MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
FUND LOGO
Semi-Annual Report
December 31, 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
Robert A. DiMella, 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., December 31, 1999
DEAR SHAREHOLDER
The Municipal Market Environment
The combination of steady strong domestic economic growth,
improvement in foreign economies (most notably in Japan) and
increasing investor concerns regarding potential increases in US
inflation put upward pressure on bond yields throughout the six-
month period ended December 31, 1999. Continued strong US employment
growth and consumer spending were among the reasons the Federal
Reserve Board cited for raising short-term interest rates in late
June, August and November. US Treasury bond yields reacted by
climbing above 6.375% by late October and generally rising for the
remainder of the year. During the period, yields on 30-year US
Treasury bonds increased over 50 basis points (0.50%).
Long-term tax-exempt bond yields also rose during the six months
ended December 31, 1999. For much of the first half of 1999, the
municipal bond market was able to withstand much of the upward
pressure on bond yields. However, investor concerns of additional
moves by the Federal Reserve Board to moderate US economic growth
and, more importantly, the loss of the strong technical support that
the tax-exempt market enjoyed in early 1999 helped push municipal
bond yields significantly higher for the remainder of the period.
The yields on long-term tax-exempt revenue bonds rose over 60 basis
points to 6.23% by December 31, 1999, as measured by the Bond Buyer
Revenue Bond Index.
In recent months, the significant decline in new tax-exempt bond
issuance has remained a positive factor within the municipal bond
market, as it had been for much of the past year. Over the last
year, more than $225 billion in long-term municipal bonds was
issued, a decline of nearly 20% compared to the same period a year
ago. During the past six months, over $100 billion in long-term tax-
exempt bonds was underwritten, representing a decline of nearly 18%
compared to the corresponding period in 1998. Over the past three
months, approximately $55 billion in securities was issued by
municipalities nationally. This quarterly issuance also represented
a decline of over 20% when compared to the same period in 1998. It
is likely that many tax-exempt issuers accelerated their financings
in recent months or decided to postpone issuance into early 2000 to
avoid any potential Year 2000 (Y2K)-related disruptions at year-end.
Consequently, December 1999 volume of issuance of approximately $14
billion declined more than 40% compared to 1998 levels. We expect
decreased tax-exempt bond issuance to continue. Early estimates
suggest that annual tax-exempt issuance in 2000 will be in the $210
billion--$215 billion range.
Although tax-exempt bond yields are at their highest level in over
two years and have attracted significant retail investor interest,
institutional demand has declined sharply. Long-term municipal
mutual funds have seen consistent outflows in recent months as the
yields of individual securities have risen faster than those of
larger, more diverse mutual funds. In addition, the demand from
property/casualty insurance companies has weakened as a result of
the losses, and anticipated losses, incurred as a result of the
series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who were attracted to the
municipal bond market in recent years by historically attractive tax-
exempt bond yield ratios of over 90% have found other asset classes
even more attractive. Even with a reduced supply position, tax-
exempt issuers have been forced to repeatedly raise municipal bond
yields in the attempt to attract adequate demand.
The recent relative underperformance of the municipal bond market
has resulted in an opportunity for long-term investors to purchase
tax-exempt issues whose yields are nearly identical with taxable US
Treasury securities. At December 31, 1999, long-term uninsured
municipal revenue bond yields were more than 96% of comparable US
Treasury securities. In recent months, many taxable asset classes,
such as corporate bonds, mortgage-backed securities and US agency
debt, have all accelerated debt issuance. This acceleration was
initiated largely to avoid issuing securities at year-end and to
minimize any associated Y2K problems that could possibly develop.
However, this increased issuance also resulted in higher yield
levels in the various asset classes, as lower bond prices became
necessary to attract sufficient investor demand. Going forward, it
is believed that the pace of non-US Government debt issuance is
likely to slow significantly. As the supply of this debt declines,
we would expect many institutional investors to return to the
municipal bond market and the attractive yield ratios available.
Looking ahead, it appears to us that long-term tax-exempt bond
yields will remain under pressure, trading in a broad range centered
near current levels. Investors are likely to remain concerned about
future action by the Federal Reserve Board. Any improvement in bond
prices will probably be contingent upon weakening in both US
employment growth and consumer spending. The over 100 basis point
rise in US Treasury bond yields seen thus far this year may
negatively impact US economic growth. The US housing market will be
among the first sectors likely to be affected, as some declines have
already been evidenced in response to higher mortgage rates. We
believe that it is also unrealistic to expect double-digit returns
in US equity markets to continue indefinitely. Much of the US
consumer's wealth is tied to recent stock market appreciation. Any
slowing in these incredible growth rates is likely to reduce
consumer spending. We believe that these factors suggest that the
worst of the recent increase in bond yields has passed and stable,
if not slightly improving, bond prices may be expected.
Portfolio Strategy
Our primary portfolio strategy for the Insured and National
Portfolios of the Fund has been to focus on seeking to generate an
above-industry average level of current income to shareholders. In
the beginning of last year, the market experienced conditions where
credit quality spreads were unusually tight. The difference in yield
between higher-rated securities and lower-rated credits was
unusually narrow. This period was used to structure the National
Portfolio in an effort to provide a generous current return without
subjecting its net asset values to any possible deterioration from
credit concerns. This structuring benefited the Portfolio's
performance because credit spreads widened while interest rates rose
throughout 1999. For the Insured Portfolio, we continued to focus on
relative value within the insured market and those securities
offering a generous yield.
However, market volatility and a general trend toward rising
interest rates were negative factors in the municipal market. The
Portfolios had relatively fully invested positions, which negatively
impacted total returns. As we start 2000, we do intend to
restructure the Portfolios in a way that may limit some degree of
the market's volatility in our investments. Higher interest rates
give us the opportunity to increase coupon structure, thereby
enhancing current return going forward. Call provisions may be
improved through the upcoming new-issue calendar. We intend to
position each of the Portfolios' structure in a manner conducive to
achieving a relatively high level of tax-exempt income, while
tempering any negative market impact of rising interest rates. We
will continue to monitor the economic landscape for signs that a
more positive outlook for bonds is imminent and find appropriate tax-
exempt issues within the Portfolios' respective credit limits in an
effort to enhance yield.
Throughout most of the quarter ended December 31, 1999, we
positioned the Limited Maturity Portfolio with a neutral-to-slightly
defensive investment stance. Cash reserves fluctuated between 3% and
10%, while the average portfolio maturity was reduced to
approximately 1.5 years. The prolonged strength of the US economy
and the possibility of unconditional Federal Reserve Board
tightening prompted this positioning. Our primary investment focus
continues to be on higher coupon, higher-quality issues, which tend
to maintain a high level of current yield, as well as less
volatility in a rising interest rate environment. This strategy has
allowed the Portfolio to continue to outperform the average total
return of its peer group for the quarter, as measured by Lipper
Analytical Services, Inc.
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
We appreciate your ongoing interest in the 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 and Trustee
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Robert A. DiMella)
Robert A. DiMella
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
February 15, 2000
Effective January 7, 2000, Robert A. DiMella was named Portfolio
Manager of Merrill Lynch Municipal Bond Fund, Inc. Mr. DiMella has
been Vice President of Merrill Lynch Asset Management, L.P. (MLAM)
since 1997. Prior thereto he was Assistant Vice President of MLAM
from 1995 to 1997.
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
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/99 -5.23% -9.02%
Five Years Ended 12/31/99 +5.77 +4.91
Ten Years Ended 12/31/99 +6.19 +5.75
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/99 -6.07% -9.60%
Five Years Ended 12/31/99 +4.95 +4.95
Ten Years Ended 12/31/99 +5.38 +5.38
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 12/31/99 -6.11% -7.00%
Five Years Ended 12/31/99 +4.90 +4.90
Inception (10/21/94) through 12/31/99 +4.63 +4.63
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 12/31/99 -5.59% -9.37%
Five Years Ended 12/31/99 +5.48 +4.62
Inception (10/21/94) through 12/31/99 +5.21 +4.39
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
National Portfolio
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/99 -5.42% -9.20%
Five Years Ended 12/31/99 +6.14 +5.27
Ten Years Ended 12/31/99 +6.33 +5.89
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/99 -6.13% -9.70%
Five Years Ended 12/31/99 +5.36 +5.36
Ten Years Ended 12/31/99 +5.53 +5.53
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payments of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 12/31/99 -6.26% -7.16%
Five Years Ended 12/31/99 +5.29 +5.29
Inception (10/21/94) through 12/31/99 +4.80 +4.80
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 12/31/99 -5.64% -9.42%
Five Years Ended 12/31/99 +5.89 +5.03
Inception (10/21/94) through 12/31/99 +5.40 +4.58
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
PERFORMANCE DATA (concluded)
Limited Maturity
Portfolio
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/99 +2.04% +1.02%
Five Years Ended 12/31/99 +4.14 +3.93
Ten Years Ended 12/31/99 +4.54 +4.43
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/99 +1.68% +0.69%
Five Years Ended 12/31/99 +3.76 +3.76
Inception (11/2/92) through 12/31/99 +3.47 +3.47
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 12/31/99 +1.67% +0.68%
Five Years Ended 12/31/99 +3.66 +3.66
Inception (10/21/94) through 12/31/99 +3.54 +3.54
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 12/31/99 +1.94% +0.92%
Five Years Ended 12/31/99 +4.03 +3.82
Inception (10/21/94) through 12/31/99 +3.91 +3.70
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results*
<CAPTION>
Ten Years/
Since
3 Month 12 Month Inception Standardized
As of December 31, 1999 Total Return Total Return Total Return 30-Day Yield
<S> <C> <C> <C> <C>
ML Municipal Bond Fund, Inc. Insured Portfolio Class A Shares** -1.44% -5.23% +82.28% 5.17%
ML Municipal Bond Fund, Inc. Insured Portfolio Class B Shares** -1.63 -6.07 +68.83 4.62
ML Municipal Bond Fund, Inc. Insured Portfolio Class C Shares** -1.64 -6.11 +26.48 4.57
ML Municipal Bond Fund, Inc. Insured Portfolio Class D Shares** -1.50 -5.59 +30.19 4.94
ML Municipal Bond Fund, Inc. National Portfolio Class A Shares** -1.70 -5.42 +84.66 5.33
ML Municipal Bond Fund, Inc. National Portfolio Class B Shares** -1.89 -6.13 +71.24 4.78
ML Municipal Bond Fund, Inc. National Portfolio Class C Shares** -1.90 -6.26 +27.58 4.73
ML Municipal Bond Fund, Inc. National Portfolio Class D Shares** -1.66 -5.64 +31.45 5.08
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class A Shares*** +0.48 +2.04 +55.82 3.92
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class B Shares*** +0.38 +1.68 +27.63 3.60
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class C Shares*** +0.38 +1.67 +19.83 3.60
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class D Shares*** +0.45 +1.94 +22.02 3.82
*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.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Alabama--6.2% AAA Aaa $ 12,500 Alabama State Docks Department, Docks Facilities Revenue
Refunding Bonds, Series B, 5.50% due 10/01/2022 (e) $ 11,583
AAA Aaa 1,585 Alabama Water Pollution Control Authority Revenue Bonds,
Revolving Fund Loan, Series A, 6.75% due 8/15/2017 (b) 1,676
AAA Aaa 39,270 Jefferson County, Alabama, Sewer Revenue Bonds,
Capital Improvement Warrants, Series A, 5.375% due 2/01/2036 (h) 34,296
AAA Aaa 37,720 Jefferson County, Alabama, Sewer Revenue Refunding
Warrants, Series A, 5.375% due 2/01/2027 (h) 33,795
AAA NR* 1,250 Mobile, Alabama, GO, Refunding and Capital Improvement
Bonds, 10.875% due 11/01/2007 (c) 1,609
AAA Aaa 7,250 University of Alabama, University Revenue Bonds (Birmingham),
6% due 10/01/2020 (h) 7,254
Arizona--0.5% AAA Aaa 6,750 Arizona State Municipal Financing Program, COP, Series 34,
7.25% due 8/01/2009 (g) 7,734
California--0.6% AAA Aaa 5,800 Oakland, California, Redevelopment Agency, Tax Allocation
Refunding Bonds, INFLOS, 8.32% due 9/01/2019 (d)(e) 5,662
AAA Aaa 2,300 San Jose, California, Redevelopment Agency, Tax Allocation
Refunding Bonds (Merged Area Redevelopment Project),
6% due 8/01/2008 (e) 2,458
Colorado--3.1% Denver, Colorado, City and County Airport Revenue
Refunding Bonds:
AAA Aaa 10,000 Series A, 5.75% due 11/15/2016 (e) 9,893
AAA Aaa 6,030 Series B, 5% due 11/15/2025 (i) 5,055
AAA Aaa 1,500 Series D, 5.50% due 11/15/2025 (e) 1,369
AAA Aaa 5,000 Series E, 5.50% due 11/15/2025 (e) 4,563
NR* Aaa 19,160 Denver, Colorado, City and County Airport Revenue
Refunding Bonds, RIB, Series 153, 5.561% due
11/15/2025 (d)(e) 16,947
AAA Aaa 8,500 E-470 Public Highway Authority, Colorado, Revenue Refunding
Bonds, Senior Series A, 5.25% due 9/01/2018 (e) 7,789
District of AAA Aaa 7,500 District of Columbia, GO, Refunding, Series B,
Columbia-- 5.50% due 6/01/2014 (i) 7,268
0.9% AAA Aaa 7,000 Washington, D.C., Convention Center Authority, Dedicated
Tax Revenue Bonds, Senior Lien, 4.75% due 10/01/2028 (b) 5,497
</TABLE>
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
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Florida--1.7% A1+ NR* $ 9,000 Capital Projects Finance Authority, Florida, Revenue
Bonds (Florida Hospital Association--Capital Projects
Loan), VRDN, Series A, 4.90% due 6/01/2028 (f)(i) $ 9,000
Dade County, Florida, Water and Sewer System
Revenue Bonds (h):
AAA Aaa 10,000 5.25% due 10/01/2026 8,909
A1+ VMIG1++ 2,500 VRDN, 4.75% due 10/05/2022 (f) 2,500
AAA Aaa 500 Jacksonville, Florida, Health Facilities Authority,
Hospital Revenue Refunding Bonds, 11.50% due 10/01/2012 (c) 778
AAA Aaa 2,240 West Coast Regional Water Supply Authority, Florida,
Capital Improvement Revenue Bonds (Hillsborough County
Project), 10.40% due 10/01/2010 (a)(b) 3,034
Georgia--2.2% Georgia Municipal Electric Authority, Power Revenue
Refunding Bonds (b):
AAA Aaa 20,000 Series EE, 7% due 1/01/2025 22,573
AAA Aaa 9,000 Series Y, 6.40% due 1/01/2013 9,745
Hawaii--0.9% AAA Aaa 10,000 Hawaii State Airport System, Revenue Refunding Bonds,
6.45% due 7/01/2013 (e) 10,581
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) 1,835
Illinois--13.6% Chicago, Illinois, Board of Education, GO (b):
AAA Aaa 10,000 (Chicago School Reform), 5.75% due 12/01/2027 9,456
AAA Aaa 12,650 (Chicago School Reform Project), Series A, 5.25%
due 12/01/2022 11,203
AAA Aaa 12,520 Chicago, Illinois, GO, Project and Refunding Bonds,
5.25% due 1/01/2020 (h) 11,194
AAA Aaa 2,000 Chicago, Illinois, O'Hare International Airport Revenue
Bonds (Passenger Facility Charge), Series A,
5.625% due 1/01/2015 (b) 1,954
Chicago, Illinois, Sales Tax Revenue Bonds (h):
AAA Aaa 12,450 5.375% due 1/01/2030 10,997
AAA Aaa 35,565 5.75% due 1/01/2034 33,403
AAA Aaa 13,675 Chicago, Illinois, Wastewater Transmission Revenue
Bonds, Second Lien, 5.25% due 1/01/2028 (b) 11,878
AAA Aaa 13,950 Chicago, Illinois, Water Revenue Refunding Bonds,
5.25% due 11/01/2027 (h) 12,119
AAA Aaa 12,000 Illinois Development Finance Authority, PCR, Refunding
(Illinois Power Company Project), Series A,
5.40% due 3/01/2028 (e) 10,707
AAA Aaa 3,250 Illinois Health Facilities Authority Revenue Bonds
(Elmhurst Memorial Hospital), 6.625% due 1/01/2022 (h) 3,362
Illinois Health Facilities Authority, Revenue
Refunding Bonds (e):
AAA Aaa 3,740 (Methodist Medical Center), 5.50% due 11/15/2011 3,730
A1+ VMIG1++ 31,745 (University of Chicago Hospitals), VRDN, 4.65%
due 8/01/2026 (f) 31,745
AAA AAA 14,450 Illinois Health Facilities Authority, Revenue
Refunding Bonds, RIB, Series 166, 6.16% due 2/15/2024 (b)(d)(j) 13,449
AAA Aaa 3,000 Illinois State, GO, 5.75% due 5/01/2021 (e) 2,875
AAA Aaa 3,000 Metropolitan Pier and Exposition Authority, Illinois,
Dedicated State Tax Revenue Refunding Bonds (McCormick Plant
Expansion Project), 5.50% due 12/15/2024 (h) 2,749
AAA Aaa 26,000 Regional Transportation Authority, Illinois, Revenue
Bonds, Series A, 6.25% due 6/01/2004 (a)(b) 27,905
Indiana--4.5% AAA Aaa 15,000 Indiana Health Facilities Financing Authority, Hospital
Revenue Refunding Bonds (Sisters of Saint Francis
Health), Series A, 5.375% due 11/01/2027 (e) 13,128
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) 5,353
AAA Aaa 12,625 Indianapolis, Indiana, Gas Utility Revenue Refunding
Bonds (Distribution Systems), Series A, 5% due 8/15/2024 (b) 10,612
AAA Aaa 4,040 Indianapolis, Indiana, Local Public Improvement
Revenue Bonds, 7.90% due 2/01/2002 (a)(g) 4,294
AAA Aaa 10,000 Marion County, Indiana, Convention and Recreational
Facilities Authority, Excise Tax Revenue Bonds,
Lease Rental, Sub-Series A, 5% due 6/01/2027 (e) 8,313
AAA Aaa 4,510 Munster, Indiana, School Building Corporation, Revenue
Refunding Bonds, First Mortgage, 5.75% due 1/15/2005 (a)(e) 4,722
AAA Aaa 5,000 Penn, Indiana, High School Building Corporation Revenue Bonds,
First Mortgage, 6.125% due 7/15/2005 (a)(e) 5,335
Rockport, Indiana, PCR, Refunding (AEP Generating
Company Project), VRDN (b)(f):
AAA Aaa 2,000 Series A, 4.55% due 7/01/2025 2,000
AAA Aaa 2,000 Series B, 4.55% due 7/01/2025 2,000
AAA Aaa 10,370 Wayne Township, Indiana, Marion County School Building Corporation
Revenue Bonds, First Mortgage, 5.50% due 1/15/2022 (e) 9,539
Kentucky--0.8% A1 VMIG1++ 12,100 Kentucky Economic Development Finance Authority, Hospital
Facilities Revenue Refunding Bonds (Baptist Healthcare),
VRDN, Series C, 4.55% due 8/15/2031 (e)(f) 12,100
Louisiana--0.7% AAA Aaa 10,000 De Soto Parish, Louisiana, PCR, Refunding (Cleco Utilities
Group Inc. Project), 5.875% due 9/01/2029 (b) 9,574
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) 4,999
Massachusetts Massachusetts Bay Transportation Authority, Massachusetts,
- --4.1% Revenue Bonds (General Transportation System):
AAA Aaa 21,535 Series A, 5% due 3/01/2027 (h) 18,084
AAA Aaa 5,000 Series B, 5.25% due 3/01/2020 (i) 4,505
AAA Aaa 3,675 Massachusetts Educational Loan Authority, Education Loan Revenue
Bonds, AMT, Issue D, Series A, 7.25% due 1/01/2009 (e) 3,804
AAA Aaa 10,000 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (Beth Israel Deaconess
Medical Center), INFLOS, Series G-4, 8.066% due 7/01/2025 (b)(d) 9,538
AAA Aaa 3,100 Massachusetts State Health and Educational Facilities
Authority, Revenue Refunding Bonds (Saint Elizabeth's Hospital),
LEVRRS, Series E, 9.09% due 8/12/2021 (d)(i) 3,336
AAA Aaa 19,875 Massachusetts State Turnpike Authority, Metropolitan
Highway System Revenue Refunding Bonds, Senior-Series A,
5.125% due 1/01/2023 (e) 17,299
AAA Aaa 2,500 Massachusetts State Water Resource Authority Revenue Bonds,
Series A, 5.50% due 11/01/2006 (a)(h) 2,597
Michigan--1.2% AAA Aaa 6,915 Michigan State, HDA, Rental Housing Revenue Refunding
Bonds, Series B, 6.15% due 10/01/2015 (e) 7,021
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) 9,999
AAA Aaa 1,000 Rockford, Michigan, Public Schools, GO, 6% due 5/01/2007 (h) 1,058
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Mississippi-- AAA Aaa $ 1,320 Harrison County, Mississippi, Wastewater Management
0.1% District, Revenue Refunding Bonds (Wastewater
Treatment Facilities), Series A, 8.50% due 2/01/2013 (h) $ 1,676
Nevada--3.8% AAA Aaa 10,600 Nevada State, GO (Municipal Bond Bank Projects 66 and 67),
Series A, 5% due 5/15/2028 (h) 8,849
AAA Aaa 45,000 Washoe County, Nevada, Water Facility Revenue Bonds
(Sierra Pacific Power Company Project), AMT,
6.65% due 6/01/2017 (e) 46,745
New Jersey--4.3% AAA Aaa 6,810 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) 7,580
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) 29,397
AAA Aaa 4,460 New Jersey Sports and Exposition Authority, State Contract
Revenue Refunding Bonds, Series A, 5.50% due 3/01/2016 (e) 4,380
AAA Aaa 15,505 New Jersey State Housing and Mortgage Finance Agency
Revenue Bonds, Home Buyer, AMT, Series M, 7% due 10/01/2026 (e) 16,318
AAA Aaa 4,215 New Jersey State Turnpike Authority, Turnpike Revenue
Refunding Bonds, Series C, 6.50% due 1/01/2008 (b) 4,599
New York--15.1% AAA Aaa 27,225 Long Island Power Authority, New York, Electric System Revenue
Refunding Bonds, Series A, 5.50% due 12/01/2029 (e) 24,850
Metropolitan Transportation Authority, New York, Transit
Facilities Revenue Bonds (a):
AAA Aaa 10,000 Series A, 6.10% due 7/01/2006 (i) 10,758
AAA Aaa 7,000 Series O, 6.375% due 7/01/2004 (e) 7,535
A1 Aaa 28,510 New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds,
RITR, Series FR-5, 5.395% due 6/15/2026 (d)(e) 25,868
New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue
Refunding Bonds:
AAA NR* 4,900 Series B, 5.25% due 6/15/2029 (i) 4,279
A1+ VMIG1++ 1,100 VRDN, Series G, 4.50% due 6/15/2024 (f)(h) 1,100
New York City, New York, GO:
AAA Aaa 15,000 Series B, 6.25% due 8/15/2008 (b) 16,065
AAA Aaa 4,225 Series E, 6% due 8/01/2007 (h) 4,464
AAA Aaa 6,320 Series G, 6% due 10/15/2007 (b) 6,683
AAA Aaa 31,000 Series I, 6% due 4/15/2012 (i) 32,181
AAA Aaa 5,385 Series I, 5.25% due 4/15/2016 (e) 4,984
AAA Aaa 3,350 Series I, 5% due 4/15/2029 (e) 2,794
AAA Aaa 15,000 Series M, 5.50% due 6/01/2017 (b) 14,289
A1+ VMIG1++ 1,200 VRDN, Series B, 4.50% due 10/01/2020 (f)(h) 1,200
New York City, New York, GO, Refunding:
AAA Aaa 24,500 Series D, 6% due 8/01/2008 (h) 25,908
AAA Aaa 1,500 Series E, 6.20% due 8/01/2008 (e) 1,607
AAA Aaa 3,405 Series H, 5.125% due 8/01/2018 (e) 3,032
AAA NR* 2,000 New York State Dormitory Authority, Lease Revenue Bonds
(State University Dormitory Facilities), 5.375%
due 7/01/2021 (i) 1,825
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) 2,648
AAA Aaa 3,400 New York State Dormitory Authority, Revenue Refunding
Bonds (Saint Charles Hospital and Rehabilitation
Center), Series A, 5.625% due 7/01/2012 (e) 3,416
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) 1,593
New York State Medical Care Facilities Finance Agency
Revenue Bonds, Series E (h):
AAA NR* 8,965 6.25% due 8/15/2004 (a) 9,638
AAA Aaa 160 6.25% due 8/15/2019 162
AAA NR* 6,650 New York State Urban Development Corporation Revenue
Bonds (Correctional Capital Facilities), Series 7,
5.70% due 1/01/2027 (i) 6,277
Niagara Falls, New York, GO, Public Improvement (e):
AAA Aaa 2,975 6.90% due 3/01/2023 3,174
AAA Aaa 3,190 6.90% due 3/01/2024 3,404
Ohio--1.6% AAA Aaa 12,000 Cleveland, Ohio, Public Power System Revenue Bonds,
First Mortgage, Series A, 7% due 11/15/2004 (a)(e) 13,324
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) 4,990
AAA Aaa 5,260 Ohio State Water Development Authority Revenue Bonds
(Water Development--Community Assistance), 5.375% due
12/01/2024 (b) 4,793
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) 4,420
Pennsylvania AAA Aaa 6,000 Philadelphia, Pennsylvania, Gas Works Revenue
- --1.3% Bonds, 12th Series B, 7% due 5/15/2020 (c)(e) 6,734
AAA Aaa 4,000 Philadelphia, Pennsylvania, Water and Wastewater
Revenue Bonds, Series A, 5% due 8/01/2016 (b) 3,572
AAA Aaa 4,020 Philadelphia, Pennsylvania, Water and Wastewater
Revenue Refunding Bonds, 5.60% due 8/01/2018 (e) 3,848
AAA Aaa 5,000 Southeastern Pennsylvania Transportation Authority,
Special Revenue Bonds, 5.375% due 3/01/2022 (h) 4,540
Rhode Island-- AAA Aaa 3,525 Rhode Island State, GO, Consolidated Capital Development
0.2% Loan, Series A, 6% due 8/01/2007 (e) 3,733
South Carolina AAA Aaa 4,000 Piedmont Municipal Power Agency, South Carolina,
- --1.8% Electric Revenue Refunding Bonds, 6.30% due 1/01/2003 (a)(e) 4,254
South Carolina State Public Service Authority,
Revenue Refunding Bonds, Series A (b):
AAA Aaa 17,090 6.375% due 7/01/2021 17,280
AAA Aaa 4,200 6.25% due 1/01/2022 4,208
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Texas--17.8% AAA Aaa $ 11,190 Austin, Texas, Utility System Revenue Bonds,
Combined, 9.25% due 11/15/2004 (a)(e) $ 13,105
AAA Aaa 4,800 Austin, Texas, Utility System Revenue Refunding Bonds,
5.125% due 11/15/2020 (i) 4,226
AAA Aaa 6,000 Brazos River Authority, Texas, PCR, Refunding (Texas
Utilities Electric Company Project), AMT, 6.50% due
12/01/2027 (b) 6,075
AAA Aaa 12,000 Brazos River Authority, Texas, PCR (Texas Utilities
Electric Company Project), AMT, Series B, 6.625% due
6/01/2022 (h) 12,456
Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Industries Inc. Project) (b):
AAA Aaa 20,755 Series B, 5.125% due 11/01/2020 18,078
AAA Aaa 36,900 Series C, 5.125% due 5/01/2019 32,396
AAA Aaa 7,000 Coastal Water Authority, Texas, Contract Revenue
Refunding Bonds (City of Houston Projects), 5% due
12/15/2025 (i) 5,899
AAA Aaa 27,000 Dallas, Texas, Civic Center Revenue Refunding and
Improvement Bonds, 5% due 8/15/2028 (e) 22,557
AAA Aaa 11,100 Harris County, Texas, Toll Road Revenue Bonds, Senior
Lien, Series A, 6.375% due 8/15/2004 (a)(e) 11,999
AAA Aaa 2,750 Harris County, Texas, Toll Road Revenue Refunding Bonds,
Series A, 6.50% due 8/15/2017 (b) 2,816
AAA Aaa 19,250 Houston, Texas, Water and Sewer System Revenue Bonds,
Junior Lien, Series C, 5.375% due 12/01/2027 (h) 17,200
Houston, Texas, Water and Sewer System, Revenue Refunding
Bonds, Junior Lien, Series A:
AAA Aaa 14,770 6.125% due 12/01/2005 (a)(e) 15,704
AAA Aaa 8,000 6.20% due 12/01/2005 (a)(e) 8,537
AAA Aaa 4,500 5.25% due 12/01/2022 (h) 4,001
AAA Aaa 15,750 Houston, Texas, Water and Sewer System, Revenue Refunding
Bonds, Series A, 5% due 12/01/2028 (i) 13,149
AAA Aaa 3,500 Houston, Texas, Water Conveyance System Contract, COP,
Series J, 6.25% due 12/15/2013 (b) 3,715
Matagorda County, Texas, Navigation District Number 1,
Revenue Refunding Bonds, Series A (b):
AAA Aaa 11,800 (Houston Light and Power Company), 6.70% due 3/01/2027 12,318
AAA Aaa 39,300 (Reliant Energy Inc.), 5.25% due 6/01/2026 34,202
A1+ Aaa 300 North Central Texas Health Facility Development Corporation
Revenue Bonds (Methodist Hospitals-Dallas), VRDN, Series B,
4.55% due 10/01/2015 (e)(f) 300
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) 4,624
AAA VMIG1++ 3,000 Sabine River Authority, Texas, PCR, Refunding (Texas Utilities
Electric Company Project), VRDN, Series A, 4.55% due
3/01/2026 (b)(f) 3,000
AAA Aaa 6,000 San Antonio, Texas, Electric and Gas Revenue Bonds, 5.375%
due 2/01/2018 (e) 5,564
AAA Aaa 7,430 Southwest Higher Education Authority Incorporated, Revenue
Refunding Bonds, Series B, 6.25% due 10/01/2022 (h) 7,420
Utah--2.5% AAA VMIG1++ 3,200 Carbon County, Utah, PCR, Refunding (Pacificorp Projects),
VRDN, 4.55% due 11/01/2024 (b)(f) 3,200
A1 VMIG1++ 15,400 Emery County, Utah, PCR, Refunding (Pacificorp Projects),
VRDN, 4.55% due 11/01/2024 (b)(f) 15,400
AAA Aaa 2,650 Utah State Board of Regents, Student Loan Revenue Bonds,
AMT, Series F, 7.45% due 11/01/2008 (b) 2,769
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 3,014
AAA Aaa 3,000 5.50% due 5/15/2013 2,997
AAA NR* 9,535 Utah Transit Authority, Sales Tax and Transportation Revenue
Bonds (Salt Lake County Light Rail Transit Project), 5.375% due
12/15/2022 (i) 8,631
Virginia--1.5% AAA Aaa 5,000 Danville, Virginia, IDA, Hospital Revenue Refunding
Bonds (Danville Regional Medical Center), 6.50% due
10/01/2004 (a)(h) 5,394
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 5,075
AAA Aaa 11,215 6.35% due 7/01/2018 11,383
Washington AAA Aaa 5,315 King County, Washington, Sewer Revenue Bonds, 5.25% due
- --3.6% 1/01/2026 (h) 4,624
Seattle, Washington, Metropolitan Seattle Municipality,
Sewer Revenue Bonds, Series W (a)(e):
AAA Aaa 3,730 6.25% due 1/01/2003 3,956
AAA Aaa 2,465 6.25% due 1/01/2003 2,614
AAA Aaa 4,485 6.25% due 1/01/2003 4,757
AAA Aaa 33,535 Seattle, Washington, Municipal Light and Power
Revenue Bonds, 6.625% due 7/01/2004 (a)(h) 36,527
West Virginia AAA Aaa 11,465 Mason County, West Virginia, PCR, Refunding
- --1.8% (Appalachian Power Company), 6.85% due 6/01/2022 (e) 12,105
AAA Aaa 12,250 Pleasants County, West Virginia, PCR, Refunding
(Potomac-Pleasants), Series C, 6.15% due 5/01/2015 (b) 12,511
AAA Aaa 2,500 West Virginia School Building Authority, Revenue
Refunding Bonds, Capital Improvement, Series B, 5.25%
due 7/01/2021 (i) 2,239
Wisconsin--3.2% AAA Aaa 9,000 Superior, Wisconsin, Limited Obligation Revenue
Refunding Bonds (Midwest Energy Resources), Series E,
6.90% due 8/01/2021 (h) 9,961
AAA Aaa 4,650 Wisconsin Public Power Inc., Power Supply System
Revenue Bonds, Series A, 5.75% due 7/01/2023(e) 4,409
Wisconsin State, GO, AMT, Series B (e):
AAA Aaa 7,920 6.50% due 5/01/2020 8,054
AAA Aaa 17,130 6.50% due 5/01/2025 17,421
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) 6,445
Total Investments (Cost--$1,466,053)--100.2% 1,459,140
Liabilities in Excess of Other Assets--(0.2%) (3,136)
----------
Net Assets--100.0% $1,456,004
==========
(a)Prerefunded.
(b)AMBAC Insured.
(c)Escrowed to maturity.
(d)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at December 31, 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 December 31, 1999.
(g)BIG Insured.
(h)FGIC Insured.
(i)FSA Insured.
(j)FHA Insured.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Alabama--1.1% AAA Aaa $ 15,250 Jefferson County, Alabama, Sewer Revenue Bonds, Capital
Improvement Warrants, Series A, 5% due 2/01/2033 (e) $ 12,579
Alaska--3.4% NR* NR* 12,055 Alaska State Housing Finance Corporation Revenue Bonds,
RITR, Series 2, 6.07% due 6/01/2035 (f)(g) 11,241
AA+ NR* 27,150 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Sohio
Pipeline-British Petroleum Oil), 7.125% due 12/01/2025 28,487
Arizona--0.6% BBB+ Baa1 2,170 Arizona Health Facilities Authority Revenue Bonds (Catholic
Healthcare West), Series A, 6.625% due 7/01/2020 2,095
NR* B1 5,000 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding
Bonds (America West Airlines Inc. Project), AMT, 6.30%
due 4/01/2023 4,488
California-- AAA Aaa 13,420 Alameda Corridor Transportation Authority, California,
13.3% Revenue Bonds, Senior Lien, Series A, 4.75% due 10/01/2025 (f) 10,976
AAA Aaa 6,000 California Health Facilities Finance Authority
Revenue Bonds (UCSF-Stanford Health Care), Series A,
5% due 11/15/2028 (h) 5,074
AAA Aaa 3,000 California Health Facilities Finance Authority, Revenue
Refunding Bonds (Little Co. of Mary Health Service),
4.50% due 10/01/2028 (c) 2,307
AA- Aa3 10,000 California State, GO, 5% due 10/01/2023 8,606
AAA Aaa 30,000 California State, GO, Refunding, 4.25% due 10/01/2026 (f) 22,468
A+ Aaa 10,000 California State Public Works Board, Lease Revenue Bonds
(Department of Corrections), Series A, 7% due 11/01/2004 (i) 11,194
AAA Aaa 9,000 Fresno, California, Sewer Revenue Bonds, Series A, 5%
due 9/01/2023 (f) 7,798
NR* NR* 4,000 Long Beach, California, Special Tax Bonds (Community
Facilities District No. 3-Pine Ave.), 6.375% due 9/01/2023 3,788
Los Angeles, California, Department of Water and Power,
Waterworks Revenue Refunding Bonds:
AAA Aa3 5,700 4.25% due 10/15/2030 (e) 4,180
AAA Aaa 5,000 4.25% due 10/15/2034 (f) 3,598
AAA Aaa 20,000 Los Angeles, California, Unified School District, GO,
Series A, 5% due 7/01/2021 (e) 17,406
AAA Aaa 3,000 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Refunding Bonds, Proposition C,
Second Series, Series A, 4.75% due 7/01/2026 (h) 2,448
AAA Aaa 23,000 Northern California Power Agency, Public Power Revenue
Refunding Bonds (Hydroelectric Project Number One), Series A,
5.125% due 7/01/2023 (f) 20,272
AAA Aaa 10,000 Sacramento County, California, Airport System Revenue
Refunding Bonds, Sub-Series B, 5% due 7/01/2026 (e) 8,575
AAA Aaa 3,250 Sacramento County, California, COP, Refunding (Public
Facilities Project), 4.75% due 10/01/2027 (c) 2,632
AAA Aaa 16,000 San Diego, California, Certificates of Undivided Interest
Revenue Bonds (Water Utility Fund), 4.75% due 8/01/2028 (e) 12,951
AAA Aaa 10,000 San Jose, California, Redevelopment Agency Tax Allocation
Bonds (Merged Area Redevelopment Project), 5% due 8/01/2026 (c) 8,573
Colorado--6.6% AA Aa2 15,150 Colorado Springs, Colorado, Utilities Revenue Bonds (System
Improvement), Sub Lien, Series A, 5% due 11/15/2027 12,797
AA Aa2 25,200 Colorado Springs, Colorado, Utilities Revenue Refunding Bonds
(System Improvement), Series A, 5.375% due 11/15/2026 22,768
Denver, Colorado, City and County Airport Revenue Bonds, AMT:
BBB+ Baa1 2,575 Series A, 7.50% due 11/15/2023 2,773
BBB+ Baa1 7,910 Series A, 8% due 11/15/2025 8,238
BBB+ Baa1 9,710 Series B, 7.25% due 11/15/2023 10,213
NR* Aaa 12,000 Denver, Colorado, City and County Airport Revenue
Refunding Bonds, RIB, Series 153, 5.561% due 11/15/2025 (f)(g) 10,614
AAA Aaa 10,600 E-470 Public Highway Authority, Colorado, Revenue Refunding
Bonds, Senior Series A, 5% due 9/01/2026 (f) 8,914
Connecticut BB+ Ba1 5,000 Connecticut State Development Authority, PCR, Refunding
- --0.4% (Connecticut Light & Power Company), Series A,
5.85% due 9/01/2028 4,435
District of A1+ VMIG1++ 1,300 District of Columbia, GO, General Fund Recovery, VRDN,
Columbia-- Series B-3, 4.25% due 6/01/2003 (a) 1,300
0.9% AAA Aaa 11,000 Washington, D.C., Convention Center Authority,
Dedicated Tax Revenue Bonds, Senior Lien, 4.75% due
10/01/2028 (c) 8,639
Florida--3.6% A1+ VMIG1++ 9,950 Dade County, Florida, IDA, Exempt Facilities Revenue
Refunding Bonds (Florida Power & Light Co.), VRDN,
4% due 6/01/2021 (a) 9,950
NR* Aaa 5,175 Florida HFA, Home Ownership Revenue Refunding Bonds,
AMT, Series G1, 7.90% due 3/01/2022 (d) 5,336
AAA Aaa 6,330 Florida HFA, Revenue Bonds (Antigua Club Apartments),
AMT, Series A-1, 7% due 2/01/2035 (c) 6,642
NR* NR* 3,000 Mediterra, Florida, South Community Development District, Capital
Improvement Revenue Bonds, Series B, 6.25% due 5/01/2004 2,976
AAA NR* 2,360 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT,
Series A, 8.375% due 3/01/2021 (b)(d) 2,411
A1+ VMIG1++ 200 Pinellas County, Florida, Health Facilities Authority,
Revenue Refunding Bonds (Pooled Hospital Loan
Program), DATES, 4.25% due 12/01/2015 (a)(c) 200
A1+ VMIG1++ 900 Saint Lucie County, Florida, PCR, Refunding (Florida Power
and Light Company Project), VRDN, 4% due 3/01/2027 (a) 900
AAA Aaa 15,825 Tampa Bay, Florida, Water Utility System Revenue Bonds,
Series B, 4.75% due 10/01/2027 (e) 12,820
Georgia--3.2% AAA Aaa 18,350 Fulton County, Georgia, Water and Sewer Revenue Bonds,
4.75% due 1/01/2028 (e) 14,681
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)(i) 22,012
Illinois--3.6% AAA Aaa 7,780 Chicago, Illinois, GO, Refunding Bonds (Project and
Refunding), Series A, 5.375% due 1/01/2024 (e) 6,975
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 8,247
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 4,718
BB+ Baa2 12,975 Series 84-B, 8.85% due 5/01/2018 13,686
AA Aa1 250 Illinois HDA, Residential Mortgage Revenue Bonds, RIB,
AMT, 8.65% due 2/01/2018 (g) 265
A1+ VMIG1++ 3,000 Illinois Health Facilities Authority Revenue Refunding Bonds
(University of Chicago Hospitals), VRDN, 4.65% due
8/01/2026 (a)(f) 3,000
NR* A2 4,400 Southwestern Illinois Development Authority, Sewer Facilities
Revenue Bonds (Monsanto Company Project), AMT, 7.30% due
7/15/2015 4,729
Indiana--2.2% NR* NR* 2,595 Indiana State Educational Facilities Authority, Revenue
Refunding Bonds (Saint Joseph's College Project),
7% due 10/01/2029 2,544
AA NR* 9,100 Indianapolis, Indiana, Local Public Improvement Bond Bank
Revenue Refunding Bonds, Series D, 6.75% due 2/01/2020 9,404
A1 VMIG1++ 1,700 Jasper County, Indiana, PCR, Refunding (Northern Indiana
Public Service), VRDN, Series C, 4.55% due 4/01/2019 (a) 1,700
AAA Aaa 13,950 Marion County, Indiana, Convention and Recreational
Facilities Authority, Excise Tax Revenue Bonds
(Lease Rental), Sub-Series A, 5% due 6/01/2022 (f) 11,847
</TABLE>>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Iowa--0.9% NR* NR* $ 9,000 Iowa Finance Authority, Health Care Facilities
Revenue Refunding Bonds (Care Initiatives Project),
9.25% due 7/01/2025 $ 10,885
Kansas--2.0% Wichita, Kansas, Hospital Revenue Refunding
Bonds, RIB (f)(g):
AAA Aaa 12,000 Series III-A, 7.931% due 10/01/2017 12,720
AAA Aaa 10,000 Series III-B, 8.337% due 10/21/2022 10,563
Kentucky--2.4% AAA Aaa 20,105 Louisville and Jefferson County, Kentucky, Metropolitan
Sewer District, Sewer and Drain System Revenue Refunding
Bonds, Series A, 5% due 5/15/2030 (e) 16,726
NR* NR* 4,500 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 6/01/2024 4,601
A+ Aa2 6,345 Trimble County, Kentucky, PCR, AMT, Series A, 7.625%
due 11/01/2020 6,589
Louisiana--4.8% 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 37,735
A1+ VMIG1++ 4,100 Louisiana State Offshore Terminal Authority, Deepwater
Port Revenue Refunding Bonds (1st Stage A-Loop Inc.), VRDN,
4.50% due 9/01/2008 (a) 4,100
CC NR* 13,000 Port New Orleans, Louisiana, IDR, Refunding (Continental
Grain Company Project), 7.50% due 7/01/2013 13,195
Massachusetts NR* Ca 11,302 Massachusetts State Health and Educational Facilities
- --2.0% Authority, Revenue Refunding Bonds (New England
Memorial Hospital), Series B, 6.25% due 7/01/2023 (j) 2,841
AAA Aaa 11,510 Massachusetts State Water Resource Authority Revenue Bonds,
Series A, 4.75% due 8/01/2027 (h) 9,202
AAA Aaa 13,000 Massachusetts State Water Resource Authority, Revenue
Refunding Bonds, Series D, 5% due 8/01/2024 (f) 11,030
Michigan--1.3% AAA Aaa 15,000 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds, INFLOS, 8.361% due 2/15/2022 (g)(h) 15,206
Minnesota--0.5% AA+ Aa2 2,110 Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT,
Series A, 7.45% due 7/01/2022 (b) 2,160
AA+ NR* 3,000 Rochester, Minnesota, Health Care Facilities Revenue
Bonds, IRS, Series H, 7.155% due 11/15/2015 (g) 3,056
Mississippi AAA Aaa 16,290 Harrison County, Mississippi, Wastewater Management and
- --2.0% Solid Waste Revenue Refunding Bonds, 4.75%
due 2/01/2027 (e) 13,011
NR* Baa2 5,360 Lowndes County, Mississippi, Hospital Revenue Refunding
Bonds (Golden Triangle Medical Center), 8.50%
due 2/01/2010 5,478
NR* Aaa 3,940 Mississippi Home Corporation, S/F Mortgage Revenue Bonds
(Access Program), AMT, Series A, 6.90% due 6/01/2024 (d) 4,042
Missouri--1.0% NR* NR* 11,400 Bi-State Development Agency, Missouri and Illinois,
Metropolitan District Terminal Facilities Revenue
Refunding Bonds (American Commercial Lines), 7.75%
due 6/01/2000 (i) 11,899
Montana--0.2% NR* A2 2,000 Montana State Higher Education, Student Assistance
Corporation, Student Loan Revenue Refunding Bonds,
AMT, Sub-Series B, 6.40% due 12/01/2032 1,968
Nebraska--0.2% AAA Aaa 1,800 Nebraska Investment Finance Authority, S/F Mortgage
Revenue Bonds, RIB, AMT, Series 2, 10.364% due
9/10/2030 (d)(g) 1,908
Nevada--1.5% AAA Aaa 10,000 Clark County, Nevada, Airport Revenue Bonds, Sub-Lien,
Series A, 6% due 7/01/2029 (f) 9,824
BBB+ Baa1 10,000 Henderson, Nevada, Health Care Facilities Revenue Bonds
(Catholic Healthcare West), 5.375% due 7/01/2026 7,813
New Jersey New Jersey EDA, Special Facility Revenue Bonds (Continental
- --1.2% Airlines Inc. Project), AMT:
BB Ba2 5,000 6.25% due 9/15/2019 4,665
BB Ba2 5,000 6.25% due 9/15/2029 4,550
NR* Aaa 5,000 Union County, New Jersey, Utilities Authority, RITR,
Series 38, 6.42% due 6/01/2020 (g) 4,231
New Mexico A1+ NR* 400 Eddy County, New Mexico, PCR, Refunding (IMC Fertilizer
- --0.0% Inc. Project), VRDN, 5.40% due 2/01/2003 (a) 400
New York--14.8% A1+ VMIG1++ 6,800 Long Island Power Authority, New York, Electric System
Revenue Bonds, VRDN, Sub-Series 5, 4.50% due
5/01/2033 (a) 6,800
AAA Aaa 3,380 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Refunding Bonds, Series B,
4.75% due 7/01/2026 (e) 2,737
A- Baa1 5,000 Metropolitan Transportation Authority, New York, Service
Contract Revenue Refunding Bonds (Commuter Facilities),
Series 5, 7% due 7/01/2012 5,249
AAA Aaa 7,370 Metropolitan Transportation Authority, New York, Transit
Facilities Revenue Refunding Bonds, Series A,
4.75% due 7/01/2024 (f) 6,025
New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds:
NR* Aaa 10,000 RIB, Series 158, 5.785% due 6/15/2026 (g) 9,236
AAA Aaa 10,000 Series B, 5.75% due 6/15/2026 (f) 9,537
New York City, New York, City Transitional Finance
Authority Revenue Bonds, Future Tax Secured:
AA Aa3 5,000 Series A, 6% due 8/15/2029 4,911
AA Aa3 8,500 Series B, 4.75% due 11/01/2023 6,939
New York City, New York, GO:
A- A3 4,000 Series B, 8.25% due 6/01/2006 4,636
A- Aaa 5,495 Series F, 8.25% due 11/15/2001 (i) 5,935
New York City, New York, GO, Refunding, Series B (i):
A- A3 10,000 7.75% due 2/01/2002 10,747
A- A3 4,500 7.75% due 2/01/2002 4,836
AAA Aaa 10,000 New York State Dormitory Authority, Revenue Refunding
Bonds (Saint Charles Hospital and Rehabilitation
Center), Series A, 5.50% due 7/01/2022 (f) 9,202
New York State Dormitory Authority, Revenue Refunding
Bonds (State University Educational Facilities):
A A3 5,000 Series A, 7.50% due 5/15/2013 5,880
AAA Aaa 23,000 Series A, 4.75% due 5/15/2025 (f) 18,737
A A3 5,000 Series B, 7.375% due 5/15/2000 (i) 5,158
AA- Aa3 35,000 New York State Thruway Authority, Revenue Refunding
Bonds, Series E, 5% due 1/01/2025 29,581
AAA Aaa 20,000 Port Authority of New York and New Jersey,
Consolidated Revenue Bonds, 116th Series, 4.25% due
10/01/2026 (e) 14,915
AAA Aaa 12,500 Triborough Bridge and Tunnel Authority, New York,
Special Obligation Revenue Refunding Bonds, Series A,
4.75% due 1/01/2024 (f) 10,238
North BBB Baa3 4,000 North Carolina Eastern Municipal Power Agency,
Carolina--0.3% Power System Revenue Bonds, Series D, 6.75% due
1/01/2026 3,952
A1 VMIG1++ 100 North Carolina Medical Care Commission, Hospital
Revenue Bonds (Pooled Equipment Financing Project),
ACES, 5.10% due 12/01/2025 (a)(f) 100
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Ohio--2.0% AAA Aaa $ 12,000 Cleveland, Ohio, Public Power System Revenue Bonds,
First Mortgage, Series A, 7% due 11/15/2004 (f)(i) $ 13,324
AAA Aaa 5,000 Hamilton County, Ohio, Sales Tax Revenue Bonds
(Hamilton County Football Project), Series A, 4.75% due
12/01/2027 (f) 4,021
AAA Aaa 5,600 Ohio HFA, S/F Mortgage Revenue Bonds, AMT, RIB,
Series B, 9.162% due 3/31/2031 (d)(g) 5,922
Pennsylvania NR* Aaa 16,500 Allegheny County, Pennsylvania, Sanitation Authority,
- --3.7% Sewer Revenue Bonds, RITR, Series 20, 4.67% due
12/01/2024 (f)(g) 13,220
BBB Baa 10,000 Pennsylvania Convention Center Authority, Revenue
Refunding Bonds, Series A, 6.75% due 9/01/2019 10,353
AA+ Aa2 8,800 Pennsylvania HFA, Revenue Refunding Bonds, RIB, AMT,
8.95% due 10/01/2023 (g) 9,438
AAA NR* 2,000 Pennsylvania State Higher Educational Facilities Authority,
College and University Revenue Bonds (Eastern College),
Series B, 8% due 10/15/2006 (i) 2,369
AAA Aaa 9,050 Philadelphia, Pennsylvania, School District, GO, Series A,
4.75% due 4/01/2027 (f) 7,233
Puerto Rico AAA Aaa 10,000 Puerto Rico Commonwealth, GO, Public Improvement,
- --1.4% 4.75% due 7/01/2023 (f) 8,326
A1+ VMIG1++ 5,200 Puerto Rico Commonwealth, Government Development Bank
Revenue Refunding Bonds, VRDN, 4.95% 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, 5% due 7/01/2028 (a)(c) 2,400
Rhode Island NR* Aa2 7,975 Rhode Island Housing and Mortgage Finance Corporation
- --0.6% Revenue Bonds, RITR, AMT, Series 30, 5.67% due
4/01/2029 (g) 7,334
South Dakota AAA Aa1 6,025 South Dakota, HDA, Revenue Refunding Bonds,
- --0.5% Homeownership Mortgage, Series A, 7.15% due 5/01/2027 6,174
Texas--11.3% NR* Aaa 14,000 Arlington, Texas, Independent School District , GO,
Refunding, 5% due 2/15/2024 11,926
AAA Aaa 5,300 Austin, Texas, Revenue Bonds (Town Lake Community
Events Center Venue), 6.20% due 11/15/2029 (e) 5,335
BBB+ A3 18,150 Brazos River Authority, Texas, PCR (Texas Utilities
Electric Company Project), AMT, Series A, 7.875% due
3/01/2021 18,923
A1+ VMIG1++ 1,100 Gulf Coast Waste Disposal Authority, Texas, PCR, Refunding
(Amoco Oil Company Project), VRDN, 4.50% due 10/01/2017 (a) 1,100
BBB Baa1 7,250 Gulf Coast Waste Disposal Authority, Texas, Revenue Bonds
(Champion International Corporation), AMT, 7.45% due
5/01/2026 7,541
A1+ NR* 13,600 Harris County, Texas, Health Facilities Development
Corporation, Hospital Revenue Refunding Bonds
(Methodist Hospital), VRDN, 4.65% due 12/01/2025 (a) 13,600
AAA Aaa 24,775 Houston, Texas, Airport System Revenue Refunding Bonds,
Sub Lien, Series C, 5% due 7/01/2028 (e) 20,706
Houston, Texas, Water and Sewer System Revenue
Bonds, RITR (e)(g):
NR* Aaa 15,750 Series 5, 4.67% due 12/01/2027 12,383
NR* Aaa 10,620 Series 32, 4.696% due 12/01/2027 8,682
A1+ NR* 3,200 North Central Texas Health Facility Development Corporation
Revenue Bonds (Methodist Hospitals-Dallas), VRDN, Series B,
4.55% due 10/01/2015 (a)(f) 3,200
AAA Aaa 4,470 Richardson, Texas, Independent School District, GO, Series C,
4.75% due 2/15/2025 3,606
AA Aa1 27,700 San Antonio, Texas, Electric and Gas Revenue Refunding
Bonds, Series A, 4.50% due 2/01/2021 21,762
NR* VMIG1++ 1,000 Southwest Texas, Higher Education Authority Incorporated,
Revenue Refunding Bonds (Southern Methodist University), VRDN,
4.55% due 7/01/2015 (a) 1,000
Utah--1.5% NR* NR* 2,000 Tooele County, Utah, PCR, Refunding (Laidlaw Environmental),
AMT, Series A, 7.55% due 7/01/2027 2,037
AAA Aaa 13,250 Weber County, Utah, Municipal Building Authority, Lease
Revenue Bonds, 7.50% due 12/15/2004 (i) 15,014
Virginia--1.3% A1+ VMIG1++ 7,000 Dinwiddie County, Virginia, IDA, Exempt Facility Revenue
Bonds (Chaparral Steel Virginia Project), VRDN, AMT, Series A,
4.55% due 8/01/2029 (a) 7,000
NR* NR* 4,030 Dulles Town Center Community Development Authority,
Virginia, Special Assessment Tax (Dulles Town Center Project),
6.25% due 3/01/2026 3,747
NR* NR* 5,000 Peninsula Ports Authority, Virginia, Revenue Refunding Bonds
(Port Facility-Zeigler Coal), 6.90% due 5/02/2022 4,162
West Virginia NR* NR* 4,000 Upshur County, West Virginia, Solid Waste Disposal
- --0.4% Revenue Bonds (TJ International Project), AMT, 7% due
7/15/2025 4,051
Wisconsin--1.9% Wisconsin Housing and EDA, Home Ownership Revenue
Refunding Bonds:
NR* Aa2 21,150 RITR, AMT, Series 18, 5.762% due 9/01/2028 (g) 19,744
AA Aa2 2,425 Series A, 7.10% due 3/01/2023 2,493
Total Investments (Cost--$1,183,946)--98.6% 1,136,545
Other Assets Less Liabilities--1.4% 15,584
----------
Net Assets--100.0% $1,152,129
==========
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at December 31, 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 December 31, 1999.
(h)FSA Insured.
(i)Prerefunded.
(j)Non-income producing security.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Alabama--2.3% AA Aa3 $ 7,675 Alabama State Public School and College Authority,
Capital Improvement Revenue Bonds, Series D, 5% due
8/01/2003 $ 7,752
Alaska--0.0% A1+ VMIG1++ 100 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
(Exxon Pipeline Company Project), VRDN, Series A, 4.50%
due 12/01/2033 (b) 100
Arizona--4.6% AA- A1 200 Central Arizona, Water Conservation District, Contract
Revenue Bonds, Series B, 6.50% due 5/01/2001 (a) 209
AAA NR* 4,720 Phoenix, Arizona, Civic Improvement Corporation,
Wastewater System, Lease Revenue Bonds, 6.125% due
7/01/2003 (a) 5,015
SP1+ NR* 5,780 Phoenix, Arizona, IDA, S/F Mortgage Revenue Refunding
Bonds, Series D, 4.20% due 6/01/2002 5,686
AAA NR* 4,285 Pima County, Arizona, Unified School District Number 6,
Marana, GO, Series A, 5.75% due 7/01/2003 (a)(f) 4,466
Colorado--0.1% AAA VMIG1++ 500 Moffat County, Colorado, PCR, Refunding (Pacificorp
Projects), VRDN, 4.80% due 5/01/2013 (b)(c) 500
Connecticut Connecticut State Resource Recovery Authority, Resource
- --4.9% Recovery Revenue Refunding Bonds (Bridgeport Resco Company
LP Project):
A+ A2 2,500 5.25% due 1/01/2002 2,518
A+ A2 4,000 5% due 1/01/2003 4,001
AAA Aaa 10,000 Connecticut State, Special Assessment Unemployment
Compensation Advanced Fund, Refunding (Connecticut Unemployment),
Series A, 5.50% due 5/15/2001 (c) 10,146
Florida--3.5% AAA Aaa 6,200 Dade County, Florida, GO, Seaport Bonds, 6.50% due
10/01/2001 (a)(c) 6,465
AAA Aaa 5,400 Florida State Division Bond Finance Department, General
Services Revenue Bonds (Environmental Protection, Preservation
2000), Series B, 5% due 7/01/2002 (e) 5,457
Georgia--2.8% AAA Aaa 4,000 Georgia Municipal Electric Authority, Power Revenue
Refunding Bonds, Series D, 6% due 1/01/2000 (c) 4,000
AAA Aaa 5,310 Georgia State, GO, Series B, 5.75% due 8/01/2002 5,469
Hawaii--2.1% Hawaii State, GO:
AAA Aaa 3,200 Refunding, Series CO, 6% due 3/01/2001 (f) 3,259
AAA Aaa 3,585 Series CT, 5.25% due 9/01/2003 (e) 3,648
Illinois--9.3% AAA Aaa 1,790 Chicago, Illinois, GO, Series C, 6.25% due 10/31/2001 (d) 1,842
AAA Aaa 5,000 Chicago, Illinois, Public Building, Commerce Building
Revenue Bonds, Series C, 5.125% due 2/01/2003 (f) 5,051
AAA Aaa 12,000 Cook County, Illinois, GO, Series A, 6.60% due 11/15/2002 (a)(d) 12,832
BBB Ba1 4,625 Illinois Development Finance Authority, Solid Waste
Disposal Revenue Bonds (Waste Management Inc. Project),
AMT, 7.125% due 1/01/2001 4,656
AA Aa2 7,100 Illinois State, GO, 4% due 3/01/2003 6,912
Indiana--4.2% A+ Aaa 5,008 Indiana Transportation Finance Authority, Airport
Facilities Lease Revenue Bonds, Series A, 6.25% due
11/01/2002 (a) 5,306
AAA Aaa 3,000 Indianapolis, Indiana, Airport Authority, Revenue
Refunding Bonds, AMT, Series A, 4.50% due 7/01/2001 (f) 2,995
AA NR* 5,790 Richmond, Indiana, Hospital Authority, Revenue Refunding
Bonds (Reid Hospital and Health Care), VRDN,
4.35% due 1/01/2012 (b) 5,700
Kansas--2.2% A- A2 3,500 Burlington, Kansas, Environmental Improvement Revenue
Refunding Bonds (Kansas City Power and Light
Company Project), VRDN, Series D, 4.35% due 10/01/2017 (b) 3,472
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) 4,037
Kentucky--3.2% 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) 4,926
Kentucky Asset/Liability Commission, General Fund Revenue
Bonds, Project Notes, First Series:
A+ Aa3 2,900 4% due 3/01/2001 2,884
A+ Aa3 3,000 4% due 3/01/2002 2,950
Maryland--0.6% NR* Aa2 2,000 Maryland State Community Development Administration, Department
of Housing and Community Development, Revenue Refunding
Bonds, S/F Program, First Series, 4.45% due 4/01/2001 (h) 1,994
Massachusetts NR* A1 270 Boston, Massachusetts, Economic Development and Industrial
- --4.8% Corporation Revenue Bonds, VRDN,
Series A, 5% due 7/01/2015 (b) 270
AAA Aaa 175 Massachusetts Education Loan Authority, Education Loan
Revenue Refunding Bonds, AMT, Issue E, Series B, 5.50% due
7/01/2001 (c) 177
Massachusetts State, GO, Refunding:
AA- Aa3 3,000 Series A, 4.90% due 7/01/2001 3,020
AA- Aa3 750 Series B, 6.25% due 8/01/2001 770
SP1+ MIG1++ 3,200 Massachusetts State, HFA, S/F Housing Revenue Bonds, AMT,
Series, 3.60% due 6/01/2000 3,194
AAA Aaa 3,500 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (Newton-Wellesley Hospital), VRDN,
Series D, 6.90% due 7/01/2007 (a)(b)(d) 3,684
Massachusetts State Industrial Finance Agency, Resource
Recovery Revenue Refunding Bonds (Ogden Haverhill Associates),
Series A:
BBB NR* 1,750 4.35% due 12/01/2000 1,745
BBB NR* 2,925 4.50% due 12/01/2001 2,898
AA Aa3 300 Massachusetts State Special Obligation Revenue Bonds,
Series A, 5.90% due 6/01/2001 (c) 306
AA Aa1 100 Peabody, Massachusetts, GO, Series A, 4.50% due 8/01/2000 100
Michigan--2.4% AA Aa2 110 Ann Arbor, Michigan, School District, Public Schools, GO,
Refunding, 4.75% due 5/01/2000 110
AAA Aaa 105 Chelsea, Michigan, School District, GO, 6.75% due 5/01/2002 (f) 110
AAA Aaa 250 Dearborn, Michigan, Economic Development Corporation,
Hospital Revenue Bonds (Oakwood Obligated Group), Series A
, 6.95% due 8/15/2001 (a)(d) 264
Detroit, Michigan, GO, Refunding:
AAA Aaa 200 Distributable State Aid, 5.70% due 5/01/2001 (c) 203
A- Baa1 6,585 Series B, 6.25% due 4/01/2001 6,699
AA+ Aa2 450 Michigan Municipal Bond Authority, Revenue Refunding
Bonds (Local Government--Qualified School), Series A,
6% due 5/01/2001 459
NR* Aaa 100 Michigan State Hospital Finance Authority Revenue Bonds
(McLaren Obligated Group), Series A, 7.50% due
9/15/2001 (a) 107
Minnesota--2.2% AAA Aaa 2,385 Metropolitan Council, Minnesota, Minneapolis-St. Paul
Metropolitan Area Transit, GO, Series C, 4.75% due
2/01/2000 2,386
AA+ Aa2 5,000 Minnesota State, HFA, S/F Mortgage Revenue Bonds, Series I,
3.90% due 8/29/2000 4,986
Mississippi NR* Baa2 7,200 Lawrence County, Mississippi, PCR (Georgia-Pacific
- --2.1% Corporation Project), 4.30% due 12/01/2000 7,192
Nebraska--0.8% 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) 2,558
New Hampshire BBB+ Baa3 7,500 New Hampshire State Business Finance Authority, PCR,
- --2.2% Refunding (UTD Illuminating), VRDN, AMT,
Series A, 4.35% due 2/01/2002 (b) 7,315
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
New Jersey--4.7% AAA Aaa $ 300 New Jersey State Educational Facilities Authority
Revenue Bonds (Princeton University), Series E, 4.05%
due 7/01/2000 $ 300
AA+ Aaa 5,070 New Jersey State, GO, 6% due 8/01/2002 (a) 5,261
AA- Aa2 3,900 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series B,
4.75% due 6/15/2002 3,912
NR* MIG1++ 6,250 Readington-Lebanon, New Jersey, Sewer Authority Revenue
Bonds, Project Notes, Series A, 4.25% due
12/01/2000 6,247
AAA Aaa 125 Somerset County, New Jersey, GO, 5.875% due 12/01/2001 128
New York--8.5% New York City, New York, GO:
A- Aaa 60 Refunding, Series A, 6% due 8/01/2000 (g) 61
A- A3 3,200 Refunding, Series G, 4.30% due 8/01/2002 3,159
A- Aaa 4,615 Series C, Sub-Series C-1, 7.50% due 8/01/2002 (a) 4,995
A- Baa1 3,000 New York State, COP, Commissioner of General Services
Executive Department, 4% due 3/01/2000 2,998
New York State Local Government Assistance Corporation
Revenue Bonds (a):
AA- Aaa 625 Series A, 7% due 4/01/2001 656
AAA Aaa 600 Series D, 7% due 4/01/2002 641
NR* Aaa 725 New York State Medical Care Facilities Finance Agency
Revenue Bonds, 7.75% due 2/15/2001 (a) 766
AA- Aa3 5,305 New York State Power Authority, Revenue and General
Purpose Refunding Bonds, Series A, 5% due 2/15/2002 5,343
New York State Urban Development Corporation Revenue Bonds:
A- Aaa 5,000 7.50% due 4/01/2001 (a) 5,280
A- Baa1 4,525 (Correctional Capital Facilities), Series 4, 4.90%
due 1/01/2001 4,544
A+ Aa3 340 Triborough Bridge and Tunnel Authority, New York,
Revenue Bonds, Series R, 6.90% due 1/01/2000 340
Ohio--8.6% SP1+ NR* 4,650 Cleveland, Ohio, State University, General Receipt
Revenue Notes, BAN, Series B, 3.85% due 1/16/2001 4,641
AAA Aaa 6,990 Columbus, Ohio, GO, Series 2, 5% due 6/15/2002 7,066
NR* Aa3 6,000 Franklin County, Ohio, Hospital Revenue Refunding Bonds
(US Health Corporation), VRDN, Series B, 4.50% due
12/01/2020 (b) 6,005
AAA Aaa 3,135 Kent State University, Ohio, University Revenue Bonds,
VRDN, Series B, 4.15% due 5/01/2001 (b)(c) 3,112
AAA Aa1 8,000 Ohio State Highway, GO, Series V, 4.70% due 5/15/2000 8,020
Pennsylvania AA Aa2 1,000 Bucks County, Pennsylvania, GO, Refunding, Series A,
- --1.6% 5.95% due 3/01/2000 1,003
AAA Aaa 4,145 Pittsburgh, Pennsylvania, GO, Refunding, Series A, 5%
due 3/01/2000 (d) 4,151
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) 340
Rhode Island AAA Aaa 4,100 Rhode Island State, GO, Refunding (Consolidated
- --1.2% Capital Development Loan), 5.50% due 8/01/2001 (d) 4,165
South AA Aa1 5,855 Charleston County, South Carolina, School District,
Carolina--3.2% GO, Refunding, 4% due 2/01/2003 5,727
AAA Aaa 5,000 Florence County, South Carolina, Hospital Revenue
Bonds (McLeod Regional Medical Center Project),
6.75% due 11/01/2000 (a)(f) 5,207
Texas--6.8% BBB Baa1 5,000 Brazos River Authority, Texas, PCR, Refunding (Texas
Utilities Electric Company), AMT, VRDN, Series B,
4.15% due 6/01/2030 (b) 4,989
AA- Aa3 7,000 Houston, Texas, GO, Refunding, Series C, 5.80% due 3/01/2002 7,166
AAA Aaa 3,925 Houston, Texas Independent School District, GO,
6.375% due 8/15/2001 (g) 4,039
San Antonio, Texas, Electric and Gas Revenue Bonds:
AA Aa1 2,840 5.25% due 2/01/2000 2,843
AA NR* 160 5.25% due 2/01/2000 (g) 160
AA Aa1 3,600 Texas State University System Revenue Bonds
(Constitutional Appropriation), 4.75% due 8/15/2001 3,616
Virginia--1.7% AA A1 3,330 Richmond, Virginia, GO, Equipment Notes, 4.25% due 5/15/2002 3,301
AA Aa2 2,555 Virginia State Transportation Board, Transportation
Contract Revenue Bonds (US Route 58 Corridor),
Series B, 5% due 5/15/2000 2,564
Washington AAA Aaa 5,000 Seattle, Washington, Municipality of Metropolitan
- --3.6% Seattle Sewer Revenue Bonds, Series U, 6.60% due
1/01/2001 (a)(f) 5,214
AA Aa 6,750 South Columbia, Washington, Basin Irrigation District,
Washington, Revenue Refunding Bonds, 5.75%
due 6/01/2000 6,797
Wisconsin--5.0% AA+ Aa1 6,510 Milwaukee, Wisconsin, Metropolitan Sewer District, GO,
Refunding, Series A, 4.25% due 10/01/2000 6,521
AA Aa2 4,385 Wisconsin State, GO, Series C, 5.50% due 5/01/2000 4,406
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) 5,971
Total Investments (Cost--$336,591)--99.2% 334,456
Other Assets Less Liabilities--0.8% 2,694
----------
Net Assets--100.0% $ 337,150
==========
(a)Prerefunded.
(b)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at December 31, 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 by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
<CAPTION>
Limited
Insured National Maturity
As of December 31, 1999 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Assets: Investments, at value* $1,459,140,430 $1,136,544,660 $ 334,456,355
Cash 85,112 23,768 23,479
Receivables:
Interest 24,110,087 20,403,562 5,044,608
Securities sold 305,000 7,072,165 15,000
Capital shares sold 809,883 879,738 193,082
Prepaid registration fees and other assets 790,663 112,689 67,888
-------------- -------------- --------------
Total assets 1,485,241,175 1,165,036,582 339,800,412
-------------- -------------- --------------
Liabilities: Payables:
Dividends to shareholders 16,933,195 3,910,636 669,905
Capital shares redeemed 5,101,763 7,860,284 1,729,474
Securities purchased 5,974,057 -- --
Investment adviser 520,706 542,594 110,518
Distributor 254,733 255,429 19,186
Accrued expenses and other liabilities 453,207 338,724 121,209
-------------- -------------- --------------
Total liabilities 29,237,661 12,907,667 2,650,292
-------------- -------------- --------------
Net Assets: Net assets $1,456,003,514 $1,152,128,915 $ 337,150,120
============== ============== ==============
Net Assets Class A Common Stock, $.10 par value++ $ 14,276,681 $ 7,702,946 $ 2,314,738
Consist of: Class B Common Stock, $.10 par value++++ 4,455,249 3,102,242 433,178
Class C Common Stock, $.10 par value++++++ 188,576 390,867 6,101
Class D Common Stock, $.10 par value++++++++ 1,234,895 891,919 669,753
Paid-in capital in excess of par 1,502,291,928 1,218,678,463 337,788,322
Accumulated realized capital losses
on investments--net (59,531,386) (30,639,979) (1,622,169)
Accumulated distributions in excess of
realized capital gains on investments--net -- (596,027) (304,677)
Unrealized depreciation on investments--net (6,912,429) (47,401,516) (2,135,126)
-------------- -------------- --------------
Net assets $1,456,003,514 $1,152,128,915 $ 337,150,120
============== ============== ==============
Net Asset Class A:
Value: Net assets $1,031,506,187 $ 734,220,044 $ 227,920,418
============== ============== ==============
Shares outstanding 142,766,805 77,029,458 23,147,381
============== ============== ==============
Net asset value and redemption
price per share $ 7.23 $ 9.53 $ 9.85
============== ============== ==============
Class B:
Net assets $ 321,682,490 $ 295,595,355 $ 42,660,512
============== ============== ==============
Shares outstanding 44,552,487 31,022,419 4,331,778
============== ============== ==============
Net asset value and redemption
price per share $ 7.22 $ 9.53 $ 9.85
============== ============== ==============
Class C:
Net assets $ 13,618,549 $ 37,263,815 $ 598,742
============== ============== ==============
Shares outstanding 1,885,763 3,908,668 61,007
============== ============== ==============
Net asset value and redemption
price per share $ 7.22 $ 9.53 $ 9.81
============== ============== ==============
Class D:
Net assets $ 89,196,288 $ 85,049,701 $ 65,970,448
============== ============== ==============
Shares outstanding 12,348,950 8,919,187 6,697,529
============== ============== ==============
Net asset value and redemption
price per share $ 7.22 $ 9.54 $ 9.85
============== ============== ==============
*Identified cost $1,466,052,859 $1,183,946,176 $ 336,591,481
============== ============== ==============
++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 Six Months Ended December 31, 1999 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Investment Interest and amortization of premium
Income: and discount earned $ 46,275,831 $ 40,485,870 $ 7,681,344
-------------- -------------- --------------
Expenses: Investment advisory fees 2,965,275 3,108,367 614,968
Account maintenance and distribution
fees--Class B 1,409,063 1,287,606 75,474
Transfer agent fees--Class A 172,641 152,936 29,564
Account maintenance fees--Class D 110,371 116,650 36,113
Account maintenance and distribution
fees--Class C 62,681 177,412 1,027
Accounting services 96,425 75,358 19,980
Custodian fees 81,680 66,092 20,206
Transfer agent fees--Class B 72,499 79,544 6,745
Registration fees 31,587 63,591 12,688
Professional fees 34,693 58,000 6,948
Printing and shareholder reports 34,604 27,314 7,309
Transfer agent fees--Class D 13,280 17,369 8,440
Pricing services 15,479 11,053 7,158
Directors' fees and expenses 9,960 7,723 3,708
Transfer agent fees--Class C 2,999 10,002 101
Other 32,220 15,851 3,636
-------------- -------------- --------------
Total expenses 5,145,457 5,274,868 854,065
-------------- -------------- --------------
Investment income--net 41,130,374 35,211,002 6,827,279
-------------- -------------- --------------
Realized & Realized loss on investments--net (59,263,882) (20,605,064) (58,908)
Unrealized Change in unrealized appreciation/depreciation
Loss on on investments--net (37,355,043) (68,598,086) (2,380,447)
Investments-- -------------- -------------- --------------
Net: Net Increase (Decrease) in Net Assets
Resulting from Operations $ (55,488,551) $ (53,992,148) $ 4,387,924
============== ============== ==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Insured Portfolio National Portfolio
For the Six For the For the Six For the
Months Ended Year Ended Months Ended Year Ended
Increase (Decrease) in Net Assets: Dec. 31, 1999 June 30, 1999 Dec. 31, 1999 June 30, 1999
<S> <S> <C> <C> <C> <C>
Operations: Investment income--net $ 41,130,374 $ 90,946,268 $ 35,211,002 $ 74,353,391
Realized gain (loss) on
investments--net (59,263,882) 27,181,029 (20,605,064) 9,433,376
Change in unrealized
appreciation/depreciation on
investments--net (37,355,043) (87,414,180) (68,598,086) (66,961,746)
-------------- -------------- -------------- --------------
Net increase (decrease) in
net assets resulting from
operations (55,488,551) 30,713,117 (53,992,148) 16,825,021
-------------- -------------- -------------- --------------
Dividends & Investment income--net:
Distributions to Class A (30,168,001) (66,779,244) (23,227,290) (49,579,905)
Shareholders: Class B (8,409,016) (20,438,753) (8,390,880) (18,305,554)
Class C (346,899) (699,230) (1,072,996) (2,146,172)
Class D (2,206,458) (3,029,041) (2,519,836) (4,321,760)
Realized gain on
investments--net:
Class A (15,607,942) (30,333,680) -- --
Class B (4,878,687) (11,021,698) -- --
Class C (207,962) (405,758) -- --
Class D (1,326,468) (1,454,294) -- --
In excess of realized
gain on investments--net:
Class A -- -- -- (375,628)
Class B -- -- -- (165,207)
Class C -- -- -- (19,432)
Class D -- -- -- (35,760)
-------------- -------------- -------------- --------------
Net decrease in net assets
resulting from dividends and
distributions to shareholders (63,151,433) (134,161,698) (35,211,002) (74,949,418)
-------------- -------------- -------------- --------------
Capital Share Net decrease in net assets
Transactions: derived from capital share
transactions (153,925,213) (106,960,336) (152,253,058) (29,277,945)
-------------- -------------- -------------- --------------
Net Assets: Total decrease in net assets (272,565,197) (210,408,917) (241,456,208) (87,402,342)
Beginning of period 1,728,568,711 1,938,977,628 1,393,585,123 1,480,987,465
-------------- -------------- -------------- --------------
End of period $1,456,003,514 $1,728,568,711 $1,152,128,915 $1,393,585,123
============== ============== ============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Limited Maturity Portfolio
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: Dec. 31, 1999 June 30, 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 6,827,279 $ 14,976,944
Realized gain (loss) on
investments--net (58,908) 507,908
Change in unrealized
appreciation/depreciation on
investments--net (2,380,447) (2,207,796)
-------------- --------------
Net increase (decrease) in
net assets resulting from
operations 4,387,924 13,277,056
-------------- --------------
Dividends & Investment income--net:
Distributions to Class A (4,755,157) (10,528,513)
Shareholders: Class B (736,667) (1,537,329)
Class C (10,016) (10,535)
Class D (1,325,439) (2,900,567)
Realized gain on
investments--net:
Class A -- --
Class B -- --
Class C -- --
Class D -- --
In excess of realized
gain on investments--net:
Class A -- (211,240)
Class B -- (35,110)
Class C -- (281)
Class D -- (58,046)
-------------- --------------
Net decrease in net assets
resulting from dividends and
distributions to shareholders (6,827,279) (15,281,621)
-------------- --------------
Capital Share Net decrease in net assets
Transactions: derived from capital share
transactions (48,924,849) (18,483,783)
-------------- --------------
Net Assets: Total decrease in net assets (51,364,204) (20,488,348)
Beginning of period 388,514,324 409,002,672
-------------- --------------
End of period $ 337,150,120 $ 388,514,324
============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios Insured Portfolio
have been derived from information Class A
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 7.79 $ 8.25 $ 8.06 $ 7.91 $ 7.92
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .20 .41 .43 .45 .44
Realized and unrealized
gain(loss) on
investments--net (.45) (.27) .20 .15 (.01)
------------- ------------- ------------- ------------- -------------
Total from investment
operations (.25) .14 .63 .60 .43
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment
income--net (.20) (.41) (.43) (.45) (.44)
Realized gain on
investments--net (.11) (.19) (.01) -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.31) (.60) (.44) (.45) (.44)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 7.23 $ 7.79 $ 8.25 $ 8.06 $ 7.91
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share (3.23%)++ 1.56% 8.05% 7.72% 5.51%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses .43%* .42% .42% .44% .43%
Average ============= ============= ============= ============= =============
Net Assets: Investment
income--net 5.22%* 5.02% 5.29% 5.58% 5.55%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 1,031,506 $ 1,216,346 $ 1,377,025 $ 1,441,785 $ 1,572,835
============= ============= ============= ============= =============
Portfolio turnover 49.14% 86.35% 102.89% 74.40% 78.49%
============= ============= ============= ============= =============
<CAPTION>
The following per share data and ratios Insured Portfolio
have been derived from information Class B
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 7.78 $ 8.24 $ 8.05 $ 7.91 $ 7.92
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .17 .35 .37 .39 .38
Realized and unrealized
gain (loss) on
investments--net (.45) (.27) .20 .14 (.01)
------------- ------------- ------------- ------------- -------------
Total from investment
operations (.28) .08 .57 .53 .37
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment income--net (.17) (.35) (.37) (.39) (.38)
Realized gain on
investments--net (.11) (.19) (.01) -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.28) (.54) (.38) (.39) (.38)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 7.22 $ 7.78 $ 8.24 $ 8.05 $ 7.91
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share (3.61%)++ .79% 7.24% 6.78% 4.71%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses 1.19%* 1.18% 1.18% 1.19% 1.19%
Average ============= ============= ============= ============= =============
Net Assets: Investment income--net 4.46%* 4.26% 4.53% 4.82% 4.80%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 321,683 $ 414,135 $ 498,624 $ 560,105 $ 723,090
============= ============= ============= ============= =============
Portfolio turnover 49.14% 86.35% 102.89% 74.40% 78.49%
============= ============= ============= ============= =============
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
The following per share data and ratios Insured Portfolio
have been derived from information Class C
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 7.78 $ 8.24 $ 8.06 $ 7.91 $ 7.92
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .17 .34 .37 .38 .38
Realized and unrealized
gain (loss) on
investments--net (.45) (.27) .19 .15 (.01)
------------- ------------- ------------- ------------- -------------
Total from investment
operations (.28) .07 .56 .53 .37
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment income--net (.17) (.34) (.37) (.38) (.38)
Realized gain on
investments--net (.11) (.19) (.01) -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.28) (.53) (.38) (.38) (.38)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 7.22 $ 7.78 $ 8.24 $ 8.06 $ 7.91
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share (3.64%)+++ .74% 7.05% 6.86% 4.65%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses 1.24%* 1.23% 1.23% 1.25% 1.24%
Average ============= ============= ============= ============= =============
Net Assets: Investment income--net 4.42%* 4.21% 4.48% 4.77% 4.75%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 13,619 $ 16,850 $ 14,623 $ 11,922 $ 18,936
============= ============= ============= ============= =============
Portfolio turnover 49.14% 86.35% 102.89% 74.40% 78.49%
============= ============= ============= ============= =============
<CAPTION>
The following per share data and ratios Insured Portfolio
have been derived from information Class D
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 7.79 $ 8.24 $ 8.06 $ 7.91 $ 7.92
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .19 .39 .41 .43 .42
Realized and unrealized
gain (loss) on
investments--net (.46) (.26) .19 .15 (.01)
------------- ------------- ------------- ------------- -------------
Total from investment
operations (.27) .13 .60 .58 .41
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment income--net (.19) (.39) (.41) (.43) (.42)
Realized gain on
investments--net (.11) (.19) (.01) -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.30) (.58) (.42) (.43) (.42)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 7.22 $ 7.79 $ 8.24 $ 8.06 $ 7.91
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share (3.48%)+++ 1.43% 7.65% 7.46% 5.25%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses .68%* .67% .67% .69% .68%
Average ============= ============= ============= ============= =============
Net Assets: Investment
income--net 4.98%* 4.77% 5.03% 5.33% 5.31%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 89,196 $ 81,238 $ 48,706 $ 38,422 $ 51,772
============= ============= ============= ============= =============
Portfolio turnover 49.14% 86.35% 102.89% 74.40% 78.49%
============= ============= ============= ============= =============
<CAPTION>
The following per share data and ratios National Portfolio
have been derived from information Class A
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 10.22 $ 10.64 $ 10.38 $ 10.11 $ 10.02
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .28 .56 .59 .60 .60
Realized and unrealized
gain (loss)on
investments--net (.69) (.42) .26 .27 .09
------------- ------------- ------------- ------------- -------------
Total from investment
operations (.41) .14 .85 .87 .69
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment income--net (.28) (.56) (.59) (.60) (.60)
In excess of realized
gain on investments--net -- --++ -- -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.28) (.56) (.59) (.60) (.60)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 9.53 $ 10.22 $ 10.64 $ 10.38 $ 10.11
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share (4.02%)+++ 1.28% 8.36% 8.84% 6.98%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses .56%* .55% .55% .55% .56%
Average ============= ============= ============= ============= =============
Net Assets: Investment income--net 5.63%* 5.26% 5.58% 5.86% 5.89%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 734,220 $ 877,841 $ 964,940 $ 983,650 $ 983,550
============= ============= ============= ============= =============
Portfolio turnover 41.26% 125.75% 142.02% 99.52% 95.09%
============= ============= ============= ============= =============
<CAPTION>
The following per share data and ratios National Portfolio
have been derived from information Class B
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 10.21 $ 10.63 $ 10.37 $ 10.11 $ 10.02
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .24 .48 .51 .52 .52
Realized and unrealized
gain (loss) on
investments--net (.68) (.42) .26 .26 .09
------------- ------------- ------------- ------------- -------------
Total from investment
operations (.44) .06 .77 .78 .61
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment
income--net (.24) (.48) (.51) (.52) (.52)
In excess of
realized gain on
investments--net -- --++ -- -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.24) (.48) (.51) (.52) (.52)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 9.53 $ 10.21 $ 10.63 $ 10.37 $ 10.11
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share (4.30%)+++ .51% 7.55% 7.92% 6.17%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses 1.32%* 1.31% 1.31% 1.31% 1.32%
Average ============= ============= ============= ============= =============
Net Assets: Investment income--net 4.87%* 4.50% 4.82% 5.10% 5.13%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 295,595 $ 374,642 $ 406,798 $ 415,103 $ 399,341
============= ============= ============= ============= =============
Portfolio turnover 41.26% 125.75% 142.02% 99.52% 95.09%
============= ============= ============= ============= =============
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>?
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
The following per share data and ratios National Portfolio
have been derived from information Class C
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 10.22 $ 10.64 $ 10.38 $ 10.11 $ 10.03
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .24 .47 .50 .52 .52
Realized and unrealized
gain (loss)on
investments--net (.69) (.42) .26 .27 .08
------------- ------------- ------------- ------------- -------------
Total from investment
operations (.45) .05 .76 .79 .60
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment
income--net (24) (.47) (.50) (.52) (.52)
In excess of
realized gain on
investments--net -- --++ -- -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.24) (.47) (.50) (.52) (.52)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 9.53 $ 10.22 $ 10.64 $ 10.38 $ 10.11
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share (4.41%)+++ .47% 7.49% 7.97% 6.01%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses 1.37%* 1.36% 1.36% 1.36% 1.37%
Average ============= ============= ============= ============= =============
Net Assets: Investment income--net 4.83%* 4.45% 4.76% 5.04% 5.08%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 37,264 $ 47,901 $ 41,087 $ 28,096 $ 13,291
============= ============= ============= ============= =============
Portfolio turnover 41.26% 125.75% 142.02% 99.52% 95.09%
============= ============= ============= ============= =============
<CAPTION>
The following per share data and ratios National Portfolio
have been derived from information Class D
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 10.22 $ 10.64 $ 10.39 $ 10.12 $ 10.03
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .27 .53 .56 .58 .57
Realized and unrealized
gain (loss) on
investments--net (.68) (.42) .25 .27 .09
------------- ------------- ------------- ------------- -------------
Total from investment
operations (.41) .11 .81 .85 .66
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment
income--net (.27) (.53) (.56) (.58) (.57)
In excess of
realized gain on
investments--net -- --++ -- -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.27) (.53) (.56) (.58) (.57)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 9.54 $ 10.22 $ 10.64 $ 10.39 $ 10.12
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share (4.04%)+++ 1.03% 7.99% 8.57% 6.71%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses .81%* .81% .80% .80% .81%
Average ============= ============= ============= ============= =============
Net Assets: Investment income
--net 5.39%* 5.01% 5.32% 5.60% 5.64%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 85,050 $ 93,201 $ 68,162 $ 51,038 $ 43,884
============= ============= ============= ============= =============
Portfolio turnover 41.26% 125.75% 142.02% 99.52% 95.09%
============= ============= ============= ============= =============
<CAPTION>
The following per share data and ratios Limited Maturity Portfolio
have been derived from information Class A
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 9.91 $ 9.96 $ 9.93 $ 9.91 $ 9.92
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .19 .37 .39 .39 .38
Realized and unrealized
gain (loss) on
investments--net (.06) (.04) .03 .04 (.01)
------------- ------------- ------------- ------------- -------------
Total from investment
operations .13 .33 .42 .43 .37
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment
income--net (.19) (.37) (.39) (.39) (.38)
Realized gain on
investments--net -- -- -- (.02) --
In excess of
realized gain on
investments--net -- (.01) -- -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.19) (.38) (.39) (.41) (.38)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 9.85 $ 9.91 $ 9.96 $ 9.93 $ 9.91
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share 1.32%+++ 3.37% 4.26% 4.40% 3.75%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses .40%* .43% .43% .39% .44%
Average ============= ============= ============= ============= =============
Net Assets: Investment income--net 3.76%* 3.75% 3.88% 3.93% 3.83%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 227,920 $ 261,970 $ 295,641 $ 343,641 $ 417,097
============= ============= ============= ============= =============
Portfolio turnover 31.83% 40.28% 72.69% 61.90% 88.32%
============= ============= ============= ============= =============
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
The following per share data and ratios Limited Maturity Portfolio
have been derived from information Class B
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 9.92 $ 9.97 $ 9.94 $ 9.91 $ 9.92
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .17 .34 .35 .36 .35
Realized and unrealized
gain (loss) on
investments--net (.07) (.04) .03 .05 (.01)
------------- ------------- ------------- ------------- -------------
Total from investment
operations .10 .30 .38 .41 .34
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment
income--net (.17) (.34) (.35) (.36) (.35)
Realized gain on
investments--net -- -- -- (.02) --
In excess of
realized gain on
investments--net -- (.01) -- -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.17) (.35) (.35) (.38) (.35)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 9.85 $ 9.92 $ 9.97 $ 9.94 $ 9.91
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share 1.03%++ 3.01% 3.89% 4.13% 3.37%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses .76%* .78% .78% .75% .80%
Average ============= ============= ============= ============= =============
Net Assets: Investment income--net 3.41%* 3.39% 3.43% 3.58% 3.46%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 42,661 $ 42,930 $ 44,714 $ 54,275 $ 71,075
============= ============= ============= ============= =============
Portfolio turnover 31.83% 40.28% 72.69% 61.90% 88.32%
============= ============= ============= ============= =============
<CAPTION>
The following per share data and ratios Limited Maturity Portfolio
have been derived from information Class C
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 9.88 $ 9.94 $ 9.91 $ 9.88 $ 9.92
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .17 .34 .35 .35 .34
Realized and unrealized
gain (loss) on
investments--net (.07) (.05) .03 .05 (.04)
------------- ------------- ------------- ------------- -------------
Total from investment
operations .10 .29 .38 .40 .30
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment income--net (.17) (.34) (.35) (.35) (.34)
Realized gain on
investments--net -- -- -- (.02) --
In excess of realized
gain on investments--net -- (.01) -- -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.17) (.35) (.35) (.37) (.34)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 9.81 $ 9.88 $ 9.94 $ 9.91 $ 9.88
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share 1.03%++ 2.89% 3.88% 4.11% 2.97%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses .76%* .79% .79% .75% .80%
Average ============= ============= ============= ============= =============
Net Assets: Investment income--net 3.41%* 3.37% 4.27% 3.57% 3.41%
============= ============= ============= ============= =============
Supplemental Net assets,
Data: end of period
(in thousands) $ 599 $ 437 $ 86 $ 108 $ 94
============= ============= ============= ============= =============
Portfolio turnover 31.83% 40.28% 72.69% 61.90% 88.32%
============= ============= ============= ============= =============
<CAPTION>
The following per share data and ratios Limited Maturity Portfolio
have been derived from information Class D
provided in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1999 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value,
Operating beginning of period $ 9.92 $ 9.97 $ 9.94 $ 9.91 $ 9.93
Performance: ------------- ------------- ------------- ------------- -------------
Investment income--net .18 .37 .38 .38 .37
Realized and unrealized
gain (loss) on
investments--net (.07) (.04) .03 .05 (.02)
------------- ------------- ------------- ------------- -------------
Total from investment
operations .11 .33 .41 .43 .35
------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Investment income--net (.18) (.37) (.38) (.38) (.37)
Realized gain on
investments--net -- -- -- (.02) --
In excess of realized
gain on investments
--net -- (.01) -- -- --
------------- ------------- ------------- ------------- -------------
Total dividends and
distributions (.18) (.38) (.38) (.40) (.37)
------------- ------------- ------------- ------------- -------------
Net asset value,
end of period $ 9.85 $ 9.92 $ 9.97 $ 9.94 $ 9.91
============= ============= ============= ============= =============
Total Based on net asset
Investment value per share 1.16%++ 3.27% 4.16% 4.40% 3.55%
Return:** ============= ============= ============= ============= =============
Ratios to Expenses .50%* .53% .54% .48% .54%
Average ============= ============= ============= ============= =============
Net Assets: Investment income--net 3.66%* 3.65% 3.89% 3.84% 3.71%
============= ============= ============= ============= =============
Supplemental Net assets, end of
Data: period (in thousands) $ 65,970 $ 83,177 $ 68,562 $ 20,383 $ 15,886
============= ============= ============= ============= =============
Portfolio turnover 31.83% 40.28% 72.69% 61.90% 88.32%
============= ============= ============= ============= =============
*Annualized.
**Total investment returns exclude the effects of sales charges.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 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. These unaudited financial statements reflect all
adjustments, which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. All
such adjustments are of a normal recurring nature. The Fund's
Portfolios offer four classes of shares under the Merrill Lynch
Select 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.
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 six months ended December 31, 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 $ 5,581 $ 3,291 $ 389
MLPF&S 39,523 27,822 3,480
Class D Shares:
MLFD 1,938 1,484 287
MLPF&S 18,854 13,478 4,493
For the six months ended December 31, 1999, MLPF&S received
contingent deferred sales charges of $503,909 relating to
transactions in Class B Shares, amounting to $185,485, $304,792 and
$13,632 in the Insured, National and Limited Maturity Portfolios,
respectively, and $18,267 relating to transactions in Class C
Shares, amounting to $1,277, $15,757 and $1,233 in the Insured,
National and Limited Maturity Portfolios, respectively. Furthermore,
MLPF&S received contingent deferred sales charges of $2,448 relating
to transactions subject to front-end sales charge waivers in Class D
Shares, amounting to $1,009 and $430 in the 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 six months ended December 31, 1999 were as follows:
Purchases Sales
Insured Portfolio $729,721,823 $809,401,710
National Portfolio 494,872,779 621,210,608
Limited Maturity Portfolio 104,107,504 147,047,619
Net realized gains (losses) for the six months ended December 31,
1999 and net unrealized gains (losses) as of December 31, 1999 were
as follows:
Realized Unrealized
Insured Portfolio Gains (Losses) Losses
Long-term investments $ (60,649,601) $ (6,912,429)
Financial futures contracts 1,385,719 --
-------------- --------------
Total $ (59,263,882) $ (6,912,429)
============== ==============
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
Realized Unrealized
National Portfolio Gains (Losses) Losses
Long-term investments $ (23,830,064) $ (47,401,516)
Financial futures contracts 3,225,000 --
-------------- --------------
Total $ (20,605,064) $ (47,401,516)
============== ==============
Realized Unrealized
Limited Maturity Portfolio Losses Losses
Long-term investments $ (58,908) $ (1,769,687)
Short-term investments -- (365,439)
-------------- --------------
Total $ (58,908) $ (2,135,126)
============== ==============
As of December 31, 1999 net unrealized depreciation for Federal
income tax purposes were as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Depreciation
Insured Portfolio $29,022,505 $(35,934,934) $ (6,912,429)
National Portfolio 23,242,881 (70,644,397) (47,401,516)
Limited Maturity Portfolio 201,099 (2,336,225) (2,135,126)
The aggregate cost of investments at December 31, 1999 for Federal
income tax purposes was $1,466,052,859 for the Insured Portfolio,
$1,183,946,176 for the National Portfolio, and $336,591,481 for the
Limited Maturity Portfolio.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
for the six months ended December 31, 1999 and the year ended June
30, 1999 were $153,925,213 and $106,960,336, respectively, for the
Insured Portfolio; $152,253,058 and $29,277,945, respectively, for
the National Portfolio, and $48,924,849 and $18,483,783,
respectively, for the Limited Maturity Portfolio.
Transactions in capital shares for each class were as follows:
Insured Portfolio
Class A Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 761,509 $ 5,765,604
Shares issued to shareholders in reinvest-
ment of dividends and distributions 2,695,167 19,933,964
-------------- --------------
Total issued 3,456,676 25,699,568
Shares redeemed (16,860,047) (126,668,853)
-------------- --------------
Net decrease (13,403,371) $ (100,969,285)
============== ==============
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 reinvest-
ment 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 B Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 2,109,929 $ 15,784,347
Shares issued to shareholders in reinvest-
ment of dividends and distributions 911,433 6,730,488
-------------- --------------
Total issued 3,021,362 22,514,835
Automatic conversion of shares (3,521,537) (26,675,279)
Shares redeemed (8,154,783) (61,159,378)
-------------- --------------
Net decrease (8,654,958) $ (65,319,822)
============== ==============
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 reinvest-
ment 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 C Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 330,296 $ 2,469,128
Shares issued to shareholders in reinvest-
ment of dividends and distributions 39,578 292,156
-------------- --------------
Total issued 369,874 2,761,284
Shares redeemed (648,578) (4,859,622)
-------------- --------------
Net decrease (278,704) $ (2,098,338)
============== ==============
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 reinvest-
ment 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 D Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 3,666,945 $ 27,537,210
Automatic conversion of shares 3,520,711 26,675,279
Shares issued to shareholders in reinvest-
ment of dividends and distributions 235,600 1,738,372
-------------- --------------
Total issued 7,423,256 55,950,861
Shares redeemed (5,508,070) (41,488,629)
-------------- --------------
Net increase 1,915,186 $ 14,462,232
============== ==============
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 reinvest-
ment 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
============== ==============
National Portfolio
Class A Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 1,530,697 $ 14,808,684
Shares issued to shareholders in reinvest-
ment of dividends 1,218,723 11,936,604
-------------- --------------
Total issued 2,749,420 26,745,288
Shares redeemed (11,634,798) (114,010,804)
-------------- --------------
Net decrease (8,885,378) $ (87,265,516)
============== ==============
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 B Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 2,211,145 $ 21,617,986
Shares issued to shareholders in
reinvestment of dividends 415,080 4,065,829
-------------- --------------
Total issued 2,626,225 25,683,815
Automatic conversion of shares (1,005,780) (9,962,333)
Shares redeemed (7,277,211) (71,217,131)
-------------- --------------
Net decrease (5,656,766) $ (55,495,649)
============== ==============
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 reinvest-
ment 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 C Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 445,953 $ 4,378,473
Shares issued to shareholders in
reinvestment of dividends 64,274 629,586
-------------- --------------
Total issued 510,227 5,008,059
Shares redeemed (1,288,792) (12,575,989)
-------------- --------------
Net decrease (778,565) $ (7,567,930)
============== ==============
Merrill Lynch Municipal Bond Fund, Inc., December 31, 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 reinvest-
ment 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 D Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 3,187,811 $ 31,266,210
Automatic conversion of shares 1,004,914 9,962,333
Shares issued to shareholders
in reinvestment of dividends 126,962 1,243,839
-------------- --------------
Total issued 4,319,687 42,472,382
Shares redeemed (4,519,125) (44,396,345)
-------------- --------------
Net decrease (199,438) $ (1,923,963)
============== ==============
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
============== ==============
Limited Maturity Portfolio
Class A Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 277,669 $ 2,748,220
Shares issued to shareholders
in reinvestment of dividends 275,413 2,722,717
-------------- --------------
Total issued 553,082 5,470,937
Shares redeemed (3,829,268) (37,848,088)
-------------- --------------
Net decrease (3,276,186) $ (32,377,151)
============== ==============
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 reinvest-
ment 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 B Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 758,883 $ 7,500,663
Shares issued to shareholders
in reinvestment of dividends 49,629 490,662
-------------- --------------
Total issued 808,512 7,991,325
Automatic conversion of shares (11,194) (110,703)
Shares redeemed (794,888) (7,860,899)
-------------- --------------
Net increase 2,430 $ 19,723
============== ==============
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 reinvest-
ment 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 C Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 60,596 $ 597,803
Shares issued to shareholders
in reinvestment of dividends 722 7,109
-------------- --------------
Total issued 61,318 604,912
Shares redeemed (44,539) (439,064)
-------------- --------------
Net increase 16,779 $ 165,848
============== ==============
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 reinvest-
ment 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 D Shares for the Six Months Dollar
Ended December 31, 1999 Shares Amount
Shares sold 1,362,406 $ 13,459,113
Automatic conversion of shares 11,189 110,703
Shares issued to shareholders
in reinvestment of dividends 73,591 727,775
-------------- --------------
Total issued 1,447,186 14,297,591
Shares redeemed (3,136,361) (31,030,860)
-------------- --------------
Net decrease (1,689,175) $ (16,733,269)
============== ==============
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 reinvest-
ment 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
============== ==============
5. Capital Loss Carryforward:
At June 30, 1999, the Limited Maturity had a net capital loss
carryforward of approximately $1,928,000, all of which expires in
2003. These amounts will be available to offset like amounts of any
future taxable gains.
