MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
FUND LOGO
Annual Report
June 30, 1999
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
Printed on post-consumer recycled paper
MERRILL LYNCH MUNICIPAL BOND FUND, INC.
Officers and
Directors
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Peter J. Hayes, Vice President
Kenneth A. Jacob, Vice President
Walter C. O'Connor, Vice President
Donald C. Burke, Vice President and Treasurer
William E. Zitelli, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
DEAR SHAREHOLDER
Long-term bond yields moved higher during the three-months ended
June 30, 1999. US Treasury bond yields rose throughout the period as
the US economy continued to exhibit considerable strength. An above-
trend inflationary report in May coupled with the May announcement
by the Federal Reserve Board that it was considering increasing
short-term interest rates in order to slow domestic economic growth
also contributed to pushing US Treasury bond yields to an 18-month
high of over 6.10% by mid-June. The Federal Reserve Board's return
to a neutral policy after the expected increase in short-term
interest rates of 25 basis points (0.25%) in late June allowed long-
term US Treasury bond yields to decline and close the three-month
period ended June 30, 1999 at 5.96%. During the same period, the
yield on long-term US Treasury securities rose almost 35 basis
points.
For much of early 1999, long-term tax-exempt bond yields remained
essentially unchanged. However, in May and June municipal bond
yields eventually followed taxable bond yields higher. As measured
by the Bond Buyer Revenue Bond Index, long-term tax-exempt revenue
bond yields rose more than 35 basis points to end the three-month
period at 5.61%, their highest level in 20 months.
The strong technical position that the tax-exempt bond market has
enjoyed in recent quarters has continued. Municipal investors are
expected to have received as much as $40 billion in June and early
July from coupon income, bond maturities and the proceeds from early
bond redemptions. The receipt of these assets has coincided with a
significant decline in new bond issuance. Over the last six months,
over $115 billion in new long-term tax-exempt bonds were issued, a
decline of 22% as compared to the first six months of 1998. During
the quarter ended June 30, 1999, less than $60 billion in securities
were issued by US municipalities, a decline of nearly 25% versus the
June 30, 1998 quarter. New-issue volume of $22 billion for the month
of June 1999 was 28% lower than June 1998's issuance and the lowest
June production since 1996. The combination of reduced issuance and
seasonally high reinvestment has produced a very positive
supply/demand function for the municipal bond market.
Prior to May 1999, this positive technical position had enabled the
tax-exempt bond market to outperform its taxable counterpart. This
resulted in a decline of the yield ratio between taxable and tax-
exempt bonds. At the end of 1998, long-term uninsured revenue bond
yields were in excess of 100% of US Treasury bond yields, far
greater than their recent historic range of 85%--88%. However, by
early May, tax-exempt revenue bond yield ratios had declined to
nearly 90%. Given the rapid rise in municipal bond yields in recent
weeks, this ratio has risen again to nearly 95%. We believe that the
recent period of volatility has created additional opportunities for
long-term investors to purchase tax-exempt bonds at historically
attractive yields relative to US Treasury securities.
While the Federal Reserve Board announced that it has no immediate
bias toward raising short-term interest rates, it is clear that
additional US economic growth will result in further action by the
Federal Reserve Board.
Fiscal Year in Review
Insured Portfolio and
National Portfolio
During the fiscal year ended June 30, 1999, the fixed-income market
was subject to significant interest rate volatility. We concentrated
our investment strategy for both Portfolios on sifting through the
price volatility and identifying the optimum buying and selling
opportunities created by such an active market. As a result of this
strategy, we achieved above-industry average current yields as well
as competitive total returns, as measured by Lipper Analytical
Services, Inc., for both the Insured Portfolio and the National
Portfolio.
Earlier in the year, our strategy concentrated on capturing a fairly
well-defined trading range, purchasing performance-oriented
securities and selling them as long-term US Treasury yields
approached 5%. As interest rates rose, municipal securities
outperformed taxable securities on a relative basis. We used this
advantaged position to further reduce the Portfolios' exposure to
more aggressively structured holdings. This strategy cushioned the
Portfolios' declines in net asset values as interest rates rose
toward current levels of 6%. Credit quality spreads in the municipal
market were inordinately tight at the beginning of the year. This
allowed us to concentrate any new purchases for the National
Portfolio in higher-rated securities. This move benefited the
National Portfolio's performance since credit quality spreads
widened as the market deteriorated.
Toward the end of the fiscal year, the market reached levels where
historically strong retail demand supports municipal bonds. Although
we remain somewhat cautious, we believe the market represents
attractive value for long-term investors. We anticipate re-entering
the market with a more aggressive stance should domestic economic
conditions begin to reflect a better backdrop for fixed-income
securities. Such a scenario could occur in the near term in response
to the recent rise in demand for municipal bonds.
Limited Maturity Portfolio
During the second half of the fiscal year ended June 30, 1999, we
positioned the Limited Maturity Portfolio less aggressively based on
our belief that yields would continue to rise. Consistently strong
economic growth led investors to believe that the Federal Reserve
Board would eventually have to raise short-term interest rates in an
effort to head off inflationary pressures. Thus, we maintained the
average portfolio maturity in the 1.5 year--1.7-year range. This is
in sharp contrast to the falling interest environment and aggressive
portfolio structure that persisted for much of the first half of the
fiscal year ended June 30, 1999. As a result of this strategy, we
achieved competitive total returns, as measued by Lipper Analytical
Services, Inc.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Municipal Bond
Fund, Inc., and we look forward to serving your investment needs in
the months and years to come.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Kenneth A. Jacob)
Kenneth A. Jacob
Vice President and Portfolio Manager
(Walter C. O'Connor)
Walter C. O'Connor
Vice President and Portfolio Manager
(Peter J. Hayes)
Peter J. Hayes
Vice President and Portfolio Manager
August 13, 1999
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
PERFORMANCE DATA
About Fund
Performance
Investors are able to purchase shares of the Fund through the
Merrill Lynch Select Pricing SM System, which offers four pricing
alternatives:
* 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.
* 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.)
* 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 for all three Portfolios are subject to a 1%
contingent deferred sales charge if redeemed within one year of
purchase.
* 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 "Recent Performance
Results" and "Average Annual Total Return" 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.
Insured Portfolio's
Class A and
Class B Shares
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the
Portfolio's Class A Shares and Class B Shares compared to growth of
an investment in the Lehman Brothers Municipal Bond Index. Beginning
and ending values are:
6/89 6/99
Insured Portfolio++--
Class A Shares* $ 9,600 $18,659
Insured Portfolio++--
Class B Shares* $10,000 $18,006
Lehman Brothers Municipal
Bond Index++++ $10,000 $20,472
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
++The Insured Portfolio invests primarily in long-term, investment-
grade municipal bonds (bonds rated Baa or better) covered by
portfolio insurance guaranteeing the timely payment of principal at
maturity and interest.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years.
Insured Portfolio's
Class A and
Class B Shares
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/99 +1.56% -2.50%
Five Years Ended 6/30/99 +6.26 +5.39
Ten Years Ended 6/30/99 +6.87 +6.44
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/99 +0.79% -2.98%
Five Years Ended 6/30/99 +5.45 +5.45
Ten Years Ended 6/30/99 +6.06 +6.06
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Insured Portfolio's
Class C and
Class D Shares
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the
Portfolio's Class C and Class D Shares compared to growth of an
investment in the Lehman Brothers Municipal Bond Index. Beginning
and ending values are:
10/21/94** 6/99
Insured Portfolio++--
Class C Shares* $10,000 $13,125
Insured Portfolio++--
Class D Shares* $ 9,600 $12,951
Lehman Brothers Municipal
Bond Index++++ $10,000 $14,183
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++The Insured Portfolio invests primarily in long-term, investment-
grade municipal bonds (bonds rated Baa or better) covered by
portfolio insurance guaranteeing the timely payment of principal at
maturity and interest.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years.
The starting date for the Index is from 10/31/94.
Insured Portfolio's
Class C and
Class D Shares
Average Annual
Total Return
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 6/30/99 +0.74% -0.20%
Inception (10/21/94) through 6/30/99 +5.97 +5.97
[FN]
*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 6/30/99 +1.43% -2.63%
Inception (10/21/94) through 6/30/99 +6.59 +5.67
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
PERFORMANCE DATA (continued)
National Portfolio's
Class A and
Class B Shares
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the
Portfolio's Class A Shares and Class B Shares compared to growth of
an investment in the Lehman Brothers Municipal Bond Index. Beginning
and ending values are:
6/89 6/99
National Portfolio++--
Class A Shares* $ 9,600 $19,038
National Portfolio++--
Class B Shares* $10,000 $18,395
Lehman Brothers Municipal
Bond Index++++ $10,000 $20,472
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
++The National Portfolio invests primarily in long-term municipal
bonds rated in any rating category.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years.
Past performance is not predictive of future performance.
National Portfolio's
Class A and
Class B Shares
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/99 +1.28% -2.77%
Five Years Ended 6/30/99 +6.63 +5.77
Ten Years Ended 6/30/99 +7.09 +6.65
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/99 +0.51% -3.32%
Five Years Ended 6/30/99 +5.85 +5.85
Ten Years Ended 6/30/99 +6.28 +6.28
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payments of applicable contingent deferred sales charge.
National Portfolio's
Class C and
Class D Shares
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the
Portfolio's Class C Shares and Class D Shares compared to growth of
an investment in the Lehman Brothers Muncipal Bond Index. Beginning
and ending values are:
10/21/94** 6/99
National Portfolio++--
Class C Shares* $10,000 $13,347
National Portfolio++--
Class D Shares* $ 9,600 $13,150
Lehman Brothers Municipal
Bond Index++++ $10,000 $14,183
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++The National Portfolio invests primarily in long-term municipal
bonds rated in any rating category.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years. The starting date for the Index is from
10/31/94.
Past performance is not predictive of future performance.
National Portfolio's
Class C and
Class D Shares
Average Annual
Total Return
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 6/30/99 +0.47% -0.49%
Inception (10/21/94) through 6/30/99 +6.35 +6.35
[FN]
*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 6/30/99 +1.03% -3.01%
Inception (10/21/94) through 6/30/99 +6.94 +6.01
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Limited Maturity
Portfolio's
Class A and
Class B Shares
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the
Portfolio's Class A Shares compared to growth of an investment in
the Lehman Brothers Municipal Bond Index and the Lehman Brothers 3-
Year General Obligation Bond Index. Beginning and ending values are:
6/89 6/99
Limited Maturity Portfolio++--
Class A Shares* $ 9,900 $15,722
Lehman Brothers Municipal
Bond Index++++ $10,000 $20,472
Lehman Brothers 3-Year General
Obligation Bond Index++++++ $10,000 $17,683
A line graph depicting the growth of an investment in the
Portfolio's Class B Shares compared to growth of an investment in
the Lehman Brothers Municipal Bond Index and the Lehman Brothers 3-
Year General Obligation Bond Index. Beginning and ending values are:
11/02/92** 6/99
Limited Maturity Portfolio++--
Class B Shares* $10,000 $12,633
Lehman Brothers Municipal
Bond Index++++ $10,000 $15,475
Lehman Brothers 3-Year General
Obligation Bond Index++++++ $10,000 $13,782
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++The Limited Maturity Portfolio invests primarily in investment-
grade municipal bonds (bonds rated Baa or better) with a maximum
maturity not to exceed 4 years.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years. The starting date for the Index is from
10/31/92.
++++++This unmanaged Index consists of state and local government
obligation bonds that mature in 3 years--4 years, rated Baa or
better. The starting date for the Index in the Class B Shares'
graph is from 10/31/92.
Past performance is not predictive of future performance.
Limited Maturity
Portfolio's
Class A and
Class B Shares
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/99 +3.37% +2.34%
Five Years Ended 6/30/99 +4.06 +3.85
Ten Years Ended 6/30/99 +4.73 +4.63
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/99 +3.01% +2.01%
Five Years Ended 6/30/99 +3.71 +3.71
Inception (11/2/92) through 6/30/99 +3.57 +3.57
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
PERFORMANCE DATA (concluded)
Limited Maturity
Portfolio's
Class C and
Class D Shares
Total Return
Based on a $10,000
Investment
A line graph depicting the growth of an investment in the
Portfolio's Class C Shares and Class D Shares compared to growth of
an investment in the Lehman Brothers Municipal Bond Index and the
Lehman Brothers 3-Year General obligation Bond Index. Beginning and
ending values are:
10/21/94** 6/99
Limited Maturity Portfolio++--
Class C Shares* $10,000 $11,861
Limited Maturity Portfolio++--
Class D Shares* $ 9,900 $11,942
Lehman Brothers Municipal
Bond Index++++ $10,000 $14,183
Lehman Brothers 3-Year General
Obligation Bond Index++++++ $10,000 $12,733
[FN]
*Assuming maximum sales charge, transaction costs and other
operating expenses, including advisory fees.
**Commencement of operations.
++The Limited Maturity Portfolio invests primarily in investment-
grade municipal bonds (bonds rated Baa or better) with a maximum
maturity not to exceed 4 years.
++++This unmanaged Index consists of revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds, all of which
mature within 30 years. The starting date for the Index is from
10/31/94.
++++++This unmanaged Index consists of state and local government
obligation bonds that mature in 3 years--4 years, rated Baa or
better. The starting date for the Index is from 10/31/94.
Past performance is not predictive of future performance.
Limited Maturity
Portfolio's
Class C and
Class D Shares
Average Annual
Total Return
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 6/30/99 +2.89% +1.90%
Inception (10/21/94) through 6/30/99 +3.71 +3.71
[FN]
*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 6/30/99 +3.27% +2.24%
Inception (10/21/94) through 6/30/99 +4.08 +3.85
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results*
<CAPTION>
Ten Years/
Since Standardized
12 Month 3 Month Inception 30-Day Yield
Total Return Total Return Total Return As of 6/30/99
<S> <C> <C> <C> <C>
ML Municipal Bond Fund, Inc. Insured Portfolio Class A Shares** +1.56% -2.61% +94.38% 4.52%
ML Municipal Bond Fund, Inc. Insured Portfolio Class B Shares** +0.79 -2.80 +80.06 3.94
ML Municipal Bond Fund, Inc. Insured Portfolio Class C Shares** +0.74 -2.82 +31.25 3.89
ML Municipal Bond Fund, Inc. Insured Portfolio Class D Shares** +1.43 -2.67 +34.89 4.28
ML Municipal Bond Fund, Inc. National Portfolio Class A Shares** +1.28 -2.03 +98.34 4.63
ML Municipal Bond Fund, Inc. National Portfolio Class B Shares** +0.51 -2.31 +83.94 4.06
ML Municipal Bond Fund, Inc. National Portfolio Class C Shares** +0.47 -2.32 +33.46 4.01
ML Municipal Bond Fund, Inc. National Portfolio Class D Shares** +1.03 -2.19 +36.98 4.39
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class A Shares*** +3.37 +0.03 +58.80 3.31
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class B Shares*** +3.01 +0.04 +26.33 2.98
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class C Shares*** +2.89 +0.03 +18.61 2.98
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class D Shares*** +3.27 +0.10 +20.61 3.21
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the payable date.
**The Fund's ten-year/since inception periods are ten years for
Class A & Class B Shares and from 10/21/94 for Class C & Class D
Shares.
***The Fund's ten-year/since inception periods are ten years for
Class A Shares; from 11/2/92 for Class B Shares; and from 10/21/94
for Class C & Class D Shares.
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
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.
ACES SM Adjustable Convertible Extendable Securities
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
EDA Economic Development Authority
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
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--2.1% AAA Aaa $ 1,585 Alabama Water Pollution Control Authority Revenue Bonds,
Revolving Fund Loan, Series A, 6.75% due 8/15/2017 (b) $ 1,727
AAA Aaa 16,345 Jefferson County, Alabama, Sewer Revenue Bonds, Capital
Improvement Warrants, Series A, 5% due 2/01/2033 (h) 14,994
AAA NR* 19,635 Jefferson County, Alabama, Sewer Revenue Bonds, RIB,
Series 124, 6.73% due 2/01/2036 (d)(h) 18,562
AAA NR* 1,250 Mobile, Alabama, GO, Refunding, 10.875% due 11/01/2007 (c) 1,662
Arizona--0.5% AAA Aaa 6,750 Arizona State Municipal Financing Program, COP, Series 34,
7.25% due 8/01/2009 (g) 8,051
California--0.6% A1+ VMIG1++ 1,000 California Health Facilities Finance Authority, Revenue
Refunding Bonds (Adventist Hospital), VRDN, Series B, 3.85%
due 9/01/2028 (e)(f) 1,000
AAA Aaa 5,800 Oakland, California, Redevelopment Agency Tax Allocation
Refunding Bonds, INFLOS, 8.574% due 9/01/2019 (d)(e) 6,423
AAA Aaa 2,300 San Jose, California, Redevelopment Agency, Tax Allocation
Refunding Bonds (Merged Area Redevelopment Project), 6%
due 8/01/2008 (e) 2,512
Colorado--5.7% NR* Aaa 20,000 Denver, Colorado, City and County Airport Revenue Bonds,
RITR, Series 13, 6.32% due 11/15/2023 (d)(e) 18,716
Denver, Colorado, City and County Airport Revenue Refunding
Bonds (e):
AAA Aaa 38,325 Series A, 5.70% due 11/15/2025 38,960
AAA Aaa 1,500 Series D, 5.50% due 11/15/2025 1,500
AAA Aaa 17,825 Series E, 5.50% due 11/15/2025 17,824
AAA Aaa 8,500 E-470 Public Highway Authority, Colorado, Revenue Refunding
Bonds, Senior Series A, 5.25% due 9/01/2018 (e) 8,378
A1+ VMIG1++ 12,800 Moffat County, Colorado, PCR, Refunding (Pacificorp Projects),
VRDN, 3.95% due 5/01/2013 (b)(f) 12,800
District of AAA Aaa 5,115 District of Columbia, Water and Sewer Authority, Public Utility
Columbia--1.9% Revenue Refunding Bonds, 5.50% due 10/01/2023 (i) 5,183
Washington, D.C., Convention Center Authority, Dedicated Tax
Revenue Bonds, Senior Lien (b):
AAA Aaa 20,970 5% due 10/01/2021 19,657
AAA Aaa 10,000 4.75% due 10/01/2028 8,796
Florida--2.8% A1+ VMIG1++ 2,500 Dade County, Florida, Water and Sewer System Revenue Bonds,
VRDN, 3.70% due 10/05/2022 (f)(h) 2,500
AAA Aaa 500 Jacksonville, Florida, Health Facilities Authority, Hospital
Revenue Refunding Bonds, 11.50% due 10/01/2012 (a)(c) 803
AAA Aaa 12,000 Orange County, Florida, Tourist Development Tax Revenue Refunding
Bonds, 5.125% due 10/01/2021 (e) 11,584
A1+ VMIG1++ 19,600 Pinellas County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan Program), DATES, 4% due
12/01/2015 (b)(f) 19,600
NR* Aaa 10,000 Saint Petersburg, Florida, Public Utilities Revenue Bonds,
Series A, 5.375% due 10/01/2024 (i) 9,938
AAA Aaa 2,240 West Coast Regional Water Supply Authority, Florida, Capital
Improvement Revenue Bonds, 10.40% due 10/01/2010 (a)(b) 3,133
Georgia--2.3% AAA Aaa 4,000 Chatam County, Georgia, School District, GO, 6.75% due
8/01/2003 (a)(e) 4,423
Georgia Municipal Electric Authority, Power Revenue Refunding
Bonds (b):
AAA Aaa 20,000 Series EE, 7% due 1/01/2025 24,435
AAA Aaa 9,000 Series Y, 6.40% due 1/01/2013 10,066
Hawaii--1.4% AAA Aaa 10,000 Hawaii State Airports System Revenue Refunding Bonds, 6.45%
due 7/01/2013 (e) 10,779
Hawaii State, GO (a)(h):
AAA Aaa 5,000 Series CJ, 6.25% due 1/01/2005 5,395
AAA Aaa 6,000 Series CN, 5.50% due 3/01/2007 6,358
AAA Aaa 2,000 Honolulu, Hawaii, City and County Wastewater System, Revenue
Refunding Bonds, Second Bond Resolution (Junior Series),
5.25% due 7/01/2017 (h) 1,950
Illinois--14.7% Chicago, Illinois, Board of Education, GO (Chicago School Reform
Project), Series A (b):
AAA Aaa 59,185 5.25% due 12/01/2027 56,739
AAA Aaa 20,970 5.25% due 12/01/2030 20,039
AAA Aaa 18,000 Chicago, Illinois, GO, Project and Refunding Bonds, 5.25% due
1/01/2028 (h) 17,281
AAA Aaa 2,000 Chicago, Illinois, O'Hare International Airport Revenue Bonds
(Passenger Facility Charge), Series A, 5.625% due 1/01/2015 (b) 2,033
AAA NR* 6,225 Chicago, Illinois, Sales Tax Revenue Bonds, RIB, Series 92,
6.695% due 1/01/2030 (d)(h) 5,888
AAA Aaa 5,000 Chicago, Illinois, Water Revenue Refunding Bonds, 5.25% due
11/01/2027 (h) 4,793
AAA Aaa 4,500 Cook County, Illinois, GO, Capital Improvement, Series A, 5%
due 11/15/2023 (h) 4,200
A1+ VMIG1++ 4,400 Illinois Development Finance Authority Revenue Refunding Bonds
(Provena Health), VRDN, Series B, 3.95% due 5/01/2028 (e)(f) 4,400
AAA Aaa 3,250 Illinois Health Facilities Authority Revenue Bonds (Elmhurst
Memorial Hospital), 6.625% due 1/01/2022 (h) 3,451
Illinois Health Facilities Authority, Revenue Refunding Bonds:
AAA Aaa 3,740 (Methodist Medical Center), 5.50% due 11/15/2011 (e) 3,805
AAA Aaa 28,900 (Sinai Health System), 6% due 2/15/2024 (b)(j) 29,820
A1+ VMIG1++ 25,100 (University of Chicago Hospitals), VRDN, 4% due 8/01/2026 (e)(f) 25,100
Illinois State, GO:
AAA Aaa 16,825 5.125% due 3/01/2011 (h) 16,787
AAA Aaa 3,000 5.75% due 5/01/2021 (e) 3,054
AAA Aaa 22,940 Illinois State, GO, Refunding, 5.125% due 4/01/2023 (i) 21,805
AAA Aaa 6,600 Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Bonds, 6.50% due 6/15/2003 (a)(b) 7,220
AAA Aaa 26,000 Regional Transportation Authority, Illinois, Revenue Bonds,
Series A, 6.25% due 6/01/2024 (b) 27,797
Indiana--2.1% AAA NR* 7,500 Indiana Health Facility Financing Authority, Hospital Revenue
Refunding Bonds, RIB, Series 89, 6.692% due 11/01/2027 (d)(e) 7,001
AAA Aaa 5,555 Indiana State Office Building Commission, Facilities Revenue
Bonds (Miami Correctional Facility-Phase 1), Series A, 5.50%
due 7/01/2015 (b) 5,589
AAA Aaa 4,040 Indianapolis, Indiana, Local Public Improvement Revenue Bonds,
7.90% due 2/01/2002 (a)(g) 4,395
AAA Aaa 4,510 Munster, Indiana, School Building Corporation Revenue Refunding
Bonds, First Mortgage, 5.75% due 1/15/2005 (a)(e) 4,801
AAA Aaa 5,000 Penn, Indiana, High School Building Corporation Revenue Bonds,
First Mortgage, 6.125% due 7/15/2005 (a)(e) 5,442
Rockport, Indiana, PCR, Refunding (AEP Generating Company
Project), VRDN (b)(f):
AAA Aaa 2,000 Series A, 3.95% due 7/01/2025 2,000
AAA Aaa 7,735 Series B, 3.95% due 7/01/2025 7,735
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Maryland--0.3% AAA Aaa $ 4,400 Maryland State Health and Higher Educational Facilities
Authority Revenue Bonds (University of Maryland Medical
System), Series B, 7% due 7/01/2022 (h) $ 5,341
Massachusetts Massachusetts Bay Transportation Authority, Massachusetts,
- --5.0% Revenue Bonds (General Transportation System):
AAA Aaa 8,300 Series A, 5% due 3/01/2027 (h) 7,713
AAA Aaa 5,000 Series B, 5.25% due 3/01/2020 (i) 4,864
AAA Aaa 3,980 Massachusetts Educational Loan Authority, Education Loan Revenue
Bonds, AMT, Issue D, Series A, 7.25% due 1/01/2009 (e) 4,182
AAA Aaa 5,350 Massachusetts State, GO, Refunding, Series A, 5.75% due
8/01/2009 (b) 5,686
AAA Aaa 10,000 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (Beth Israel Deaconess Medical Center),
INFLOS, Series G-4, 8.623% due 7/01/2025 (b)(d) 10,950
AAA Aaa 3,100 Massachusetts State Health and Educational Facilities Authority,
Revenue Refunding Bonds (Saint Elizabeth's Hospital), LEVRRS,
Series E, 9.52% due 8/12/2021 (d)(i) 3,495
AAA Aaa 13,500 Massachusetts State Port Authority Revenue Bonds, Series A, 5%
due 7/01/2027 (h) 12,578
AAA Aaa 2,500 Massachusetts State Water Resource Authority Revenue Bonds,
Series A, 5.50% due 11/01/2006 (a)(h) 2,650
Massachusetts State Water Resource Authority, Revenue Refunding
Bonds (e):
AAA Aaa 10,100 Series C, 5.25% due 12/01/2015 10,166
AAA Aaa 25,000 Series D, 5% due 8/01/2024 23,341
Michigan--1.1% AAA Aaa 6,915 Michigan State, HDA, Rental Housing Revenue Refunding Bonds,
Series B, 6.15% due 10/01/2015 (e) 7,277
AAA Aaa 10,000 Michigan State Strategic Fund, Limited Obligation, Revenue
Refunding Bonds (Detroit Edison Company), Series AA, 6.40%
due 9/01/2025 (e) 10,861
AAA Aaa 1,000 Rockford, Michigan, Public Schools, GO, 6% due 5/01/2007 (h) 1,074
Minnesota--0.3% AAA Aaa 5,500 Northern Municipal Power Agency, Minnesota, Electric System
Revenue Refunding Bonds, 5.40% due 1/01/2016 (i) 5,521
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) 1,734
Nevada--2.8% AAA Aaa 45,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra
Pacific Power Company), AMT, 6.65% due 6/01/2017 (e) 48,389
New Jersey--3.9% 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) 4,007
AAA Aaa 28,750 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds
(NUI Corporation Project), Series A, 6.35% due 10/01/2022 (b) 31,028
New Jersey State Housing and Mortgage Finance Agency Revenue
Bonds, Home Buyer, AMT (e):
AAA Aaa 5,280 Series D, 7.70% due 10/01/2029 (j) 5,400
AAA Aaa 20,505 Series M, 7% due 10/01/2026 22,110
AAA Aaa 4,215 New Jersey State Turnpike Authority, Turnpike Revenue Refunding
Bonds, Series C, 6.50% due 1/01/2008 (b) 4,664
New York--22.5% A1+ VMIG1++ 21,350 Long Island Power Authority, New York, Electric System Revenue
Bonds, VRDN, Sub-Series 7, 3.95% due 4/01/2025 (e)(f) 21,350
Long Island Power Authority, New York, Electric System Revenue
Refunding Bonds (e):
AAA Aaa 10,455 4.625% due 4/01/2016 9,456
AAA Aaa 27,425 Series A, 5.25% due 12/01/2026 26,534
AAA Aaa 4,395 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds, Series A, 5.25% due 7/01/2028 (h) 4,249
Metropolitan Transportation Authority, New York, Transit
Facilities Revenue Bonds (a):
AAA Aaa 10,000 Series A, 6.10% due 7/01/2006 (i) 11,035
AAA Aaa 7,000 Series O, 6.375% due 7/01/2004 (e) 7,699
AAA Aaa 11,025 Metropolitan Transportation Authority, New York, Transit
Facilities Revenue Refunding Bonds, Series C, 4.75% due
7/01/2016 (i) 10,177
New York City, New York, GO:
AAA Aaa 15,000 Series B, 6.25% due 8/15/2008 (b) 16,279
AAA Aaa 8,175 Series E, 6% due 8/01/2007 (h) 8,775
AAA Aaa 13,770 Series G, 6% due 10/15/2007 (b) 14,801
AAA NR* 31,000 Series I, 6% due 4/15/2012 (i) 32,920
AAA Aaa 5,385 Series I, 5.25% due 4/15/2016 (e) 5,308
AAA Aaa 3,350 Series I, 5% due 4/15/2029 (e) 3,115
AAA Aaa 10,095 Series M, 5.30% due 6/01/2012 (b) 10,149
AAA Aaa 15,000 Series M, 5.50% due 6/01/2017 (b) 15,171
New York City, New York, GO, Refunding:
AAA Aaa 24,500 Series D, 6% due 8/01/2008 (h) 26,289
AAA Aaa 1,500 Series E, 6.20% due 8/01/2008 (e) 1,631
AAA Aaa 18,530 Series F, 5.25% due 8/01/2012 (h) 18,559
AAA Aaa 3,405 Series H, 5.125% due 8/01/2018 (e) 3,286
New York City, New York, GO, VRDN (f):
A1+ VMIG1++ 3,000 Series B, 4% due 10/01/2020 (h) 3,000
A1 VMIG1++ 8,600 Series B, Sub-Series B-6, 3.95% due 8/15/2005 (e) 8,600
A1+ VMIG1++ 11,365 Series B-2, Sub-Series B-5, 3.95% due 8/15/2011 (e) 11,365
A1 Aaa 28,510 New York City, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, RITR, Series FR-5,
7.295% due 6/15/2026 (d)(e) 29,857
New York City, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Refunding Bonds:
AAA Aaa 7,500 Series B, 5.125% due 6/15/2030 (h) 7,084
AAA Aaa 4,000 Series D, 4.75% due 6/15/2025 (e) 3,593
A1+ VMIG1++ 14,600 VRDN, Series A, 3.90% due 6/15/2025 (f)(h) 14,600
A1+ VMIG1++ 21,900 VRDN, Series G, 3.90% due 6/15/2024 (f)(h) 21,900
AAA Aaa 2,500 New York State Dormitory Authority Revenue Bonds (City
University), Third Generation Reserves, Series 2, 6.25%
due 7/01/2004 (a)(e) 2,706
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) 1,673
New York State Medical Care Facilities Finance Agency
Revenue Bonds, Series E (h):
AAA Aaa 160 6.25% due 8/15/2004 171
AAA Aaa 8,965 6.25% due 8/15/2004 (a) 9,840
A1+ VMIG1++ 2,000 New York State Thruway Authority, General Revenue Bonds,
VRDN, 3.90% due 1/01/2024 (f)(h) 2,000
New York State Thruway Authority, Service Contract Revenue
Bonds (Local Highway and Bridge Project), Series A-2 (e):
AAA Aaa 6,205 5.25% due 4/01/2011 6,260
AAA Aaa 5,000 5.25% due 4/01/2012 5,024
Niagara Falls, New York, GO, Public Improvement (e):
AAA Aaa 2,975 6.90% due 3/01/2023 3,290
AAA Aaa 3,190 6.90% due 3/01/2024 3,528
AAA Aaa 7,820 Triborough Bridge and Tunnel Authority, New York, Special
Obligation Revenue Refunding Bonds, Series A, 5.25% due
1/01/2011 (h) 7,889
Ohio--1.1% AAA Aaa 12,000 Cleveland, Ohio, Public Power System Revenue Bonds, First
Mortage, Series A, 7% due 11/15/2004 (a)(e) 13,631
AAA Aaa 5,235 Ohio State Water Development Authority, Pollution Control
Facilities Revenue Bonds (Water Control Loan Fund), Water
Quality Series, 5% due 12/01/2012 (e) 5,164
Oregon--0.3% AAA Aaa 3,865 Port of Portland, Oregon, Airport Revenue Refunding Bonds
(Portland International Airport), AMT, Series 7-B, 7.10% due
1/01/2012 (a)(e) 4,540
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Pennsylvania AAA Aaa $12,520 Pennsylvania State Turnpike Commission, Oil Franchise Tax
- --2.5% Revenue Refunding Bonds, Senior Series A, 5.25% due
12/01/2018 (b) $ 12,325
AAA Aaa 6,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th
Series B, 7% due 5/15/2020 (c)(e) 7,031
AAA Aaa 4,000 Philadelphia, Pennsylvania, Water and Wastewater Revenue
Bonds, Series A, 5% due 8/01/2016 (b) 3,818
Philadelphia, Pennsylvania, Water and Wastewater Revenue
Refunding Bonds (e):
AAA Aaa 5,000 5.625% due 6/15/2008 5,223
AAA Aaa 4,020 5.60% due 8/01/2018 4,063
AAA Aaa 5,250 Pittsburgh and Allegheny County, Pennsylvania, Public
Auditorium Revenue Bonds (Regional Asset District Sales
Tax), 5% due 2/01/2024 (b) 4,912
AAA Aaa 7,000 Pittsburgh, Pennsylvania, Water and Sewer Authority, Water
and Sewer System Revenue Refunding Bonds, Sub-Series C, 5.25%
due 9/01/2022 (i) 6,781
Rhode AAA Aaa 6,100 Rhode Island Depositors Economic Protection Corporation, Special
Island--0.6% Obligation Revenue Bonds, Series A, 6.625% due 8/01/2002 (a)(i) 6,627
AAA Aaa 3,775 Rhode Island State, GO, Consolidated Capital Development Loan,
Series A, 6% due 8/01/2007 (e) 4,060
South AAA Aaa 4,000 Piedmont Municipal Power Agency, South Carolina, Electric Revenue
Carolina--1.6% Refunding Bonds, 6.30% due 1/01/2003 (a)(e) 4,322
South Carolina State Public Service Authority Revenue Refunding
Bonds, Series A (b):
AAA Aaa 17,090 6.375% due 7/01/2021 18,235
AAA Aaa 4,200 6.25% due 1/01/2022 4,518
Texas--13.3% AAA Aaa 11,190 Austin, Texas, Utility System Revenue Bonds, Combined, 9.25% due
11/15/2008 (e) 13,473
AAA Aaa 4,800 Austin, Texas, Utility System Revenue Refunding Bonds, 5.125% due
11/15/2020 (i) 4,599
AAA Aaa 7,800 Austin, Texas, Utility System Revenue Refunding Bonds, Combined,
5.60% due 5/15/2005 (a)(e) 8,197
AAA Aaa 6,000 Brazos River Authority, Texas, PCR, Refunding (Texas Utilities
Electric Company Project), AMT, 6.50% due 12/01/2027 (b) 6,402
AAA Aaa 12,000 Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series B, 6.625% due 6/01/2022 (h) 12,768
Brazos River Authority, Texas, Revenue Refunding Bonds (Houston
Industries Inc. Project) (b):
AAA Aaa 10,755 Series B, 5.125% due 11/01/2020 10,238
AAA Aaa 36,900 Series C, 5.125% due 5/01/2019 35,239
AAA Aaa 17,000 Brownsville, Texas, Utility System Revenue Refunding Bonds, 6.25%
due 9/01/2014 (e) 18,799
AAA Aaa 10,000 Dallas, Texas, Revenue Bonds, Special Tax, Series A, 5% due
8/15/2025 (b) 9,311
AAA Aaa 11,100 Harris County, Texas, Toll Road Revenue Bonds, Senior Lien, Series
A, 6.375% due 8/15/2004 (a)(e) 12,208
AAA Aaa 2,750 Harris County, Texas, Toll Road Revenue Refunding Bonds, Series A,
6.50% due 8/15/2017 (b) 2,949
AAA Aaa 13,500 Houston, Texas, Water and Sewer System Revenue Bonds, Junior Lien,
Series C, 5.375% due 12/01/2027 (h) 13,239
NR* Aaa 11,230 Houston, Texas, Water and Sewer System Revenue Bonds, RITR, Series
5, 6.57% due 12/01/2027 (d)(h) 11,778
Houston, Texas, Water and Sewer System, Revenue Refunding Bonds,
Junior Lien, Series A (a)(e):
AAA Aaa 14,770 6.125% due 12/01/2005 16,052
AAA Aaa 8,000 6.20% due 12/01/2005 8,727
AAA Aaa 3,500 Houston, Texas, Water Conveyance System Contract, COP, Series J,
6.25% due 12/15/2013 (b) 3,851
AAA Aaa 11,800 Matagorda County, Texas, Navigation District No. 1 Revenue
Refunding Bonds (Houston Light and Power Company), Series A,
6.70% due 3/01/2027 (b) 12,596
A1+ NR* 2,000 North Central Texas Health Facility Development Corporation
Revenue Bonds (Methodist Hospitals-Dallas), VRDN, Series B,
3.95% due 10/01/2015 (e)(f) 2,000
AAA Aaa 5,300 North Central Texas Health Facility Development Corporation,
Revenue Refunding Bonds (Texas Health Resources System),
Series B, 5% due 2/15/2017 (e) 4,986
AAA VMIG1++ 6,300 Sabine River Authority, Texas, PCR, Refunding (Texas Utilities
Electric Company Project), VRDN, Series A, 3.95% due
3/01/2026 (b)(f) 6,300
AAA Aaa 7,430 Southwest Higher Education Authority Incorporated, Revenue
Refunding Bonds, Series B, 6.25% due 10/01/2022 (h) 7,903
AAA Aaa 8,250 Texas State Turnpike Authority, Dallas North Thruway Revenue
Bonds (President George Bush Turnpike), 5% due 1/01/2025 (h) 7,688
Utah--2.4% AAA VMIG1++ 3,200 Carbon County, Utah, PCR, Refunding (Pacificorp Projects),
VRDN, 3.95% due 11/01/2024 (b)(f) 3,200
A1 VMIG1++ 22,400 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN,
3.95% due 11/01/2024 (b)(f) 22,400
AAA Aaa 7,785 Salt Lake City, Utah, Metropolitan Water District, Water Revenue
Bonds, 5.375% due 7/01/2024 (b) 7,623
AAA Aaa 2,650 Utah State Board of Regents, Student Loan Revenue Bonds, AMT,
Series F, 7.45% due 11/01/2008 (b) 2,819
Utah State Building Ownership Authority, Lease Revenue Refunding
Bonds (State Facilities Master Lease Program), Series C (i):
AAA Aaa 2,995 5.50% due 5/15/2012 3,090
AAA Aaa 3,000 5.50% due 5/15/2013 3,094
Virginia--1.3% AAA Aaa 5,000 Danville, Virginia, IDA, Hospital Revenue Refunding Bonds
(Danville Regional Medical Center), 6.50% due 10/01/2004 (a)(h) 5,500
Virginia State HDA, Commonwealth Mortgage Revenue Bonds, AMT,
Series A, Sub-Series A-4 (e):
AAA Aaa 5,000 6.30% due 7/01/2014 5,297
AAA Aaa 11,215 6.35% due 7/01/2018 11,879
Washington--3.4% AAA Aaa 5,000 King County, Washington, GO, Refunding, Series B, 5.25% due
1/01/2034 (e) 4,771
AAA Aaa 5,315 King County, Washington, Sewer Revenue Bonds, 5.25% due
1/01/2026 (h) 5,109
AAA Aaa 10,680 Seattle, Washington, Metropolitan Seattle Municipality, Sewer
Revenue Bonds, Series W, 6.25% due 1/01/2003 (a)(e) 11,516
AAA Aaa 33,535 Seattle, Washington, Municipal Light and Power Revenue Bonds,
6.625% due 7/01/2004 (a)(h) 37,281
West AAA Aaa 11,465 Mason County, West Virginia, PCR, Refunding (Appalachian Power
Virginia--1.6% Company), 6.85% due 6/01/2022 (e) 12,317
AAA Aaa 12,250 Pleasants County, West Virginia, PCR, Refunding (Potomac-
Pleasants), Series C, 6.15% due 5/01/2015 (b) 13,063
AAA Aaa 2,500 West Virginia School Building Authority, Revenue Refunding
Bonds (Capital Improvement), Series B, 5.25% due 7/01/2021 (i) 2,424
Wisconsin--2.8% AAA Aaa 9,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds
(Midwest Energy Resources), Series E, 6.90% due 8/01/2021 (h) 10,703
AAA Aaa 4,650 Wisconsin Public Power Inc., Power Supply System Revenue Bonds,
Series A, 5.75% due 7/01/2023 (e) 4,725
Wisconsin State, GO, AMT, Series B (e):
AAA Aaa 7,920 6.50% due 5/01/2020 8,399
AAA Aaa 17,130 6.50% due 5/01/2025 18,166
AAA Aaa 6,520 Wisconsin State Health and Educational Facilities Authority
Revenue Bonds (Sister's Sorrowful Mother), Series A, 6.125%
due 8/15/2022 (e) 6,849
Total Investments (Cost--$1,715,413)--101.0% 1,745,856
Liabilities in Excess of Other Assets--(1.0%) (17,287)
----------
Net Assets--100.0% $1,728,569
==========
<FN>
(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 June 30, 1999.
(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 June 30, 1999.
(g)BIG Insured.
(h)FGIC Insured.
(i)FSA Insured.
(j)FHA Insured.
*Not rated.
++Highest short-term rating issued by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--0.7% AAA NR* $10,000 Jefferson County, Alabama, Sewer Revenue Bonds, RIB, Series 124,
6.73% due 2/01/2036 (e)(g) $ 9,454
Alaska--2.1% AA+ NR* 27,150 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Sohio
Pipeline-British Petroleum Oil), 7.125% due 12/01/2025 29,490
Arizona--0.3% NR* B1 5,000 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds
(America West Airlines Inc.), AMT, 6.30% due 4/01/2023 4,958
California AAA Aaa 11,010 Beverly Hills, California, Public Financing Authority, Lease
- --13.7% Revenue Refunding Bonds, Series A, 5.125% due 6/01/2017 (f) 10,826
AAA Aaa 6,540 California Health Facilities Finance Authority, Revenue
Refunding Bonds (Little Co. of Mary Health Service), 4.50% due
10/01/2028 (c) 5,552
California State, GO, Refunding:
AAA Aaa 25,000 4.25% due 10/01/2026 (f) 20,369
AAA Aaa 13,450 4.75% due 2/01/2029 (e) 11,966
A Aaa 10,350 California State Public Works Board, Lease Revenue Bonds
(Department of Corrections), Series A, 7% due 11/01/2004 (j) 11,839
AAA Aaa 9,000 Fresno, California, Sewer Revenue Bonds, Series A, 5% due
9/01/2023 (f) 8,505
NR* NR* 4,000 Long Beach, California, Special Tax Bonds (Community Facilities
District No. 3--Pine Ave.), 6.375% due 9/01/2023 4,156
AAA Aaa 25,000 Los Angeles, California, Department of Water and Power, Waterworks
Revenue Refunding Bonds, 4.25% due 10/15/2030 (e) 20,042
AAA Aaa 20,000 Los Angeles, California, Unified School District, GO, Series A,
5% due 7/01/2021 (e) 19,051
AAA Aaa 13,420 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Refunding Bonds, First Tier,
Senior Series B, 4.75% due 7/01/2024 (h) 12,078
AAA Aaa 29,000 Northern California Power Agency, Public Power Revenue Refunding
Bonds (Hydroelectric Project Number One), Series A, 5.125% due
7/01/2023 (f) 27,934
AAA Aaa 10,000 Sacramento County, California, Airport System Revenue Refunding
Bonds, Sub-Series B, 5% due 7/01/2026 (e) 9,421
AAA Aaa 3,250 Sacramento County, California, COP, Refunding (Public Facilities
Project), 4.75% due 10/01/2027 (c) 2,907
AAA Aaa 16,000 San Diego, California, Certificates of Undivided Interest Revenue
Bonds (Water Utility Fund), 4.75% due 8/01/2028 (e) 14,289
AAA Aaa 10,000 San Jose, California, Redevelopment Agency Tax Allocation (Merged
Area Redevelopment Project), 5% due 8/01/2026 (c) 9,420
AAA Aaa 2,000 San Rafael, California, Redevelopment Agency, Tax Allocation Bonds
(Central San Rafael Redevelopment Project), 5% due 12/01/2022 (c) 1,892
Colorado--5.9% NR* Aa2 12,600 Colorado Springs, Colorado, Utilities Revenue Bond, RITR, Series
19, 6.495% due 11/15/2026 (g) 12,331
Denver, Colorado, City and County Airport Revenue Bonds, AMT:
BBB+ Baa1 2,575 Series A, 7.50% due 11/15/2023 2,877
BBB+ Baa1 7,910 Series A, 8% due 11/15/2025 8,376
BBB+ Baa1 9,710 Series B, 7.25% due 11/15/2023 10,535
Denver, Colorado, City and County Airport Revenue Refunding Bonds,
Series A (f):
AAA Aaa 23,280 5.75% due 11/15/2016 24,228
AAA Aaa 24,000 5.70% due 11/15/2025 24,397
District of A- A2 3,750 District of Columbia Revenue Bonds (Georgetown University), RIB,
Columbia--1.0% 6.562% due 4/22/2002 (g)(j) 4,125
AAA Aaa 11,000 Washington, D.C. Convention Center Authority, Dedicated Tax Revenue
Bonds, Senior Lien, 4.75% due 10/01/2028 (c) 9,676
Florida--3.7% A1+ VMIG1++ 700 Dade County, Florida, IDA Exempt Facilities, Revenue Refunding
Bonds (Florida Power & Light Co.), VRDN, 3.90% due 6/01/2021 (a) 700
A1 VMIG1++ 7,750 Escambia County, Florida, PCR, Refunding (Gulf Power Company
Project), VRDN, 4.05% due 7/01/2022 (a) 7,750
NR* Aaa 5,915 Florida HFA, Home Ownership Revenue Refunding Bonds, AMT,
Series G-1, 7.90% due 3/01/2022 (d) 6,181
AAA Aaa 6,330 Florida HFA, Revenue Bonds (Antigua Club Apartments), AMT,
Series A-1, 7% due 2/01/2035 (c) 6,881
AA+ Aa2 13,000 Florida State Board of Education, Capital Outlay, GO, Public
Education, Series B, 4.50% due 6/01/2027 11,073
AA Aa3 5,000 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa
Electric Company Project), 7.875% due 8/01/2021 5,474
NR* Aa2 2,700 Jacksonville, Florida, Health Facilities Authority, Hospital
Revenue Refunding Bonds (Genesis Rehabilitation Hospital),
VRDN, 4% due 5/01/2021 (a) 2,700
AAA NR* 2,790 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT,
Series A, 8.375% due 3/01/2021 (d) 2,879
AAA Aaa 8,430 Tampa Bay, Florida, Water Utility System Revenue Bonds, Series B,
4.75% due 10/01/2027 (e) 7,539
Georgia--3.2% A1 VMIG1++ 5,700 Effingham County, Georgia, Development Authority, PCR, Refunding
(Savannah Electric and Power Company Project), VRDN, 4.05% due
4/01/2037 (a) 5,700
AAA Aaa 18,600 Fulton County, Georgia, Water and Sewer Revenue Bonds, 4.75% due
1/01/2028 (e) 16,702
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) 22,487
Idaho--0.1% AA NR* 950 Idaho Housing Agency, S/F Mortgage Revenue Bonds, AMT, Senior
Series E, 7.875% due 7/01/2024 (b) 996
Illinois--3.4% AAA NR* 12,265 Chicago, Illinois, GO, Refunding, RITR, Series 126, 6.72% due
1/01/2034 (e)(g) 11,657
AA- Aa2 8,000 Chicago, Illinois, Gas Supply Revenue Bonds (Peoples Gas, Light
& Coke Company Project), AMT, Series A, 8.10% due 5/01/2020 8,409
Chicago, Illinois, O'Hare International Airport, Special Facilities
Revenue Bonds (United Airlines, Inc.):
BB+ Baa2 4,475 AMT, Series B, 8.95% due 5/01/2018 4,849
BB+ Baa2 12,975 Series 84-B, 8.85% due 5/01/2018 14,061
AA Aa1 1,100 Illinois HDA, Residential Mortgage, Revenue Bonds, RIB, AMT,
10.049% due 2/01/2018 (g) 1,216
NR* NR* 2,625 Illinois Health Facilities Authority, Revenue Refunding Bonds
(Saint Elizabeth's Hospital--Chicago), 7.75%
due 7/01/2004 (j) 3,026
NR* A2 4,400 Southwestern Illinois, Development Authority, Sewer Facilities
Revenue Bonds (Monsanto Company Project), AMT, 7.30% due 7/15/2015 4,828
Indiana--0.7% AA NR* 9,100 Indianapolis, Indiana, Local Public Improvement Bond Bank Revenue
Refunding Bonds, Series D, 6.75% due 2/01/2020 9,813
Iowa--0.8% NR* NR* 9,000 Iowa Finance Authority, Health Care Facilities Revenue Bonds
(Care Initiatives Project), 9.25% due 7/01/2025 11,619
Kansas--1.8% Wichita, Kansas, Hospital Revenue Refunding Bonds, RIB (f)(g):
AAA Aaa 12,000 Series III-A, 9.198% due 10/01/2017 13,755
AAA Aaa 10,000 Series III-B, 9.34% due 10/21/2022 11,450
Kentucky--1.6% AAA Aaa 11,900 Louisville and Jefferson County, Kentucky, Metropolitian Sewer
District, Sewer and Drain System Revenue Refunding Bonds, Series
A, 4.75% due 5/15/2028 (e) 10,663
NR* NR* 4,500 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds (TJ
International Project), AMT, 7% due 6/01/2024 4,827
A+ Aa2 6,345 Trimble County, Kentucky, PCR, AMT, Series A, 7.625% due
11/01/2020 6,695
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Louisiana--3.6% NR* A3 $35,000 Lake Charles, Louisiana, Harbor and Terminal District, Port
Facilities Revenue Refunding Bonds (Trunkline Long Company
Project), 7.75% due 8/15/2022 $ 39,194
B- NR* 10,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
Company Project), 7.50% due 7/01/2013 10,308
Maine--0.1% AA Aa2 1,000 Maine State Housing Authority, Mortgage Purchase Revenue
Bonds, AMT, Series B-4, 6.90% due 11/15/2026 1,072
Maryland--0.5% AA- Aa2 7,000 Maryland State Stadium Authority, Sports Facilities Lease Revenue
Bonds, AMT, Series D, 7.60% due 12/15/2019 7,252
Massachusetts AAA Aaa 22,500 Massachusetts Bay Transportation Authority, Revenue Refunding
- --2.7% Bonds (General Transportation System), Series A, 4.50% due
3/01/2026 (f) 19,120
Massachusetts State Health and Educational Facilities Authority,
Revenue Refunding Bonds:
A1+ VMIG1++ 4,900 (Harvard University), VRDN, 3.70% due 2/01/2016 (a) 4,900
NR* Ca 12,350 (New England Memorial Hospital), Series B, 6.25% due
7/01/2023 (k) 3,890
AAA Aaa 11,510 Massachusetts State Water Resources Authority Revenue Bonds,
Series A, 4.75% due 8/01/2027 (h) 10,222
Michigan--1.9% AAA Aaa 15,000 Michigan State Hospital Finance Authority, Revenue Refunding
Bonds, INFLOS, 9.122% due 2/15/2022 (g)(h) 16,763
BBB Baa1 9,350 Monroe County, Michigan, PCR (Detroit Edison Co. Project), AMT,
Series A, 7.75% due 12/01/2019 9,731
Minnesota--0.5% AA+ Aa2 3,585 Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT, Series A,
7.45% due 7/01/2022 (b) 3,722
AA+ NR* 3,000 Rochester, Minnesota, Health Care Facilities Revenue Bonds, IRS,
Series H, 8.472% due 11/15/2015 (g) 3,274
Mississippi--1.5% AAA Aaa 11,290 Harrison County, Mississippi, Wastewater Management and Solid
Waste Revenue Refunding Bonds, 4.75% due 2/01/2027 (e) 10,022
NR* Baa2 5,640 Lowndes County, Mississippi, Hospital Revenue Refunding Bonds
(Golden Triangle Medical Center), 8.50% due 2/01/2010 5,863
NR* Aaa 4,195 Mississippi Home Corporation, S/F Mortgage Revenue Bonds (Access
Program), AMT, Series A, 6.90% due 6/01/2024 (d) 4,472
Missouri--0.9% NR* NR* 11,400 Bi-State Development Agency, Missouri and Illinois, Metropolitan
District Terminal Facilities Revenue Refunding Bonds (American
Commonwealth), 7.75% due 6/01/2000 (j) 12,147
Nebraska--0.2% AAA Aaa 2,100 Nebraska Investment Finance Authority, S/F Mortgage Revenue Bonds,
RIB, AMT, Series 2, 11.632% due 9/10/2030 (d)(g) 2,276
Nevada--0.6% BBB+ A2 10,000 Henderson, Nevada, Health Care Facilities Revenue Bonds (Catholic
Healthcare West), 5.375% due 7/01/2026 9,046
New Jersey--1.1% NR* Aaa 5,000 Union County, New Jersey, Utilities Authority, RITR, Series 38,
6.62% due 6/01/2020 (g) 5,038
AA- A3 9,500 University of Medicine and Dentistry, New Jersey, Revenue Bonds,
Series C, 7.20% due 12/01/1999 (j) 9,838
New Mexico--0.0% A1+ NR* 400 Eddy County, New Mexico, PCR, Refunding (IMC Fertilizer Inc.
Project), VRDN, 3.65% due 2/01/2003 (a) 400
New York--17.7% A1+ VMIG1++ 13,800 Long Island Power Authority, New York, Electric System Revenue
Bonds, VRDN, Sub-Series 7, 3.45% due 4/01/2025 (a)(f) 13,800
AAA Aaa 10,000 Long Island Power Authority, New York, Electric System Revenue
Refunding Bonds, Series A, 5.50% due 12/01/2029 (f) 10,073
AAA Aaa 6,170 Metropolitan Transportation Authority, New York, Dedicated Tax
Fund Revenue Bonds, Series A, 5% due 4/01/2029 (h) 5,737
Metropolitan Transportation Authority, New York, Service Contract
Revenue Refunding Bonds (Commuter Facilities), Series 5:
BBB+ Baa1 2,145 6.90% due 7/01/2006 2,280
BBB+ Baa1 5,000 7% due 7/01/2012 5,329
New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds:
AAA Aaa 7,450 Series A, 4.75% due 6/15/2031 (e) 6,583
AAA Aaa 10,000 Series B, 5.75% due 6/15/2026 (f) 10,237
AAA NR* 10,000 Series B, 5.875% due 6/15/2026 (h) 10,323
New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Refunding Bonds, Series B:
AAA Aaa 10,440 5.375% due 6/15/2019 (c) 10,421
AAA Aaa 5,500 5% due 6/15/2029 (h) 5,114
New York City, New York, City Transitional Finance Authority
Revenue Bonds, Future Tax Secured:
AA Aa3 8,500 Series B, 4.75% due 11/01/2023 7,608
AA Aa3 10,000 Series C, 5% due 5/01/2026 9,289
AA Aa3 7,750 Series C, 5.50% due 5/01/2025 7,783
New York City, New York, GO:
A- A3 4,000 Series B, 8.25% due 6/01/2006 4,761
A- Aaa 5,495 Series F, 8.25% due 11/15/2001 (j) 6,089
New York City, New York, GO, Refunding, Series B (j):
A- A3 10,000 7.75% due 2/01/2002 10,979
A- A3 4,500 7.75% due 2/01/2002 4,941
A- A3 11,515 New York State Dormitory Authority Revenue Bonds (State
University Educational Facilities), 5.50% due 5/15/2026 11,371
New York State Dormitory Authority, Revenue Refunding Bonds
(State University Educational Facilities):
A- A3 5,000 Series A, 7.50% due 5/15/2013 6,143
AAA Aaa 26,250 Series A, 4.75% due 5/15/2025(f) 23,582
A- A3 5,000 Series B, 7.375% due 5/15/2014 5,233
New York State Medical Care Facilities Finance Agency Revenue
Bonds (New York Hospital Mortgage), Series A (b)(c)(j):
AAA Aaa 8,400 6.75% due 2/15/2005 9,438
AAA Aaa 9,100 6.80% due 2/15/2005 10,247
New York State Urban Development Corporation Revenue Bonds:
AAA Aaa 9,600 (Correctional Capital Facilities), Series 6, 5.375% due
1/01/2025 (c) 9,462
AAA NR* 5,000 (Correctional Capital Facilities-Service Contract), Series
A, 5% due 1/01/2028 (h) 4,656
AAA Aaa 20,000 Port Authority of New York and New Jersey, Consolidated Revenue
Bonds, 116th Series, 4.25% due 10/01/2026 (e) 16,612
AAA Aaa 21,055 Triborough Bridge and Tunnel Authority, New York, Special
Obligation Revenue Refunding Bonds, Series A, 4.75% due
1/01/2024 (f) 18,944
North A1 VMIG1++ 100 North Carolina Medical Care Commission, Hospital Revenue Bonds
Carolina--0.0% (Pooled Equipment Financing Project), ACES, 3.50% due
12/01/2025 (a)(f) 100
Ohio--1.5% AAA Aaa 12,000 Cleveland, Ohio, Public Power System Revenue Bonds, First
Mortgage, Series A, 7% due 11/15/2004 (f)(j)(l) 13,631
AAA Aaa 7,200 Ohio HFA, S/F Mortgage Revenue Bonds, AMT, RIB, Series B,
10.181% due 3/31/2031 (d)(g) 7,866
Pennsylvania AAA Aaa 16,500 Allegheny County, Pennsylvania, Sanitation Authority, Sewer
- --5.9% Revenue Bonds, RITR, Series 20, 6.67% due 12/01/2024 (f)(g) 15,982
BBB Baa 10,000 Pennsylvania Convention Center Authority, Revenue Refunding
Bonds, Series A, 6.75% due 9/01/2019 10,904
AA+ Aa2 8,800 Pennsylvania HFA, Refunding, RIB, AMT, 10.319% due 10/01/2023 (g) 9,746
AAA NR* 2,000 Pennsylvania State Higher Educational Facilities Authority,
College and University Revenue Bonds (Eastern College), Series B,
8% due 10/15/2006 (j) 2,430
AAA Aaa 11,200 Philadelphia, Pennsylvania, School District, GO, Series B, 5.375%
due 4/01/2027 (c) 11,017
Pittsburgh and Allegheny County, Pennsylvania, Public Auditorium
Revenue Bonds (c):
AAA Aaa 6,000 (Hotel Room), 5% due 2/01/2024 5,613
AAA Aaa 5,250 (Regional Asset District Sales Tax), 5% due 2/01/2024 4,912
A1+ NR* 10,400 Schuylkill County, Pennsylvania, IDA, Resource Recovery Revenue
Refunding Bonds (Northeastern Power Company), VRDN, Series A,
3.90% due 12/01/2022 (a) 10,400
AAA Aaa 13,000 Southeastern Pennsylvania Transportation Authority, Pennsylvania,
Special Revenue Bonds, Series A, 4.75% due 3/01/2029 (e) 11,529
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Rhode NR* Aa2 $ 7,975 Rhode Island Housing and Mortgage Finance Corporation Revenue
Island--0.6% Bonds, RITR, AMT, Series 30, 7.62% due 4/01/2029 (g) $ 8,496
South AAA Aa1 9,085 South Dakota, HDA, Revenue Refunding Bonds, Homeownership
Dakota--0.7% Mortgage, Series A, 7.15% due 5/01/2027 9,479
Texas--11.6% NR* Aaa 14,000 Arlington, Texas, Independent School District , GO, Refunding,
5% due 2/15/2024 13,061
BBB+ A3 18,150 Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series A, 7.875% due 3/01/2021 19,440
AAA Aaa 5,000 Cypress-Fairbanks, Texas, Independent School District, GO,
4.75% due 2/15/2022 4,500
BBB Baa1 7,250 Gulf Coast Waste Disposal Authority, Texas, Revenue Bonds
(Champion International Corporation), AMT, 7.45% due 5/01/2026 7,798
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds:
NR* Aaa 10,150 RITR, Series 12, 6.375% due 10/01/2004 (f)(g)(j) 12,048
AAA Aa3 12,470 (Saint Luke's Episcopal Hospital Project), 6.75% due
2/15/2021 (i) 13,273
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Refunding Bonds (Methodist Hospital), VRDN (a):
A1+ NR* 4,900 4% due 12/01/2025 4,900
A1+ NR* 1,300 4% due 12/01/2026 1,300
AAA Aaa 25,000 Houston, Texas, Independent School District, GO, Refunding,
Series A, 4.75% due 2/15/2022 22,529
Houston, Texas, Water and Sewer System Revenue Bonds, RITR
(e)(g):
NR* Aaa 15,750 Series 5, 6.57% due 12/01/2027 16,518
NR* Aaa 10,620 Series 32, 6.596% due 12/01/2027 10,262
AAA Aaa 5,120 Keller, Texas, Independent School District, GO, Refunding,
4.875% due 8/15/2024 4,654
AA Aa1 27,700 San Antonio, Texas, Electric and Gas Revenue Refunding Bonds,
Series A, 4.50% due 2/01/2021 24,003
NR* VMIG1++ 1,000 Southwest Texas, Higher Education Authority Incorporated,
Revenue Refunding Bonds (Southern Methodist University),
VRDN, 3.95% due 7/01/2015 (a) 1,000
AA Aaa 2,725 Texas Housing Agency, Residential Development Mortgage Revenue
Bonds, Series A, 7.50% due 7/01/2015 (b)(d) 2,880
AA Aa1 3,700 Texas State, GO, Veterans' Housing Assistance Fund II, AMT,
Series A, 7% due 12/01/2025 3,951
Utah--1.4% A1 VMIG1++ 2,100 Emery County, Utah, PCR, Refunding (Pacificorp Projects),
VRDN, 3.95% due 11/01/2024 (a)(c) 2,100
NR* NR* 2,000 Tooele County, Utah, PCR, Refunding (Laidlaw Environmental),
AMT, Series A, 7.55% due 7/01/2027 2,156
AAA Aaa 13,250 Weber County, Utah, Municipal Building Authority, Lease
Revenue Bonds, 7.50% due 12/15/2004 (j) 15,369
Virginia--0.9% NR* NR* 4,030 Dulles Town Center Community Development Authority, Virginia,
Special Assessment Tax (Dulles Town Center Project), 6.25%
due 3/01/2026 4,051
NR* NR* 5,000 Peninsula Ports Authority, Virginia, Revenue Refunding Bonds
(Port Facility-Zeigler Coal), 6.90% due 5/02/2022 5,009
AA+ Aa1 3,215 Virginia State HDA, Commonwealth Mortgage Revenue Bonds,
Series A, 7.15% due 1/01/2033 3,339
Washington--1.1% AAA Aaa 17,000 Washington State, GO, Series A, 4.50% due 7/01/2023 (h) 14,648
West NR* NR* 4,000 Upshur County, West Virginia, Solid Waste Disposal Revenue Bonds
Virginia--0.3% (TJ International Project), AMT, 7% due 7/15/2025 4,355
Wisconsin--1.9% Wisconsin Housing and EDA, Home Ownership Revenue Refunding Bonds:
NR* Aa2 21,150 RITR, Series 18, 7.762% due 9/01/2028 (g) 22,562
AA Aa2 3,090 Series A, 7.10% due 3/01/2023 3,250
Puerto AAA Aaa 10,000 Puerto Rico Commonwealth, GO, Public Improvement, 4.75% due
Rico--1.2% 7/01/2023 (f) 9,156
A1+ VMIG1++ 5,200 Puerto Rico Commonwealth, Government Development Bank Revenue
Refunding Bonds, VRDN, 3.30% due 12/01/2015 (a)(f) 5,200
A1+ VMIG1++ 2,400 Puerto Rico Commonwealth Highway and Transportation Authority,
Transportation Revenue Refunding Bonds, VRDN, Series A, 3.25%
due 7/01/2028 (a)(c) 2,400
Total Investments (Cost--$1,336,710)--97.4% 1,358,026
Variation Margin on Financial Futures Contracts**--0.0% (119)
Other Assets Less Liabilities--2.6% 35,678
----------
Net Assets--100.0% $1,393,585
==========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at June 30, 1999.
(b)FHA Insured.
(c)AMBAC Insured.
(d)GNMA Collateralized.
(e)FGIC Insured.
(f)MBIA Insured.
(g)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 June 30, 1999.
(h)FSA Insured.
(i)Escrowed to maturity.
(j)Prerefunded.
(k)Non-income producing security.
(l)All or a portion of the security held as collateral in connection
with open financial futures contracts.
*Not Rated.
**Financial futures contracts sold as of June 30, 1999 were as
follows:
(in Thousands)
Value
Number of Expiration (Notes
Contracts Issue Date 1a & 1b)
500 US Treasury Bonds September 1999 $ 57,954
----------
(Total Contract Price--$57,834) $ 57,954
==========
++Highest short-term rating issued by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Arizona--1.7% AA- A1 $ 200 Central Arizona Water Conservation District, Contract Revenue
Bonds, Series B, 6.50% due 5/01/2001 (a) $ 212
AA+ Aa1 250 Phoenix, Arizona, GO, Refunding, 5.70% due 7/01/1999 250
SP1+ NR* 5,780 Phoenix, Arizona, IDA, S/F Mortgage Revenue Refunding Bonds,
Series D, 4.20% due 6/01/2002 5,746
A+ A1 200 Pima County, Arizona, GO, Refunding, Series A, 5.60% due
7/01/1999 200
AAA Aaa 200 Yuma County, Arizona, Jail District Revenue Bonds, 4.30% due
7/01/1999 (c) 200
Connecticut AAA Aaa 12,100 Connecticut State Special Assesment Unemployment Compensation
- --3.2% Advanced Fund, Refunding (Connecticut Unemployment), Series A,
5.50% due 5/15/2001 (c) 12,423
Florida--3.2% AAA Aaa 5,000 Dade County, Florida, GO, Seaport Bonds, 6.50% due 10/01/2001
(a)(c) 5,311
Florida State Board Education Capital Outlay, GO, Refunding,
Public Education, Series B:
AA+ Aa2 2,600 5% due 6/01/2002 2,658
AA+ Aa2 4,385 5% due 6/01/2003 4,491
Georgia--1.8% AA Aa2 3,000 Clayton County, Georgia, GO (Jail Courthouse and Public
Administration Building), 5% due 8/01/2002 3,068
AAA Aaa 4,000 Georgia Muncipal Electric Authority, Power Revenue Refunding
Bonds, Series D, 6% due 1/01/2000 (c) 4,052
Hawaii--2.2% AAA Aaa 3,200 Hawaii State, GO, Refunding, Series CO, 6% due 3/01/2001 (f) 3,294
A+ A1 5,250 Hawaii State, GO, Series CH, 4.75% due 11/01/1999 5,273
Illinois--7.0% AA- NR* 10,000 Chicago, Illinois, Board of Education, COP (School Reform
Equipment Acquisition), 4.60% due 12/01/1999 10,048
BBB+ Baa3 4,625 Illinois Development Finance Authority, Solid Waste Disposal
Revenue Bonds (Waste Managment Inc. Project), 7.125% due 1/01/2001 4,790
A1+ VMIG1++ 2,000 Illinois Health Facilities Authority, Revenue Refunding Bonds
(University of Chicago Hospitals), VRDN, 4% due 8/01/2026 (b)(d) 2,000
AA Aa2 7,100 Illinois State, GO, 4% due 3/01/2003 6,998
AAA Aaa 3,500 Illinois State, GO, Refunding, 5.125% due 12/01/1999 (f) 3,526
Indiana--3.6% A Aaa 5,008 Indiana Transportation Finance Authority, Airport Facilities
Lease Revenue Bonds, Series A, 6.25% due 11/01/2002 (a) 5,403
AAA Aaa 3,000 Indianapolis, Indiana, Airport Authority, Revenue Refunding Bonds,
AMT, Series A, 4.50% due 7/01/2001 (f) 3,014
AA NR* 5,790 Richmond, Indiana, Hospital Authority, Revenue Refunding Bonds
(Reid Hospital and Health Care), 4.35% due 1/01/2002 5,732
Kansas--1.9% A- A2 3,500 Burlington, Kansas, Environmental Improvement Revenue Refunding
Bonds (Kansas City Power and Light Company Project), Series D,
4.35% due 9/01/2001 3,493
AAA Aaa 4,000 Kansas State Development Finance Authority Revenue Bonds, Board
of Regents (Rehabilitation Center), Series G-2, 5% due 10/01/2001 (c) 4,079
Kentucky--2.8% AAA Aaa 5,000 Carrollton and Henderson, Kentucky, Public Energy Authority, Gas
Revenue Bonds (Kentucky Trust), Series A, 4.50% due 1/01/2002 (e) 5,018
Kentucky Asset/Liability Commission, General Fund Revenue Bonds,
Project Notes, First Series:
A+ Aa3 2,900 4% due 3/01/2001 2,893
A+ Aa3 3,000 4% due 3/01/2002 2,974
Louisiana--0.0% NR* VMIG1++ 100 Louisiana State Offshore Terminal Authority, Deepwater Port Revenue
Refunding Bonds (1st Stage A-Loop Inc.), ACES, 3.90% due 9/01/2006 (b) 100
Maryland--0.5% NR* Aa2 2,000 Maryland State Community Development, Administration Department,
Housing and Community Development Revenue Refunding Bonds, S/F
Program, First Series, 4.45% due 4/01/2001 (h) 2,002
Massachusetts NR* A1 270 Boston, Massachusetts, Economic Development and Industrial
- --3.4% Corporation Revenue Bonds, Series A, 5% due 7/01/2000 272
AAA Aaa 190 Massachusetts Education Loan Authority, Education Loan Revenue
Refunding Bonds, AMT, Issue E, Series B,
5.50% due 7/01/2001 (c) 193
AA- Aa3 750 Massachusetts State, GO, Refunding, Series B, 6.25% due 8/01/2001 782
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) 3,754
SP1+ MIG1++ 3,200 Massachusetts State Housing Finance Agency, S/F Housing Revenue
Bonds, AMT, 3.60% due 6/01/2000 3,198
Massachusetts State Industrial Finance Agency, Resource Recovery
Revenue Refunding Bonds (Ogden Haverhill Associates):
BBB NR* 1,750 4.35% due 12/01/2000 1,750
BBB NR* 2,925 4.50% due 12/01/2001 2,908
AA Aa3 300 Massachusetts State Special Obligation Revenue Bonds, Series A,
5.90% due 6/01/2001 (c) 310
AA Aa1 100 Peabody, Massachusetts, GO, Series A, 4.50% due 8/01/2000 101
Michigan--2.1% AA Aa2 110 Ann Arbor, Michigan, School District, Public Schools, GO, Refunding,
4.75% due 5/01/2000 111
AAA Aaa 105 Chelsea, Michigan, School District, GO, 6.75% due 5/01/2002 (f) 112
AAA Aaa 250 Dearborn, Michigan, Economic Development Corporation, Hospital
Revenue Bonds (Oakwood Obligated Group), Series A, 6.95% due
8/15/2001 (a)(d) 269
AAA Aaa 200 Detroit, Michigan, GO, Refunding, Distributable State Aid, 5.70%
due 5/01/2001 (c) 206
A- Baa1 6,585 Detroit, Michigan, GO, Refunding, Series B, 6.25% due 4/01/2001 6,788
AA+ Aa2 450 Michigan Municipal Bond Authority, Revenue Refunding Bonds (Local
Government-Qualified School), Series A, 6% due 5/01/2001 465
NR* Aaa 100 Michigan State Hospital Finance Authority Revenue Bonds (McLaren
Obligated Group), Series A, 7.50% due 9/15/2001 (a) 109
Minnesota--2.6% AAA Aaa 2,385 Metropolitan Council, Minnesota, Minneapolis-St. Paul Metropolitan
Area Transit, GO, Series C, 4.75% due 2/01/2000 2,405
AAA Aaa 2,610 Minnesota State, HFA, Revenue Refunding Bonds, Rental Housing,
Series D, 4.50% due 8/01/1999 (d) 2,611
A1+ Aa2 5,000 Minnesota State, HFA, S/F Mortgage Revenue Bonds, Series I, 3.90%
due 8/29/2000 4,994
Mississippi NR* Baa2 7,200 Lawrence County, Mississippi, PCR (Georgia-Pacific Corporation
- --1.9% Project), 4.30% due 12/01/2000 7,226
Nebraska--1.5% AAA Aaa 2,575 American Public Energy Agency, Nebraska, Gas Supply Revenue
Bonds (Nebraska Public Gas Agency Project), Series A, 4.50%
due 6/01/2002 (c) 2,583
AAA Aaa 3,000 Nebraska Public Power District, Revenue Refunding Bonds, Series A,
5% due 1/01/2002 (d) 3,051
New Hampshire BBB+ Baa3 7,500 New Hampshire State Business Finance Authority, PCR, Refunding
- --1.9% (UTD Illuminating), VRDN, AMT, Series A, 4.35% due 2/01/2002 (b) 7,442
New Jersey--5.8% NR* Aaa 300 Bergen County, New Jersey, GO, 5.20% due 10/01/1999 302
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) 5,732
AAA Aaa 300 New Jersey State Educational Facilities Authority Revenue Bonds
(Princeton University), Series E, 4.05% due 7/01/2000 302
AA+ Aaa 5,070 New Jersey State, GO, 6% due 8/01/2002 (a) 5,358
AA+ Aa1 4,250 New Jersey State, GO, Refunding, Series D, 5.10% due 2/15/2000 4,297
NR* MIG1++ 6,250 Readington-Lebanon, New Jersey, Sewer Authority Revenue Bonds,
Project Notes, Series A, 4.25% due 12/01/2000 6,264
AAA Aaa 125 Somerset County, New Jersey, GO, 5.875% due 12/01/2001 130
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New York A1+ VMIG1++ $ 200 Long Island Power Authority, New York, Electric System Revenue
- --13.5% Bonds, VRDN, Sub-Series 7, 3.45% due 4/01/2025 (b)(d) $ 200
New York City, New York, GO, Refunding:
A- Aaa 60 Series A, 6% due 8/01/2000 (g) 62
A- A3 2,020 Series G, 3.90% due 8/01/1999 2,021
A- A3 3,200 Series G, 4.30% due 8/01/2002 3,191
A- Aaa 4,615 New York City, New York, GO, Series C, Sub-Series C-1, 7.50% due
8/01/2002 (a) 5,109
AA Aa2 4,550 New York City, New York, Municipal Assistance Corporation,
Revenue Refunding Bonds, Series E, 5.50% due 7/01/2000 4,642
BBB+ Baa1 3,000 New York State, COP, Commissioner of General Services Executive
Department, 4% due 3/01/2000 3,011
BBB+ Baa1 10,885 New York State Dormitory Authority, Revenue Refunding Bonds
(Consolidated City University System), Series A, 4.75% due
7/01/1999 10,885
New York State Local Government Assistance Corporation Revenue
Bonds (a):
A+ Aaa 625 Series A, 7% due 4/01/2001 668
A+ Aaa 5,000 Series B, 6.25% due 4/01/2002 5,358
AAA Aaa 600 Series D, 7% due 4/01/2002 655
NR* Aaa 725 New York State Medical Care Facilities Finance Agency Revenue
Bonds, 7.75% due 2/15/2001 (a) 780
AA- Aa3 5,305 New York State Power Authority, Revenue and General Purpose
Refunding Bonds, Series A, 5% due 2/15/2002 5,403
New York State Urban Development Corporation Revenue Bonds:
BBB+ Aaa 5,000 7.50% due 4/01/2001 (a) 5,387
BBB+ Baa1 4,525 (Correctional Capital Facilities), Series 4, 4.90% due
1/01/2001 4,569
A+ Aa3 340 Triborough Bridge and Tunnel Authority, New York, Revenue Bonds,
Series R, 6.90% due 1/01/2000 346
Ohio--10.3% SP1+ NR* 4,650 Cleveland, Ohio, State University General Reciept Revenue Notes,
BAN, Series B, 3.85% due 1/16/2001 4,633
NR* Aa3 6,000 Franklin County, Ohio, Hospital Revenue Refunding Bonds (US
Health Corporation), Series B, 4.50% due 6/01/2000 6,033
AAA Aaa 3,135 Kent State University, Ohio, University Revenue Bonds, VRDN,
Series B, 4.15% due 5/01/2001 (b)(c) 3,124
AAA Aa1 12,400 Ohio State Highway, GO, Series V, 4.70% due 5/15/2000 12,543
A1+ P1 8,500 Ohio State Water Development Authority, Pollution Control
Facilities Revenue Bonds (Ohio Edison Company Project),
AMT, Series A, 4.20% due 5/01/2000 8,495
NR* Aaa 5,290 Student Loan Funding Corporation, Cincinnati, Ohio, Student Loan
Revenue Refunding Bonds, AMT, Series C, 5.70% due 7/01/1999 5,290
Pennsylvania AAA Aaa 300 Beaver County, Pennsylvania, Hospital Authority, Revenue
- --3.2% Refunding Bonds (Medical Center of Beaver County, Inc.),
5.70% due 7/01/1999 (c)(g) 300
AA Aa2 1,000 Bucks County, Pennsylvania, GO, Refunding, Series A, 5.95%
due 3/01/2000 1,017
AA Aa3 6,500 Pennsylvania State, GO, First Series, 4.50% due 3/01/2002 6,540
AAA Aaa 4,145 Pittsburgh, Pennsylvania, GO, Refunding, Series A, 5% due
3/01/2000 (d) 4,190
AAA Aaa 325 Washington County, Pennsylvania, Lease Authority Revenue Bonds,
Municipal Facility, Series C, Sub-Series C1-A, 7.45% due
6/15/2000 (a)(c) 346
Rhode AAA Aaa 4,100 Rhode Island State, GO, Refunding (Consolidated Capital
Island--1.1% Development Loan), 5.50% due 8/01/2001 (d) 4,213
South AA Aa1 5,855 Charleston County, South Carolina, School District, GO, Refunding,
Carolina--2.9% 4% due 2/01/2003 5,788
AAA Aaa 5,000 Florence County, South Carolina, Hospital Revenue Bonds (McLeod
Regional Medical Center Project), 6.75% due 11/01/2000 (a)(f) 5,291
Texas--7.2% BBB Baa1 5,000 Brazos River Authority, Texas, PCR, Refunding (Utilities
Electric Company), VRDN, AMT, Series B, 4.15% due 6/01/2030 (b) 4,995
AAA Aaa 3,925 Houston, Texas, Independent School District, GO, 6.375% due
8/15/2001 (g) 4,111
AAA Aaa 2,600 Houston, Texas, Water and Sewer System, Revenue Refunding Bonds,
Junior Lien, Series C, 5.90% due 12/01/1999 (c) 2,627
San Antonio, Texas, Electric and Gas Revenue Bonds:
AA NR* 160 5.25% due 2/01/2000 (g) 162
AA Aa1 2,840 5.25% due 2/01/2000 2,872
AAA Aaa 8,825 Texas National Research Laboratory Commission Revenue Bonds
(Superconducting Super Collider Project), 7.10% due 12/01/2001 (a) 9,602
AA Aa1 3,600 Texas State University System Revenue Bonds (Consititutional
Appropriation), 4.75% due 8/15/2001 3,647
Virginia--2.8% AA A1 3,330 Richmond, Virginia, GO, Equipment Notes, 4.25% due 5/15/2002 3,329
AA Aa2 5,000 Virginia College Building Authority, Virginia Educational
Facilities Revenue Bonds (Equipment Leasing Program), 4.75% due
2/01/2002 5,061
AA Aa2 2,555 Virginia State Transportation Board, Transportation Contract
Revenue Bonds (US Route 58 Corridor), Series B, 5% due 5/15/2000 2,591
Washington--6.1% AAA Aaa 5,000 Seattle, Washington, Municipality of Metropolitan Seattle Sewer
Revenue Bonds, Series U, 6.60% due 1/01/2001 (a)(f) 5,281
AA Aa 6,750 South Columbia Basin Irrigation Distirct, Revenue Refunding Bonds,
5.75% due 6/01/2000 6,891
Washington State, GO, Refunding:
AA+ Aa1 3,000 Series B, 6.80% due 8/01/2000 (a) 3,102
AA+ Aa1 8,000 Series R-92 B, 6.20% due 9/01/2001 8,339
Wisconsin--4.4% AA+ Aa1 6,510 Milwaukee, Wisconsin, Metropolitan Sewer District, GO, Refunding,
Series A, 4.25% due 10/01/2000 6,559
AA Aa2 4,385 Wisconsin State, GO, Series C, 5.50% due 5/01/2000 4,462
AAA NR* 5,720 Wisconsin State Health and Educational Facilities Authority
Revenue Bonds (Medical College of Wisconsin Inc. Project),
Series D, 7.35% due 12/01/2000 (a) 6,080
Total Investments (Cost--$382,828)--98.6% 383,074
Other Assets Less Liabilities--1.4% 5,440
----------
Net Assets--100.0% $ 388,514
==========
<FN>
(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 June 30, 1999.
(c)AMBAC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)FGIC Insured.
(g)Escrowed to maturity.
(h)FHA Insured.
*Not Rated.
++Highest short-term rating issued by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
<CAPTION>
Limited
Insured National Maturity
As of June 30, 1999 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Assets: Investments, at value* (Note 1a) $1,745,855,855 $1,358,025,563 $ 383,073,608
Cash 53,060 -- 76,167
Receivables:
Securities sold 18,575,831 131,092,486 826,000
Interest 23,642,937 21,529,222 5,507,899
Capital shares sold 369,201 1,115,881 80,564
Prepaid registration fees and other assets
(Note 1e) 790,189 43,124 67,887
-------------- -------------- --------------
Total assets 1,789,287,073 1,511,806,276 389,632,125
-------------- -------------- --------------
Liabilities: Payables:
Securities purchased 54,555,702 111,923,695 --
Capital shares redeemed 2,866,131 3,145,123 499,289
Dividends to shareholders (Note 1f) 2,090,259 1,778,835 353,258
Investment adviser (Note 2) 522,033 554,132 107,740
Distributor (Note 2) 288,642 286,489 19,671
Variation margin (Note 1b) -- 118,750 --
Accrued expenses and other liabilities 395,595 414,129 137,843
-------------- -------------- --------------
Total liabilities 60,718,362 118,221,153 1,117,801
-------------- -------------- --------------
Net Assets: Net assets $1,728,568,711 $1,393,585,123 $ 388,514,324
============== ============== ==============
Net Assets Class A Common Stock, $0.10 par value++ $ 15,617,018 $ 8,591,484 $ 2,642,357
Consist of: Class B Common Stock, $0.10 par value++++ 5,320,744 3,667,918 432,935
Class C Common Stock, $0.10 par value++++++ 216,447 468,723 4,423
Class D Common Stock, $0.10 par value++++++++ 1,043,376 911,862 838,670
Paid-in capital in excess of par 1,654,174,957 1,369,379,508 386,218,556
Undistributed (accumulated) realized capital
gains (losses) on investments--net (Note 5) 21,753,555 (10,034,915) (1,563,261)
Accumulated distributions in excess of realized
capital gains on investments--net (Note 1f) -- (596,027) (304,677)
Unrealized appreciation on investments--net. 30,442,614 21,196,570 245,321
-------------- -------------- --------------
Net assets $1,728,568,711 $1,393,585,123 $ 388,514,324
============== ============== ==============
Net Asset Class A:
Value: Net assets $1,216,345,459 $ 877,840,945 $ 261,970,305
============== ============== ==============
Shares outstanding 156,170,176 85,914,836 26,423,567
============== ============== ==============
Net asset value and redemption price
per share $ 7.79 $ 10.22 $ 9.91
============== ============== ==============
Class B:
Net assets $ 414,135,412 $ 374,642,223 $ 42,930,082
============== ============== ==============
Shares outstanding 53,207,445 36,679,185 4,329,348
============== ============== ==============
Net asset value and redemption price
per share $ 7.78 $ 10.21 $ 9.92
============== ============== ==============
Class C:
Net assets $ 16,849,873 $ 47,900,992 $ 437,034
============== ============== ==============
Shares outstanding 2,164,467 4,687,233 44,228
============== ============== ==============
Net asset value and redemption price
per share $ 7.78 $ 10.22 $ 9.88
============== ============== ==============
Class D:
Net assets $ 81,237,967 $ 93,200,963 $ 83,176,903
============== ============== ==============
Shares outstanding 10,433,764 9,118,625 8,386,704
============== ============== ==============
Net asset value and redemption price
per share $ 7.79 $ 10.22 $ 9.92
============== ============== ==============
<FN>
*Identified cost $1,715,413,241 $1,336,710,243 $ 382,828,287
============== ============== ==============
++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>
STATEMENTS OF OPERATIONS
<CAPTION>
Limited
Insured National Maturity
For the Year Ended June 30, 1999 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Investment Interest and amortization of premium and discount
Income (Note 1d): earned $ 102,852,630 $ 86,270,954 $ 16,949,970
-------------- -------------- --------------
Expenses: Investment advisory fees (Note 2) 6,832,049 7,068,892 1,350,646
Account maintenance and distribution fees--Class B
(Note 2) 3,595,606 3,048,607 158,570
Transfer agent fees--Class A (Note 2) 372,451 356,029 56,152
Account maintenance and distribution fees--Class C
(Note 2) 132,850 385,625 1,095
Account maintenance fees--Class D (Note 2) 158,843 215,726 79,493
Accounting services (Note 2) 188,162 156,567 84,374
Transfer agent fees--Class B (Note 2) 173,081 189,225 12,723
Custodian fees 161,866 134,241 40,651
Registration fees (Note 1e) 63,131 124,816 26,776
Printing and shareholder reports 51,821 61,858 72,606
Professional fees 59,758 68,977 38,329
Transfer agent fees--Class D (Note 2) 17,190 32,750 15,814
Pricing services 25,009 20,372 18,585
Directors' fees and expenses 19,513 15,260 2,974
Transfer agent fees--Class C (Note 2) 5,874 21,796 107
Other 49,158 16,822 14,131
-------------- -------------- --------------
Total expenses 11,906,362 11,917,563 1,973,026
-------------- -------------- --------------
Investment income--net 90,946,268 74,353,391 14,976,944
-------------- -------------- --------------
Realized & Realized gain on investments--net 27,181,029 9,433,376 507,908
Unrealized Gain Change in unrealized appreciation on
(Loss) on investments--net (87,414,180) (66,961,746) (2,207,796)
Investments--Net -------------- -------------- --------------
(Notes 1b, Net Increase in Net Assets Resulting
1d & 3): from Operations $ 30,713,117 $ 16,825,021 $ 13,277,056
============== ============== ==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Insured Portfolio National Portfolio Limited Maturity Portfolio
For the Year For the Year For the Year
Ended June 30, Ended June 30, Ended June 30,
Increase (Decrease) in
Net Assets: 1999 1998 1999 1998 1999 1998
<S> <S> <C> <C> <C> <C> <C> <C>
Operations: Investment
income--net $ 90,946,268 $ 102,591,875 $ 74,353,391 $ 79,796,136 $ 14,976,944 $ 15,558,651
Realized gain
on investments
--net 27,181,029 44,682,184 9,433,376 39,111,030 507,908 395,414
Change in un-
realized
appreciation/
depreciation on
investments--net (87,414,180) 5,253,448 (66,961,746) (2,308,236) (2,207,796) 789,704
-------------- -------------- -------------- -------------- -------------- --------------
Net increase in
net assets re-
sulting from
operations 30,713,117 152,527,507 16,825,021 116,598,930 13,277,056 16,743,769
-------------- -------------- -------------- -------------- -------------- --------------
Dividends & Investment
Distri- income--net:
butions to Class A (66,779,244) (75,235,351) (49,579,905) (54,724,558) (10,528,513) (12,354,558)
Shareholders Class B (20,438,753) (24,092,878) (18,305,554) (19,749,158) (1,537,329) (1,724,528)
(Note 1f): Class C (699,230) (608,829) (2,146,172) (1,588,802) (10,535) (5,682)
Class D (3,029,041) (2,654,817) (4,321,760) (3,733,618) (2,900,567) (1,473,883)
Realized gain on
investments--net:
Class A (30,333,680) (2,005,059) -- -- -- --
Class B (11,021,698) (747,289) -- -- -- --
Class C (405,758) (18,784) -- -- -- --
Class D (1,454,294) (76,185) -- -- -- --
In excess of
realized gain on
investments--net:
Class A -- -- (375,628) -- (211,240) --
Class B -- -- (165,207) -- (35,110) --
Class C -- -- (19,432) -- (281) --
Class D -- -- (35,760) -- (58,046) --
-------------- -------------- -------------- -------------- -------------- --------------
Net decrease in
net assets resulting
from dividends and
distributions to
shareholders (134,161,698) (105,439,192) (74,949,418) (79,796,136) (15,281,621) (15,558,651)
-------------- -------------- -------------- -------------- -------------- --------------
Capital Net proceeds from
Share issuance of
Trans- capital shares (106,960,336) (160,344,787) (29,277,945) (33,702,285) (18,483,783) (42,037,027)
actions Net proceeds
(Note 4): from issuance
of capital shares
resulting from
reorganization -- -- -- -- -- 31,447,783
-------------- -------------- -------------- -------------- -------------- --------------
Net decrease in
net assets derived
from capital share
transactions (106,960,336) (160,344,787) (29,277,945) (33,702,285) (18,483,783) (10,589,244)
-------------- -------------- -------------- -------------- -------------- --------------
Net Assets: Total increase
(decrease) in net
assets (210,408,917) (113,256,472) (87,402,342) 3,100,509 (20,488,348) (9,404,126)
Beginning of
year 1,938,977,628 2,052,234,100 1,480,987,465 1,477,886,956 409,002,672 418,406,798
-------------- -------------- -------------- -------------- -------------- --------------
End of year $1,728,568,711 $1,938,977,628 $1,393,585,123 $1,480,987,465 $ 388,514,324 $ 409,002,672
============== ============== ============== ============== ============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Insured Portfolio
The following per share data and ratios have been derived
from information provided in the financial statements. Class A
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of year $ 8.25 $ 8.06 $ 7.91 $ 7.92 $ 7.88
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .41 .43 .45 .44 .46
Realized and unrealized gain
(loss) on investments--net (.27) .20 .15 (.01) .18
------------ ------------ ------------ ------------ ------------
Total from investment operations .14 .63 .60 .43 .64
------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
Investment income--net (.41) (.43) (.45) (.44) (.46)
Realized gain on
investments--net (.19) (.01) -- -- (.14)
------------ ------------ ------------ ------------ ------------
Total dividends and distributions (.60) (.44) (.45) (.44) (.60)
------------ ------------ ------------ ------------ ------------
Net asset value, end of year $ 7.79 $ 8.25 $ 8.06 $ 7.91 $ 7.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:* per share 1.56% 8.05% 7.72% 5.51% 8.60%
============ ============ ============ ============ ============
Ratios to Average Expenses .42% .42% .44% .43% .43%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 5.02% 5.29% 5.58% 5.55% 5.78%
============ ============ ============ ============ ============
Supplemental Net assets, end of year
Data: (in thousands) $ 1,216,346 $ 1,377,025 $ 1,441,785 $ 1,572,835 $ 1,706,064
============ ============ ============ ============ ============
Portfolio turnover 86.35% 102.89% 74.40% 78.49% 35.61%
============ ============ ============ ============ ============
<CAPTION>
Insured Portfolio
The following per share data and ratios have been derived
from information provided in the financial statements. Class B
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of year $ 8.24 $ 8.05 $ 7.91 $ 7.92 $ 7.87
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .35 .37 .39 .38 .40
Realized and unrealized gain
(loss) on investments--net (.27) .20 .14 (.01) .19
------------ ------------ ------------ ------------ ------------
Total from investment operations .08 .57 .53 .37 .59
------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
Investment income--net (.35) (.37) (.39) (.38) (.40)
Realized gain on investments
--net (.19) (.01) -- -- (.14)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.54) (.38) (.39) (.38) (.54)
------------ ------------ ------------ ------------ ------------
Net asset value, end of year $ 7.78 $ 8.24 $ 8.05 $ 7.91 $ 7.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:* per share .79% 7.24% 6.78% 4.71% 7.91%
============ ============ ============ ============ ============
Ratios to Average Expenses 1.18% 1.18% 1.19% 1.19% 1.19%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 4.26% 4.53% 4.82% 4.80% 5.03%
============ ============ ============ ============ ============
Supplemental Net assets, end of year (in
Data: thousands) $ 414,135 $ 498,624 $ 560,105 $ 723,090 $ 782,748
============ ============ ============ ============ ============
Portfolio turnover 86.35% 102.89% 74.40% 78.49% 35.61%
============ ============ ============ ============ ============
<FN>
*Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Insured Portfolio
Class C
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. Oct. 21, 1994++
For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 8.24 $ 8.06 $ 7.91 $ 7.92 $ 7.68
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .34 .37 .38 .38 .27
Realized and unrealized gain
(loss) on investments--net (.27) .19 .15 (.01) .38
------------ ------------ ------------ ------------ ------------
Total from investment
operations .07 .56 .53 .37 .65
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.34) (.37) (.38) (.38) (.27)
Realized gain on invest-
ments--net (.19) (.01) -- -- (.14)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.53) (.38) (.38) (.38) (.41)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 7.78 $ 8.24 $ 8.06 $ 7.91 $ 7.92
============ ============ ============ ============ ============
Total Investment Based on net asset value per
Return:** share .74% 7.05% 6.86% 4.65% 8.83%+++
============ ============ ============ ============ ============
Ratios to Average Expenses 1.23% 1.23% 1.25% 1.24% 1.23%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 4.21% 4.48% 4.77% 4.75% 4.93%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period (in
Data: thousands) $ 16,850 $ 14,623 $ 11,922 $ 18,936 $ 7,756
============ ============ ============ ============ ============
Portfolio turnover 86.35% 102.89% 74.40% 78.49% 35.61%
============ ============ ============ ============ ============
<CAPTION>
Insured Portfolio
Class D
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. Oct. 21, 1994++
For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 8.24 $ 8.06 $ 7.91 $ 7.92 $ 7.68
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .39 .41 .43 .42 .29
Realized and unrealized gain
(loss) on investments--net (.26) .19 .15 (.01) .38
------------ ------------ ------------ ------------ ------------
Total from investment
operations .13 .60 .58 .41 .67
------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
Investment income--net (.39) (.41) (.43) (.42) (.29)
Realized gain on invest-
ments--net (.19) (.01) -- -- (.14)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.58) (.42) (.43) (.42) (.43)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 7.79 $ 8.24 $ 8.06 $ 7.91 $ 7.92
============ ============ ============ ============ ============
Total Investment Based on net asset value per
Return:** share 1.43% 7.65% 7.46% 5.25% 9.24%+++
============ ============ ============ ============ ============
Ratios to Average Expenses .67% .67% .69% .68% .68%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 4.77% 5.03% 5.33% 5.31% 5.50%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period (in
Data: thousands) $ 81,238 $ 48,706 $ 38,422 $ 51,772 $ 26,015
============ ============ ============ ============ ============
Portfolio turnover 86.35% 102.89% 74.40% 78.49% 35.61%
============ ============ ============ ============ ============
<CAPTION>
National Portfolio
The following per share data and ratios have been derived
from information provided in the financial statements. Class A
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating year $ 10.64 $ 10.38 $ 10.11 $ 10.02 $ 10.08
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .56 .59 .60 .60 .60
Realized and unrealized gain
(loss) on investments--net (.42) .26 .27 .09 .15
------------ ------------ ------------ ------------ ------------
Total from investment operations .14 .85 .87 .69 .75
------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
Investment income--net (.56) (.59) (.60) (.60) (.60)
Realized gain on investments
--net -- -- -- -- (.19)
In excess of realized gain on
investments--net --++++ -- -- -- (.02)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.56) (.59) (.60) (.60) (.81)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
year $ 10.22 $ 10.64 $ 10.38 $ 10.11 $ 10.02
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 1.28% 8.36% 8.84% 6.98% 7.89%
============ ============ ============ ============ ============
Ratios to Average Expenses .55% .55% .55% .56% .56%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 5.26% 5.58% 5.86% 5.89% 6.01%
============ ============ ============ ============ ============
Supplemental Net assets, end of year (in
Data: thousands) $ 877,841 $ 964,940 $ 983,650 $ 983,550 $ 1,059,440
============ ============ ============ ============ ============
Portfolio turnover 125.75% 142.02% 99.52% 95.09% 103.65%
============ ============ ============ ============ ============
<CAPTION>
National Portfolio
The following per share data and ratios have been derived
from information provided in the financial statements. Class B
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of year $ 10.63 $ 10.37 $ 10.11 $ 10.02 $ 10.07
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .48 .51 .52 .52 .52
Realized and unrealized gain
(loss) on investments--net (.42) .26 .26 .09 .16
------------ ------------ ------------ ------------ ------------
Total from investment
operations .06 .77 .78 .61 .68
------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
Investment income--net (.48) (.51) (.52) (.52) (.52)
Realized gain on
investments--net -- -- -- -- (.19)
In excess of realized
gain on investments--net --++++ -- -- -- (.02)
------------ ------------ ------------ ------------ ------------
Total dividends and
distributions (.48) (.51) (.52) (.52) (.73)
------------ ------------ ------------ ------------ ------------
Net asset value, end
of year $ 10.21 $ 10.63 $ 10.37 $ 10.11 $ 10.02
============ ============ ============ ============ ============
Total Investment Based on net asset
Return:** value per share .51% 7.55% 7.92% 6.17% 7.28%
============ ============ ============ ============ ============
Ratios to Average Expenses 1.31% 1.31% 1.31% 1.32% 1.32%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 4.50% 4.82% 5.10% 5.13% 5.25%
============ ============ ============ ============ ============
Supplemental Net assets, end of
Data: year (in thousands) $ 374,642 $ 406,798 $ 415,103 $ 399,341 $ 419,933
============ ============ ============ ============ ============
Portfolio turnover 125.75% 142.02% 99.52% 95.09% 103.65%
============ ============ ============ ============ ============
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
National Portfolio
Class C
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. Oct. 21, 1994++
For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 10.64 $ 10.38 $ 10.11 $ 10.03 $ 9.85
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .47 .50 .52 .52 .36
Realized and unrealized
gain (loss) on investments--net (.42) .26 .27 .08 .39
------------ ------------ ------------ ------------ ------------
Total from investment operations .05 .76 .79 .60 .75
------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
Investment income--net (.47) (.50) (.52) (.52) (.36)
Realized gain on investments
--net -- -- -- -- (.19)
In excess of realized gain
on investments--net --++++ -- -- -- (.02)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.47) (.50) (.52) (.52) (.57)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 10.22 $ 10.64 $ 10.38 $ 10.11 $ 10.03
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share .47% 7.49% 7.97% 6.01% 7.97%+++
============ ============ ============ ============ ============
Ratios to Average Expenses 1.36% 1.36% 1.36% 1.37% 1.37%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 4.45% 4.76% 5.04% 5.08% 5.21%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period (in
Data: thousands) $ 47,901 $ 41,087 $ 28,096 $ 13,291 $ 5,195
============ ============ ============ ============ ============
Portfolio turnover 125.75% 142.02% 99.52% 95.09% 103.65%
============ ============ ============ ============ ============
<CAPTION>
National Portfolio
Class D
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. Oct. 21, 1994++
For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 10.64 $ 10.39 $ 10.12 $ 10.03 $ 9.85
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .53 .56 .58 .57 .40
Realized and unrealized gain
(loss) on investments--net (.42) .25 .27 .09 .39
------------ ------------ ------------ ------------ ------------
Total from investment
operations .11 .81 .85 .66 .79
------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
Investment income--net (.53) (.56) (.58) (.57) (.40)
Realized gain on investments
--net -- -- -- -- (.19)
In excess of realized gain
on investments--net --++++ -- -- -- (.02)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.53) (.56) (.58) (.57) (.61)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 10.22 $ 10.64 $ 10.39 $ 10.12 $ 10.03
============ ============ ============ ============ ============
Total Investment Based on net asset value per
Return:** share 1.03% 7.99% 8.57% 6.71% 8.37%+++
============ ============ ============ ============ ============
Ratios to Average Expenses .81% .80% .80% .81% .81%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 5.01% 5.32% 5.60% 5.64% 5.78%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 93,201 $ 68,162 $ 51,038 $ 43,884 $ 19,656
============ ============ ============ ============ ============
Portfolio turnover 125.75% 142.02% 99.52% 95.09% 103.65%
============ ============ ============ ============ ============
<CAPTION>
Limited Maturity Portfolio
The following per share data and ratios have been derived
from information provided in the financial statements. Class A
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating year $ 9.96 $ 9.93 $ 9.91 $ 9.92 $ 9.87
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .37 .39 .39 .38 .38
Realized and unrealized gain
(loss) on investments--net (.04) .03 .04 (.01) .05
------------ ------------ ------------ ------------ ------------
Total from investment
operations .33 .42 .43 .37 .43
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.37) (.39) (.39) (.38) (.38)
Realized gain on
investments--net -- -- (.02) -- --
In excess of realized gain
on investments--net (.01) -- -- -- --
------------ ------------ ------------ ------------ ------------
Total dividends and
distributions (.38) (.39) (.41) (.38) (.38)
------------ ------------ ------------ ------------ ------------
Net asset value, end of year $ 9.91 $ 9.96 $ 9.93 $ 9.91 $ 9.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 3.37% 4.26% 4.40% 3.75% 4.53%
============ ============ ============ ============ ============
Ratios to Average Expenses .43% .43% .39% .44% .41%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 3.75% 3.88% 3.93% 3.83% 3.86%
============ ============ ============ ============ ============
Supplemental Net assets, end of year
Data: (in thousands) $ 261,970 $ 295,641 $ 343,641 $ 417,097 $ 536,474
============ ============ ============ ============ ============
Portfolio turnover 40.28% 72.69% 61.90% 88.32% 37.33%
============ ============ ============ ============ ============
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Limited Maturity Portfolio
The following per share data and ratios have been derived
from information provided in the financial statements. Class B
For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of year $ 9.97 $ 9.94 $ 9.91 $ 9.92 $ 9.87
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .34 .35 .36 .35 .35
Realized and unrealized gain
(loss) on investments--net (.04) .03 .05 (.01) .05
------------ ------------ ------------ ------------ ------------
Total from investment operations .30 .38 .41 .34 .40
------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
Investment income--net (.34) (.35) (.36) (.35) (.35)
Realized gain on investments
--net -- -- (.02) -- --
In excess of realized gain on
investments--net (.01) -- -- -- --
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.35) (.35) (.38) (.35) (.35)
------------ ------------ ------------ ------------ ------------
Net asset value, end of year $ 9.92 $ 9.97 $ 9.94 $ 9.91 $ 9.92
============ ============ ============ ============ ============
Total Investment Based on net asset value per
Return:** share 3.01% 3.89% 4.13% 3.37% 4.14%
============ ============ ============ ============ ============
Ratios to Average Expenses .78% .78% .75% .80% .78%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 3.39% 3.43% 3.58% 3.46% 3.50%
============ ============ ============ ============ ============
Supplemental Net assets, end of year (in
Data: thousands) $ 42,930 $ 44,714 $ 54,275 $ 71,075 $ 129,581
============ ============ ============ ============ ============
Portfolio turnover 40.28% 72.69% 61.90% 88.32% 37.33%
============ ============ ============ ============ ============
<CAPTION>
Limited Maturity Portfolio
Class C
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. Oct. 21, 1994++
For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 9.94 $ 9.91 $ 9.88 $ 9.92 $ 9.83
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .34 .35 .35 .34 .25
Realized and unrealized gain
(loss) on investments--net (.05) .03 .05 (.04) .09
------------ ------------ ------------ ------------ ------------
Total from investment
operations .29 .38 .40 .30 .34
------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
Investment income--net (.34) (.35) (.35) (.34) (.25)
Realized gain on
investments--net -- -- (.02) -- --
In excess of realized gain
on investments--net (.01) -- -- -- --
------------ ------------ ------------ ------------ ------------
Total dividends and
distributions (.35) (.35) (.37) (.34) (.25)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 9.88 $ 9.94 $ 9.91 $ 9.88 $ 9.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 2.89% 3.88% 4.11% 2.97% 3.52%+++
============ ============ ============ ============ ============
Ratios to Average Expenses .79% .79% .75% .80% .70%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 3.37% 4.27% 3.57% 3.41% 3.61%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 437 $ 86 $ 108 $ 94 $ 3,965
============ ============ ============ ============ ============
Portfolio turnover 40.28% 72.69% 61.90% 88.32% 37.33%
============ ============ ============ ============ ============
<CAPTION>
Limited Maturity Portfolio
Class D
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. Oct. 21, 1994++
For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 9.97 $ 9.94 $ 9.91 $ 9.93 $ 9.83
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .37 .38 .38 .37 .26
Realized and unrealized gain
(loss) on investments--net (.04) .03 .05 (.02) .10
------------ ------------ ------------ ------------ ------------
Total from investment operations .33 .41 .43 .35 .36
------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
Investment income--net (.37) (.38) (.38) (.37) (.26)
Realized gain on investments
--net -- -- (.02) -- --
In excess of realized gain
on investments--net (.01) -- -- -- --
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.38) (.38) (.40) (.37) (.26)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 9.92 $ 9.97 $ 9.94 $ 9.91 $ 9.93
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 3.27% 4.16% 4.40% 3.55% 3.73%+++
============ ============ ============ ============ ============
Ratios to Average Expenses .53% .54% .48% .54% .53%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 3.65% 3.89% 3.84% 3.71% 3.78%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 83,177 $ 68,562 $ 20,383 $ 15,886 $ 11,258
============ ============ ============ ============ ============
Portfolio turnover 40.28% 72.69% 61.90% 88.32% 37.33%
============ ============ ============ ============ ============
<FN>
*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., June 30, 1999
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. The Fund's financial statements are
prepared in accordance with generally accepted accounting
principles, which may require the use of management accruals and
estimates. The Fund's Portfolios offer four classes of shares under
the Merrill Lynch Select Pricing SM 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.
* Financial futures contracts--The Fund's Portfolios may purchase or
sell financial 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 deposit and maintain 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. Distributions in excess
of realized capital gains are due primarily to differing tax
treatments for futures transactions and post-October losses.
(g) Reclassification--Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of $5,910
in the Limited Maturity Portfolio have been reclassified between
accumulated net realized capital losses and paid-in capital in
excess of par. These reclassifications have no effect on net assets
or net asset values per share.
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 ("MLFD" or the "Distributor"), a division of Princeton
Funds Distributor, Inc. ("PFD"), which is 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 million .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 Incorporated ("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 year ended June 30, 1999, 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 $ 20,406 $ 12,026 $ 736
MLPF&S 188,747 112,031 6,338
Class D Shares:
MLFD 8,778 12,332 2,020
MLPF&S 172,595 310,480 20,314
For the year ended June 30, 1999, MLPF&S received contingent
deferred sales charges of $848,204 relating to transactions in Class
B Shares, amounting to $321,449, $491,369 and $35,386 in the
Insured, National and Limited Maturity Portfolios, respectively, and
$32,016 relating to transactions in Class C Shares, amounting to
$11,099, $20,051 and $866 in the Insured, National and Limited
Maturity Portfolios, respectively. Furthermore, MLPF&S received
contingent deferred sales charges of $128,758 relating to
transactions subject to front-end sales charge waivers in Class D
Shares, amounting to $49,520, $37,014 and $42,224 in the Insured,
National and Limited Maturity Portfolios, respectively.
Financial Data Services, Inc. ("FDS"), 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, PFD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended June 30, 1999 were as follows:
Purchases Sales
Insured Portfolio $1,565,967,513 $1,853,126,343
National Portfolio 1,773,334,921 1,841,187,297
Limited Maturity Portfolio 146,252,302 182,712,535
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
Net realized gains (losses) for the year ended June 30, 1999 and net
unrealized gains (losses) as of June 30, 1999 were as follows:
Realized Unrealized
Insured Portfolio Gains Gains
Long-term investments $ 27,177,185 $ 30,442,614
Financial futures contracts 3,844 --
-------------- --------------
Total $ 27,181,029 $ 30,442,614
============== ==============
Realized Unrealized
National Portfolio Gains (Losses) Gains (Losses)
Long-term investments $ 7,589,770 $ 21,315,320
Short-term investments (175) --
Financial futures contracts 1,843,781 (118,750)
-------------- --------------
Total $ 9,433,376 $ 21,196,570
============== ==============
Realized Unrealized
Limited Maturity Portfolio Gains Gains (Losses)
Long-term investments $ 263,932 $ 419,339
Short-term investments 243,976 (174,018)
-------------- --------------
Total $ 507,908 $ 245,321
============== ==============
As of June 30, 1999 net unrealized appreciation/depreciation for
Federal income tax purposes were as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Appreciation
Insured Portfolio $55,559,047 $25,961,176 $29,597,871
National Portfolio 45,792,621 24,678,258 21,114,363
Limited Maturity
Portfolio 1,240,733 995,412 245,321
The aggregate cost of investments at June 30, 1999 for Federal
income tax purposes was $1,716,257,984 for the Insured Portfolio,
$1,336,911,200 for the National Portfolio, and $382,828,287 for the
Limited Maturity Portfolio.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
for the years ended June 30, 1999 and June 30, 1998 were
$106,960,336 and $160,344,787, respectively, for the Insured
Portfolio; $29,277,945 and $33,702,285, respectively, for the
National Portfolio, and $18,483,783 and $10,589,244, respectively,
for the Limited Maturity Portfolio.
Transactions in capital shares for each class were as follows:
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 2,523,386 $ 20,682,133
Shares issued to shareholders
in reinvestment of dividends
and distributions 5,070,798 41,426,673
-------------- --------------
Total issued 7,594,184 62,108,806
Shares redeemed (18,415,364) (150,312,025)
-------------- --------------
Net decrease (10,821,180) $ (88,203,219)
============== ==============
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 2,602,916 $ 21,473,195
Shares issued to shareholders
in reinvestment of dividends
and distributions 3,893,110 32,056,227
-------------- --------------
Total issued 6,496,026 53,529,422
Shares redeemed (18,381,072) (151,209,859)
-------------- --------------
Net decrease (11,885,046) $ (97,680,437)
============== ==============
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 5,641,000 $ 46,434,676
Shares issued to shareholders
in reinvestment of dividends
and distributions 1,938,622 15,832,867
-------------- --------------
Total issued 7,579,622 62,267,543
Automatic conversion of shares (4,030,189) (32,518,388)
Shares redeemed (10,851,320) (88,606,396)
-------------- --------------
Net decrease (7,301,887) $ (58,857,241)
============== ==============
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 4,428,347 $ 36,455,981
Shares issued to shareholders
in reinvestment of dividends
and distributions 1,474,207 12,130,689
-------------- --------------
Total issued 5,902,554 48,586,670
Automatic conversion of shares (286,423) (2,350,040)
Shares redeemed (14,644,280) (120,322,635)
-------------- --------------
Net decrease (9,028,149) $ (74,086,005)
============== ==============
Insured Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 1,057,672 $ 8,728,474
Shares issued to shareholders
in reinvestment of dividends
and distributions 78,764 642,933
-------------- --------------
Total issued 1,136,436 9,371,407
Shares redeemed (746,046) (6,101,279)
-------------- --------------
Net increase 390,390 $ 3,270,128
============== ==============
Insured Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 600,875 $ 4,950,738
Shares issued to shareholders
in reinvestment of dividends
and distributions 42,007 345,869
-------------- --------------
Total issued 642,882 5,296,607
Shares redeemed (348,588) (2,863,946)
-------------- --------------
Net increase 294,294 $ 2,432,661
============== ==============
Insured Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 6,472,195 $ 53,073,631
Automatic conversion of shares 4,027,297 32,518,388
Shares issued to shareholders
in reinvestment of dividends
and distributions 284,865 2,322,184
-------------- --------------
Total issued 10,784,357 87,914,203
Shares redeemed (6,260,301) (51,084,207)
-------------- --------------
Net increase 4,524,056 $ 36,829,996
============== ==============
Insured Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 23,577,522 $ 193,830,379
Automatic conversion of shares 286,423 2,350,040
Shares issued to shareholders
in reinvestment of dividends
and distributions 140,376 1,155,893
-------------- --------------
Total issued 24,004,321 197,336,312
Shares redeemed (22,861,619) (188,347,318)
-------------- --------------
Net increase 1,142,702 $ 8,988,994
============== ==============
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 5,156,566 $ 54,885,021
Shares issued to shareholders
in reinvestment of dividends
and distributions 2,320,546 24,626,470
-------------- --------------
Total issued 7,477,112 79,511,491
Shares redeemed (12,286,769) (130,243,238)
-------------- --------------
Net decrease (4,809,657) $ (50,731,747)
============== ==============
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 4,266,519 $ 45,187,344
Shares issued to shareholders
in reinvestment of dividends 2,527,972 26,788,694
-------------- --------------
Total issued 6,794,491 71,976,038
Shares redeemed (10,854,978) (114,962,452)
-------------- --------------
Net decrease (4,060,487) $ (42,986,414)
============== ==============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 7,103,091 $ 75,637,764
Shares issued to shareholders
in reinvestment of dividends
and distributions 842,039 8,936,016
-------------- --------------
Total issued 7,945,130 84,573,780
Automatic conversion of shares (1,680,490) (17,743,676)
Shares redeemed (7,846,538) (83,194,847)
-------------- --------------
Net decrease (1,581,898) $ (16,364,743)
============== ==============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 6,485,604 $ 68,758,999
Shares issued to shareholders
in reinvestment of dividends 914,162 9,684,295
-------------- --------------
Total issued 7,399,766 78,443,294
Automatic conversion of shares (244,397) (2,584,813)
Shares redeemed (8,908,400) (94,243,672)
-------------- --------------
Net decrease (1,753,031) $ (18,385,191)
============== ==============
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
National Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 2,059,325 $ 21,920,588
Shares issued to shareholders
in reinvestment of dividends
and distributions 114,406 1,213,929
-------------- --------------
Total issued 2,173,731 23,134,517
Shares redeemed (1,348,878) (14,247,726)
-------------- --------------
Net increase 824,853 $ 8,886,791
============== ==============
National Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 2,076,332 $ 21,976,496
Shares issued to shareholders
in reinvestment of dividends 81,934 868,569
-------------- --------------
Total issued 2,158,266 22,845,065
Shares redeemed (1,002,742) (10,604,512)
-------------- --------------
Net increase 1,155,524 $ 12,240,553
============== ==============
National Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 5,435,500 $ 57,997,735
Automatic conversion of shares 1,679,382 17,743,676
Shares issued to shareholders
in reinvestment of dividends
and distributions 200,319 2,125,076
-------------- --------------
Total issued 7,315,201 77,866,487
Shares redeemed (4,602,754) (48,934,733)
-------------- --------------
Net increase 2,712,447 $ 28,931,754
============== ==============
National Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 24,013,327 $ 254,654,607
Automatic conversion of shares 244,216 2,584,813
Shares issued to shareholders
in reinvestment of dividends 157,029 1,665,789
-------------- --------------
Total issued 24,414,572 258,905,209
Shares redeemed (22,922,793) (243,476,442)
-------------- --------------
Net increase 1,491,779 $ 15,428,767
============== ==============
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 1,531,619 $ 15,316,774
Shares issued to shareholders
in reinvestment of dividends
and distributions 600,760 6,003,286
-------------- --------------
Total issued 2,132,379 21,320,060
Shares redeemed (5,378,094) (53,754,851)
-------------- --------------
Net decrease (3,245,715) $ (32,434,791)
============== ==============
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 1,637,467 $ 16,313,195
Shares issued to shareholders
in reinvestment of dividends 689,267 6,863,420
Shares issued resulting from
reorganization 610,766 6,117,207
-------------- --------------
Total issued 2,937,500 29,293,822
Shares redeemed (7,862,688) (78,301,847)
-------------- --------------
Net decrease (4,925,188) $ (49,008,025)
============== ==============
Limited Maturity Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 1,338,974 $ 13,393,753
Shares issued to shareholders
in resinvestment of dividends
and distributions 102,051 1,019,989
-------------- --------------
Total issued 1,441,025 14,413,742
Automatic conversion of shares (4,824) (48,169)
Shares redeemed (1,593,291) (15,930,886)
-------------- --------------
Net decrease (157,090) $ (1,565,313)
============== ==============
Limited Maturity Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 2,835,507 $ 28,244,737
Shares issued to shareholders
in reinvestment of dividends 110,626 1,101,933
-------------- --------------
Total issued 2,946,133 29,346,670
Automatic conversion of shares (17,299) (172,475)
Shares redeemed (3,905,076) (38,899,023)
-------------- --------------
Net decrease (976,242) $ (9,724,828)
============== ==============
Limited Maturity Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 63,750 $ 635,910
Shares issued to shareholders
in reinvestment of dividends
and distributions 804 8,012
-------------- --------------
Total issued 64,554 643,922
Shares redeemed (28,985) (289,370)
-------------- --------------
Net increase 35,569 $ 354,552
============== ==============
Limited Maturity Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 212,120 $ 2,106,982
Shares issued to shareholders
in reinvestment of dividends 265 2,632
-------------- --------------
Total issued 212,385 2,109,614
Shares redeemed (214,575) (2,131,347)
-------------- --------------
Net decrease (2,190) $ (21,733)
============== ==============
Limited Maturity Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1999 Shares Amount
Shares sold 7,562,021 $ 75,656,488
Automatic conversion of shares 4,820 48,169
Shares issued to shareholders
in reinvestment of dividends
and distributions 137,748 1,377,161
-------------- --------------
Total issued 7,704,589 77,081,818
Shares redeemed (6,196,465) (61,920,049)
-------------- --------------
Net increase 1,508,124 $ 15,161,769
============== ==============
Limited Maturity Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 6,883,210 $ 68,670,633
Automatic conversion of shares 17,300 172,475
Shares issued to shareholders
in reinvestment of dividends 70,267 700,217
Shares issued resulting from
reorganization 2,546,189 25,330,576
-------------- --------------
Total issued 9,516,966 94,873,901
Shares redeemed (4,689,176) (46,708,559)
-------------- --------------
Net increase 4,827,790 $ 48,165,342
============== ==============
5. Capital Loss Carryforward:
At June 30, 1999, the Limited Maturity Portfolio had a net capital
loss carryforward of approximately $1,928,000, all of which expires
in 2003. This amount will be available to offset like amounts of any
future taxable gains.
Merrill Lynch Municipal Bond Fund, Inc., June 30, 1999
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Merrill Lynch Municipal Bond Fund, Inc.:
We have audited the accompanying statements of assets and
liabilities, including the schedules of investments, of the Insured,
National and Limited Maturity Portfolios of Merrill Lynch Municipal
Bond Fund, Inc. (the "Fund") as of June 30, 1999, the related
statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and
the financial highlights for each of the years in the five-year
period then ended. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at June 30,
1999 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
the Insured, National and Limited Maturity Portfolios of Merrill
Lynch Municipal Bond Fund, Inc. as of June 30, 1999, the results of
their operations, the changes in their net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
August 17, 1999
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions declared daily by
Merrill Lynch Municipal Bond Fund, Inc. during its taxable year
ended June 30, 1999 qualify as tax-exempt interest dividends for
Federal income tax purposes.
Additionally, the following table summarizes the taxable
distributions paid by the Fund during the year.
<TABLE>
Record Payable Ordinary Long-Term
Date Date Income Capital Gains*
<S> <C> <C> <C> <C>
Insured Portfolio 12/22/98 12/31/98 $.040498 $.146686
National Portfolio 12/22/98 12/31/98 $.000056 $.004181
Limited Maturity Portfolio 12/22/98 12/31/98 $.007539 --
<FN>
*The entire distribution is subject to the 20% tax rate.
Please retain this information for your records.
</TABLE>
