AAA Aaa 10,000 (Beth Israel), INFLOS, 8.268% due 7/01/2025 (b) 11,337
AAA Aaa 3,100 (Saint Elizabeth's Hospital), LEVRRS, Series E, 9.32%
due 8/12/2021 (i) 3,658
AAA Aaa 4,020 Massachusetts State Insured Revenue Refunding Bonds,
Series B, 5.40% due 11/01/2007 (e) 4,331
AAA Aaa 3,250 Massachusetts State Port Authority Revenue Bonds, 13%
due 7/01/2013 (c) 5,615
Massachusetts State Turnpike Authority, Metropolitan
Highway System Revenue Bonds (e):
NR* Aaa 57,650 Series A, 5% due 1/01/2037 55,732
AAA Aaa 10,000 Series B, 5.125% due 1/01/2037 9,810
AAA Aaa 2,500 Massachusetts State Water Resource Authority Revenue
Bonds, Series A, 5.50% due 11/01/2014 (h) 2,621
Michigan -- 2.7% AAA Aaa 5,000 Michigan State Building Authority, Revenue Refunding
Bonds, Series I, 6.25% due 10/01/2020 (e) 5,401
AAA Aaa 6,915 Michigan State, HDA, Rental Housing Revenue Bonds,
Series B, 6.15% due 10/01/2015 (e) 7,320
AAA Aaa 10,000 Michigan State Strategic Fund Limited Obligation,
Revenue Refunding Bonds (Detroit Edison Co.), Series
AA, 6.40% due 9/01/2025 (e) 11,230
Monroe County, Michigan, PCR (Detroit Edison Co.
Project), AMT:
AAA Aaa 16,500 (Monroe and Fermi Plants), Series 1, 7.65% due
9/01/2020 (h) 18,062
AAA Aaa 9,745 Series I-B, 7.50% due 9/01/2019 (b) 10,496
AAA Aaa 1,000 Rockford, Michigan, Public Schools, UT, Series Q, 6%
due 5/01/2007 (h) 1,117
Mississippi -- 0.1% 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) 1,822
Missouri -- 0.2% AAA Aaa 3,500 Sikeston, Missouri, Electric Revenue Refunding Bonds,
6.25% due 6/01/2002 (a) (e) 3,850
Nebraska -- 0.5% AAA Aaa 9,000 Nebraska Public Power District, Revenue Refunding
Bonds, 6.125% due 1/01/2015 (e) 9,633
Nevada -- 2.4% AAA Aaa 45,000 Washoe County, Nevada, Water Facility Revenue Bonds
(Sierra Pacific Power), AMT, 6.65% due 6/01/2017 (e) 49,505
New Jersey -- 4.4% AAA Aaa 3,350 Cape May County, New Jersey, Industrial Pollution
Control Financing Authority, Revenue Refunding Bonds
(Atlantic City Electric Company Project), Series A,
6.80% due 3/01/2021 (e) 4,161
AAA Aaa 28,750 New Jersey EDA, Natural Gas Facilities Revenue
Refunding Bonds (NUI Corporation), Series A, 6.35%
due 10/01/2022 (b) 32,115
New Jersey State Housing and Mortgage Finance Agency
Revenue Bonds (Home Buyer), AMT (e):
AAA Aaa 7,935 Series D, 7.70% due 10/01/2029 8,328
AAA Aaa 23,225 Series M, 7% due 10/01/2026 25,281
AAA Aaa 15,000 New Jersey State Transit Corp. Capital, GAN, Series
A, 5% due 9/01/2000 (i) 15,292
AAA Aaa 4,215 New Jersey State Turnpike Authority, Turnpike
Revenue Refunding Bonds, 6.50% due 1/01/2008 (b) 4,917
New York -- 10.3% New York City, New York, GO, UT:
AAA Aaa 15,000 Series B, 6.25% due 8/15/2008 (b) 16,935
A1+ VMIG1+ 800 Series B, Sub-Series B-6, VRDN, 4.20% due 8/15/2005
(e) (f) 800
AAA Aaa 8,175 Series E, 6% due 8/01/2007 (h) 9,103
AAA Aaa 2,585 Series G, 5.75% due 2/01/2007 (e) 2,819
AAA Aaa 13,770 Series G, 6% due 10/15/2007 (b) 15,357
AAA Aaa 31,000 Series I, 6% due 4/15/2012 (i) 34,081
AAA Aaa 6,000 Series L, 5.20% due 8/01/2008 (e) 6,285
AAA Aaa 10,095 Series M, 5.30% due 6/01/2012 (b) 10,425
AAA Aaa 15,000 Series M, 5.50% due 6/01/2017 (b) 15,553
New York City, New York, GO, UT, Series I (b):
AAA Aaa 2,645 7.25% due 8/15/2013 2,810
AAA Aaa 4,505 7.25% due 8/15/2013 4,807
AAA Aaa 4,385 7.25% due 8/15/2016 4,662
New York City, New York, Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds:
AAA Aaa 28,510 RITR, 6.945% due 6/15/2026 (d) (e) 31,432
AAA Aaa 5,000 Series B, 5.125% due 6/15/2030 (h) 4,911
AAA Aaa 5,010 Series C, 6.20% due 6/15/2002 (a) (b) 5,484
A1+ VMIG1+ 1,600 VRDN, Series A, 4.15% due 6/15/2025 (f) (h) 1,600
AAA Aaa 1,500 New York City, New York, Refunding, UT, Series E,
6.20% due 8/01/2008 (e) 1,704
AAA Aaa 2,500 New York State Dormitory Authority Revenue Bonds
(City University), Third Generation Reserves,
Series 2, 6.25% due 7/01/2019 (e) 2,737
AAA Aaa 1,650 New York State Enviromental Facilities Corporation,
Special Obligation Revenue Refunding Bonds (Riverbank
State Park), 5.50% due 4/01/2016 (b) 1,725
AAA Aaa 5,500 New York State Local Government Assistance Corp.,
Series A, 5.375% due 4/01/2014 (e) 5,656
AAA Aaa 9,125 New York State Medical Care Facilities Financial
Agency Revenue Bonds (Mental Health Services),
Series E, 6.25% due 8/15/2019 (h) 10,083
AAA Aaa 12,000 New York State Thruway Authority, Highway and Bridge
Trust Fund, Series B, 5.125% due 4/01/2015 (e) 12,045
Niagara Falls, New York, Public Improvement Bonds,
UT (e):
AAA Aaa 2,975 6.90% due 3/01/2023 3,392
AAA Aaa 3,190 6.90% due 3/01/2024 3,637
Ohio -- 1.3% 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) 3,018
Cleveland, Ohio, Public Power System Revenue Bonds,
First Mortgage (e):
AAA Aaa 4,600 Refunding, Series 1, 5% due 11/15/2024 4,506
AAA Aaa 12,000 Series A, 7% due 11/15/2004 (a) 14,097
AAA Aaa 3,500 Ohio State Building Authority, State Facilities
(Adult Correctional), Series A, 6% due 4/01/2004 (b) 3,834
Oklahoma -- 0.9% AAA Aaa 9,280 Grand River Dam Authority, Oklahoma, Revenue
Refunding Bonds, 5.50% due 6/01/2009 (b) 10,066
AAA Aaa 7,500 Oklahoma State Industrial Authority, Hospital
Revenue Bonds (Baptist Medical Center), Series A,
7% due 8/15/2000 (a) (b) 8,176
Oregon -- 0.5% AAA Aaa 14,570 Oregon Health Sciences University Revenue Bonds,
Series A, 5.37% due 7/01/2021 (e) (k) 4,281
Port Portland, Oregon, International Airport Revenue
Bonds (Portland International Airport),
Series Seven-B, AMT (e):
AAA Aaa 3,865 7.10% due 1/01/2012 (a) 4,737
AAA Aaa 135 7.10% due 7/01/2021 147
Pennsylvania -- 5.0% AAA Aaa 1,750 Allegheny County, Pennsylvania, Hospital Development
Authority Revenue Bonds (Mercy Hospital of
Pittsburgh), 6.75% due 4/01/2001 (a) (b) 1,920
AAA Aaa 6,900 Beaver County, Pennsylvania, Hospital Authority
Revenue Bonds (Medical Center of Beaver, Pennsylvania
Inc.), Series A, 6.25% due 7/01/2022 (b) 7,470
AAA Aaa 3,365 Beaver County, Pennsylvania, IDA, PCR, Refunding (Ohio
Edison Company/Mansfield), Series A, 7% due 6/01/2021
(h) 3,675
Pennsylvania State Higher Educational Assistance
Agency, Student Loan Revenue Bonds, AMT, RIB (d):
AAA Aaa 15,000 9.368% due 9/03/2026 (b) 17,381
AAA Aaa 8,000 Series B, 10.433% due 3/01/2020 (e) 9,090
AAA Aaa 18,600 Series B, 7.986% due 3/01/2022 (b) 20,506
AAA Aaa 4,250 Pennsylvania State Higher Educational Facilities
Authority, College and University Revenue Bonds
(Temple University), First Series, 6.50% due
4/01/2021 (e) 4,591
AAA Aaa 10,000 Pennsylvania State Higher Educational Facilities
Authority, Health Services Revenue Refunding Bonds
(Allegheny Delaware Valley), Series A, 5.875% due
11/15/2016 (e) 10,759
Pennsylvania State Second Series, GO, UT (b):
AAA Aaa 8,875 5% due 11/15/2014 8,890
AAA Aaa 1,000 5% due 11/15/2015 998
AAA Aaa 6,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds,
12th Series B, 7% due 5/15/2020 (c) (e) 7,274
Philadelphia, Pennsylvania, Water and Wastewater
Revenue Bonds:
AAA Aaa 4,020 5.60% due 8/01/2018 (e) 4,146
AAA Aaa 4,000 Series A, 5% due 8/01/2016 (b) 3,946
Puerto Rico -- 0.6% Puerto Rico, Electric Power Authority, Power Revenue
Refunding Bonds, Series CC (i):
AAA Aaa 4,000 5.50% due 7/01/2008 4,351
AAA Aaa 8,000 5.25% due 7/01/2009 8,493
Rhode Island -- 1.3% AAA Aaa 6,100 Rhode Island Depositors Economic Protection
Corporation, Special Obligation Bonds, Series A,
6.625% due 8/01/2002 (a) (i) 6,814
AAA Aaa 3,775 Rhode Island State Consolidated Capital Development
Loan, Series A, 6% due 8/01/2007 (e) 4,230
AAA Aaa 12,800 Rhode Island State Health and Educational Building
Corporation Revenue Bonds (Rhode Island Hospital),
INFLOS, 9.715% due 8/15/2021 (c) (d) (h) 15,520
South Carolina --
1.6% AAA Aaa 5,000 Florence County, South Carolina, Hospital Revenue
Bonds (McLeod Regional Medical Center Project),
6.75% due 11/01/2020 (h) 5,391
AAA Aaa 4,000 Piedmont, South Carolina, Municipal Power Agency,
Electric Revenue Refunding Bonds, 6.30% due 1/01/2022
(e) 4,374
South Carolina State Public Service Authority,
Revenue Refunding Bonds, Series A (b):
AAA Aaa 17,090 6.375% due 7/01/2021 18,662
AAA Aaa 4,200 6.25% due 1/01/2022 4,646
Tennessee -- 0.4% AAA Aaa 8,555 Metropolitan Government Nashville and Davidson
County, Tennesse, UT, Series A, 5.125% due
11/15/2027 8,419
Texas -- 13.6% Austin, Texas, Utility System, Combined Revenue
Bonds, Prior Lien (a) (e):
AAA Aaa 5,000 6.25% due 5/15/2004 5,540
AAA Aaa 11,190 9.25% due 5/15/2004 14,238
Brazos River Authority, Texas, PCR (Texas Utilities
Electric Company Project), AMT:
AAA Aaa 6,000 Refunding, 6.50% due 12/01/2027 (b) 6,595
AAA Aaa 12,000 Series B, 6.625% due 6/01/2022 (h) 13,162
AAA Aaa 20,000 Brownsville, Texas, Utility System, Revenue Refunding
Bonds, 6.25% due 9/01/2014 ( e) 23, 232
AAA Aaa 5,000 Harris County, Texas, Hospital District Mortgage,
Revenue Refunding Bonds, 7.40% due 2/15/2010 (b) 6,059
Harris County, Texas, Toll Road Revenue Bonds,
Series A:
AAA Aaa 1,695 6.50% due 8/15/2011 (h) 1,863
AAA Aaa 20,430 Refunding, Senior Lien, 6.50% due 8/15/2002 (a) (b) 22,729
AAA Aaa 10,305 Refunding, Senior Lien, 6.50% due 8/15/2002 (a) (h) 11,465
AAA Aaa 1,000 Senior Lien, 6.25% due 8/15/2004 (a) (e) 1,127
AAA Aaa 11,100 Senior Lien, 6.375% due 8/15/2004 (a) (e) 12,585
AAA Aaa 2,750 Senior Lien, 6.50% due 8/15/2017 (b) 3,022
Houston, Texas, Water and Sewer System Revenue Bonds,
Junior Lien, Series A:
AAA Aaa 7,615 6.375% due 12/01/2022 (e) 8,361
AAA Aaa 19,770 Refunding, 6.125% due 12/01/2005 (a) (e) 22,099
AAA Aaa 8,000 Refunding, 6.20% due 12/01/2005 (a) (e) 8,982
AAA Aaa 10,000 Refunding, 5.25% due 12/01/2025 (h) 10,008
AAA Aaa 22,665 Refunding, 5.375% due 12/01/2027 (h) 22,993
AAA Aaa 3,500 Houston, Texas, Water Conveyance System Contract,
COP, Series J, 6.25% due 1 2/15/2013 (b) 4,048
AAA Aaa 5,000 Matagorda County, Texas, Navigation District No. 1,
PCR (Central Power and Light Company Project),
AMT, 7.50% due 3/01/2020 (b) 5,391
AAA Aaa 11,800 Matagorda County, Texas, Navigation District No. 1,
Revenue Refunding Bonds ( Houston Light and
Power Co.), Series A, 6.70% due 3/01/2027 (b) 12,901
Sabine River Authority, Texas, PCR, Refunding (Texas
Utilities Project), VRDN, Series A (f):
A1+ VMIG1+ 2,500 4.25% due 3/01/2026 (b) 2,500
A1+ Aaa 20,225 AMT, 4.10% due 7/01/2022 (e) 20,225
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) 16,353
Texas State Municipal Power Agency, Revenue Refunding
Bonds:
AAA Aaa 3,520 5.25% due 9/01/2007 (e) 3,756
AAA Aaa 11,600 5.50% due 9/01/2010 (e) 12,605
AAA Aaa 3,150 Series A, 6.75% due 9/01/2012 (b) 3,452
Utah -- 1.8% A1+ VMIG1+ 2,000 Carbon County, Utah, PCR, Refunding (PacifiCorp
Projects), VRDN, 4.25% due 11/01/2024 (b) (f) 2,000
AAA Aaa 12,855 Intermountain Power Agency, Utah, Power Supply Revenue
Refunding Bonds, Series B, 6% due 7/01/2006 (e) 14,291
AAA Aaa 14,000 Salt Lake City, Utah, Hospital Revenue Refunding
Bonds (IHC Hospitals, Inc.), INFLOS, 9.332% due
5/15/2020 (b) (c) (d) 16,660
AA- Aaa 1,000 Uintah County, Utah, PCR (Deseret Generation and
Transmission Cooperative -- National Rural
Utilities Company), Series 1984 F-2, 10.50% due
6/15/2001 (a) 1,202
AAA Aaa 2,650 Utah State Board of Regents, Student Loan Revenue
Bonds, AMT, Series F, 7.45% due 11/01/2008 (b) 2,795
Vermont -- 1.0% AAA Aaa 18,950 Vermont HFA, Home Mortgage Purchase Bonds, AMT,
Series B, 7.60% due 12/01/2024 (e) 20,118
Virginia -- 2.1% AAA Aaa 5,000 Danville, Virginia, IDA, Hospital Revenue Refunding
Bonds (Danville Regional Medical Center),
6.50% due 10/01/2019 (h) 5,515
Virginia State, HDA, Commonwealth Mortgage, AMT,
Series A, Sub-Series A-4 (e):
AAA Aaa 5,000 6.30% due 7/01/2014 5,364
AAA Aaa 11,215 6.35% due 7/01/2018 12,030
AAA Aaa 19,000 6.45% due 7/01/2028 20,374
Washington -- 3.2% Seattle, Washington, Metropolitan Seattle
Municipality, Sewer Revenue Bonds, Series W (e):
AAA Aaa 3,730 6.25% due 1/01/2020 4,062
AAA Aaa 2,465 6.25% due 1/01/2022 2,684
AAA Aaa 4,485 6.25% due 1/01/2023 4,884
AAA Aaa 33,535 Seattle, Washington, Municipal Light and Power
Revenue Bonds, 6.625% due 7/01/2020 (h) 37,772
University of Washington, University Revenue Bonds
(Housing and Dining) (e):
AAA Aaa 2,785 7% due 12/01/2001 (a) 3,122
AAA Aaa 465 7% due 12/01/2021 516
Washington State Health Care Facilities Authority
Revenue Bonds:
AAA Aaa 7,000 (Southwest Washington Hospital -- Vancouver), 7.125%
due 10/01/2019 (g) 7,453
AAA Aaa 5,000 Virginia Mason Medical Center, Refunding, Series A,
5.125% due 8/15/2017 (e) 4,930
West Virginia --
1.3% AAA Aaa 11,465 Mason County, West Virginia, PCR, Refunding
(Appalachian Power Co.), Series I, 6.85% due
6/01/2022 (e) 12,638
AAA Aaa 12,250 Pleasants County, West Virginia, PCR (Potomac
Pleasants), Series 95-C, 6.15% due 5/01/2015 (b) 13,432
Wisconsin -- 3.2% AAA Aaa 9,000 Superior, Wisconsin, Limited Obligation Revenue
Refunding Bonds (Midwest Energy Resources), Series E,
6.90% due 8/01/2021 (h) 11,186
Wisconsin Public Power System Inc., Power Supply
System Revenue Bonds, Series A:
AAA Aaa 6,500 6.875% due 7/01/2001 (a) (b) 7,195
AAA Aaa 4,650 5.75% due 7/01/2023 (e) 4,905
Wisconsin State Health and Educational Facilities
Authority Revenue Bonds:
AAA Aaa 6,520 Refunding (Sister's Sorrowful Mother), Series A,
6.125% due 8/15/2022 (e) 6,998
AAA Aaa 1,500 (Saint Luke's Medical Center Project), 7.10% due
8/15/2001 (a) (e) 1,674
AAA Aaa 5,655 (Waukesha Memorial Hospital), Series B, 7.25% due
8/15/2000 (a) (b) 6,200
Wisconsin State Veterans Housing Loans, AMT, Series
B (e):
AAA Aaa 7,920 6.50% due 5/01/2020 8,581
AAA Aaa 17,130 6.50% due 5/01/2025 18,559
------------
Total Investments (Cost -- $1,846,304) -- 99.1% 2,008,731
============
Other Assets Less Liabilities -- 0.9% 18,485
------------
Net Assets -- 100.0% $2,027,216
============
(a) Prerefunded.
(b) AMBAC Insured.
(c) Escrowed to maturity.
(d) 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 December 31, 1997.
(e) MBIA Insured.
(f) The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at December 31, 1997.
(g) BIG Insured.
(h) FGIC Insured.
(i) FSA Insured.
(j) GNMA Collateralized.
(k) Represents a zero coupon bond; the interest rate shown is the effective
yield at the time of purchase by the Portfolio.
(l) FHA Insured.
* Not Rated.
+ Highest short-term rating issued by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C> <C>
Alaska -- 2.5% Valdez, Alaska, Marine Terminal Revenue Refunding
Bonds:
AA Aa2 $6,000 (British Petroleum Pipeline), Series B, 7% due
12/01/2025 $6,665
AA Aa3 27,150 (Sohio Pipeline -- British Petroleum Oil), 7.125%
due 12/01/2025 30,513
California -- 6.5% AAA Aaa 5,690 Anaheim, California, Public Financing Authority Lease
Revenue Bonds (Public Improvement Project), Senior
Series A, 5% due 3/01/2037 (h) 5,491
NR* NR* 6,000 Antioch, California, Improvement Bond Act of 1915
(Assessment District No.27 -- Lone Tree), Series E,
7.125% due 9/02/2016 6,195
A+ A1 10,000 California State, GO, 5.50% due 10/01/2006 10,848
California State Public Works Board, Lease Revenue
Bonds:
A Aaa 10,350 (Department of Corrections -- Monterey County, Soledad
II), Series A, 7% due 11/01/2004 (j) 12,212
AAA Aaa 20,000 (University of California Projects), Series C, 5.125%
due 9/01/2022 (c) 19,682
NR* NR* 4,000 Long Beach, California, Special Tax Community
Facilities (District No.3 -- Pine Avenue), 6.375% due
9/01/2023 4,230
A NR* 5,500 Palmdale, California, Civic Authority, Revenue Refunding
Bonds (Merged Redevelopment Project), Series A, 6.60%
due 9/01/2034 6,239
AAA Aaa 10,000 San Diego, California, Public Facilities Financing
Authority, Sewer Revenue Bonds, 5% due 5/15/2020 (e) 9,802
AAA Aaa 10,000 San Francisco, California, City and County Refunding
Bonds, Series 1, UT, 5.75% due 6/15/2006 (e) 11,079
AAA Aaa 12,000 Santa Clara County, California, Financing Authority,
Lease Revenue Refunding Bonds, Series A, 5% due
11/15/2022 (c) 11,748
Colorado -- 6.3% Denver Colorado, City and County Airport Revenue Bonds:
AAA Aaa 23,280 Series A, 5.75% due 11/15/2016 (f) 24,880
AAA Aaa 24,000 Series A, 5.70% due 11/15/2025 (f) 25,218
BBB Aaa 425 Series A, AMT, 7.50% due 11/15/2004 (j) 510
BBB Baa1 2,575 Series A, AMT, 7.50% due 11/15/2023 2,972
BBB Baa1 7,910 Series A, AMT, 8% due 11/15/2025 8,732
BBB Aaa 3,290 Series B, AMT, 7.25% due 11/15/2002 (j) 3,779
BBB Baa1 9,710 Series B, AMT, 7.25% due 11/15/2023 10,868
BBB Aaa 2,870 Series D, AMT, 7.75% due 11/15/2001 (j) 3,285
BBB Baa1 10,280 Series D, AMT, 7.75% due 11/15/2021 11,514
A1+ VMIG1+ 2,300 Moffat County, Colorado, PCR, Refunding (Pacificorp
Projects), VRDN, 4.25% due 5/01/2013 (a) (c) 2,300
Connecticut -- 0.3% AA- Baa1 4,550 Connecticut State Resource Recovery Authority, Resouce
Recovery Revenue Bonds (American Refunding Fuel), AMT,
Series A, 8% due 11/15/2015 4,817
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 (j) 8,400
District of A1+ VMIG1+ 1,300 District of Columbia General Fund Recovery Bonds, VRDN,
Columbia -- 0.4% UT, Series B-2, 4.35% due 6/01/2003 (a) 1,300
A+ A1 3,750 District of Columbia Revenue Bonds (Georgetown
University), RIB, 8.733% due 4/01/2022 (k) 4,411
Florida -- 2.6% AAA Aaa 6,330 Florida HFA (Antigua Club Apartments), AMT, Series A-1,
7% due 2/01/2035 (c) 6,908
NR* Aaa 8,355 Florida HFA, Home Ownership Revenue Bonds, AMT, Series
G1, 7.90% due 3/01/2022 (i) 8,885
AA Aa3 5,000 Hillsborough County, Florida, IDA, PCR, Refunding
(Tampa Electric Company Project), Series 91, 7.875% due
8/01/2021 5,715
NR* VMIG1+ 3,100 Jacksonville, Florida, Health Facilities Authority,
Hospital Revenue Refunding Bonds (Genesis Rehabilitation
Hospital), VRDN, 4.30% due 5/01/2021 (a) 3,100
A- NR* 2,700 Leesburg, Florida, Hospital Revenue Capital Improvement
Revenue Bonds (Leesburg Regional Medical Center Project),
Series 91-A, 7.50% due 7/01/2002 (j) 3,108
AAA NR* 4,005 Orange County, Florida, HFA, Mortgage Revenue Bonds,
AMT, Series A, 8.375% due 3/01/2021 (i) 4,191
AAA Aaa 5,850 South Broward, Florida, Hospital District, RIB, Series C,
9.237% due 5/01/2001 (c) (j) (k) 6,976
Georgia -- 1.7% A1 VMIG1+ 2,580 Floyd County, Georgia, Development Authority, PCR,
Georgia Power Co. (Plant Hammond Project), VRDN, 4.35%
due 9/01/2026 (a) 2,580
AAA Aaa 20,000 Metropolitan Atlanta, Georgia, Rapid Transit Authority,
Sales Tax Revenue Bonds, Second Indenture, Series A,
6.90% due 7/01/2004 (f) (j) 23,231
Idaho -- 0.1% AA NR* 1,595 Idaho Housing Agency, S/F Mortgage, AMT, Series E,
7.875% due 7/01/2024 (b) 1,715
Illinois -- 4.5% 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 8,797
Chicago, Illinois, O'Hare International Airport,
Special Facilities Revenue Bonds (United Airlines,
Inc.):
BB+ Baa2 4,675 AMT, Series B, 8.95% due 5/01/2018 5,315
BB+ Baa2 13,565 Series 1984-B, 8.85% due 5/01/2018 15,466
AAA Aaa 10,000 Chicago, Illinois, Water Revenue Bonds, 5% due
11/01/2025 (e) 9,707
A+ Aa2 4,300 Illinois HDA, Residential Mortgage Revenue Bonds, RIB,
AMT, Series C-2, 9.319% due 2/01/2018 (k) 4,864
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 1,500 (Methodist Health Project), RIB, 9.365% due 5/01/2021
(c) (k) 1,774
NR* NR* 2,625 Refunding (Saint Elizabeth's Hospital-Chicago), 7.75%
due 7/01/2004 (j) 3,158
AAA Aaa 11,000 (Rush Presbyterian -- Saint Luke's Medical Center),
INFLOS, 9.615% due 10/01/2024 (f) (k) 13,118
NR* A1 4,400 Southwestern Illinois Development Authority, Sewer
Facilities Revenue Bonds (Monsanto Company Project),
AMT, 7.30% due 7/15/2015 4,974
Indiana -- 2.1% NR* Aaa 9,500 Indiana State Educational Facilities Authority Revenue
Bonds (University of Notre Dame Project), 6.70% due
3/01/2004 (j) 10,873
A+ NR* 9,100 Indianapolis, Indiana, Local Public Improvement Bond
Bank, Refunding, Series D, 6.75% due 2/01/2020 10,100
AA- Aa2 5,700 Petersburg, Indiana, PCR, Refunding (Indianapolis Power
& Light Company Project), 6.625% due 12/01/2024 6,313
A1+ Aaa 4,500 Rockport, Indiana, PCR, Refunding (AEP Generating Co.
Project), VRDN, Series B, 4.25% due 7/01/2025 (a) (c) 4,500
Iowa -- 0.8% NR* NR* 9,000 Iowa Finance Authority, Health Care Facilities, Revenue
Refunding Bonds (Care Initiatives Project), 9.25% due
7/01/2025 11,949
Kansas -- 1.8% Wichita, Kansas, Hospital Revenue Bonds, RIB (f) (k):
AAA Aaa 12,000 Series III-A, 8.448% due 10/01/2017 14,310
AAA Aaa 10,000 Series III-B, 8.59% due 10/21/2022 11,925
Kentucky -- 1.5% AAA Aaa 10,000 Louisville and Jefferson County, Kentucky, Metropolitan
Sewer District, Sewer and Drain System Revenue Refunding
Bonds, Series A, 5.25% due 5/15/2027 (f) 10,008
NR* NR* 4,500 Perry County, Kentucky, Solid Waste Disposal Revenue
Bonds (TJ International Project), AMT, 7% due 6/01/2024 4,930
AA- Aa2 6,345 Trimble County, Kentucky, PCR (Louisville Gas and
Electric Company), AMT, Series A, 7.625% due 11/01/2020 6,977
Louisiana -- 4.1% NR* A3 37,850 Lake Charles, Louisiana, Harbor and Terminal District
Port Facilities, Revenue Refunding Bonds (Trunkline LNG
Company Project), 7.75% due 8/15/2022 43,707
Port New Orleans, Louisiana, IDR, Refunding
(Continental Grain Company Project):
BB NR* 10,000 7.50% due 7/01/2013 11,300
BB NR* 5,000 6.50% due 1/01/2017 5,383
BBB Baa2 1,100 Saint Charles Parish, Louisiana, PCR (Union Carbide
Project), AMT, 7.35% due 11/01/2022 1,217
Maine -- 0.3% NR* Aa2 3,815 Maine State Housing Authority, Mortgage Purchase, AMT,
Series B-4, 6.90% due 11/15/2026 4,062
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 7,564
Massachusetts --
6.1% AAA Aaa 39,045 Massachusetts Bay Transportation Authority, General
Transportation System, Series A, 5% due 3/01/2027 (e) 38,048
AAA Aaa 6,000 Massachusetts Bay Transportation Authority, Series B,
7.875% due 3/01/2001 (j) 6,778
Massachusetts State Health and Educational Facilities
Authority Revenue Bonds:
NR* Aaa 5,000 (North Adams Regional Hospital), Series A, 9.625% due
7/01/1999 (j) 5,503
NR* B2 12,350 Refunding (New England Memorial Hospital), Series B,
6.25% due 7/01/2023 11,561
AAA Aaa 30,000 Massachusetts State Water Resources Authority, Series
B, 5% due 12/01/2025 (f) 29,249
Michigan -- 2.1% AAA Aaa 3,500 Michigan State Hospital Finance Authority, Hospital
Revenue Bonds (Detroit Medical Center), Series A,
7.50% due 8/15/2001 (j) 3,957
AAA Aaa 15,000 Michigan State Hospital Finance Authority (Sisters of
Mercy), INFLOS, 8.412% due 2/15/2022 (h) (k) 17,288
BBB Baa1 9,350 Monroe County, Michigan, PCR (Detroit Edison Company
Project), AMT, Series A, 7.75% due 12/01/2019 10,137
Minnesota -- 1.5% Minnesota State, HFA, S/F Mortgage:
AA+ Aa 5,910 AMT, Series A, 7.45% due 7/01/2022 (b) 6,259
AA+ Aa2 4,240 Series F, 6.30% due 7/01/2025 4,491
AA+ NR* 3,000 Rochester, Minnesota, Health Care Facilities Revenue
Bonds (Mayo Foundation), IRS, Series H, 7.661% due
11/15/2015 (k) 3,480
AAA NR* 7,885 Saint Paul, Minnesota, Housing and Redevelopment
Authority, S/F Mortgage Revenue Refunding Bonds, Series
C, 6.95% due 12/01/2031 (d) 8,441
Mississippi -- 0.7% BBB Baa 5,950 Lowndes County, Mississippi, Hospital Revenue Refunding
Bonds (Golden Triangle Medical Center), 8.50% due
2/01/2010 6,513
NR* Aaa 4,195 Mississippi Home Corporation, S/F Mortgage Revenue
Bonds (Access Program), AMT, Final Tranche, Series A,
6.90% due 6/01/2024 (i) 4,516
Missouri & BBB NR* 11,400 Bi-State Development Agency, Missouri and Illinois,
Illinois -- 0.8% Metropolitan No.5, Refunding
(American Commercial Lines, Inc.), 7.75% due 6/01/2010 12,481
Nebraska -- 0.3% AAA Aaa 3,200 Nebraska Investment Finance Authority, S/F Mortgage
Revenue Bonds, AMT, Series 2, RIB, 11.287% due 9/10/2030
(i) (k) 3,612
New Hampshire -- A+ Aa 2,685 New Hampshire State, HFA, S/F Residential Mortgage,
0.2% AMT, 7.90% due 7/01/2022 2,825
New Jersey -- 1.2% NR* NR* 6,495 New Jersey Health Care Facilities Financing Authority
Revenue Bonds (Riverwood Center), Series A, 9.90% due
7/01/2001 (j) 7,767
AA- A3 9,500 University of Medicine and Dentistry of New Jersey,
Series C, 7.20% due 12/01/1999 (j) 10,233
New York -- 16.0% Metropolitan Transportation Authority, New York, Service
Contract Refunding Bonds (Commuter Facilities), Series 5:
BBB+ Baa1 2,145 6.90% due 7/01/2006 2,354
BBB+ Baa1 5,000 7% due 7/01/2012 5,466
NR* Aaa 10,000 Metropolitan Transportation Authority, New York,
Transportation Facilities Revenue Refunding Bonds,
Series K, 6.625% due 7/01/2002 (j) 11,122
BBB+ Baa1 20,000 New York, New York, GO, Series C, 5.50% due 11/15/2037 19,871
New York City, New York, GO, UT:
AAA Aaa 7,240 Series A, 7.75% due 8/15/2001 (j) 8,223
BBB+ Baa1 280 Series A, 7.75% due 8/15/2017 314
BBB+ Baa1 4,000 Series B, 8.25% due 6/01/2006 4,928
BBB+ Baa1 10,000 Series B, Fiscal 92, 7.75% due 2/01/2011 11,321
BBB+ Baa1 4,500 Series B, Fiscal 92, 7.75% due 2/01/2012 5,094
BBB+ Baa1 2,875 Series B, Fiscal 92, 7.75% due 2/01/2013 3,255
BBB+ Baa1 1,650 Series B, Fiscal 92, 7.75% due 2/01/2014 1,868
AAA Aaa 1,865 Series D, 7.70% due 2/01/2002 (j) 2,137
BBB+ Aaa 3,495 Series D, Group C, 8% due 8/01/2001 (j) 3,994
AAA Aaa 5,495 Series F, 8.25% due 11/15/2001 (j) 6,380
New York City, New York, Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds:
AAA Aaa 10,000 Series B, 5.75% due 6/15/2026 (f) 10,513
AAA Aaa 10,000 Series B, 5.875% due 6/15/2026 (h) 10,668
A1+ VMIG1+ 300 Series G, VRDN, 4.30% due 6/15/2024 (a) (e) 300
A1 VMIG1+ 3,000 Series RI-2, RITR, 7.225% due 6/15/2025 (k) 3,424
New York State Dormitory Authority Revenue Bonds
(State University Educational Facilities):
A- A3 20,000 Refunding, 5.125% due 5/15/2021 19,638
A- A3 6,735 Refunding, Series B, 7.375% due 5/15/2014 7,330
A- A3 2,000 Refunding, Series B, 7% due 5/15/2016 2,155
A- A3 5,000 Series A, 7.50% due 5/15/2013 6,323
New York State Local Government Assistance Corporation
(j):
A+ Aaa 6,000 Series A, 7% due 4/01/2002 6,765
A+ A3 10,000 Series C, 6.25% due 4/01/2002 10,986
New York State Medical Care Facilities, Finance Agency
Revenue Bonds (New York Hospital Mortgage), Series A (c):
AAA Aaa 8,400 6.75% due 8/15/2014 9,514
AAA Aaa 9,100 6.80% due 8/15/2024 (b) 10,334
Port Authority of New York and New Jersey, Consolidated
Revenue Bonds:
AA- A1 10,000 72nd Series, 7.35% due 10/01/2002 (j) 11,418
AA- A1 10,000 111th Series, 5% due 10/01/2027 9,862
NR* Aaa 30,520 United Nations Development Corp., New York, Revenue
Refunding Bonds, Senior-Lien, Series A, 6% due 7/01/2003
(j) 33,647
Ohio -- 2.0% AAA Aaa 12,000 Cleveland, Ohio, Public Power System Revenue Bonds
(First Mortgage), Series A, 7% due 11/15/2004 (f) (j) 14,097
Ohio HFA, S/F Mortgage Revenue Bonds, AMT (i):
AAA Aaa 8,800 RIB, Series B-4, 9.517% due 3/31/2031 (k) 9,900
AAA NR* 1,725 Series B, 8.25% due 12/15/2019 1,812
AAA NR* 4,065 Series C, 7.85% due 9/01/2021 4,323
Pennsylvania -- 3.9% BBB Baa 10,000 Pennsylvania Convention Center Authority, Revenue
Refunding Bonds, Series A, 6.75% due 9/01/2019 11,047
Pennsylvania HFA, Refunding:
AA Aa2 8,800 RIB, AMT, Series 1991-31C, 9.761% due 10/01/2023 (k) 10,120
AAA Aaa 7,850 (Rental Housing), 6.50% due 7/01/2023 (d) 8,301
AAA Aaa 10,000 Pennsylvania State Higher Educational Assistance Agency,
Student Loan Revenue B onds, RIB,AMT, 9.368% due
9/03/2026 (c) (k) 11,588
NR* NR* 2,000 Pennsylvania State Higher Educational Facilities
Authority, College and University Revenue Bonds
(Eastern College), Series B, 8% due 10/15/2025 2,313
AAA Aaa 7,000 Pennsylvania State Higher Educational Facilities
Authority, Revenue Refunding Bonds
(State System of Higher Education), Series I, 5.70% due
6/15/2015 (c) 7,261
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) (j) 5,311
AAA Aaa 2,500 York County, Pennsylvania, Hospital Authority Revenue
Bonds (York Hospital), 7% due 1/01/2001 (c) (j) 2,748
Rhode Island -- 1.0% AAA Aaa 5,250 Rhode Island Depositors Economic Protection Corporation,
Special Obligation Bonds, Series A, 6.95% due 8/01/2002
(j) 5,935
NR* Aa2 7,975 Rhode Island Housing & Mortgage Finance Corporation,
RITR, Series 30, AMT, 7.47% due 4/01/2029 (k) 8,463
South Dakota -- 0.7% AAA Aa1 9,085 South Dakota HDA, Homeownership Mortgage, Series A,
7.15% due 5/01/2027 9,595
Tennessee -- 0.7% NR* Aaa 10,000 Knox County, Tennessee, Health, Educational and Housing
Facilities Board, Hospital Facilities Revenue Bonds
(Baptist Health System of East Tennessee), 8.60% due
4/15/1999 (j) 10,764
Texas -- 15.9% Brazos River Authority, Texas, PCR (Texas Utilities
Electric Company Project), AMT, Series A:
BBB+ Baa1 2,095 8.25% due 1/01/2019 2,211
BBB+ Baa1 18,150 7.875% due 3/01/2021 20,075
A- A2 12,350 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series 1989-A, 7.625% due
5/01/2019 13,168
BBB Baa1 7,250 Gulf Coast Waste Disposal Authority, Texas, Revenue
Bonds (Champion International Corporation), AMT, 7.45%
due 5/01/2026 8,034
AA Aa3 19,000 Harris County, Texas, Health Facilities Development
Corporation, Health Care System Revenue Bonds (Sisters
of Charity), 7.10% due 7/01/2001 (j) 21,144
Harris County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds:
AAA Aaa 10,150 RITR, Series 12, 8.22% due 10/01/2024 (f) (k) 12,167
AAA Aa3 12,470 (Saint Luke's Episcopal Hospital Project), Series A,
6.75% due 2/15/2021 13,732
AAA Aaa 11,100 Harris County, Texas, Toll Road Revenue Bonds, Senior
Lien, Series A, 6.375% due 8/15/2004 (f) (j) 12,585
BB Ba1 8,095 Jefferson County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Baptist Healthcare
System Project), 8.875% due 6/01/2021 8,568
AA Aa 12,000 North Central Texas, Health Facilities Development
Corporation Revenue Bonds (Baylor University Medical
Center), INFLOS, Series A, 9.644% due 5/15/2001 (j) (k) 14,415
BB Ba2 3,000 Odessa, Texas, Junior College District, Revenue
Refunding Bonds, Series A, 8.125% due 12/01/2018 3,428
A1+ VMIG1+ 1,000 Sabine River Authority, Texas, PCR, Refunding (Texas
Utilities Project), VRDN, Series A, 4.25% due 3/01/2026
(a) (c) 1,000
AAA Aaa 10,000 Tarrant County, Texas, Health Facilities Development
Corporation, Health System Revenue Refunding Bonds
(Texas Health Resources System), Series A, 5% due
2/15/2026 (f) 9,677
A+ Aa 4,550 Texas Housing Agency, Residential Development Mortgage
Revenue Bonds, Series A, 7.50% due 7/01/2015 (i) 4,893
AAA Aaa 50,000 Texas State Turnpike Authority, Dallas North Thruway
Revenue Bonds (President George Bush Turnpike), 5% due
1/01/2025 (e) 48,771
AA Aa2 4,440 Texas State Veteran's Housing Assistance (Fund II), AMT,
UT, Series A, 7% due 12/01/2025 4,805
AA Aa2 16,000 Texas State Water Development, Series A, B and C, 5.25%
due 8/01/2028 16,119
AAA Aaa 20,000 University of Texas, Refunding Bonds (Permanent
University Fund), 6.50% due 7/01/2001 (j) 21,897
Utah -- 3.1% A1+ VMIG1+ 7,300 Emery County, Utah, PCR, Refunding (Pacificorp
Projects), VRDN, 4.25% due 11/01/2024 (a) (c) 7,300
A+ A1 20,000 Intermountain Power Agency, Utah, Power Supply Revenue
Refunding Bonds, Series D, 5% due 7/01/2021 19,382
A1+ P1 600 Salt Lake County, Utah, PCR, Refunding (Service Station
Holdings Project), VRDN, 4.25% due 2/01/2008 (a) 600
NR* NR* 2,000 Tooele County, Utah, PCR, Refunding (Laidlaw
Environmental), AMT, Series A, 7.55% due 7/01/2027 2,211
AAA Aaa 13,250 Weber County, Utah, Municipal Building Authority, Lease
Revenue Bonds, 7.50% due 12/15/2004 (j) 15,972
Virginia -- 0.3% AA+ Aa1 4,000 Virginia State, HDA, Commonwealth Mortgage, Series A,
7.15% due 1/01/2033 4,225
Washington -- 1.6% AAA NR* 18,070 Washington State Housing Finance Commission, S/F
Mortgage Revenue Refunding Bonds, AMT, Series E, 7.10%
due 7/01/2022 (g) 18,992
AA- Aaa 5,000 Washington State Public Power Supply System, Revenue
Refunding Bonds (Nuclear Project No. 1), Series A,
6.875% due 7/01/2001 (j) 5,528
West Virginia --
0.9% NR* NR* 4,000 Upshur County, West Virginia, Solid Waste Disposal
Revenue Bonds (TJ International Project), AMT, 7% due
7/15/2025 4,425
AAA Aaa 8,400 West Virginia State, Housing Development Fund, Housing
Finance, Series D, 7.05% due 11/01/2024 8,944
Wisconsin -- 3.5% Wisconsin Housing and EDA, Home Ownership Revenue Bonds:
A+ VMIG1+ 21,150 RITR, Series 18, AMT, 7.362% due 9/01/2028 (k) 22,895
AA Aa 4,860 Series A, 7.10% due 3/01/2023 5,160
Wisconsin Housing and EDA, Housing Revenue Bonds:
A A1 5,400 Series B, 7.05% due 11/01/2022 5,754
A A1 5,105 Series C, 7% due 5/01/2015 5,442
AAA Aaa 11,400 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Wausau Hospitals Inc.),
Series B, 6.70% due 8/15/2020 (c) 12,286
------------
Total Investments (Cost -- $1,361,772) -- 99.1% 1,478,116
Other Assets Less Liabilities -- 0.9% 13,158
------------
Net Assets -- 100.0% $1,491,274
============
(a) The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in effect
at December 31, 1997.
(b) FHA Insured.
(c) AMBAC Insured.
(d) FNMA Collateralized.
(e) FGIC Insured.
(f) MBIA Insured.
(g) GNMA/FNMA Collateralized.
(h) FSA Insured.
(i) GNMA Collateralized.
(j) Prerefunded.
(k) 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 December 31, 1997.
* Not Rated.
+ Highest short-term rating issued by Moody's Investors Service, Inc.
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C> <C>
California -- 3.3% SP1+ VMIG1+ $7,500 Los Angeles, California, Unified School District,
TRAN, Series B, 4.50% due 10/01/1998 $7,542
SP1+ VMIG1+ 5,000 Los Angeles County, California, Local Educational
Agencies, COP, TRAN, Series B, 4.50% due 9/30/1998
(e) 5,024
Connecticut -- 3.9% AAA Aaa 2,160 Bridgeport, Connecticut, Refunding, GO, UT, Series A,
4.40% due 9/01/1998 (c) 2,170
AAA Aaa 12,100 Connecticut State Special Assessment (Unemployment
Compensation Advance Fund), Revenue Refunding Bonds,
Series A, 5.50% due 5/15/2001 (c) 12,661
District of A1+ VMIG1+ 400 District of Columbia, General Fund Recovery Bonds,
Columbia -- 0.1% VRDN, UT, Series B-3, 4.35% due 6/01/2003 (b) 400
Florida -- 1.1% AAA Aaa 4,000 Florida School Boards Association Incorporated, Lease
Revenue Bonds (Orange County School Board Project),
6.80% due 7/01/1998 (c) 4,062
Georgia -- 2.7% A NR* 6,410 Burke County, Georgia, Development Authority, PCR,
Refunding (Oglethorpe Power Corporation -- Plant
Vogtle Project), Series B, 3.95% due 1/01/1999 6,418
AAA Aaa 4,000 Georgia Municipal Electric Authority, General Power
Revenue Refunding Bonds, Series D, 6% due 1/01/2000
(c) 4,155
Hawaii -- 3.6% AAA Aaa 3,200 Hawaii State, GO, Refunding, Series CO, 6% due
3/01/2001 (f) 3,383
Hawaii State, GO, UT:
A+ NR* 5,000 Series BT, 6.125% due 2/01/2001 (a) 5,332
A+ Aa3 5,250 Series CH, 4.75% due 11/01/1999 5,322
Illinois -- 6.9% AA- NR* 10,000 Chicago, Illinois, Board of Education, COP (School
Reform Equipment Acquisition), 4.60% due 12/01/1999 10,101
AA- Baa1 5,000 Chicago, Illinois, School Finance Authority, 7.25%
due 6/01/1998 5,071
AAA Aaa 3,000 Cook County, Illinois, High School District No. 205,
Revenue Refunding Bonds (ThortonTownship), UT, 5.60%
due 6/01/1998 (f) (g) 3,024
A- Baa1 4,625 Illinois Development Finance Authority, Solid Waste
Disposal Revenue Bonds (Waste Management Inc.
Project), AMT, 7.125% due 1/01/2001 4,942
AAA Aaa 3,500 Illinois State Refunding, GO, UT, 5.125% due
12/01/1999 (f) 3,576
Kansas -- 1.1% AAA Aaa 4,000 Kansas State Development Finance Authority Revenue
Bonds (Regents Rehab), Series G-2, 5% due 10/01/2001
(c) 4,138
Kentucky -- 2.4% Kentucky State Property and Buildings Commission,
Revenue Refunding Bonds:
A+ A2 5,000 (Project No. 55), 4.10% due 9/01/1998 5,012
A+ A2 4,000 (Project No. 59), 5.00% due 11/01/1998 4,040
Louisiana -- 6.4% A1+ VMIG1+ 5,000 Louisiana State Recovery District, Sales Tax Revenue
Bonds, 4.25% due 7/01/1998 (d) (g) 5,015
AAA Aaa 19,230 Louisiana State Refunding, GO, Series A, 5.50% due
8/01/1998 (f) 19,425
Maryland -- 0.5% NR* Aa2 2,000 Maryland State Community Development Administration
Department, Housing and Community Development
Refunding Bonds (S/F Program -- First Series), 4.45%
due 4/01/2001 2,016
Massachusetts -- 3.7% AAA Aaa 3,500 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (Newton Wellesley Hospital),
Series D, 6.90% due 7/01/2001 (a) (d) 3,872
A- A1 10,160 New England Education Loan Marketing Corporation
Refunding Bonds (Massachusetts Student Loan), Series D,
4.75% due 7/01/1998 10,203
Michigan -- 3.8% AAA Aaa 8,000 Detroit, Michigan, Distributable State Aid, 7.20% due
5/01/1999 (a) (c) 8,497
AA- A1 6,000 Michigan State Building Authority, Revenue Refunding
Bonds, Series I, 5.80% due 10/01/1998 6,090
Minnesota -- 1.4% AAA Aaa 2,385 Metropolitan Council, Minneapolis, St. Paul
Metropolitan Area Transit, UT, Series C, 4.75% due
2/01/2000 2,427
AAA Aaa 2,805 Minnesota State, HFA (Rental Housing), Refunding,
Series D, 4.50% due 8/01/1999 (d) 2,830
Mississippi -- 2.6% NR* Aaa 10,000 Mississippi Higher Education Assistance Corporation,
Student Loan Revenue Bonds, AMT, Series B, 4.80% due
9/01/1998 10,042
Nebraska -- 1.6% A+ A1 6,250 Nebraska Public Power District Revenue Bonds (Consumer
Public Power District), 4.90% due 7/01/1998 6,286
New Jersey -- 3.4% NR* NR* 2,850 New Jersey State, EDA, Economic Growth Revenue Bonds
(Greater Mercer County), VRDN, Series C, 4.25% due
11/01/2011 (b) 2,850
AAA Aaa 5,715 New Jersey State Educational Facilities Authority
Revenue Bonds (Higher Educational Facilities Trust
Fund), Series A, 5.125% due 9/01/1999 (c) 5,826
AA+ Aa1 4,250 New Jersey State Refunding, UT, Series D, 5.10% due
2/15/2000 4,352
New York -- 14.9% BBB+ Baa1 10,255 Metropolitan Transportation Authority of New York,
Service Contract Commuter Facilities, Series 6, 6%
due 7/01/2001 (a) 10,871
AA- Aa2 4,550 Municipal Assistance Corporation, Refunding, Series E,
5.50% due 7/01/2000 4,713
BBB+ Aaa 2,100 New York City, New York, GO, UT, Series B, 7% due
6/01/2001 (a) 2,318
New York State Dormitory Authority Revenue Bonds
(Consolidated City University System), Series A:
BBB+ Baa1 6,675 4.50% due 7/01/1998 6,699
BBB+ Baa1 10,885 4.75% due 7/01/1999 11,006
AAA Aaa 3,000 New York State Dormitory Authority Revenue Bonds
(State University Educational), Series A, 7.125% due
5/15/1999 (a) 3,188
New York State Urban Development Corporation Revenue
Bonds:
BBB+ Baa1 4,525 (Correctional Capital Facilities), Series 4, 4.90% due
1/01/2001 4,611
BBB+ Aaa 12,300 (State Facilities), 7.50% due 4/01/2001 (a) 13,799
Ohio -- 10.1% AAA Aaa 2,000 Cincinnati, Ohio, City School District, TAN, Series B,
5% due 12/01/1998 (c) 2,022
NR* Aa1 6,000 Franklin County, Ohio, Hospital Revenue Refunding
Bonds (US Health Corp.), Series B, 4.50% due 6/01/2000 6,057
A1+ VMIG1+ 7,000 Ohio State Air Quality Development Authority, Revenue
Refunding Bonds (Ohio Edison Project), Series A,
4.35% due 8/01/1998 7,003
AAA Aa1 12,400 Ohio State Highway, GO, Series V, 4.70% due 5/15/2000 12,617
AA- Aa3 5,000 Ohio State Public Facilities Commission, Higher
Education Capital Facilities, Series II-B, 4.50% due
11/01/1999 5,048
NR* Aaa 6,000 Student Loan Funding Corporation, Cincinnati, Ohio,
Student Loan Revenue Refunding Bonds, AMT, Series C,
5.70% due 7/01/1999 6,117
Oklahoma -- 0.6% AA Aa2 2,400 Tulsa, Oklahoma, GO, UT, 5.125% due 5/01/1999 2,440
Pennsylvania -- 3.4% AAA Aaa 8,675 Pennsylvania State Refunding Bonds, GO, UT, 5.25% due
11/15/1998 (f) 8,788
AAA Aaa 4,145 Pittsburgh, Pennsylvania, Refunding, UT, Series A,
5% due 3/01/2000 (d) 4,230
Rhode Island -- 1.1% AAA Aaa 4,100 Rhode Island State Refunding Bonds (Consolidated
Capital Development Loan), 5.50% due 8/01/2001 (d) 4,296
South Carolina -- 1.6% AA A1 6,250 Greenville County, South Carolina, School District,
UT, 4% due 3/01/1999 6,265
Tennessee -- 3.1% AA NR* 11,885 Clarksville, Tennessee, Public Building Authority,
Revenue Refunding Bonds (Pooled Loan Program), 4.40%
due 12/01/1998 11,947
Texas -- 3.4% NR* Aaa 2,070 Brazos, Texas, Higher Education Authority
Incorporated, Student Loan Revenue Refunding Bonds,
AMT, Senior Lien, Series A-2, 5.45% due 6/01/1998 2,083
AAA Aaa 2,600 Houston, Texas, Water and Sewer Systems, Revenue
Refunding Bonds, Junior Lien, Series C, 5.90% due
12/01/1999 (c) 2,692
AA Aa1 3,000 San Antonio, Texas, Electric and Gas Revenue Refunding
Bonds, 5.25% due 2/01/2000 3,075
AAA Aaa 5,000 Texas State Public Finance Authority, Building Revenue
Refunding Bonds, 6.50% due 2/01/1999 (d) 5,140
Utah -- 1.2% AAA Aaa 4,700 Utah State Building and Highway, GO, UT, 4.40% due
7/01/1999 4,739
Virginia -- 2.8% Fairfax County, Virginia, Public Improvement, GO, UT,
Series B:
AAA Aaa 3,000 4.50% due 12/01/2000 3,047
AAA Aaa 2,900 4.50% due 12/01/2001 2,954
AA Aa 1,925 Virginia State Public School Authority, Series B, 6%
due 8/01/2001 2,050
AA Aa2 2,555 Virginia State Transportation Board, Transportation
Contract Revenue Bonds (US Route 58 Corridor),
Series B, 5% due 5/15/2000 2,613
Washington -- 3.9% AAA NR* 5,000 King County, Washington, School District No. 414
(Lake Washington), UT, 7% due 12/01/2000 (a) 5,402
AAA Aaa 5,000 Seattle, Washington, Municipality Metropolitan Seattle
Sewer Revenue Bonds, Series U, 6.60% due 1/01/2001 (a)
(f) 5,445
Washington State Refunding Bonds, Motor Vehicle Fuel
Tax:
AA+ Aa1 2,000 Series R-94B, 4.20% due 9/01/1998 2,006
AA+ Aa1 2,285 Series R-96A, 5% due 7/01/1998 2,300
Wisconsin -- 4.5% AA+ Aa1 6,510 Milwaukee, Wisconsin, Metropolitan Sewer District,
Refunding Bonds, Series A, 4.25% due 10/01/2000 6,555
AA Aa2 4,385 Wisconsin State, GO, Series C, 5.50% due 5/01/2000 4,534
AAA NR* 5,720 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Medical College of Wisconsin),
Series D, 7.35% due 12/01/2000 (a) 6,305
------------
Total Investments (Cost -- $378,526) -- 99.1% 381,079
Other Assets Less Liabilities -- 0.9% 3,426
------------
Net Assets -- 100.0% $384,505
============
(a) Prerefunded.
(b) The interest rate is subject to change periodically based upon prevailing market rates. The
interest rate shown is the rate in effect at December 31, 1997.
(c) AMBAC Insured.
(d) MBIA Insured.
(e) FSA Insured.
(f) FGIC Insured.
(g) Escrowed to maturity.
* Not rated.
+ Highest short-term rating by Moody's Investors Service, Inc.
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)
COP Certificates of Participation
EDA Economic Development Authority
GAN Grant Anticipation Notes
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
IRS Inverse Rate Securities
LEVRRS Leveraged Reverse Rate Securities
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
Limited
Insured National Maturity
As of December 31, 1997 Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
Assets: Investments, at value* (Note 1a) $2,008,731,216 $1,478,116,037 $381,079,227
Cash 9,891 21,613 17,965
Receivables:
Interest 33,492,728 25,033,983 6,204,900
Capital shares sold 2,378,094 1,057,206 922,989
Securities sold 170,000 1,445,168 20,375
Prepaid registration fees and other assets (Note 1e) 806,823 48,745 37,641
---------------- ---------------- ----------------
Total assets 2,045,588,752 1,505,722,752 388,283,097
---------------- ---------------- ----------------
Liabilities: Payables:
Securities purchased 5,956,725 7,253,412 --
Dividends to shareholders (Note 1f) 6,140,946 4,220,855 699,043
Capital shares redeemed 2,182,277 1,696,491 2,824,202
Investment adviser (Note 2) 643,947 629,208 113,722
Distributor (Note 2) 372,357 308,604 16,796
Accrued expenses and other liabilities 3,076,038 339,884 124,031
---------------- ---------------- ----------------
Total liabilities 18,372,290 14,448,454 3,777,794
---------------- ---------------- ----------------
Net Assets: Net assets $2,027,216,462 $1,491,274,298 $384,505,303
================ ================ ================
Net Assets Class A Common Stock, $0.10 par value+ $17,296,276 $9,272,394 $3,174,951
Consist of: Class B Common Stock, $0.10 par value++ 6,443,459 3,851,359 484,801
Class C Common Stock, $0.10 par value+++ 162,932 308,722 1,660
Class D Common Stock, $0.10 par value++++ 524,117 546,216 197,532
Paid-in capital in excess of par 1,833,926,799 1,403,899,784 382,588,523
Undistributed (accumulated) realized capital gains
(losses) on investments -- net (Note 5) 6,435,679 (42,947,799) (4,495,147)
Unrealized appreciation on investments -- net 162,427,200 116,343,622 2,552,983
---------------- ---------------- ----------------
Net assets $2,027,216,462 $1,491,274,298 $384,505,303
================ ================ ================
Net Asset Class A:
Value: Net assets $1,435,715,082 $989,269,295 $316,334,550
================ ================ ================
Shares outstanding 172,962,761 92,723,938 31,749,505
================ ================ ================
Net asset value and redemption price per share $8.30 $10.67 $9.96
================ ================ ================
Class B:
Net assets $534,487,578 $410,754,626 $48,312,367
================ ================ ================
Shares outstanding 64,434,590 38,513,593 4,848,011
================ ================ ================
Net asset value and redemption price per share $8.30 $10.67 $9.97
================ ================ ================
Class C:
Net assets $13,518,673 $32,943,415 $164,909
================ ================ ================
Shares outstanding 1,629,320 3,087,219 16,602
================ ================ ================
Net asset value and redemption price per share $8.30 $10.67 $9.93
================ ================ ================
Class D:
Net assets $43,495,129 $58,306,962 $19,693,477
================ ================ ================
Shares outstanding 5,241,170 5,462,158 1,975,320
================ ================ ================
Net asset value and redemption price per share $8.30 $10.67 $9.97
================ ================ ================
* Identified cost $1,846,304,016 $1,361,772,415 $378,526,244
================ ================ ================
+ 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>
<CAPTION>
STATEMENTS OF OPERATIONS
Limited
Insured National Maturity
For the Six Months Ended December 31, 1997 Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C>
Investment Interest and amortization of premium and discount
Income (Note 1d): earned $59,946,801 $46,705,975 $8,754,948
---------------- ---------------- ----------------
Expenses: Investment advisory fees (Note 2) 3,747,587 3,612,982 679,461
Account maintenance and distribution fees --
Class B (Note 2) 2,074,803 1,568,771 90,905
Transfer agent fees -- Class A (Note 2) 247,825 209,278 43,606
Transfer agent fees -- Class B (Note 2) 116,970 107,638 8,924
Accounting services (Note 2) 114,348 76,394 19,580
Custodian fees 88,841 70,657 21,612
Account maintenance and distribution fees -- Class C
(Note 2) 52,455 124,593 306
Account maintenance fees -- Class D (Note 2) 62,670 82,024 10,176
Registration fees (Note 1e) 50,987 48,991 41,418
Printing and shareholder reports 56,885 36,950 11,196
Professional fees 33,044 20,751 8,145
Transfer agent fees -- Class D (Note 2) 8,511 13,695 2,640
Directors' fees and expenses 10,930 7,096 2,284
Pricing services 1,417 13,661 23
Transfer agent fees -- Class C (Note 2) 2,737 8,041 38
Other -- 9,223 --
---------------- ---------------- ----------------
Total expenses 6,670,010 6,010,745 940,314
---------------- ---------------- ----------------
Investment income -- net 53,276,791 40,695,230 7,814,634
---------------- ---------------- ----------------
Realized & Realized gain on investments -- net 13,329,906 15,631,523 69,443
Unrealized Gain on Change in unrealized appreciation on investments
Investments -- Net -- net 49,823,854 25,877,070 1,152,211
(Notes 1b, 1d & 3): ---------------- ---------------- ----------------
Net Increase in Net Assets Resulting from
Operations $116,430,551 $82,203,823 $9,036,288
================ ================ ================
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
Insured Portfolio National Portfolio Limited Maturity Portfolio
For the Six For the For the Six For the For the Six For the
Increase Months Ended Year Ended Months Ended Year Ended Months Ended Year Ended
(Decrease) Dec. 31, 1997 June 30, 1997 Dec. 31, 1997 June 30, 1997 Dec. 31, 1997 June 30, 1997
in Net Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Operations: Investment
income
-- net $53,276,791 $119,207,937 $40,695,230 $82,141,900 $7,814,634 $18,141,276
Realized
gain on
investments
-- net 13,329,906 37,935,579 15,631,523 18,687,317 69,443 1,870,059
Change in
unrealized
appreciation/
depreciation
on investments
-- net 49,823,854 5,465,463 25,877,070 18,217,116 1,152,211 104,267
-------------- -------------- -------------- -------------- -------------- --------------
Net increase
in net assets
resulting from
operations 116,430,551 162,608,979 82,203,823 119,046,333 9,036,288 20,115,602
-------------- -------------- -------------- -------------- -------------- --------------
Dividends & Investment
Distributions to income -- net:
Shareholders Class A (39,009,927) (84,438,105) (28,056,156) (57,401,862) (6,513,857) (15,176,552)
(Note 1f): Class B (12,691,893) (31,486,251) (10,136,376) (20,879,493) (913,528) (2,274,531)
Class C (297,635) (800,743) (746,857) (1,024,766) (3,065) (6,456)
Class D (1,277,336) (2,482,838) (1,755,841) (2,835,779) (384,184) (683,737)
Realized gain
on investments
-- net:
Class A (2,005,059) -- -- -- -- (666,000)
Class B (747,289) -- -- -- -- (108,061)
Class C (18,784) -- -- -- -- (293)
Class D (76,185) -- -- -- -- (28,170)
-------------- -------------- -------------- -------------- -------------- --------------
Net decrease
in net assets
resulting from
dividends and
distributions
to shareholders (56,124,108) (119,207,937) (40,695,230) (82,141,900) (7,814,634) (18,943,800)
-------------- -------------- -------------- -------------- -------------- --------------
Capital Share Net increase
Transactions (decrease) in
(Note 4): net assets
derived from
capital share
transactions (85,324,081) (357,799,862) (28,121,251) 916,838 (35,123,149) (86,916,618)
-------------- -------------- -------------- -------------- -------------- --------------
Net Assets: Total increase
(decrease) in
net assets (25,017,638) (314,398,820) 13,387,342 37,821,271 (33,901,495) (85,744,816)
Beginning of
period 2,052,234,100 2,366,632,920 1,477,886,956 1,440,065,685 418,406,798 504,151,614
-------------- -------------- -------------- -------------- -------------- --------------
End of period $2,027,216,462 $2,052,234,100 $1,491,274,298 $1,477,886,956 $384,505,303 $418,406,798
============== ============== ============== ============== ============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Insured Portfolio
The following per share Class A
data and ratios have been
derived from information
provided in the financial
statements.
For the Six
Months Ended For the Year Ended June 30,
Dec. 31, 1997 1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $8.06 $7.91 $7.92 $7.88 $8.64
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income -- net .22 .45 .44 .46 .47
Realized and unrealized gain (loss) on
investments -- net .25 .15 (.01) .18 (.53)
----------- ----------- ----------- ----------- -----------
Total from investment operations .47 .60 .43 .64 (.06)
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.22) (.45) (.44) (.46) (.47)
Realized gain on investments -- net (.01) -- -- (.14) (.23)
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.23) (.45) (.44) (.60) (.70)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $8.30 $8.06 $7.91 $7.92 $7.88
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 5.94%++++ 7.72% 5.51% 8.60% (1.08%)
Return:** =========== =========== =========== =========== ===========
Ratios to Average Expenses .43%* .44% .43% .43% .42%
Net Assets: =========== =========== =========== =========== ===========
Investment income -- net 5.35%* 5.58% 5.55% 5.78% 5.53%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $1,435,715 $1,441,785 $1,572,835 $1,706,064 $1,941,741
Data: =========== =========== =========== =========== ===========
Portfolio turnover 30.34% 74.40% 78.49% 35.61% 28.34%
=========== =========== =========== =========== ===========
<CAPTION>
Insured Portfolio
The following per share Class B
data and ratios have been
derived from information
provided in the financial
statements.
For the Six
Months Ended For the Year Ended June 30,
Dec. 31, 1997 1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $8.05 $7.91 $7.92 $7.87 $8.63
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income -- net .19 .39 .38 .40 .40
Realized and unrealized gain (loss) on
investments -- net .26 .14 (.01) .19 (.53)
----------- ----------- ----------- ----------- -----------
Total from investment operations .45 .53 .37 .59 (.13)
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.19) (.39) (.38) (.40) (.40)
Realized gain on investments -- net (.01) -- -- (.14) (.23)
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.20) (.39) (.38) (.54) (.63)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $8.30 $8.05 $7.91 $7.92 $7.87
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 5.67%++++ 6.78% 4.71% 7.91% (1.81%)
Return:** =========== =========== =========== =========== ===========
Ratios to Average Expenses 1.19%* 1.19% 1.19% 1.19% 1.17%
Net Assets: =========== =========== =========== =========== ===========
Investment income -- net 4.59%* 4.82% 4.80% 5.03% 4.78%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $534,487 $560,105 $723,090 $782,748 $866,193
Data: =========== =========== =========== =========== ===========
Portfolio turnover 30.34% 74.40% 78.49% 35.61% 28.34%
=========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales loads.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Insured Portfolio
The following per share Class C
data and ratios have been
derived from information
provided in the financial
statements.
For the Six For the Period
Months Ended For the Year Ended June 30, Oct. 21, 1994+ to
Dec. 31, 1997 1997 1996 June 30, 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $8.06 $7.91 $7.92 $7.68
Operating ----------- ----------- ----------- -----------
Performance: Investment income -- net .19 .38 .38 .27
Realized and unrealized gain (loss)
on investments -- net .25 .15 (.01) .38
----------- ----------- ----------- -----------
Total from investment operations .44 .53 .37 .65
----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.19) (.38) (.38) (.27)
Realized gain on investments -- net (.01) -- -- (.14)
----------- ----------- ----------- -----------
Total dividends and distributions (.20) (.38) (.38) (.41)
----------- ----------- ----------- -----------
Net asset value, end of period $8.30 $8.06 $7.91 $7.92
=========== =========== =========== ===========
Total Investment Based on net asset value per share 5.51%++++ 6.86% 4.65% 8.83%++++
Return:** =========== =========== =========== ===========
Ratios to Average Expenses 1.24%* 1.25% 1.24% 1.23%*
Net Assets: =========== =========== =========== ===========
Investment income -- net 4.54%* 4.77% 4.75% 4.93%*
=========== =========== =========== ===========
Supplemental Net assets, end of period
Data: (in thousands) $13,519 $11,922 $18,936 $7,756
=========== =========== =========== ===========
Portfolio turnover 30.34% 74.40% 78.49% 35.61%
=========== =========== =========== ===========
<CAPTION>
Insured Portfolio
The following per share Class D
data and ratios have been
derived from information
provided in the financial
statements.
For the Six For the Period
Months Ended For the Year Ended June 30, Oct. 21, 1994+ to
Dec. 31, 1997 1997 1996 June 30, 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $8.06 $7.91 $7.92 $7.68
Operating ----------- ----------- ----------- -----------
Performance: Investment income -- net .21 .43 .42 .29
Realized and unrealized gain (loss)
on investments -- net .25 .15 (.01) .38
----------- ----------- ----------- -----------
Total from investment operations .46 .58 .41 .67
----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.21) (.43) (.42) (.29)
Realized gain on investments -- net (.01) -- -- (.14)
----------- ----------- ----------- -----------
Total dividends and distributions (.22) (.43) (.42) (.43)
----------- ----------- ----------- -----------
Net asset value, end of period $8.30 $8.06 $7.91 $7.92
=========== =========== =========== ===========
Total Investment Based on net asset value per share 5.81%++++ 7.46% 5.25% 9.24%++++
Return:** =========== =========== =========== ===========
Ratios to Average Expenses .68%* .69% .68% .68%*
Net Assets: =========== =========== =========== ===========
Investment income -- net 5.10%* 5.33% 5.31% 5.50%*
=========== =========== =========== ===========
Supplemental Net assets, end of period
Data: (in thousands) $43,495 $38,422 $51,772 $26,015
=========== =========== =========== ===========
Portfolio turnover 30.34% 74.40% 78.49% 35.61%
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
National Portfolio
The following per share Class A
data and ratios have been
derived from information
provided in the financial
statements.
For the Six
Months Ended For the Year Ended June 30,
Dec. 31, 1997 1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.38 $10.11 $10.02 $10.08 $11.02
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income -- net .30 .60 .60 .60 .62
Realized and unrealized gain (loss) on
investments -- net .29 .27 .09 .15 (.64)
----------- ----------- ----------- ----------- -----------
Total from investment operations .59 .87 .69 .75 (.02)
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.30) (.60) (.60) (.60) (.62)
Realized gain on investments -- net -- -- -- (.19) (.30)
In excess of realized gain on
investments -- net -- -- -- (.02) --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.30) (.60) (.60) (.81) (.92)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $10.67 $10.38 $10.11 $10.02 $10.08
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 5.74%++++ 8.84% 6.98% 7.89% (.47%)
Return:** =========== =========== =========== =========== ===========
Ratios to Average Expenses .56%* .55% .56% .56% .55%
Net Assets: =========== =========== =========== =========== ===========
Investment income -- net 5.61%* 5.86% 5.89% 6.01% 5.72%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $989,269 $983,650 $983,550 $1,059,440 $1,203,181
Data: =========== =========== =========== =========== ===========
Portfolio turnover 61.64% 99.52% 95.09% 103.65% 73.33%
=========== =========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of Operations
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
National Portfolio
The following per share Class B
data and ratios have been
derived from information
provided in the financial
statements.
For the Six
Months Ended For the Year Ended June 30,
Dec. 31, 1997 1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.37 $10.11 $10.02 $10.07 $11.02
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income -- net .26 .52 .52 .52 .54
Realized and unrealized gain (loss) on
investments -- net .30 .26 .09 .16 (.65)
----------- ----------- ----------- ----------- -----------
Total from investment operations .56 .78 .61 .68 (.11)
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.26) (.52) (.52) (.52) (.54)
Realized gain on investments -- net -- -- -- (.19) (.30)
In excess of realized gain on investments
-- net -- -- -- (.02) --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.26) (.52) (.52) (.73) (.84)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $10.67 $10.37 $10.11 $10.02 $10.07
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 5.44%++++ 7.92% 6.17% 7.28% (1.39%)
Return:** =========== =========== =========== =========== ===========
Ratios to Average Expenses 1.32%* 1.31% 1.32% 1.32% 1.30%
Net Assets: =========== =========== =========== =========== ===========
Investment income -- net 4.85%* 5.10% 5.13% 5.25% 4.97%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $410,755 $415,103 $399,341 $419,933 $459,169
Data: =========== =========== =========== =========== ===========
Portfolio turnover 61.64% 99.52% 95.09% 103.65% 73.33%
=========== =========== =========== =========== ===========
<CAPTION>
National Portfolio
The following per share Class C
data and ratios have been
derived from information
provided in the financial
statements.
For the Six For the Period
Months Ended For the Year Ended June 30, Oct. 21, 1994+ to
Dec. 31, 1997 1997 1996 June 30, 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.38 $10.11 $10.03 $9.85
Operating ----------- ----------- ----------- -----------
Performance: Investment income -- net .26 .52 .52 .36
Realized and unrealized gain on
investments -- net .29 .27 .08 .39
----------- ----------- ----------- -----------
Total from investment operations .55 .79 .60 .75
----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.26) (.52) (.52) (.36)
Realized gain on investments -- net -- -- -- (.19)
In excess of realized gain on
investments -- net -- -- -- (.02)
----------- ----------- ----------- -----------
Total dividends and distributions (.26) (.52) (.52) (.57)
----------- ----------- ----------- -----------
Net asset value, end of period $10.67 $10.38 $10.11 $10.03
=========== =========== =========== ===========
Total Investment Based on net asset value per share 5.31%++++ 7.97% 6.01% 7.97%++++
Return:** =========== =========== =========== ===========
Ratios to Average Expenses 1.37%* 1.36% 1.37% 1.37%*
Net Assets: =========== =========== =========== ===========
Investment income -- net 4.80%* 5.04% 5.08% 5.21%*
=========== =========== =========== ===========
Supplemental Net assets, end of period
Data: (in thousands) $32,943 $28,096 $13,291 $5,195
=========== =========== =========== ===========
Portfolio turnover 61.64% 99.52% 95.09% 103.65%
=========== =========== =========== ===========
<CAPTION>
National Portfolio
The following per share Class C
data and ratios have been
derived from information
provided in the financial
statements.
For the Six For the Period
Months Ended For the Year Ended June 30, Oct. 21, 1994+ to
Dec. 31, 1997 1997 1996 June 30, 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $10.39 $10.12 $10.03 $9.85
Operating ----------- ----------- ----------- -----------
Performance: Investment income -- net .29 .58 .57 .40
Realized and unrealized gain on
investments -- net .28 .27 .09 .39
----------- ----------- ----------- -----------
Total from investment operations .57 .85 .66 .79
----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.29) (.58) (.57) (.40)
Realized gain on investments -- net -- -- -- (.19)
In excess of realized gain on
investments -- net -- -- -- (.02)
----------- ----------- ----------- -----------
Total dividends and distributions (.29) (.58) (.57) (.61)
----------- ----------- ----------- -----------
Net asset value, end of period $10.67 $10.39 $10.12 $10.03
=========== =========== =========== ===========
Total Investment Based on net asset value per share 5.51%++++ 8.57% 6.71% 8.37%++++
Return:** =========== =========== =========== ===========
Ratios to Average Expenses .81%* .80% .81% .81%*
Net Assets: =========== =========== =========== ===========
Investment income -- net 5.35%* 5.60% 5.64% 5.78%*
=========== =========== =========== ===========
Supplemental Net assets, end of period
Data: (in thousands) $58,307 $51,038 $43,884 $19,656
=========== =========== =========== ===========
Portfolio turnover 61.64% 99.52% 95.09% 103.65%
=========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of Operations
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Limited Maturity Portfolio
The following per share Class A
data and ratios have been
derived from information
provided in the financial
statements.
For the Six
Months Ended For the Year Ended June 30,
Dec. 31, 1997 1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $9.93 $9.91 $9.92 $9.87 $10.01
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income -- net .20 .39 .38 .38 .37
Realized and unrealized gain (loss) on
investments -- net .03 .04 (.01) .05 (.14)
----------- ----------- ----------- ----------- -----------
Total from investment operations .23 .43 .37 .43 .23
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.20) (.39) (.38) (.38) (.37)
Realized gain on investments -- net -- (.02) -- -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.20) (.41) (.38) (.38) (.37)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $9.96 $9.93 $9.91 $9.92 $9.87
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 2.29%++++ 4.40% 3.75% 4.53% 2.30%
Return:** =========== =========== =========== =========== ===========
Ratios to Average Expenses .41%* .39% .44% .41% .40%
Net Assets: =========== =========== =========== =========== ===========
Investment income -- net 3.88%* 3.93% 3.83% 3.86% 3.68%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $316,335 $343,641 $417,097 $536,474 $790,142
Data: =========== =========== =========== =========== ===========
Portfolio turnover 34.50% 61.90% 88.32% 37.33% 45.67%
=========== =========== =========== =========== ===========
<CAPTION>
Limited Maturity Portfolio
The following per share Class B
data and ratios have been
derived from information
provided in the financial
statements.
For the Six
Months Ended For the Year Ended June 30,
Dec. 31, 1997 1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $9.94 $9.91 $9.92 $9.87 $10.01
Operating ----------- ----------- ----------- ----------- -----------
Performance: Investment income -- net .18 .36 .35 .35 .33
Realized and unrealized gain (loss) on
investments -- net .03 .05 (.01) .05 (.14)
----------- ----------- ----------- ----------- -----------
Total from investment operations .21 .41 .34 .40 .19
----------- ----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.18) (.36) (.35) (.35) (.33)
Realized gain on investments -- net -- (.02) -- -- --
----------- ----------- ----------- ----------- -----------
Total dividends and distributions (.18) (.38) (.35) (.35) (.33)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $9.97 $9.94 $9.91 $9.92 $9.87
=========== =========== =========== =========== ===========
Total Investment Based on net asset value per share 2.10%++++ 4.13% 3.37% 4.14% 1.98%
Return:** =========== =========== =========== =========== ===========
Ratios to Average Expenses .77%* .75% .80% .78% .76%
Net Assets: =========== =========== =========== =========== ===========
Investment income -- net 3.52%* 3.58% 3.46% 3.50% 3.33%
=========== =========== =========== =========== ===========
Supplemental Net assets, end of period (in thousands) $48,312 $54,275 $71,075 $129,581 $145,534
Data: =========== =========== =========== =========== ===========
Portfolio turnover 34.50% 61.90% 88.32% 37.33% 45.67%
=========== =========== =========== =========== ===========
<CAPTION>
Limited Maturity Portfolio
The following per share Class C
data and ratios have been
derived from information
provided in the financial
statements.
For the Six For the Period
Months Ended For the Year Ended June 30, Oct. 21, 1994+ to
Dec. 31, 1997 1997 1996 June 30, 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $9.91 $9.88 $9.92 $9.83
Operating ----------- ----------- ----------- -----------
Performance: Investment income -- net .18 .35 .34 .25
Realized and unrealized gain (loss) on
investments -- net .02 .05 (.04) .09
----------- ----------- ----------- -----------
Total from investment operations .20 .40 .30 .34
----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.18) (.35) (.34) (.25)
Realized gain on investments -- net -- (.02) -- --
----------- ----------- ----------- -----------
Total dividends and distributions (.18) (.37) (.34) (.25)
----------- ----------- ----------- -----------
Net asset value, end of period $9.93 $9.91 $9.88 $9.92
=========== =========== =========== ===========
Total Investment Based on net asset value per share 1.99%++++ 4.11% 2.97% 3.52%++++
Return:** =========== =========== =========== ===========
Ratios to Average Expenses .78%* .75% .80% .70%*
Net Assets: =========== =========== =========== ===========
Investment income -- net 3.51%* 3.57% 3.41% 3.61%*
=========== =========== =========== ===========
Supplemental Net assets, end of period
Data: (in thousands) $165 $108 $94 $3,965
=========== =========== =========== ===========
Portfolio turnover 34.50% 61.90% 88.32% 37.33%
=========== =========== =========== ===========
<CAPTION>
Limited Maturity Portfolio
The following per share Class D
data and ratios have been
derived from information
provided in the financial
statements.
For the Six For the Period
Months Ended For the Year Ended June 30, Oct. 21, 1994+ to
Dec. 31, 1997 1997 1996 June 30, 1995
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $9.94 $9.91 $9.93 $9.83
Operating ----------- ----------- ----------- -----------
Performance: Investment income -- net .19 .38 .37 .26
Realized and unrealized gain (loss)
on investments -- net .03 .05 (.02) .10
----------- ----------- ----------- -----------
Total from investment operations .22 .43 .35 .36
----------- ----------- ----------- -----------
Less dividends and distributions:
Investment income -- net (.19) (.38) (.37) (.26)
Realized gain on investments -- net -- (.02) -- --
----------- ----------- ----------- -----------
Total dividends and distributions (.19) (.40) (.37) (.26)
----------- ----------- ----------- -----------
Net asset value, end of period $9.97 $9.94 $9.91 $9.93
=========== =========== =========== ===========
Total Investment Based on net asset value per share 2.24%++++ 4.40% 3.55% 3.73%++++
Return:** =========== =========== =========== ===========
Ratios to Average Expenses .51%* .48% .54% .53%*
Net Assets: =========== =========== =========== ===========
Investment income -- net 3.78%* 3.84% 3.71% 3.78%*
=========== =========== =========== ===========
Supplemental Net assets, end of period
Data: (in thousands) $19,693 $20,383 $15,886 $11,258
=========== =========== =========== ===========
Portfolio turnover 34.50% 61.90% 88.32% 37.33%
=========== =========== =========== ===========
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of Operations
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1997
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. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature. The
Fund's Portfolios offer four classes of shares under the Merrill Lynch
Select PricingSM 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.
(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, which are traded on exchanges, 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. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general supervision
of the Board of Directors.
(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.
[bullet] Financial futures contracts -- The Fund's 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 deposits and maintains 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
requirements 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.
(d) Security transactions and investment income -- Security
transactions 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.
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 subsidiary 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 millio .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
Pursuant to 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 fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
Account Maintenance Fees 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 Distributor and
MLPF&S for providing account maintenance services to Class B, Class C
and Class D shareholders. The ongoing distribution fee compensates the
Distributor and MLPF&S for providing shareholder and distribution-
related services to Class B and Class C shareholders.
For the six months ended December 31, 1997, MLFD earned underwriting
discounts and direct commissions and MLPF&S earned dealer concessions
on sales of the Fund's Class A and Class D Shares follows:
Limited
Insured National Maturity
Portfolio Portfolio Portfolio
Class A Shares:
MLFD $9,517 $8,062 $451
MLPF&S 82,934 65,767 3,657
Class D Shares:
MLFD 3,489 5,159 412
MLPF&S 31,279 46,862 3,686
For the six months ended December 31, 1997, MLPF&S received contingent
deferred sales charges of $522,315 relating to transactions in Class B
Shares, amounting to $190,639, $320,254 and $11,422 in the Insured,
National and Limited Maturity Portfolios, respectively, and $4,374
relating to transactions in Class C Shares, amounting to $1,276 and
$3,098 in the Insured and National 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, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended December 31, 1997, were as follows:
Purchases Sales
Insured Portfolio $590,036,669 $618,764,216
National Portfolio 886,642,818 887,562,674
Limited Maturity Portfolio 129,002,342 145,252,808
Net realized and unrealized gains (losses) as of December 31, 1997
were as follows:
Realized Unrealized
Insured Portfolio Gains (Losses) Gains
Long-term investments $13,592,906 $162,427,200
Financial futures contracts (263,000) --
------------ ------------
Total $13,329,906 $162,427,200
============ ============
Realized Unrealized
National Portfolio Gains (Losses) Gains
Long-term investments $16,434,898 $116,343,622
Financial futures contracts (803,375) --
------------ ------------
Total $15,631,523 $116,343,622
============ ============
Realized Unrealized
Limited Maturity Portfolio Gains Gains
Long-term investments $59,978 $2,540,051
Short-term investments 9,465 12,932
------------ ------------
Total $69,443 $2,552,983
============ ============
As of December 31, 1997 net unrealized appreciation/depreciation for
Federal income tax purposes were as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Appreciation
Insured Portfolio $163,349,599 $(922,399) $162,427,200
National Portfolio 116,773,032 (429,410) 116,343,622
Limited Maturity
Portfolio 2,594,904 (41,921) 2,552,983
The aggregate cost of investments at December 31, 1997 for Federal
income tax purposes was $1,846,304,016 for the Insured Portfolio,
$1,361,772,415 for the National Portfolio, and $378,526,244 for the
Limited Maturity Portfolio.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions for the six months ended December 31, 1997 and for the
year ended June 30, 1997 were $(85,324,081) and $(357,799,862),
respectively, for the Insured Portfolio; $(28,121,251) and $916,838,
respectively, for the National Portfolio and $(35,123,149) and
$(86,916,618), respectively, for the Limited Maturity Portfolio.
Transactions in capital shares for each class were as follows:
Insured Portfolio
Class A Shares for the Six Months Dollar
Ended December 31, 1997 Shares Amount
Shares sold 992,804 $8,129,083
Shares issued to shareholders in
reinvestment of dividends &
distributions 2,160,578 17,726,558
------------ ------------
Total issued 3,153,382 25,855,641
Shares redeemed (9,067,023) (74,202,134)
------------ ------------
Net decrease (5,913,641) $(48,346,493)
============ ============
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 4,575,281 $36,693,201
Shares issued to shareholders
in reinvestment of dividends 4,476,285 35,809,346
------------ ------------
Total issued 9,051,566 72,502,547
Shares redeemed (28,976,583) (232,180,607)
------------ ------------
Net decrease (19,925,017) $(159,678,060)
============ ============
Insured Portfolio
Class B Shares for the Six Months Dollar
Ended December 31, 1997 Shares Amount
Shares sold 2,100,332 $17,192,724
Shares issued to shareholders in
reinvestment of dividends &
distributions 832,268 6,825,022
------------ ------------
Total issued 2,932,600 24,017,746
Automatic conversion of shares (163,539) (1,333,499)
Shares redeemed (7,871,951) (64,380,136)
------------ ------------
Net decrease (5,102,890) $(41,695,889)
============ ============
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 5,729,555 $45,791,612
Shares issued to shareholders
in reinvestment of dividends 2,004,591 16,028,058
------------- -------------
Total issued 7,734,146 61,819,670
Automatic conversion of shares (654,971) (5,237,060)
Shares redeemed (29,004,786) (232,763,104)
------------- -------------
Net decrease (21,925,611) $(176,180,494)
============= =============
Insured Portfolio
Class C Shares for the Six Dollar
Months Ended December 31, 1997 Shares Amount
Shares sold 233,970 $1,912,968
Shares issued to shareholders
in reinvestment of dividends &
distributions 22,107 181,356
------------- -------------
Total issued 256,077 2,094,324
Shares redeemed (106,541) (872,194)
------------- -------------
Net increase 149,536 $1,222,130
============= =============
Insured Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 742,610 $5,954,624
Shares issued to shareholders
in reinvestment of dividends 65,517 524,081
------------- -------------
Total issued 808,127 6,478,705
Shares redeemed (1,722,393) (13,923,454)
------------- -------------
Net decrease (914,266) $(7,444,749)
============= =============
Insured Portfolio
Class D Shares for the Six Dollar
Months Ended December 31, 1997 Shares Amount
Shares sold 7,051,661 $57,460,993
Automatic conversion of shares 163,539 1,333,499
Shares issued to shareholders
in reinvestment of dividends &
distributions 70,522 578,640
------------- -------------
Total issued 7,285,722 59,373,132
Shares redeemed (6,811,558) (55,876,961)
------------- -------------
Net increase 474,164 $3,496,171
============= =============
Insured Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 12,779,520 $101,973,172
Automatic conversion of shares 654,971 5,237,060
Shares issued to shareholders
in reinvestment of dividends 147,570 1,180,790
------------- -------------
Total issued 13,582,061 108,391,022
Shares redeemed (15,359,300) (122,887,581)
------------- -------------
Net decrease (1,777,239) $(14,496,559)
============= =============
National Portfolio
Class A Shares for the Six
Months Ended December 31, 1997 Dollar
Shares Amount
Shares sold 2,004,907 $21,113,997
Shares issued to shareholders
in reinvestment of dividends 1,348,242 14,232,734
------------- -------------
Total issued 3,353,149 35,346,731
Shares redeemed (5,414,191) (57,069,434)
------------- -------------
Net decrease (2,061,042) $(21,722,703)
============= =============
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 7,233,788 $74,396,433
Shares issued to shareholders
in reinvestment of dividends 2,685,525 27,558,310
------------- -------------
Total issued 9,919,313 101,954,743
Shares redeemed (12,395,672) (127,128,438)
------------- -------------
Net decrease (2,476,359) $(25,173,695)
============= =============
National Portfolio
Class B Shares for the Six Dollar
Months Ended December 31, 1997 Shares Amount
Shares sold 2,670,813 $28,147,544
Shares issued to shareholders
in reinvestment of dividends 491,996 5,192,603
------------- -------------
Total issued 3,162,809 33,340,147
Automatic conversion of shares (126,059) (1,323,695)
Shares redeemed (4,537,271) (47,771,417)
------------- -------------
Net decrease (1,500,521) $(15,754,965)
============= =============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 11,777,487 $121,489,230
Shares issued to shareholders
in reinvestment of dividends 975,743 10,006,225
------------- -------------
Total issued 12,753,230 131,495,455
Automatic conversion of shares (495,542) (5,075,762)
Shares redeemed (11,745,518) (120,476,972)
------------- -------------
Net increase 512,170 $5,942,721
============= =============
National Portfolio
Class C Shares for the Six
Months Ended December 31, 1997 Dollar
Shares Amount
Shares sold 747,944 $7,875,624
Shares issued to shareholders
in reinvestment of dividends 40,871 431,509
------------- -------------
Total issued 788,815 8,307,133
Shares redeemed (408,452) (4,299,812)
------------- -------------
Net increase 380,363 $4,007,321
============= =============
National Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 2,182,254 $22,508,694
Shares issued to shareholders
in reinvestment of dividends 56,394 579,121
------------- -------------
Total issued 2,238,648 23,087,815
Shares redeemed (845,937) (8,691,227)
------------- -------------
Net increase 1,392,711 $14,396,588
============= =============
National Portfolio
Class D Shares for the Six Dollar
Months Ended December 31, 1997 Shares Amount
Shares sold 7,646,978 $80,423,731
Automatic conversion of shares 125,939 1,323,695
Shares issued to shareholders
in reinvestment of dividends 79,565 840,976
------------- -------------
Total issued 7,852,482 82,588,402
Shares redeemed (7,304,723) (77,239,306)
------------- -------------
Net increase 547,759 $5,349,096
============= =============
National Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 10,536,060 $108,053,333
Automatic conversion of shares 495,032 5,075,762
Shares issued to shareholders
in reinvestment of dividends 114,893 1,179,969
------------- -------------
Total issued 11,145,985 114,309,064
Shares redeemed (10,568,675) (108,557,840)
------------- -------------
Net increase 577,310 $5,751,224
============= =============
Limited Maturity Portfolio
Class A Shares for the Six Dollar
Months Ended December 31, 1997 Shares Amount
Shares sold 658,083 $6,546,890
Shares issued to shareholders
in reinvestment of dividends 373,098 3,712,365
------------- -------------
Total issued 1,031,181 10,259,255
Shares redeemed (3,876,146) (38,569,740)
------------- -------------
Net decrease (2,844,965) $(28,310,485)
============= =============
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 2,507,909 $24,924,435
Shares issued to shareholders
in reinvestment of dividends &
distributions 920,017 9,134,741
------------- -------------
Total issued 3,427,926 34,059,176
Shares redeemed (10,923,304) (108,467,108)
------------- -------------
Net decrease (7,495,378) $(74,407,932)
============= =============
Limited Maturity Portfolio
Class B Shares for the Six
Months Ended December 31, 1997 Dollar
Shares Amount
Shares sold 1,631,823 $16,239,795
Shares issued to shareholders
in reinvestment of dividends 60,827 605,540
------------- -------------
Total issued 1,692,650 16,845,335
Shares redeemed (2,307,319) (22,964,399)
------------- -------------
Net decrease (614,669) $(6,119,064)
============= =============
Limited Maturity Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 1,746,766 $17,337,114
Shares issued to shareholders
in reinvestment of dividends &
distributions 156,709 1,556,287
------------- -------------
Total issued 1,903,475 18,893,401
Automatic conversion of shares (11,559) (114,986)
Shares redeemed (3,599,880) (35,740,926)
------------- -------------
Net decrease (1,707,964) $(16,962,511)
============= =============
Limited Maturity Portfolio
Class C Shares for the Six Dollar
Months Ended December 31, 1997 Shares Amount
Shares sold 140,117 $1,391,193
Shares issued to shareholders
in reinvestment of dividends 164 1,624
------------- -------------
Total issued 140,281 1,392,817
Shares redeemed (134,528) (1,335,588)
------------- -------------
Net increase 5,753 $57,229
============= =============
Limited Maturity Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 125,730 $1,243,007
Shares issued to shareholders
in reinvestment of dividends &
distributions 526 5,211
------------- -------------
Total issued 126,256 1,248,218
Shares redeemed (124,926) (1,236,530)
------------- -------------
Net increase 1,330 $11,688
============= =============
Limited Maturity Portfolio
Class D Shares for the Six
Months Dollar
Ended December 31, 1997 Shares Amount
Shares sold 866,616 $8,630,063
Shares issued to shareholders
in reinvestment of dividends 19,452 193,675
------------- -------------
Total issued 886,068 8,823,738
Shares redeemed (961,538) (9,574,567)
------------- -------------
Net decrease (75,470) $(750,829)
============= =============
Limited Maturity Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1997 Shares Amount
Shares sold 3,468,693 $34,441,741
Automatic conversion of shares 11,555 114,986
Shares issued to shareholders
in reinvestment of dividends &
distributions 40,524 402,564
------------- -------------
Total issued 3,520,772 34,959,291
Shares redeemed (3,072,180) (30,517,154)
------------- -------------
Net increase 448,592 $4,442,137
============= =============
5. Capital Loss Carryforward:
At June 30, 1997, the Fund had a net capital loss carryforward as
follows: Approximately $4,620,000 in the Insured Portfolio, of which
$1,981,000 expires in 2003 and $2,639,000 expires in 2004;
approximately $48,141,000 in the National Portfolio, of which
$19,665,000 expires in 2003 and $28,476,000 expires in 2004; and
approximately $4,658,000 in the Limited Maturity Portfolio, of which
$2,590,000 expires in 1998, $22,000 expires in 1999, $25,000 expires
in 2002, and $2,021,000 expires in 2003. These amounts will be
available to offset like amounts of any future taxable gains.
