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<SEC-DOCUMENT>0000900092-99-000030.txt : 19990226
<SEC-HEADER>0000900092-99-000030.hdr.sgml : 19990226
ACCESSION NUMBER: 0000900092-99-000030
CONFORMED SUBMISSION TYPE: N-30D
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 19981231
FILED AS OF DATE: 19990225
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MERRILL LYNCH MUNICIPAL BOND FUND INC
CENTRAL INDEX KEY: 0000225635
STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000]
IRS NUMBER: 132896246
STATE OF INCORPORATION: NJ
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: N-30D
SEC ACT:
SEC FILE NUMBER: 811-02688
FILM NUMBER: 99550270
BUSINESS ADDRESS:
STREET 1: 800 SCUDDERS MILL RD
CITY: PLAINSBORO
STATE: NJ
ZIP: 08536
BUSINESS PHONE: 6092822026
FORMER COMPANY:
FORMER CONFORMED NAME: ONE LIBERTY MUNICIPAL BOND FUND INC
DATE OF NAME CHANGE: 19780622
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<DESCRIPTION>SEMI-ANNUAL REPORT
<TEXT>
MERRILL LYNCH
MUNICIPAL BOND
FUND, INC.
FUND LOGO
Semi-Annual Report
December 31, 1998
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
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Peter J. Hayes, Vice President
Kenneth A. Jacob, Vice President
Walter C. O'Connor, Vice President
Donald C. Burke, Treasurer
Barbara G. Fraser, 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, 1998
DEAR SHAREHOLDER
The Municipal Market Environment
During the three months ended December 31, 1998, long-term bond
yields increased slightly. The domestic economic scenario has
remained largely unchanged in recent months. US economic growth has
remained moderate, with losses in the manufacturing sector offset by
stronger growth in service-oriented industries. Industrial commodity
prices have recently fallen to their lowest levels in more than a
decade. This suggests that the current positive inflationary
environment is unlikely to be challenged in the near term. Also, the
Federal Reserve Board lowered short-term interest rates in October
and November, in part to ensure that US growth would not be
negatively impacted by ongoing weak economic growth overseas.
Instead investors focused on strong equity markets, both in the
United States and abroad, as well as the continued distraction of
President Clinton's impeachment trial. These factors reduced
investor demand for US fixed-income securities, pushing prices
lower. During the quarter ended December 31, 1998, the US Treasury
bond yield rose just over 10 basis points (0.10%) to 5.09%. During
the same period, long-term municipal bond yields, as measured by the
Bond Buyer Revenue Bond Index, rose over 15 basis points to 5.26%.
One of the two principal themes characterizing the municipal bond
market for much of the past year has been the significant increase
in new municipal bond issuance. Over $285 billion in new long-term
tax-exempt bonds were underwritten in 1998, an increase of almost
30% relative to 1997 levels. As tax-exempt bond yields declined in
recent years, increasingly lower municipal bond yields were required
to refinance existing debt. Consequently, the rate of increase in
municipal bond issuance has begun to slow in recent quarters. During
the last six months of 1998, nearly $135 billion in new tax-exempt
bonds were issued, an increase of nearly 10% as compared to the same
period a year earlier. During the three months ended December 31,
1998, $68 billion in new municipal bonds were underwritten, an
increase of just over 5% as compared to the quarter ended December
31, 1997. Unless municipal bond yields decline dramatically in 1999,
new bond issuance in 1999 seems unlikely to match 1998 levels.
The second and perhaps more striking theme during the past year has
been the dramatic underperformance of the municipal bond market. At
the end of 1998, long-term tax-exempt bond yields were at attractive
yield ratios relative to US Treasury securities of comparable
maturities (103%), matching their least expensive level of the year.
Municipal bond yield ratios have averaged approximately 95% for the
last six months and 92% for all of 1998. During 1997, tax-exempt
bond yield ratios averaged 84%. It is likely that the combination of
the increase in new-issue volume and the safe-haven status of US
Treasury securities has driven municipal bond yield ratios to their
present attractive levels. Should new-issue volume decline or
foreign financial markets regain stability in 1999, tax-exempt bond
yield ratios could be expected to quickly return to their more
historic levels (85%--88%).
Looking ahead, the expected combination of moderate economic growth
in the United States and continued negligible inflation suggest a
relatively stable interest rate environment into early 1999.
However, it is likely that foreign financial markets will again be a
critical factor in determining US bond yields. At this time, it
appears that there is currently little immediate risk of any
significant increase in long-term bond yields.
Portfolio Strategy
Insured Portfolio and
National Portfolio
During the December quarter, market volatility was the main factor
determining portfolio strategy and the changing composition of the
Insured and National Portfolios. Early in the three-month period,
concerns over declining foreign economies and problems within
domestic hedge funds caused interest rates to plummet. Interest
rates subsequently rebounded significantly, the result of a
remarkably insulated and firm domestic economy. We formulated our
portfolio strategy within a trading range of approximately 4.75%--
5.25% for interest rates as measured by the bellwether long-term US
Treasury bond. However, municipal market volatility was not quite as
wide, with extremely attractive historical percentage relationships
cushioning municipal securities when bond prices declined. We
maintained a relatively small cash equivalent position because of
the attractive relationship between municipal bonds and Treasury
securities. As a consequence, the Portfolios were more aggressively
positioned than in the past. We believe this more aggressive stance
was warranted in response to the extremely positive fundamental and
technical backgrounds for municipal securities. Political turmoil in
Washington and a strong equity market will probably keep demand for
Treasury securities uncertain, but economic fundamentals may provide
an opportunity for further Federal Reserve Board monetary policy
easings and an improving municipal market.
We expect to continue to concentrate purchases in the National
Portfolio in higher-quality bonds, since we find little value in
lower-rated municipal offerings. At December 31, 1998, 75% of the
National Portfolio was rated AA or better by at least one of the
major rating agencies, and the Insured Portfolio was 100% invested
in insured securities rated AAA.
Limited Maturity Portfolio
During the quarter ended December 31, 1998, we positioned the
Limited Maturity Portfolio less aggressively on the belief that the
Federal Reserve Board would not reduce interest rates further.
Although we did not adopt a bearish market stance, we believed a
retreat from our very bullish posture was warranted in light of the
relatively high prices being paid for short-term and intermediate-
term municipal bonds. We decreased the weighted average maturity of
the Portfolio to approximately 1.8 months and increased our cash
reserve position to 3% from almost zero as of December 31, 1998. We
anticipate maintaining this strategy until a clearer picture emerges
as to the strength of the economy and the impact, if any, of the
Federal Reserve Board easings.
In Conclusion
We appreciate your ongoing interest in Merrill Lynch Municipal Bond
Fund, Inc., and we look forward to serving your investment needs in
the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Kenneth A. Jacob)
Kenneth A. Jacob
Vice President and Portfolio Manager
(Walter C. O'Connor)
Walter C. O'Connor
Vice President and Portfolio Manager
(Peter J. Hayes)
Peter J. Hayes
Vice President and Portfolio Manager
February 15, 1999
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
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 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.
Average Annual
Total Returns
Insured Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/98 +5.76% +1.53%
Five Years Ended 12/31/98 +5.43 +4.57
Ten Years Ended 12/31/98 +7.73 +7.29
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/98 +4.96% +1.03%
Five Years Ended 12/31/98 +4.66 +4.66
Ten Years Ended 12/31/98 +6.94 +6.94
[FN]
*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 12/31/98 +4.90% +3.92%
Inception (10/21/94) through 12/31/98 +7.36 +7.36
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 12/31/98 +5.49% +1.27%
Inception (10/21/94) through 12/31/98 +7.96 +6.92
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
National Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/98 +5.32% +1.11%
Five Years Ended 12/31/98 +5.88 +5.02
Ten Years Ended 12/31/98 +7.86 +7.42
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/98 +4.53% +0.54%
Five Years Ended 12/31/98 +5.10 +5.10
Ten Years Ended 12/31/98 +7.05 +7.05
[FN]
*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 12/31/98 +4.57% +3.58%
Inception (10/21/94) through 12/31/98 +7.63 +7.63
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 12/31/98 +5.16% +0.95%
Inception (10/21/94) through 12/31/98 +8.22 +7.18
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
Limited Maturity Portfolio
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 12/31/98 +4.62% +3.58%
Five Years Ended 12/31/98 +4.00 +3.79
Ten Years Ended 12/31/98 +5.03 +4.92
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 12/31/98 +4.14% +3.14%
Five Years Ended 12/31/98 +3.63 +3.63
Inception (11/2/92) through 12/31/98 +3.76 +3.76
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 12/31/98 +4.13% +3.13%
Inception (10/21/94) through 12/31/98 +4.00 +4.00
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Year Ended 12/31/98 +4.41% +3.37%
Inception (10/21/94) through 12/31/98 +4.38 +4.13
[FN]
*Maximum sales charge is 1%.
**Assuming maximum sales charge.
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results*
<CAPTION>
Ten Years/
Since Standardized
12 Month 3 Month Inception 30-Day Yield
Total Return Total Return Total Return As of 12/31/98
<S> <C> <C> <C> <C>
ML Municipal Bond Fund, Inc. Insured Portfolio Class A Shares** +5.76% +0.32% +110.58% 4.43%
ML Municipal Bond Fund, Inc. Insured Portfolio Class B Shares** +4.96 +0.12 + 95.57 3.84
ML Municipal Bond Fund, Inc. Insured Portfolio Class C Shares** +4.90 +0.11 + 34.71 3.79
ML Municipal Bond Fund, Inc. Insured Portfolio Class D Shares** +5.49 +0.26 + 37.90 4.19
ML Municipal Bond Fund, Inc. National Portfolio Class A Shares*** +5.32 -0.37 +113.01 4.39
ML Municipal Bond Fund, Inc. National Portfolio Class B Shares*** +4.53 -0.56 + 97.55 3.80
ML Municipal Bond Fund, Inc. National Portfolio Class C Shares*** +4.57 -0.57 + 36.10 3.75
ML Municipal Bond Fund, Inc. National Portfolio Class D Shares*** +5.16 -0.43 + 39.31 4.14
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class A Shares**** +4.62 +1.15 + 63.29 3.19
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class B Shares**** +4.14 +0.96 + 25.53 2.87
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class C Shares**** +4.13 +0.96 + 17.86 2.87
ML Municipal Bond Fund, Inc. Limited Maturity Portfolio Class D Shares**** +4.41 +1.03 + 19.70 3.09
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included. Total
investment returns are based on changes in net asset values for the
periods shown, and assume reinvestment of all dividends and capital
gains distributions at net asset value on the payable date.
**The Fund's ten-year/since inception periods are: Class A & Class B
Shares, for the ten years ended 12/31/98; and Class C & Class D
Shares, from 10/21/94 to 12/31/98.
***The Fund's ten-year/since inception periods are: Class A & Class B
Shares, for the ten years ended 12/31/98; and Class C & Class D
Shares, from 10/21/94 to 12/31/98.
****The Fund's ten-year/since inception periods are: Class A Shares,
for the ten years ended 12/31/98; Class B Shares, from 11/2/92 to
12/31/98; and Class C & Class D Shares, from 10/21/94 to 12/31/98.
</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)
COP Certificates of Participation
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 Tax Receipts
S/F Single-Family
TRAN Tax Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--0.9% AAA Aaa $ 15,450 Alabama State Public School and College Authority (Capital
Improvement), 4.25% due 11/01/2018 (i) $ 14,060
AAA Aaa 1,585 Alabama Water Pollution Control Authority, Revolving Fund Loan,
Series A, 6.75% due 8/15/2017 (b) 1,793
AAA Aaa 1,250 Mobile, Alabama, GO, Refunding and Capital Improvement Bonds,
10.875% due 11/01/2007 (c) 1,744
Arizona--1.1% AAA Aaa 6,750 Arizona State Municipal Financing Program, COP, Series 34, 7.25%
due 8/01/2009 (g) 8,277
AAA Aaa 3,800 Maricopa County, Arizona, IDA, Health Facilities Revenue Bonds
(Saint Joseph's Care Center Project), Series A, 7.75% due 7/01/2020 (e) 4,088
Pima County, Arizona, Sewer Revenue Refunding and Improvement
Bonds (h):
AAA Aaa 2,000 5.50% due 7/01/2007 2,202
AAA Aaa 2,200 5.25% due 7/01/2008 2,390
AAA Aaa 3,725 Pima County, Arizona, Unified School District No. 1 (Tucson),
Refunding, UT, 5% due 7/01/2008 (h) 3,978
California AAA Aaa 5,000 Los Angeles, California, Wastewater System Revenue Bonds, Series A,
- --1.5% 5% due 6/01/2012 (h) 5,210
Northern California Power Agency, Multiple Capital Facilities
Revenue Bonds, RIB (d)(e):
AAA Aaa 7,600 6.538% due 8/01/2025 8,354
AAA Aaa 5,000 9.142% due 8/01/2025 5,988
AAA Aaa 5,800 Oakland, California, Redevelopment Agency, Refunding, INFLOS, 8.564%
due 9/01/2019 (d)(e) 6,699
AAA Aaa 2,300 San Jose, California, Redevelopment Agency, Refunding (Tax Allocation
Merged Area Redevelopment Project), 6% due 8/01/2008 (e) 2,635
Colorado--6.1% Denver, Colorado, City and County Airport Revenue Bonds (e):
AAA Aaa 20,000 RITR, Series 13, 6.07% due 11/15/2023 (d) 20,794
AAA Aaa 1,500 Refunding, Series D, 5.50% due 11/15/2025 1,559
AAA Aaa 17,825 Refunding, Series E, 5.50% due 11/15/2025 18,728
AAA Aaa 38,325 Series A, 5.70% due 11/15/2025 40,877
A1+ VMIG1++ 2,100 Moffat County, Colorado, PCR, Refunding (PacifiCorp Projects), VRDN,
4.10% due 5/01/2013 (b)(f) 2,100
Municipal Subdistrict Northern Colorado, Water Conservancy District,
Revenue Refunding Bonds, Series F (b):
AAA Aaa 4,470 6.15% due 12/01/2005 5,041
AAA Aaa 4,250 6.25% due 12/01/2006 4,854
AAA Aaa 5,055 6.35% due 12/01/2007 5,861
Public Highway Authority, Colorado, E-470, Revenue Refunding Bonds (e):
AAA Aaa 8,500 Series A, 5.25% due 9/01/2018 8,718
AAA Aaa 8,750 Series B, 5.08% due 9/01/2016 (k) 3,625
AAA Aaa 11,000 Series B, 5.10% due 9/01/2018 (k) 4,078
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Florida--6.0% A1+ VMIG1++$ 2,500 Dade County, Florida, Water and Sewer System Revenue Bonds,
VRDN, 3.40% due 10/05/2022 (f)(h) $ 2,500
Florida State Board of Education, Capital Outlay (Public
Education):
AAA Aaa 6,855 Refunding, Series C, 4.50% due 6/01/2019 (i) 6,453
AAA Aaa 15,000 Refunding, Series C, 4.50% due 6/01/2022 (i) 13,913
NR* Aaa 10,115 Refunding, Series D, 4.50% due 6/01/2018 (e) 9,607
AAA Aaa 4,410 Refunding, Series D, 4.50% due 6/01/2019 (e) 4,151
AAA Aaa 10,000 Series B, 4.50% due 6/01/2028 (e) 9,190
AAA Aaa 5,000 Florida State Board of Education, Lottery Revenue Bonds, Series H,
4.50% due 7/01/2018 (h) 4,748
AAA Aaa 14,000 Gulf Breeze, Florida, Capital Funding Revenue Bonds, Series B,
4.50% due 10/01/2027 (e) 12,877
AAA Aaa 500 Jacksonville, Florida, Health Facilities Authority, Hospital
Revenue Refunding and Improvement Bonds (Baptist Medical Center
Project), 11.50% due 10/01/2012 (c) 854
AAA Aaa 10,475 Miami-Dade County, Florida, School District, UT, Refunding, 5.375%
due 8/01/2013 (i) 11,381
AAA Aaa 3,950 Orange County, Florida, HFA, Mortgage Revenue Refunding Bonds,
Series A, 7.60% due 1/01/2024 (h)(j) 4,182
AAA Aaa 5,790 Orange County, Florida, Health Facilities Authority Revenue Bonds
(Hospital--Orlando Regional Healthcare), Series A, 6.25% due
10/01/2006 (e) 6,570
AAA Aaa 5,700 South Broward Hospital District, Florida, Hospital Revenue Bonds,
RIB, 6.469% due 5/13/2021 (b)(d) 6,170
Tampa Bay, Florida, Water Utility System, Revenue Refunding
Bonds (h):
AAA Aaa 9,000 Series A, 4.75% due 10/01/2027 8,592
AAA Aaa 10,000 Series B, 4.75% due 10/01/2027 9,532
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) 3,289
Georgia--3.1% AAA Aaa 4,000 Chatham County, Georgia, School District, UT, 6.75% due
8/01/2003 (a)(e) 4,559
AAA Aaa 18,100 Fulton County, Georgia, Water and Sewer Revenue Bonds, 4.75%
due 1/01/2028 (h) 17,278
Georgia Municipal Electric Authority, Power Revenue Bonds (b):
AAA Aaa 20,000 Series EE, 7% due 1/01/2025 25,925
AAA Aaa 9,000 Series Y, 6.40% due 1/01/2013 10,628
Hawaii--0.6% AAA Aaa 10,000 Hawaii State Airport System, Revenue Refunding Bonds, Series 1993,
6.45% due 7/01/2013 (e) 11,095
Illinois--10.0% Chicago, Illinois, Board of Education (b):
AAA Aaa 27,450 RITR, Series 39, 6.085% due 12/01/2030 (d) 28,068
AAA NR* 10,000 Series 51, 6.235% due 12/01/2027 10,231
Chicago, Illinois, Board of Education (Chicago School Reform), UT,
Series A (b):
AAA Aaa 2,965 5.25% due 12/01/2018 3,032
AAA Aaa 2,000 5.25% due 12/01/2030 2,013
AAA Aaa 2,000 Chicago, Illinois, O'Hare International Airport Revenue Bonds
(Passenger Facilities Charge), Series A, 5.625% due 1/01/2015 (b) 2,130
AAA Aaa 18,000 Chicago, Illinois, Project and Refunding Bonds, UT, 5.25% due
1/01/2028 (h) 18,217
AAA Aaa 3,000 Chicago, Illinois, Water Revenue Bonds, 5% due 11/01/2015 (h) 3,012
AAA Aaa 2,800 Cook County, Illinois, Refunding, UT, Series B, 5% due
11/15/2012 (e) 2,883
A1+ VMIG1++ 4,800 Illinois Development Finance Authority Revenue Bonds (Provena
Health), VRDN, Series B, 4.10% due 5/01/2028 (e)(f) 4,800
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 3,250 (Elmhurst Memorial Hospital), 6.625% due 1/01/2022 (h) 3,533
AAA Aaa 3,740 Refunding (Methodist Medical Center), 5.50% due 11/15/2011 (e) 4,022
AAA Aaa 28,900 Refunding (Sinai Health System), 6% due 2/15/2024 (b)(l) 31,398
A1+ VMIG1++ 23,800 Refunding (University of Chicago Hospitals), VRDN, 4.10%due
8/01/2026 (e)(f) 23,800
AAA Aaa 3,000 Illinois State, GO, 5.75% due 5/01/2021 (e) 3,199
Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Bonds (McCormick Place Expansion Project):
AAA Aaa 6,070 Refunding, Series A, 6% due 12/15/2006 (b) 6,825
AAA Aaa 10,000 Refunding, Series A, 6.10% due 12/15/2015 (e)(k) 4,279
AAA Aaa 8,330 Refunding, Series A, 6.10% due 12/15/2016 (e)(k) 3,361
AAA Aaa 6,600 Series A, 6.50% due 6/15/2003 (a)(b) 7,430
AAA Aaa 26,000 Regional Transportation Authority, Illinois, Series A, 6.25% due
6/01/2024 (b) 28,855
Indiana--2.0% AAA Aaa 15,000 Indiana Health Facilities Financing Authority, Hospital Revenue
Refunding Bonds (Sisters of St. Francis Health), Series A,
5.375% due 11/01/2027 (e) 15,214
AAA Aaa 4,040 Indianapolis, Indiana, Local Public Improvement Bond Bank, Series
A, 7.90% due 2/01/2002 (a)(g) 4,532
AAA Aaa 4,340 Jasper County, Indiana, PCR, Refunding (Northern Indiana Public
Service), 7.10% due 7/01/2017 (e) 4,723
AAA Aaa 4,510 Munster, Indiana, School Building Corporation (First Mortgage),
5.75% due 1/15/2005 (a)(e) 4,967
AAA Aaa 5,000 Penn, Indiana, High School Building Corporation (First Mortgage),
6.125% due 7/15/2005 (a)(e) 5,644
A1+ Aaa 2,000 Rockport, Indiana, PCR, Refunding (AEP Generating Co. Project),
VRDN, Series A, 4.10% due 7/01/2025 (b)(f) 2,000
Kentucky--0.4% AAA Aaa 8,925 Jefferson County, Kentucky, School Building Revenue Bonds (School
District Finance Corp.), Series C, 4.50% due 2/01/2019 (e) 8,352
Maryland--0.3% AAA Aaa 4,400 Maryland State Health and Higher Educational Facilities Authority
Revenue Bonds (University of Maryland Medical Systems), Series B,
7% due 7/01/2022 (h) 5,627
Massachusetts Massachusetts Bay Transportation Authority, Massachusetts General
- --4.0% Transportation Systems, Refunding, Series A (e):
AAA Aaa 11,445 4.75% due 3/01/2016 11,296
AAA Aaa 5,000 4.75% due 3/01/2021 4,743
AAA Aaa 4,160 Massachusetts Educational Loan Authority, Education Loan Revenue
Bonds, AMT, Issue D, Series A, 7.25% due 1/01/2009 (e) 4,451
AAA Aaa 9,595 Massachusetts State Consolidated Loan, Series B, 4.75% due
4/01/2018 (e) 9,367
AAA Aaa 5,350 Massachusetts State, GO, Refunding, Series A, 5.75% due 8/01/2009 (b) 6,045
Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (d):
AAA Aaa 10,000 (Beth Israel), INFLOS, 8.471% due 7/01/2025 (b) 11,500
AAA Aaa 3,100 (Saint Elizabeth's Hospital), LEVRRS, Series E, 9.42% due
8/12/2021 (i) 3,612
AAA Aaa 4,020 Massachusetts State Insured Revenue Refunding Bonds, Series B,
5.40% due 11/01/2007 (e) 4,395
Massachusetts State Water Resources Authority:
AAA Aaa 19,100 Refunding, Series B, 4.50% due 8/01/2022 (i) 17,611
AAA Aaa 2,500 Series A, 5.50% due 11/01/2014 (h) 2,659
Michigan--1.1% AAA Aaa 6,915 Michigan State, HDA, Rental Housing Revenue Bonds, Series B, 6.15%
due 10/01/2015 (e) 7,392
AAA Aaa 10,000 Michigan State Strategic Fund Limited Obligation, Revenue Refunding
Bonds (Detroit Edison Co.), Series AA, 6.40% due 9/01/2025 (e) 11,325
AAA Aaa 2,000 Plymouth-Canton, Michigan, Community School District, Refunding, UT,
4.625% due 5/01/2023 (h) 1,871
AAA Aaa 1,000 Rockford, Michigan, Public Schools, UT, Series Q, 6% due 5/01/2007 (h) 1,126
Mississippi AAA Aaa 1,320 Harrison County, Mississippi, Wastewater Management District, Revenue
- --0.4% Refunding Bonds (Wastewater
Treatment Facilities), Series A, 8.50% due 2/01/2013 (h) 1,838
AAA Aaa 6,585 Mississippi State, Capital Improvements, Series B, 4.50% due
11/01/2017 (h) 6,288
Nevada--6.0% AAA Aaa 6,820 Clark County, Nevada, Airport Revenue Bonds, Sub-Lien, Series A,
5.50% due 7/01/2006 (e) 7,413
Clark County, Nevada, Flood Control (h):
AAA Aaa 10,425 4.50% due 11/01/2016 9,983
AAA Aaa 11,410 4.50% due 11/01/2018 10,768
Clark County, Nevada, Transportation (h):
AAA Aaa 3,720 Series A, 4.50% due 12/01/2016 3,531
AAA Aaa 3,760 Series A, 4.50% due 12/01/2017 3,554
AAA Aaa 8,635 Series A, 4.50% due 12/01/2019 8,036
AAA Aaa 2,545 Series B, 4.50% due 12/01/2016 2,413
AAA Aaa 4,540 Henderson, Nevada, Water and Sewer, Series A, 4.75% due
9/01/2018 (h) 4,417
Washoe County, Nevada, School District (h):
AAA Aaa 4,755 4.75% due 6/01/2017 4,650
AAA Aaa 10,230 4.50% due 6/01/2019 9,543
AAA Aaa 45,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific
Power), AMT, 6.65% due 6/01/2017 (e) 49,415
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New Jersey AAA Aaa $ 3,350 Cape May County, New Jersey, Industrial Pollution Control
- --4.8% Financing Authority, Revenue Refunding Bonds (Atlantic City
Electric Company Project), Series A, 6.80% due 3/01/2021 (e) $ 4,188
AAA Aaa 28,750 New Jersey EDA, Natural Gas Facilities, Revenue Refunding Bonds
(NUI Corporation), Series A, 6.35% due 10/01/2022 (b) 32,258
New Jersey State Housing and Mortgage Finance Agency Revenue
Bonds (Home Buyer), AMT (e):
AAA Aaa 5,610 Series D, 7.70% due 10/01/2029 5,803
AAA Aaa 21,505 Series M, 7% due 10/01/2026 23,478
AAA Aaa 22,475 New Jersey State Transportation Trust Fund Authority (Transportation
System), Series A, 4.50% due 6/15/2019 (i) 21,155
AAA Aaa 4,215 New Jersey State Turnpike Authority, Turnpike Revenue Refunding
Bonds, Series C, 6.50% due 1/01/2008 (b) 4,935
New York--18.5% Long Island Power Authority, New York, Electric System Revenue
Bonds:
AAA Aaa 26,850 Series A, 5.50% due 12/01/2010 (b) 29,463
AAA Aaa 5,270 Series A, 5.50% due 12/01/2011 (b) 5,793
A1+ VMIG1++ 3,000 VRDN, Sub-Series 7, 5% due 1/04/1999 (e)(f) 3,000
Metropolitan Transportation Authority, New York, Dedicated Tax
Fund, Series A (h):
AAA Aaa 10,000 4.50% due 4/01/2018 9,466
AAA Aaa 6,600 4.75% due 4/01/2028 6,279
Metropolitan Transportation Authority, New York, Transportation
Facilities Revenue Bonds:
AAA Aaa 5,000 Refunding, Series A, 4.75% due 7/01/2021 (e) 4,787
AAA Aaa 3,000 Refunding, Series B-1, 5% due 7/01/2010 (b) 3,151
AAA Aaa 11,025 Refunding, Series C, 4.75% due 7/01/2016 (i) 10,826
AAA Aaa 10,000 Series B, 4.75% due 7/01/2026 (h) 9,528
AAA Aaa 2,750 New York City, New York, City Transitional Finance Authority Revenue
Bonds (Future Tax Secured), Series B, 4.75% due 11/15/2018 (h) 2,674
New York City, New York, GO:
AAA Aaa 24,500 Series D, 6% due 8/01/2008 (h) 27,660
AAA Aaa 3,405 Series H, 5.125% due 8/01/2018 (c) 3,446
New York City, New York, GO, UT:
AAA Aaa 1,500 Refunding, Series E, 6.20% due 8/01/2008 (e) 1,725
AAA Aaa 15,000 Series B, 6.25% due 8/15/2008 (b) 17,075
AAA Aaa 8,175 Series E, 6% due 8/01/2007 (h) 9,199
AAA Aaa 18,530 Series F, 5.25% due 8/01/2012 (h) 19,572
AAA Aaa 2,585 Series G, 5.75% due 2/01/2007 (e) 2,858
AAA Aaa 13,770 Series G, 6% due 10/15/2007 (b) 15,547
AAA Aaa 31,000 Series I, 6% due 4/15/2012 (i) 34,644
AAA Aaa 6,000 Series L, 5.20% due 8/01/2008 (e) 6,439
AAA Aaa 10,095 Series M, 5.30% due 6/01/2012 (b) 10,674
AAA Aaa 15,000 Series M, 5.50% due 6/01/2017 (b) 15,826
New York City, New York, Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds:
AAA Aaa 28,510 RITR, Series RI-97-6, 7.095% due 6/15/2026 (d)(e) 32,486
A1+ VMIG1++ 2,300 VRDN, Series G, 4.10% due 6/15/2024 (f)(h) 2,300
New York State Dormitory Authority Revenue Bonds:
AAA Aaa 2,500 (City University), Third Generation Reserves, Series 2, 6.25%
due 7/01/2004 (a)(e) 2,795
AAA Aaa 10,250 (Mental Health Services Facilities Improvement), Series D, 5%
due 8/15/2017 (e) 10,217
AAA Aaa 5,100 (Mental Health Services Facilities Improvement), Series F, 4.50%
due 8/15/2028 (b) 4,649
AAA Aaa 4,000 (Mental Health Services Facilities Improvement), Series G, 4.50%
due 8/15/2018 (b) 3,763
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) 1,748
AAA Aaa 9,320 New York State Local Government Assistance Corporation, Refunding,
Series B, 4.75% due 4/01/2014 (e) 9,326
New York State Medical Care Facilities Financial Agency Revenue
Bonds, Series E (h):
AAA Aaa 8,965 6.25% due 8/15/2004 (a) 10,172
AAA Aaa 160 6.25% due 8/15/2019 178
AAA Aaa 17,055 New York State Thruway Authority, Service Contract Revenue Refunding
Bonds (Local Highway and Bridge), Series B, 5.375% due 4/01/2011 (e) 18,323
Niagara Falls, New York, Public Improvement Bonds, UT (e):
AAA Aaa 2,975 6.90% due 3/01/2023 3,395
AAA Aaa 3,190 6.90% due 3/01/2024 3,640
Ohio--1.4% Cleveland, Ohio, COP (Cleveland Stadium Project) (b):
AAA Aaa 3,175 5.25% due 11/15/2010 3,392
AAA Aaa 2,130 5.25% due 11/15/2013 2,223
AAA Aaa 12,000 Cleveland, Ohio, Public Power System Revenue Bonds, First Mortgage,
Series A, 7% due 11/15/2004 (a)(e) 14,142
AAA Aaa 3,500 Cleveland, Ohio, Refunding, GO, 5.30% due 9/01/2007 (b) 3,790
AAA Aaa 3,500 Ohio State Building Authority, State Facilities (Adult Correctional),
Series A, 6% due 4/01/2004 (b) 3,847
Oregon--0.3% Port Portland, Oregon, International Airport Revenue Bonds (Portland
International Airport), Series Seven-B, AMT (e):
AAA Aaa 3,865 7.10% due 1/01/2012 (a) 4,805
AAA Aaa 135 7.10% due 7/01/2021 146
Pennsylvania AAA Aaa 6,900 Beaver County, Pennsylvania, Hospital Authority Revenue Bonds (Medical
- --6.6% Center of Beaver, Pennsylvania
Inc.), Series A, 6.25% due 7/01/2002 (a)(b) 7,584
Delaware River Port Authority, Pennsylvania and New Jersey, Revenue
Refunding Bonds, Series B (b):
AAA Aaa 9,305 5.25% due 1/01/2005 9,910
AAA Aaa 10,090 5.25% due 1/01/2006 10,790
AAA Aaa 4,200 Lancaster, Pennsylvania, GO, Series A, 4.50% due 5/01/2028 (h) 3,824
Pennsylvania State Higher Educational Assistance Agency, Student Loan
Revenue Bonds, RIB, AMT (d):
AAA Aaa 15,000 9.571% due 9/03/2026 (b) 17,325
AAA Aaa 8,000 Series B, 10.899% due 3/01/2020 (e) 8,880
AAA Aaa 18,600 Series B, 8.209% due 3/01/2022 (b) 21,181
AAA Aaa 12,520 Pennsylvania State Turnpike Commission, Oil Franchise Tax Revenue
Bonds, Senior-Series A, 5.25% due 12/01/2018 (b) 12,878
AAA Aaa 6,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th Series B,
7% due 5/15/2020 (c)(e) 7,408
Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds:
AAA Aaa 4,020 5.60% due 8/01/2018 (e) 4,223
AAA Aaa 4,000 Series A, 5% due 8/01/2016 (b) 3,997
AAA Aaa 3,595 Pittsburgh, Pennsylvania, Series B, 5% due 9/01/2010 (b) 3,742
AAA Aaa 5,280 Pittsburgh, Pennsylvania, Water and Sewer Authority, Water and Sewer
System Revenue Bonds (First Lien), Series A, 5% due 9/01/2018 (h) 5,275
Stroudsburg, Pennsylvania, Area School District Refunding Bonds,
UT (h):
AAA Aaa 2,335 5% due 10/01/2006 2,471
AAA Aaa 2,450 5% due 10/01/2007 2,597
AAA Aaa 2,575 5% due 10/01/2008 2,731
Puerto A1+ VMIG1++ 2,100 Puerto Rico Commonwealth, Government Development Bank, Refunding, VRDN,
Rico--1.6% 3.60% due 12/01/2015 (e)(f) 2,100
Puerto Rico, Electric Power Authority, Power Revenue Refunding Bonds:
AAA Aaa 3,250 Series CC, 5.50% due 7/01/2008 (i) 3,600
AAA Aaa 25,000 Series EE, 4.50% due 7/01/2018 (e) 23,950
Rhode AAA Aaa 6,100 Rhode Island Depositors Economic Protection Corporation, Special
Island--1.9% Obligation Bonds, Series A, 6.625% due 8/01/2002 (a)(i) 6,798
AAA Aaa 3,775 Rhode Island State Consolidated Capital Development Loan, Series A,
6% due 8/01/2007 (e) 4,266
AAA Aaa 12,800 Rhode Island State Health and Educational Building Corporation
Revenue Bonds (Rhode Island Hospital), INFLOS, 9.867% due
8/15/2021 (c)(d)(h) 15,184
AAA Aaa 8,335 Rhode Island State Public Projects, Revenue Refunding Bonds,
Series A, 5.25% due 2/01/2009 (b) 8,955
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds Insured Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
South AAA Aaa $ 4,000 Piedmont, South Carolina, Municipal Power Agency, Electric Revenue
Carolina--1.5% Refunding Bonds, 6.30% due 1/01/2003 (a)(e) $ 4,448
South Carolina State Public Service Authority, Revenue Refunding
Bonds, Series A (b):
AAA Aaa 17,090 6.375% due 7/01/2021 18,701
AAA Aaa 4,200 6.25% due 1/01/2022 4,734
Texas--8.2% AAA Aaa 11,190 Austin, Texas, Utility System, Combined Revenue Bonds, Prior Lien,
9.25% due 5/15/2004 (a)(e) 14,049
Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT:
AAA Aaa 6,000 Refunding, 6.50% due 12/01/2027 (b) 6,587
AAA Aaa 12,000 Series B, 6.625% due 6/01/2022 (h) 13,121
AAA Aaa 20,000 Brownsville, Texas, Utility System, Revenue Refunding Bonds, 6.25%
due 9/01/2014 (e) 23,761
Harris County, Texas, Toll Road Revenue Bonds, Senior Lien, Series A:
AAA Aaa 11,100 6.375% due 8/15/2004 (a)(e) 12,634
AAA Aaa 2,750 6.50% due 8/15/2017 (b) 3,027
Houston, Texas, Water and Sewer System Revenue Bonds:
AAA Aaa 11,230 RITR, Series 5, 6.32% due 12/01/2027 (d)(h) 11,778
AAA Aaa 14,770 Refunding, Junior Lien, Series A, 6.125% due 12/01/2005 (a)(e) 16,642
AAA Aaa 8,000 Refunding, Junior Lien, Series A, 6.20% due 12/01/2005 (a)(e) 9,050
AAA Aaa 4,210 Refunding, Junior Lien, Series B, 5% due 12/01/2007 (i) 4,433
AAA Aaa 3,500 Houston, Texas, Water Conveyance System Contract, COP, Series J,
6.25% due 12/15/2013 (b) 4,082
AAA Aaa 11,800 Matagorda County, Texas, Navigation District No. 1, Revenue Refunding
Bonds (Houston Light and Power Co.), Series A, 6.70% due 3/01/2027 (b) 12,912
North Central Texas, Health Facilities Development Corporation
Revenue Bonds:
A1+ Aaa 2,000 (Methodist Hospital, Dallas), VRDN, Series B, 4.10% due
10/01/2015 (f)(g) 2,000
AAA Aaa 5,300 (Texas Health Resources Systems), Series B, 5% due 2/15/2017 (e) 5,255
A1+ VMIG1++ 1,200 Sabine River Authority, Texas, PCR, Refunding (Texas Utilities
Project), VRDN, Series A, 4.10% due 3/01/2026 (b)(f) 1,200
AAA Aaa 15,000 Southwest Higher Education Authority Incorporated, Texas, Revenue
Refunding Bonds (Southern Methodist University), Series B, 6.25% due
10/01/2022 (h) 16,419
Utah--2.5% A1+ VMIG1++ 1,800 Carbon County, Utah, PCR, Refunding (PacifiCorp Projects), VRDN,
4.10% due 11/01/2024 (b)(f) 1,800
A1+ VMIG1++ 10,150 Emery County, Utah, PCR, Refunding (PacifiCorp Projects), VRDN,
4.15% due 11/01/2024 (b)(f) 10,150
AAA Aaa 14,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds (IHC
Hospitals, Inc.), INFLOS, 9.92% due 5/15/2020 (b)(c)(d) 16,363
AAA Aaa 10,385 Utah State Board of Regents, Revenue Refunding Bonds (University
of Utah Auxillary and Campus), Series A, 4.75% due 4/01/2025 (e) 9,776
AAA Aaa 2,650 Utah State Board of Regents, Student Loan Revenue Bonds, AMT,
Series F, 7.45% due 11/01/2008 (b) 2,879
Utah State Building Ownership Authority, Lease Revenue Refunding
Bonds (State Facilities Master Lease Program) (i):
AAA Aaa 2,995 5.50% due 5/15/2012 3,279
AAA Aaa 3,000 5.50% due 5/15/2013 3,277
Virginia--2.3% AAA Aaa 5,000 Danville, Virginia, IDA, Hospital Revenue Refunding Bonds (Danville
Regional Medical Center), 6.50% due 10/01/2004 (a)(h) 5,699
Virginia State, HDA, Commonwealth Mortgage, AMT, Series A, Sub-
Series A-4 (e):
AAA Aaa 5,000 6.30% due 7/01/2014 5,392
AAA Aaa 11,215 6.35% due 7/01/2018 12,093
AAA Aaa 19,000 6.45% due 7/01/2028 20,361
Washington AAA Aaa 7,205 Grant County, Washington, Public Utility District No. 002, Electric
- --4.2% Revenue Bonds, Series G, 4.75% due 1/01/2018 (e) 6,969
King County, Washington, School District No. 415 (h):
AAA Aaa 5,480 4.625% due 12/01/2016 5,264
AAA Aaa 5,780 4.625% due 12/01/2017 5,531
AAA Aaa 10,680 Seattle, Washington, Metropolitan Seattle Municipality, Sewer
Revenue Bonds, Series W, 6.25% due 1/01/2003 (a)(e) 11,842
AAA Aaa 33,535 Seattle, Washington, Municipal Light and Power Revenue Bonds,
6.625% due 7/01/2004 (a)(h) 38,580
AAA Aaa 11,075 Spokane County, Washington, UT, School District No. 356 (Central
Valley), Series B, 5.049% due 12/01/2016 (h)(k) 4,500
AAA Aaa 465 University of Washington, University Revenue Bonds (Housing and
Dining), 7% due 12/01/2021 (e) 511
AAA Aaa 7,000 Washington State Health Care Facilities Authority Revenue Bonds
(Southwest Washington Hospital--Vancouver), 7.125% due 10/01/2019 (g) 7,316
West AAA Aaa 11,465 Mason County, West Virginia, PCR, Refunding (Appalachian Power Co.),
Virginia--1.5% Series I, 6.85% due 6/01/2022 (e) 12,641
AAA Aaa 12,250 Pleasants County, West Virginia, PCR (Potomac Pleasants), Series
95-C, 6.15% due 5/01/2015 (b) 13,528
AAA Aaa 2,500 West Virginia School Building Authority (Capital Improvement),
Revenue Refunding Bonds, Series 8, 5.25% due 7/01/2021 (i) 2,540
Wisconsin--2.7% AAA Aaa 9,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds
(Midwest Energy Resources), Series E, 6.90% due 8/01/2021 (h) 11,261
AAA Aaa 4,650 Wisconsin Public Power System, Inc., Power Supply System Revenue
Bonds, Series A, 5.75% due 7/01/2023 (e) 4,992
AAA Aaa 6,520 Wisconsin State Health and Educational Facilities Authority
Revenue Refunding Bonds (Sister's Sorrowful Mother), Series A,
6.125% due 8/15/2022 (e) 7,076
Wisconsin State Veterans Housing Loans, AMT, Series B (e):
AAA Aaa 7,920 6.50% due 5/01/2020 8,698
AAA Aaa 17,130 6.50% due 5/01/2025 18,814
Total Investments (Cost--$1,813,031)--101.5% 1,930,956
Liabilities in Excess of Other Assets--(1.5%) (27,805)
----------
Net Assets--100.0% $1,903,151
==========
<FN>
(a)Prerefunded.
(b)AMBAC Insured.
(c)Escrowed to maturity.
(d)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at December 31, 1998.
(e)MBIA Insured.
(f)The interest rate is subject to change periodically based upon
the prevailing market rates. The interest rate shown is the rate in
effect at December 31, 1998.
(g)BIG Insured.
(h)FGIC Insured.
(i)FSA Insured.
(j)GNMA Collateralized.
(k)Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Portfolio.
(l)FHA Insured.
*Not Rated.
++Highest short-term rating issued by Moody's Investors Service,
Inc.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alaska--2.4% Valdez, Alaska, Marine Terminal Revenue Refunding Bonds:
AA Aa2 $ 6,000 (British Petroleum Pipeline), Series B, 7% due 12/01/2025 $ 6,581
AA Aa3 27,150 (Sohio Pipeline--British Petroleum Oil), 7.125% due 12/01/2025 30,132
Arizona--0.9% NR* Aa2 1,100 Arizona Educational Loan Marketing Corporation, Educational Loan
Revenue Bonds, AMT, Series B, 7% due 3/01/2005 1,188
A A2 5,475 Maricopa County, Arizona, IDA, Health Facilities Revenue Bonds
(Catholic Healthcare West Project), Series A, 5% due 7/01/2016 5,375
NR* B1 5,000 Phoenix, Arizona, IDA, Airport Facilities Revenue Refunding Bonds
(America West Airlines, Inc.), AMT, 6.30% due 4/01/2023 5,161
AA Aa1 2,275 Scottsdale, Arizona, Water and Sewer Revenue Project of 1989,
Series E, 4.50% due 7/01/2023 2,112
California NR* NR* 5,975 Antioch, California, Improvement Bond Act of 1915 (Assessment District
- --14.3% No.27--Lone Tree), Series E, 7.125% due 9/02/2016 6,166
A A2 10,000 California Health Facilities Financing Authority, Revenue Refunding
Bonds (Catholic Healthcare West), Series A, 5% due 7/01/2028 9,613
AAA Aaa 10,000 California State, 5.125% due 10/01/2027 (c) 10,049
California State Public Works Board, Lease Revenue Bonds:
A2 A 9,415 (California Community Colleges), Series A, 5.25% due 12/01/2014 9,889
A Aaa 10,350 (Department of Corrections--Monterey County, Soledad II), Series A,
7% due 11/01/2004 (j) 12,259
California State Refunding, UT:
A+ Aa3 30,000 5% due 10/01/2007 31,933
AAA Aaa 8,500 5% due 2/01/2023 (e) 8,441
AAA Aaa 30,000 4.25% due 10/01/2026 (f) 26,559
AAA Aaa 20,000 East Bay, California, Municipal Utility District, Water System
Revenue Bonds, Sub-Series, 4.75% due 6/01/2028 (f) 19,115
NR* NR* 4,000 Long Beach, California, Special Tax Community Facilities (District
No.3--Pine Avenue Public Improvement), 6.375% due 9/01/2023 4,282
AAA Aaa 30,815 Los Angeles, California, Waterworks Revenue Bonds (Department of Water
and Power), 4.25% due 10/15/2030 27,064
AA Aa2 19,750 Metropolitan Water District, Southern California, Waterworks
Revenue Refunding Bonds, Series A, 4.75% due 7/01/2022 18,940
AAA Aaa 10,000 San Bernardino County, California, COP (Medical Center Financing
Project), Series A, 5.875% due 8/01/2005 (j) 11,315
AAA Aaa 9,000 San Jose, California, Redevelopment Agency, Tax Allocation (Merged
Area Redevelopment Project), 5% due 8/01/2031 (c) 8,914
AAA Aaa 10,000 Santa Clara, California, Electric Revenue Refunding Bonds, Series A,
5% due 7/01/2027 (c) 9,925
Colorado--5.8% AA Aa2 12,600 Colorado Springs, Colorado, Utilities Revenue Bonds, RITR, Series 19,
6.245% due 11/15/2026 (g) 13,377
Denver, Colorado, City and County Airport Revenue Bonds:
AAA Aaa 23,280 Series A, 5.75% due 11/15/2016 (f) 25,098
AAA Aaa 24,000 Series A, 5.70% due 11/15/2025 (f) 25,598
BBB+ Baa1 2,575 Series A, AMT, 7.50% due 11/15/2023 2,962
BBB+ Baa1 7,910 Series A, AMT, 8% due 11/15/2025 8,535
BBB Baa1 9,710 Series B, AMT, 7.25% due 11/15/2023 10,724
Connecticut B+ Ba3 10,725 Connecticut State Development Authority, PCR, Refunding (Conneticut
- --0.7% Light & Power Co.), Series A, 5.85% due 9/01/2028 10,765
District of A+ A1 3,750 District of Columbia Revenue Bonds (Georgetown University), RIB,
Columbia--0.3% 9.30% due 4/01/2022 (g) 4,411
Florida--5.9% AA- VMIG1++ 300 Dade County, Florida, IDA, Exempt Facilities Revenue Refunding
Bonds (Florida Power & Light Company), VRDN, 3.65% due 6/01/2021 (a) 300
A1 NR* 7,750 Escambia County, Florida, PCR, Refunding (Gulf Power Company
Project), VRDN, 4.10% due 7/01/2022 (a) 7,750
AAA Aaa 6,330 Florida HFA (Antigua Club Apartments), AMT, Series A-1, 7% due
2/01/2035 (c) 6,993
NR* Aaa 6,785 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G1, 7.90%
due 3/01/2022 (d) 7,184
AA+ Aa2 30,000 Florida State Board of Education, Capital Outlay Public Education,
Series B, 4.50% due 6/01/2027 27,608
AA Aa3 5,000 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), Series 91, 7.875% due 8/01/2021 5,608
AAA NR* 3,365 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT, Series A,
8.375% due 3/01/2021 (d) 3,473
AAA Aaa 5,850 South Broward, Florida, Hospital District Revenue Bonds, RIB, Series
C, 9.693% due 5/01/2001 (c)(g)(j) 6,815
AAA Aaa 20,000 Sunrise, Florida, Utility System Revenue Bonds, Series A, 5.75% due
10/01/2026 (c)(j) 22,423
Georgia--1.6% AAA Aaa 20,000 Metropolitan Atlanta, Georgia, Rapid Transit Authority, Sales Tax
Revenue Bonds, Second Indenture, Series A, 6.90% due 7/01/2004 (f)(j) 23,290
Idaho--0.1% AA NR* 1,180 Idaho Housing Agency, S/F Mortgage, AMT, Series E, 7.875% due
7/01/2024 (b) 1,254
Illinois--3.0% AA- Aa3 8,000 Chicago, Illinois, Gas Supply Revenue Bonds (Peoples Gas, Light &
Coke Company Project), AMT, Series A, 8.10% due 5/01/2020 8,587
Chicago, Illinois, O'Hare International Airport, Special Facilities
Revenue Bonds (United Airlines, Inc.):
BB+ Baa2 4,580 AMT, Series B, 8.95% due 5/01/2018 5,048
BB+ Baa2 13,300 Series 1984-B, 8.85% due 5/01/2018 14,654
A+ Aa1 1,750 Illinois HDA, Residential Mortgage Revenue Bonds, RIB, AMT,
Series C-2, 9.562% due 2/01/2018 (g) 1,971
Illinois Health Facilities Authority Revenue Refunding Bonds:
NR* NR* 2,625 (Saint Elizabeth's Hospital--Chicago), 7.75% due 7/01/2004 (j) 3,147
A1+ VMIG1++ 6,000 (University of Chicago Hospital), VRDN, 4.10% due 8/01/2026 (a)(f) 6,000
NR* A1 4,400 Southwestern Illinois Development Authority, Sewer Facilities
Revenue Bonds (Monsanto Company Project), AMT, 7.30% due 7/15/2015 4,989
Indiana--0.7% AA NR* 9,100 Indianapolis, Indiana, Local Public Improvement Bond Bank,
Refunding, Series D, 6.75% due 2/01/2020 10,047
Iowa--0.8% NR* NR* 9,000 Iowa Finance Authority, Health Care Facilities, Revenue Refunding
Bonds (Care Initiatives Project), 9.25% due 7/01/2025 12,080
Kansas--1.8% Wichita, Kansas, Hospital Revenue Bonds, RIB (f)(g):
AAA Aaa 12,000 Series III-A, 8.894% due 10/01/2017 14,295
AAA Aaa 10,000 Series III-B, 8.945% due 10/21/2022 11,912
Kentucky--0.8% NR* NR* 4,500 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds (TJ
International Project), AMT, 7% due 6/01/2024 4,920
A+ Aa2 6,345 Trimble County, Kentucky, PCR (Louisville Gas and Electric
Company), AMT, Series A, 7.625% due 11/01/2020 6,826
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Louisiana--3.7% NR* A3 $ 35,000 Lake Charles, Louisiana, Harbor and Terminal District Port
Facilities, Revenue Refunding Bonds (Trunkline LNG Company Project),
7.75% due 8/15/2022 $ 39,730
AAA Aaa 4,000 Louisiana Stadium and Exposition District, Hotel Occupancy Tax
and Stadium Revenue Refunding Bonds, Series B, 4.75% due 7/01/2021 (e) 3,804
B+ NR* 10,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
Company Project), 7.50% due 7/01/2013 10,646
BBB Baa2 1,100 Saint Charles Parish, Louisiana, PCR (Union Carbide Project), AMT,
7.35% due 11/01/2022 1,206
Maine--0.3% AA A2 3,585 Maine State Housing Authority, Mortgage Purchase, AMT, Series B-4,
6.90% due 11/15/2026 3,904
Maryland--0.5% AA- Aa 7,000 Maryland State Stadium Authority, Sports Facilities Lease Revenue
Bonds, AMT, Series D, 7.60% due 12/15/2019 7,393
Massachusetts AAA Aaa 30,000 Massachusetts Bay Transportation Authority, General Transportation
- --4.7% System, Refunding, Series A, 4.50% due 3/01/2026 (f) 27,491
NR* Caa 12,350 Massachusetts State Health and Educational Facilities Authority,
Revenue Refunding Bonds (New England Memorial Hospital), Series B,
6.25% due 7/01/2023 6,175
AAA Aaa 40,000 Massachusetts State Water Resources Authority, General Refunding
Bonds, Series B, 4.50% due 8/01/2022 (h) 36,882
Michigan--2.6% AAA Aaa 15,000 Michigan State Hospital Finance Authority Revenue Bonds (Sisters
of Mercy), INFLOS, 9.02% due 2/15/2022 (g)(h) 17,344
AAA Aaa 10,000 Michigan State Trunk Line, Series A, 5.625% due 11/01/2006 (e)(j) 11,116
BBB Baa1 9,350 Monroe County, Michigan, PCR (Detroit Edison Company Project), AMT,
Series A, 7.75% due 12/01/2019 9,884
Minnesota--3.3% A1+ NR* 1,200 Beltrami County, Minnesota, Environmental Control Revenue
Refunding Bonds (Northwood Panelboard Co. Project), VRDN, 4.10%
due 12/01/2021 (a) 1,200
AA+ Aa 5,655 Minnesota State, HFA, S/F Mortgage, AMT, Series A, 7.45% due
7/01/2022 (b) 5,929
Minnesota State, Refunding, UT:
AAA Aaa 20,000 5% due 6/01/2004 21,146
AAA Aaa 17,285 5% due 6/01/2005 18,336
AA+ NR* 3,000 Rochester, Minnesota, Health Care Facilities Revenue Bonds (Mayo
Foundation), IRS, Series H, 7.864% due 11/15/2015 (g) 3,476
Mississippi NR* Ba2 5,950 Lowndes County, Mississippi, Hospital Revenue Refunding Bonds (Golden
- --0.7% Triangle Medical Center), 8.50% due 2/01/2010 6,305
NR* Aaa 4,195 Mississippi Home Corporation, S/F Mortgage Revenue Bonds (Access
Program), AMT, Final Tranche, Series A, 6.90% due 6/01/2024 (d) 4,557
Missouri--0.8% BBB NR* 11,400 Bi-State Development Agency, Missouri and Illinois, Metropolitan No.
5, Refunding (American Commercial Lines, Inc.), 7.75% due 6/01/2000 (j) 12,387
Nebraska--0.2% AAA Aaa 2,600 Nebraska Investment Finance Authority, S/F Mortgage Revenue Bonds,
RIB, AMT, Series 2, 11.53% due 9/10/2030 (d)(g) 2,876
Nevada--0.7% A A2 10,000 Henderson, Nevada, Health Care Facility Revenue Bonds (Healthcare
West), Series A, 5.375% due 7/01/2026 10,058
New Jersey AAA Aaa 26,750 New Jersey Health Care Facilities Financing Authority, Revenue
- --2.7% Refunding Bonds (Saint Barnabas Health), Series B, 4.75% due
7/01/2028 (f) 25,408
AAA Aaa 5,000 Union County, New Jersey, Utility Authority, Solid Waste Revenue
Bonds, RITR, AMT, Series 38, 6.27% due 6/01/2020 (c)(g) 5,337
AA- A3 9,500 University of Medicine and Dentistry of New Jersey, Series C, 7.20%
due 12/01/1999 (j) 10,038
New Mexico A1+ NR* 300 Eddy County, New Mexico, PCR, Refunding (IMC Fertilizer Inc.
- --0.0% Project), VRDN, 3.75% due 12/01/2003 (a) 300
New York A- Baa1 15,040 Long Island Power Authority, New York, Electric System Revenue
- --13.2% Bonds, Series A, 5.50% due 12/01/2029 15,521
Metropolitan Transportation Authority, New York, Service Contract
Revenue Refunding Bonds (Commuter Facilities), Series 5:
BBB+ Baa1 2,145 6.90% due 7/01/2006 2,331
BBB+ Baa1 5,000 7% due 7/01/2012 5,445
New York City, New York, GO, UT:
A- A3 14,315 Series B, 7.75% due 2/01/2002 (j) 16,182
A- A3 4,000 Series B, 8.25% due 6/01/2006 5,017
A- A3 3,060 Series B, 7.75% due 2/01/2011 3,431
AAA Aaa 5,495 Series F, 8.25% due 11/15/2001 (j) 6,263
New York City, New York, Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds, Series B:
AAA Aaa 10,440 5.375% due 6/15/2019 (c) 10,659
AAA Aaa 10,000 5.75% due 6/15/2026 (f) 10,698
AAA Aaa 10,000 5.875% due 6/15/2026 (h) 10,804
AAA Aaa 10,795 5.25% due 6/15/2029 (c) 11,004
AAA Aaa 3,000 5.25% due 6/15/2029 (e) 3,049
AA Aa3 20,000 New York City, New York, Transitional Finance Authority Revenue
Bonds (Future Tax Secured), Series B, 4.50% due 11/15/2027 18,280
AAA Aaa 4,585 New York City, New York, UT, RITR, Series 33, 6.29% due
8/01/2027 (f)(g) 4,963
New York State Dormitory Authority Revenue Bonds (State University
Educational Facilities):
A- A3 11,515 5.50% due 5/15/2026 11,915
A- A3 6,735 Refunding, Series B, 7.375% due 5/15/2014 7,181
A- A3 5,000 Series A, 7.50% due 5/15/2013 6,414
AAA Aaa 20,000 Series A, 4.75% due 5/15/2025 (f) 19,046
New York State Medical Care Facilities, Finance Agency Revenue
Bonds (New York Hospital Mortgage), Series A (b)(c)(j):
AAA Aaa 8,400 6.75% due 2/15/2005 9,789
AAA Aaa 9,100 6.80% due 2/15/2005 10,629
AAA Aaa 10,000 Port Authority of New York and New Jersey, Consolidated Revenue
Refunding Bonds, 116th Series, 4.25% due 10/01/2026 8,826
North A1 VMIG1++ 100 North Carolina Medical Care Commission, Hospital Revenue
Carolina--0.0% Bonds (Pooled Equipment Financing Project), ACES, 4% due
12/01/2025 (a)(f) 100
Ohio--2.2% AAA Aaa 12,000 Cleveland, Ohio, Public Power System Revenue Bonds (First Mortgage),
Series A, 7% due 11/15/2004 (f)(j) 14,142
AAA Aaa 7,625 Ohio, HFA, S/F Mortgage Revenue Bonds, RIB, AMT, Series B-4, 9.861%
due 3/31/2031 (d)(g) 8,511
AAA Aaa 10,000 Ohio State Turnpike Commission, Turnpike Revenue Bonds, Series A,
5.50% due 2/15/2006 (f)(j) 11,044
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds National Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Pennsylvania AAA Aaa $ 16,500 Allegheny County, Pennsylvania, Sanitary Authority, Sewer Revenue
- --6.8% Bonds, RITR, Series 20, 6.32% due 12/01/2024 (f)(g) $ 17,613
AAA Aaa 10,000 Beaver County, Pennsylvania, UT, Series A, 5.90% due 10/01/2006 (j) 11,209
BBB Baa 10,000 Pennsylvania Convention Center Authority, Revenue Refunding Bonds,
Series A, 6.75% due 9/01/2019 11,194
AA Aa2 8,800 Pennsylvania HFA, Refunding, RIB, AMT, Series 1991-31C, 9.944% due
10/01/2023 (g) 9,944
Pennsylvania State, GO:
AAA Aaa 20,000 Refunding, 5.125% due 9/15/2006 (c) 21,363
AAA Aaa 15,375 Second Series, 5% due 8/01/2005 (e) 16,273
AAA Aaa 10,000 Pennsylvania State Higher Educational Assistance Agency, Student
Loan Revenue Bonds, RIB, AMT, 9.571% due 9/03/2026 (c)(g) 11,550
NR* NR* 2,000 Pennsylvania State Higher Educational Facilities Authority, College
and University Revenue Bonds (Eastern College), Series B, 8% due
10/15/2025 2,390
Puerto A1+ VMIG1++ 2,200 Puerto Rico Commonwealth, Government Development Bank, Refunding, VRDN,
Rico--0.1% 3.60% due 12/01/2015 (a)(f) 2,200
Rhode AA+ Aa2 7,975 Rhode Island Housing and Mortgage Finance Corporation, RITR, AMT,
Island--0.6% Series 30, 7.37% due 4/01/2029 (g) 8,814
South AAA Aa1 9,085 South Dakota HDA, Homeownership Mortgage, Series A, 7.15% due 5/01/2027 9,578
Dakota--0.6%
Tennessee NR* Aaa 10,000 Knox County, Tennessee, Health, Educational and Housing Facilities
- --0.7% Board, Hospital Facilities Revenue Bonds (Baptist Health System of
East Tennessee), 8.60% due 4/15/1999 (j) 10,352
Texas--10.8% AAA Aaa 7,200 Austin, Texas, Independent School District, Refunding, 5.75% due
8/01/2006 (j) 7,986
AAA Aaa 10,000 Austin, Texas, Utility System, Combined Revenue Refunding Bonds,
5.60% due 5/15/2005 (j) 10,876
Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series A:
BBB+ Baa1 2,095 8.25% due 1/01/2019 2,143
BBB+ Baa1 18,150 7.875% due 3/01/2021 19,632
A- A2 12,350 Brazos River Authority, Texas, Revenue Refunding Bonds (Houston
Light and Power), Series 1989-A, 7.625% due 5/01/2019 12,799
AAA Aaa 13,300 Dallas, Texas, Refunding and Improvement, UT, 5% due 2/15/2006 14,107
BBB Baa1 7,250 Gulf Coast Waste Disposal Authority, Texas, Revenue Bonds (Champion
International Corporation), AMT, 7.45% due 5/01/2026 7,893
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds:
A1+ NR* 5,600 (Methodist Hospital), VRDN, 4.10% due 12/01/2025 (a) 5,600
AAA Aaa 10,150 RITR, Series 12, 8.32% due 10/01/2004 (f)(g)(j) 12,828
AAA Aa3 12,470 (Saint Luke's Episcopal Hospital Project), Series A, 6.75% due
2/15/2021 (i) 13,469
AAA Aaa 11,100 Harris County, Texas, Toll Road Revenue Bonds, Senior Lien, Series
A, 6.375% due 8/15/2004 (f)(j) 12,634
Houston, Texas, Water and Sewer System Revenue Bonds, RITR (e)(g):
AAA Aaa 15,750 Series 5, 6.32% due 12/01/2027 16,518
AAA Aaa 10,620 Series 32, 6.346% due 12/01/2027 11,310
AAA Aaa 3,000 Odessa, Texas, Junior College District, Revenue Refunding Bonds,
Series A, 8.125% due 6/01/2005 (j) 3,699
NR* VMIG1++ 2,000 Port of Arthur, Texas, Navigational District, PCR, Refunding (Texaco
Incorporated Project), VRDN, 4.10% due 10/01/2024 (a) 2,000
A+ Aa 3,185 Texas Housing Agency, Residential Development Mortgage Revenue Bonds,
Series A, 7.50% due 7/01/2015 (d) 3,417
AA Aa2 4,250 Texas State Veterans' Housing Assistance (Fund II), AMT, UT, Series A,
7% due 12/01/2025 4,607
Utah--1.2% NR* NR* 2,000 Tooele County, Utah, PCR, Refunding (Laidlaw Environmental), AMT,
Series A, 7.55% due 7/01/2027 2,207
AAA Aaa 13,250 Weber County, Utah, Municipal Building Authority, Lease Revenue
Bonds, 7.50% due 12/15/2004 (j) 15,966
Virginia--0.5% NR* NR* 4,030 Dulles Town Center Community Development Authority, Virginia, Special
Assessment Tax Bonds (Dulles Town Center Project), 6.25% due 3/01/2026 4,112
AA+ Aa1 3,215 Virginia State, HDA, Commonwealth Mortgage, Series A, 7.15% due 1/01/2033 3,376
West NR* NR* 4,000 Upshur County, West Virginia, Solid Waste Disposal Revenue Bonds (TJ
Virginia--0.3% International Project), AMT, 7% due 7/15/2025 4,451
Wisconsin--1.8% Wisconsin Housing and EDA, Home Ownership Revenue Bonds:
A1+ Aa2 21,150 RITR, AMT, Series 18, 7.462% due 9/01/2028 (g) 23,404
AA Aa 4,040 Series A, 7.10% due 3/01/2023 4,299
Total Investments (Cost--$1,399,389)--98.1% 1,469,642
Other Assets Less Liabilities--1.9% 28,454
----------
Net Assets--100.0% $1,498,096
==========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at December 31, 1998.
(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, 1998.
(h)FSA Insured.
(i)Escrowed to maturity.
(j)Prerefunded.
*Not Rated.
++Highest short-term rating issued by Moody's Investors Service,
Inc.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alaska--0.4% Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Exxon
Pipeline Co. Project), VRDN (b):
A1+ P1 $ 200 Series A, 5.10% due 12/01/2033 $ 200
A1+ P1 1,500 Series C, 5.10% due 12/01/2033 1,500
Arizona--2.2% AA- A1 200 Central Arizona Water Conservation District, Contract Revenue
Bonds (Central Arizona Project), Series B, 6.50% due 5/01/2001 (a) 217
SP1+ NR* 5,780 Phoenix, Arizona, IDA, S/F Mortgage Revenue Bonds, Series D, 4.20%
due 6/01/2002 5,781
AA+ Aa1 250 Phoenix, Arizona, Refunding Bonds, UT, 5.70% due 7/01/1999 253
Pima County, Arizona, Refunding Bonds:
A+ A1 200 Series A, 5.60% due 7/01/1999 203
AAA Aaa 2,135 UT, 4.75% due 7/01/2001 (d) 2,197
AAA Aaa 200 Yuma County, Arizona, Jail District Revenue Bonds, 4.30% due
7/01/1999 (c) 201
California SP1+ NR* 7,000 Central Valley School Financing Authority, California, TRAN,
- --3.0% 3.50% due 1/27/2000 7,026
SP1+ MIG1++ 5,000 Riverside County, California, TRAN, 4.50% due 9/30/1999 5,055
Connecticut AAA AAA 12,100 Connecticut State Special Assessment Revenue Refunding Bonds
- --3.1% (Unemployment Compensation Advance Fund), Series A, 5.50% due
5/15/2001 (c) 12,656
Florida--1.3% AAA Aaa 5,000 Dade County, Florida, GO, UT, 6.50% due 10/01/2001 (a)(c) 5,428
Georgia--1.0% AAA Aaa 4,000 Georgia Muncipal Electric Authority, General Power Revenue Refunding
Bonds, Series D, 6% due 1/01/2000 (c) 4,114
Hawaii--2.1% AAA Aaa 3,200 Hawaii State, GO, Refunding, Series CO, 6% due 3/01/2001 (f) 3,359
A+ A1 5,250 Hawaii State, GO, UT, Series CH, 4.75% due 11/01/1999 5,322
Illinois--4.5% AA- NR* 10,000 Chicago, Illinois, Board of Education, COP (School Reform Equipment
Acquisition), 4.60% due 12/01/1999 10,133
BBB+ Baa1 4,625 Illinois Development Finance Authority, Solid Waste Disposal
Revenue Bonds (Waste Management Inc. Project), AMT, 7.125% due
1/01/2001 4,853
AAA Aaa 3,500 Illinois State Refunding, GO, UT, 5.125% due 12/01/1999 (f) 3,566
Indiana--2.2% AAA Aaa 3,000 Indianapolis, Indiana, Airport Authority, Revenue Refunding Bonds,
AMT, Series A, 4.50% due 7/01/2001 (f) 3,053
AA NR* 5,790 Richmond, Indiana, Hospital Authority, Revenue Refunding Bonds
(Reid Hospital & Health Care), 4.35% due 1/01/2002 5,818
Kansas--1.9% A1 A2 3,500 Burlington, Kansas, Environmental Improvement Revenue Refunding
Bonds (Kansas City Power & Light Co. Project), Series D, 4.35%
due 10/01/2017 3,537
AAA Aaa 4,000 Kansas State Development Finance Authority Revenue Bonds (Regents
Rehab), Series G-2, 5% due 10/01/2001 (c) 4,152
Kentucky--1.2% AAA Aaa 5,000 Carrollton and Henderson, Kentucky, Public Energy Authority, Gas
Revenue Bonds, Series A, 4.50% due 1/01/2002 (e) 5,108
Maryland--0.5% NR* Aa2 2,000 Maryland State Community Development Administration Department,
Housing and Community Development Refunding Bonds (S/F Program--
First Series), 4.45% due 4/01/2001 2,014
Massachusetts-- NR* A1 275 Boston, Massachusetts, Economic Development and Industrial
2.5% Corporation, Public Parking Facility, Series 1990, 5% due 7/01/2015 279
AAA Aaa 195 Massachusetts Education Loan Authority, Educational Loan Revenue
Refunding Bonds, AMT, Issue E, Series B, 5.50% due 7/01/2001 201
AAA Aaa 3,500 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (Newtown Wellesley Hospital), Series D, 6.90% due
7/01/2001 (a)(d) 3,836
Massachusetts State Industrial Finance Agency, Resource Recovery
Revenue Refunding Bonds (Odgen), Series A:
BBB NR* 1,750 4.35% due 12/01/2000 1,762
BBB NR* 2,925 4.50% due 12/01/2001 2,950
AA- Aa3 750 Massachusetts State Refunding, Series B, 6.25% due 8/01/2001 799
AA Aa3 300 Massachusetts State Special Obligation Revenue Bonds (Highway
Improvement Loan), Series A, 5.90% due 6/01/2001 316
NR* Aa1 100 Peabody, Massachusetts, GO, Series A, 4.50% due 8/01/2000 102
Michigan--3.5% AA+ Aa2 110 Ann Arbor, Michigan, School District, Public School Refunding
Bonds, UT, 4.75% due 5/01/2000 112
AAA Aaa 105 Chelsea, Michigan, School District, UT, 6.75% due 5/01/2002 (f) 115
AAA Aaa 250 Dearborn, Michigan, Economic Development Corporation, Hospital
Revenue Bonds (Oakwood Obligated Group), Series A, 6.95% due
8/15/2001 (a)(d) 275
AAA Aaa 8,000 Detroit, Michigan, Distributable State Aid, UT, 7.20% due
5/01/1999 (a)(c) 8,268
AAA Aaa 200 Detroit, Michigan, Refunding, Distributable State Aid, UT, 5.70%
due 5/01/2001 (c) 209
AA Aa2 4,630 Michigan Municipal Bond Authority Revenue Bonds (School Loan), 5%
due 12/01/2001 4,805
AA+ Aa2 450 Michigan Municipal Bond Authority, Revenue Refunding Bonds (Local
Government--Qualified School), Series A, 6% due 5/01/2001 474
NR* Aaa 100 Michigan State Hospital Finance Authority Revenue Bonds (McLaren
Obligated Group), Series A, 7.50% due 9/15/2001 (a) 112
Minnesota AAA Aaa 2,385 Metropolitan Council, Minneapolis, St. Paul Metropolitan Area
- --2.5% Transit, UT, Series C, 4.75% due 2/01/2000 2,426
AAA Aaa 2,610 Minnesota State, HFA (Rental Housing), Refunding Bonds, Series D,
4.50% due 8/01/1999 (d) 2,621
AA+ Aa1 5,000 Minnesota State, HFA, S/F Mortgage (Series 1), 3.90% due 8/29/2000 5,001
Mississippi NR* P1 500 Jackson County, Mississippi, PCR, Refunding (Chevron USA, Inc.
- --1.9% Project), VRDN, 5.10% due 12/01/2016 (b) 500
NR* Baa2 7,200 Lawrence County, Mississippi, PCR (Georgia Pacific Corp. Project),
4.30% due 12/01/2000 7,277
Nebraska--1.8% Nebraska Public Power District Revenue Bonds (Consumer Public Power
District):
A+ A1 4,000 5.50% due 7/01/2002 4,224
AAA Aaa 3,000 Series A, 5% due 1/01/2002 (d) 3,111
New Jersey NR* Aaa 300 Bergen County, New Jersey, General Improvement Bonds, UT, 5.20%
- --4.3% due 10/01/1999 305
AAA Aaa 5,715 New Jersey State Educational Facilities Authority Revenue Bonds (Higher
Educational Facilities Trust Fund), Series A, 5.125% due 9/01/1999 (c) 5,795
AAA Aaa 300 New Jersey State Educational Facilities Authority Revenue Bonds
(Princeton University), Series E, 4.05% due 7/01/2000 303
AA+ Aa1 4,250 New Jersey State Refunding, UT, Series D, 5.10% due 2/15/2000 4,341
NR* MIG1++ 6,250 Readington-Lebanon, New Jersey, Sewer Authority Project Notes,
Series A, 4.25% due 12/01/2000 6,359
AAA Aaa 125 Somerset County, New Jersey, GO, UT, 5.875% due 12/01/2001 133
AA+ Aaa 340 Union County, New Jersey, Refunding, GO, UT, 5.875% due 3/01/1999 342
New Mexico A1+ P1 4,100 Farmington, New Mexico, PCR (Arizona Public Service Co.), VRDN, AMT,
- --1.0% Series C, 5.15% due 9/01/2024 (b) 4,100
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
Municipal Bonds Limited Maturity Portfolio
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New York A1+ VMIG1++$ 10,800 Long Island Power Authority, New York, Electric System Revenue Bonds,
- --17.8% VRDN, Sub-Series 5, 5.10% due 5/01/2033 (b) $ 10,800
BBB+ Aaa 10,255 Metropolitan Transporation Authority of New York, Service Contract
Commuter Facilities, Series 6, 6% due 7/01/2001 (a) 10,833
Municipal Assistance Corporation:
A+ Aa 4,550 Refunding, Series E, 5.50% due 7/01/2000 4,693
NR* Aa2 800 Series 68, 7.10% due 7/01/1999 832
New York City, New York, GO:
A- A3 2,020 Refunding, Series G, 3.90% due 8/01/1999 2,030
A- Aaa 60 UT, Series A, 6% due 8/01/2000 (g) 63
A- Aaa 4,615 UT, Series C, Sub-Series C-1, 7.50% due 8/01/2002 (a) 5,257
BBB+ Baa1 3,000 New York State, COP, Commissioner General Services Executive
Department, 4% due 3/01/2000 3,023
BBB+ Baa1 10,885 New York State Dormitory Authority Revenue Bonds (Consolidated
City University System), Series A, 4.75% due 7/01/1999 10,977
AA+ Aa1 400 New York State Environmental Facilities Corporation, PCR, State
Water Revolving Fund (New York City Municipal Water Finance
Authority Project), Series E, 5.60% due 6/15/1999 405
New York State Local Government Assistance Corporation (a):
A+ Aaa 625 Series A, 7% due 4/01/2001 683
A+ Aaa 5,000 Series B, 6.25% due 4/01/2002 5,480
AAA Aaa 600 Series D, 7% due 4/01/2002 671
NR* Aaa 725 New York State Medical Care Facilities Finance Agency, Revenue
Bonds (Mental Health Services Facilities), Series A, 7.75% due
2/15/2001 (a) 800
AA- Aa3 5,305 New York State Power Authority, Revenue and General Purpose
Bonds, Series A, 5% due 2/15/2002 5,508
New York State Urban Development Corporation Revenue Bonds:
BBB+ Baa1 4,525 (Correctional Capital Facilities), Series 4, 4.90% due 1/01/2001 4,638
BBB+ Aaa 5,000 (State Facilities), 7.50% due 4/01/2001 (a) 5,513
A+ Aa3 340 Triborough Bridge and Tunnel Authority, New York, Revenue Bonds,
Series R, 6.90% due 1/01/2000 353
North AAA Aaa 2,000 Charlotte, North Carolina, Water and Sewer, UT, 5.70% due 2/01/2000 (g) 2,054
Carolina--1.8% AAA Aaa 5,000 Mecklenburg County, North Carolina, Public Improvement, UT,
Series B, 4.30% due 2/01/2002 5,104
Ohio--8.8% NR* Aa1 6,000 Franklin County, Ohio, Hospital Revenue Refunding Bonds (US Health
Corp.), Series B, 4.50% due 12/01/2020 6,070
AAA Aaa 3,135 Kent State University, Ohio, University Revenue Bonds (General
Receipts), Series B, 4.15% due 5/01/2001 (c) 3,157
AAA Aa1 12,400 Ohio State Highway, GO, Series V, 4.70% due 5/15/2000 12,642
A1+ P1 8,500 Ohio State Water Development Authority, Pollution Control Facilities
Revenue Bonds (Ohio Edison Company), AMT, Series A, 4.20% due 5/01/2018 8,502
NR* Aaa 5,290 Student Loan Funding Corporation, Cincinnati, Ohio, Student Loan
Revenue Refunding Bonds, AMT, Series C, 5.70% due 7/01/1999 5,340
Oklahoma--0.6% AA Aa2 2,400 Tulsa, Oklahoma, GO, UT, 5.125% due 5/01/1999 2,417
Pennsylvania AAA Aaa 300 Beaver County, Pennsylvania, Hospital Authority, Revenue Refunding
- --3.1% Bonds (Medical Center of Beaver County, Inc.), 5.70% due 7/01/1999 (c)(g) 304
AA Aa2 1,000 Bucks County, Pennsylvania, UT, Series A, 5.95% due 3/01/2000 1,031
NR* Aa3 155 Central Bucks, Pennsylvania, School District, UT, 4.50% due 5/15/1999 156
AA Aa3 6,500 Pennsylvania State, UT, First Series, 4.50% due 3/01/2002 6,659
AAA Aaa 4,145 Pittsburgh, Pennsylvania, Refunding, UT, Series A, 5% due 3/01/2000 (d) 4,229
AAA Aaa 325 Washington County, Pennsylvania, Lease Authority Revenue Bonds
(Municipal Facility Pooled Capital--Shadyside Hospital Project),
Series C, Sub-Series C1-A, 7.45% due 6/15/2000 (a)(c) 353
Rhode AAA Aaa 4,100 Rhode Island State Refunding Bonds (Consolidated Capital Development
Island--1.1% Loan), 5.50% due 8/01/2001 (d) 4,291
South AAA Aaa 5,000 Florence County, South Carolina, Hospital Revenue Bonds (McLeod Regional
Carolina--1.8% Medical Center Project), 6.75% due 11/01/2000 (a)(f) 5,394
AA Aa1 1,930 Lexington & Richland Counties, South Carolina, School District No.
005, UT, 4.50% due 3/01/2002 1,979
Texas--8.1% AAA Aaa 3,925 Houston, Texas, Independent School District, 6.375% due 8/15/2001 4,195
AAA Aaa 2,600 Houston, Texas, Water and Sewer Systems, Revenue Refunding Bonds,
Junior Lien, Series C, 5.90% due 12/01/1999 (c) 2,667
San Antonio, Texas, Electric and Gas Revenue Refunding Bonds:
AA Aa1 3,000 5.25% due 2/01/2000 3,067
AA Aa1 3,000 Series A, 5% due 2/01/2002 3,111
AAA Aaa 8,825 Texas National Research Laboratory Commission Financing Corporation,
Lease Revenue Bonds (Superconducting Super Collider Project), 7.10%
due 12/01/2001 (a) 9,831
SP1+ MIG1++ 6,300 Texas State, TRAN, 4.50% due 8/31/1999 6,362
AA Aa2 3,600 Texas State University System, GO, 4.75% due 8/15/2001 3,704
Virginia--2.7% AA Aa1 3,330 Richmond, Virginia, Equipment Notes, 4.25% due 5/15/2002 3,386
AA Aa2 5,000 Virginia College Building Authority, Educational Facilities Revenue
Bonds (Equipment Leasing Program), 4.75% due 2/01/2002 5,155
AA Aa2 2,555 Virginia State Transportation Board, Transportation Contract
Revenue Bonds (US Route 58 Corridor), Series B, 5% due 5/15/2000 2,613
Washington AAA NR* 5,000 King County, Washington, School District No. 414 (Lake Washington),
- --7.2% UT, 7% due 12/01/2000 (a) 5,335
AAA Aaa 5,000 Seattle, Washington, Metropolitan Seattle Municipality, Sewer
Revenue Bonds, Series U, 6.60% due 1/01/2001 (a)(f) 5,390
AA Aa2 6,750 South Columbia, Washington, Hydroelectric Crossover Revenue
Refunding Bonds (Basin Irrigation District), 5.75% due 6/01/2000 6,972
AA+ Aa1 8,000 Washington State, Refunding, Series R92-B, 6.20% due 9/01/2001 8,526
AA+ Aa1 3,000 Washington State Variable Purpose, Series B, 6.80% due 8/01/2000 (a) 3,158
Wisconsin AA+ Aa1 6,510 Milwaukee, Wisconson, Metropolitan Sewer District, Refunding,
- --4.2% Series A, 4.25% due 10/01/2000 6,607
AA Aa2 4,385 Wisconsin State, GO, Series C, 5.50% due 5/01/2000 4,510
AAA NR* 5,720 Wisconsin State Health and Educational Facilities Authority Revenue
Bonds (Medical College of Wisconsin), Series D, 7.35% due
12/01/2000 (a) 6,218
Total Investments (Cost--$395,807)--98.1% 400,247
Other Assets Less Liabilities--1.9% 7,584
----------
Net Assets--100.0% $ 407,831
==========
<FN>
(a)Prerefunded.
(b)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at December 31, 1998.
(c)AMBAC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)FGIC Insured.
(g)Escrowed to maturity.
*Not rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
<CAPTION>
Limited
Insured National Maturity
As of December 31, 1998 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Assets: Investments, at value* (Note 1a) $1,930,956,211 $1,469,641,880 $ 400,246,597
Cash 28,759 27,319 46,477
Receivables:
Interest 26,828,617 20,358,534 6,007,153
Securities sold 22,176,468 29,661,603 720,000
Capital shares sold 389,261 953,658 2,167,738
Prepaid registration fees and other assets
(Note 1e) 796,123 41,452 41,589
-------------- -------------- --------------
Total assets 1,981,175,439 1,520,684,446 409,229,554
-------------- -------------- --------------
Liabilities: Payables:
Securities purchased 46,256,144 14,311,439 --
Dividends and distributions to shareholders
(Note 1f) 28,537,612 4,524,782 853,677
Capital shares redeemed 1,738,473 2,477,117 209,140
Investment adviser (Note 2) 646,173 669,582 124,501
Distributor (Note 2) 370,428 349,572 21,982
Accrued expenses and other liabilities 475,276 256,343 188,771
-------------- -------------- --------------
Total liabilities 78,024,106 22,588,835 1,398,071
-------------- -------------- --------------
Net Assets: Net assets $1,903,151,333 $1,498,095,611 $ 407,831,483
============== ============== ==============
Net Assets Class A Common Stock, $0.10 par value++ $ 16,387,018 $ 8,873,288 $ 2,808,798
Consist of: Class B Common Stock, $0.10 par value++++ 5,983,463 3,912,671 467,422
Class C Common Stock, $0.10 par value++++++ 217,101 458,408 3,746
Class D Common Stock, $0.10 par value++++++++ 766,170 830,549 791,710
Paid-in capital in excess of par 1,745,904,369 1,414,343,377 401,310,465
Undistributed (accumulated) realized capital
gains (losses)--net (Note 5) 15,967,504 (575,121) (1,990,169)
Unrealized appreciation on investments--net. 117,925,708 70,252,439 4,439,511
-------------- -------------- --------------
Net assets $1,903,151,333 $1,498,095,611 $ 407,831,483
============== ============== ==============
Net Asset Class A:
Value: Net assets $1,335,670,940 $ 944,515,851 $ 281,312,030
============== ============== ==============
Shares outstanding 163,870,182 88,732,876 28,087,980
============== ============== ==============
Net asset value and redemption price
per share $ 8.15 $ 10.64 $ 10.02
============== ============== ==============
Class B:
Net assets $ 487,366,946 $ 416,336,311 $ 46,822,967
============== ============== ==============
Shares outstanding 59,834,625 39,126,709 4,674,216
============== ============== ==============
Net asset value and redemption price
per share $ 8.15 $ 10.64 $ 10.02
============== ============== ==============
Class C:
Net assets $ 17,687,036 $ 48,803,721 $ 374,008
============== ============== ==============
Shares outstanding 2,171,008 4,584,082 37,461
============== ============== ==============
Net asset value and redemption price
per share $ 8.15 $ 10.65 $ 9.98
============== ============== ==============
Class D:
Net assets $ 62,426,411 $ 88,439,728 $ 79,322,478
============== ============== ==============
Shares outstanding 7,661,704 8,305,486 7,917,099
Net asset value and redemption price per share $ 8.15 $ 10.65 $ 10.02
============== ============== ==============
<FN>
*Identified cost $1,813,030,503 $1,399,389,441 $ 395,807,086
============== ============== ==============
++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, 1998 Portfolio Portfolio Portfolio
<S> <S> <C> <C> <C>
Investment Interest and amortization of premium and discount
Income earned $ 54,296,902 $ 44,721,686 $ 8,768,333
(Note 1d): -------------- -------------- --------------
Expenses: Investment advisory fees (Note 2) 3,580,095 3,654,529 692,661
Account maintenance and distribution fees--
Class B (Note 2) 1,911,732 1,588,561 81,922
Transfer agent fees--Class A (Note 2) 202,817 167,366 34,323
Accounting services (Note 2) 139,845 108,249 42,712
Account maintenance and distribution fees--
Class C (Note 2) 64,773 188,665 384
Account maintenance fees--Class D (Note 2) 71,691 99,857 36,978
Transfer agent fees--Class B (Note 2) 94,200 90,761 7,342
Custodian fees 82,335 66,574 23,246
Registration fees (Note 1e) 31,959 50,765 36,994
Printing and shareholder reports 63,090 32,922 19,751
Professional fees 30,642 27,754 14,592
Pricing services 15,951 12,584 9,183
Transfer agent fees--Class D (Note 2) 8,352 13,631 8,596
Directors' fees and expenses 9,892 7,421 2,309
Transfer agent fees--Class C (Note 2) 2,974 9,808 44
Other 22,728 13,432 7,105
-------------- -------------- --------------
Total expenses 6,333,076 6,132,879 1,018,142
-------------- -------------- --------------
Investment income--net 47,963,826 38,588,807 7,750,191
-------------- -------------- --------------
Realized & Realized gain on investments--net 21,394,978 19,489,197 379,767
Unrealized Gain Change in unrealized appreciation on investments
(Loss) on --net 68,914 (17,905,877) 1,986,394
Investments -------------- -------------- --------------
- --Net (Notes 1b, Net Increase in Net Assets Resulting from
1d & 3): Operations $ 69,427,718 $ 40,172,127 $ 10,116,352
============== ============== ==============
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Insured Portfolio National Portfolio Limited Maturity Portfolio
For the Six For the For the Six For the For the Six For the
Months Ended Year Ended Months Ended Year Ended Months Ended Year Ended
Increase (Decrease) in Net Assets: Dec. 31, 1998 June 30, 1998 Dec. 31, 1998 June 30, 1998 Dec. 31, 1998 June 30, 1998
<S> <S> <C> <C> <C> <C> <C> <C>
Operations: Investment income
--net $ 47,963,826 $ 102,591,875 $ 38,588,807 $ 79,796,136 $ 7,750,191 $ 15,558,651
Realized gain on
investments--net 21,394,978 44,682,184 19,489,197 39,111,030 379,767 395,414
Change in unrealized
appreciation/
depreciation
on investments
--net 68,914 5,253,448 (17,905,877) (2,308,236) 1,986,394 789,704
-------------- -------------- -------------- -------------- -------------- --------------
Net increase in
net assets resulting
from operations 69,427,718 152,527,507 40,172,127 116,598,930 10,116,352 16,743,769
-------------- -------------- -------------- -------------- -------------- --------------
Dividends & Investment income--
Distri- net:
butions to Class A (35,301,989) (75,235,351) (25,951,594) (54,724,558) (5,583,922) (12,354,558)
Shareholders Class B (10,942,063) (24,092,878) (9,575,672) (19,749,158) (801,247) (1,724,528)
(Note 1f): Class C (343,462) (608,829) (1,054,021) (1,588,802) (3,717) (5,682)
Class D (1,376,312) (2,654,817) (2,007,520) (3,733,618) (1,361,305) (1,473,883)
Realized gain on
investments--net:
Class A (30,333,680) (2,005,059) (375,628) -- (211,240) --
Class B (11,021,698) (747,289) (165,206) -- (35,110) --
Class C (405,758) (18,784) (19,432) -- (281) --
Class D (1,454,294) (76,185) (35,761) -- (58,046) --
-------------- -------------- -------------- -------------- -------------- --------------
Net decrease in net
assets resulting
from dividends and
distributions to
shareholders (91,179,256) (105,439,192) (39,184,834) (79,796,136) (8,054,868) (15,558,651)
-------------- -------------- -------------- -------------- -------------- --------------
Capital Net proceeds from
Share issuance of capital
Trans- shares (14,074,757) (160,344,787) 16,120,853 (33,702,285) (3,232,673) (42,037,027)
actions Net proceeds from
(Note 4): issuance of capital
shares resulting from
reorganization -- -- -- -- -- 31,447,783
-------------- -------------- -------------- -------------- -------------- --------------
Net increase (decrease)
in net assets derived
from capital share
transactions (14,074,757) (160,344,787) 16,120,853 (33,702,285) (3,232,673) (10,589,244)
-------------- -------------- -------------- -------------- -------------- --------------
Net Assets: Total increase
(decrease) in net
assets (35,826,295) (113,256,472) 17,108,146 3,100,509 (1,171,189) (9,404,126)
Beginning of
period 1,938,977,628 2,052,234,100 1,480,987,465 1,477,886,956 409,002,672 418,406,798
-------------- -------------- -------------- -------------- -------------- --------------
End of period $1,903,151,333 $1,938,977,628 $1,498,095,611 $1,480,987,465 $ 407,831,483 $ 409,002,672
============== ============== ============== ============== ============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Insured Portfolio
Class A
The following per share data and ratios have
been derived from information provided in
the financial statements For the Six.
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1998 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 8.25 $ 8.06 $ 7.91 $ 7.92 $ 7.88
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .22 .43 .45 .44 .46
Realized and unrealized gain
(loss) on investments--net .09 .20 .15 (.01) .18
------------ ------------ ------------ ------------ ------------
Total from investment
operations .31 .63 .60 .43 .64
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.22) (.43) (.45) (.44) (.46)
Realized gain on invest-
ments--net (.19) (.01) -- -- (.14)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.41) (.44) (.45) (.44) (.60)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 8.15 $ 8.25 $ 8.06 $ 7.91 $ 7.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 3.70%+++ 8.05% 7.72% 5.51% 8.60%
============ ============ ============ ============ ============
Ratios to Average Expenses .43%* .42% .44% .43% .43%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 5.05%* 5.29% 5.58% 5.55% 5.78%
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 1,335,671 $ 1,377,025 $ 1,441,785 $ 1,572,835 $ 1,706,064
============ ============ ============ ============ ============
Portfolio turnover 35.71% 102.89% 74.40% 78.49% 35.61%
============ ============ ============ ============ ============
<CAPTION>
Insured Portfolio
Class B
The following per share data and ratios
have been derived from information provided
in the financial statements. For the Six
Months Ended For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: Dec. 31, 1998 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 8.24 $ 8.05 $ 7.91 $ 7.92 $ 7.87
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .18 .37 .39 .38 .40
Realized and unrealized gain
(loss) on investments--net .10 .20 .14 (.01) .19
------------ ------------ ------------ ------------ ------------
Total from investment
operations .28 .57 .53 .37 .59
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.18) (.37) (.39) (.38) (.40)
Realized gain on invest-
ments--net (.19) (.01) -- -- (.14)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.37) (.38) (.39) (.38) (.54)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 8.15 $ 8.24 $ 8.05 $ 7.91 $ 7.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 3.42%+++ 7.24% 6.78% 4.71% 7.91%
============ ============ ============ ============ ============
Ratios to Average Expenses 1.19%* 1.18% 1.19% 1.19% 1.19%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 4.29%* 4.53% 4.82% 4.80% 5.03%
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 487,367 $ 498,624 $ 560,105 $ 723,090 $ 782,748
============ ============ ============ ============ ============
Portfolio turnover 35.71% 102.89% 74.40% 78.49% 35.61%
============ ============ ============ ============ ============
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
Insured Portfolio
Class C
The following per share data and ratios
have been derived from information provided in
the financial statements. For the Six For the Period
Months Ended For the Year Ended June 30, Oct. 21, 1994++ to
Increase (Decrease) in Net Asset Value: Dec. 31, 1998 1998 1997 1996 June 30, 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 8.24 $ 8.06 $ 7.91 $ 7.92 $ 7.68
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .18 .37 .38 .38 .27
Realized and unrealized gain
(loss) on investments--net .10 .19 .15 (.01) .38
------------ ------------ ------------ ------------ ------------
Total from investment
operations .28 .56 .53 .37 .65
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.18) (.37) (.38) (.38) (.27)
Realized gain on
investments--net (.19) (.01) -- -- (.14)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.37) (.38) (.38) (.38) (.41)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 8.15 $ 8.24 $ 8.06 $ 7.91 $ 7.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 3.40%+++ 7.05% 6.86% 4.65% 8.83%+++
============ ============ ============ ============ ============
Ratios to Average Expenses 1.24%* 1.23% 1.25% 1.24% 1.23%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 4.24%* 4.48% 4.77% 4.75% 4.93%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 17,687 $ 14,623 $ 11,922 $ 18,936 $ 7,756
============ ============ ============ ============ ============
Portfolio turnover 35.71% 102.89% 74.40% 78.49% 35.61%
============ ============ ============ ============ ============
<CAPTION>
Insured Portfolio
The following per share data and ratios
have been derived from information provided in Class D
the financial statements. For the Six For the Period
Months Ended For the Year Ended June 30, Oct. 21, 1994++ to
Increase (Decrease) in Net Asset Value: Dec. 31, 1998 1998 1997 1996 June 30, 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 8.24 $ 8.06 $ 7.91 $ 7.92 $ 7.68
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .20 .41 .43 .42 .29
Realized and unrealized gain
(loss) on investments--net .10 .19 .15 (.01) .38
------------ ------------ ------------ ------------ ------------
Total from investment
operations .30 .60 .58 .41 .67
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.20) (.41) (.43) (.42) (.29)
Realized gain on investments
--net (.19) (.01) -- -- (.14)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.39) (.42) (.43) (.42) (.43)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 8.15 $ 8.24 $ 8.06 $ 7.91 $ 7.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 3.69%+++ 7.65% 7.46% 5.25% 9.24%+++
============ ============ ============ ============ ============
Ratios to Average Expenses .68%* .67% .69% .68% .68%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 4.80%* 5.03% 5.33% 5.31% 5.50%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 62,426 $ 48,706 $ 38,422 $ 51,772 $ 26,015
============ ============ ============ ============ ============
Portfolio turnover 35.71% 102.89% 74.40% 78.49% 35.61%
============ ============ ============ ============ ============
<CAPTION>
National Portfolio
Class A
The following per share data and ratios
have been derived from information provided in For the Six
the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 10.64 $ 10.38 $ 10.11 $ 10.02 $ 10.08
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .29 .59 .60 .60 .60
Realized and unrealized gain
on investments--net --++++ .26 .27 .09 .15
------------ ------------ ------------ ------------ ------------
Total from investment
operations .29 .85 .87 .69 .75
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.29) (.59) (.60) (.60) (.60)
Realized gain on invest-
ments--net --++++ -- -- -- (.19)
In excess of realized gain
on investments--net -- -- -- -- (.02)
------------ ------------ ------------ ------------ ------------
Total dividends and
distributions (.29) (.59) (.60) (.60) (.81)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 10.64 $ 10.64 $ 10.38 $ 10.11 $ 10.02
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 2.78%+++ 8.36% 8.84% 6.98% 7.89%
============ ============ ============ ============ ============
Ratios to Average Expenses .55%* .55% .55% .56% .56%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 5.28%* 5.58% 5.86% 5.89% 6.01%
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 944,516 $ 964,940 $ 983,650 $ 983,550 $ 1,059,440
============ ============ ============ ============ ============
Portfolio turnover 51.87% 142.02% 99.52% 95.09% 103.65%
============ ============ ============ ============ ============
<CAPTION>
National Portfolio
Class B
The following per share data and ratios
have been derived from information provided in For the Six
the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 10.63 $ 10.37 $ 10.11 $ 10.02 $ 10.07
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .25 .51 .52 .52 .52
Realized and unrealized gain
on investments--net .01 .26 .26 .09 .16
------------ ------------ ------------ ------------ ------------
Total from investment
operations .26 .77 .78 .61 .68
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.25) (.51) (.52) (.52) (.52)
Realized gain on invest-
ments--net --++++ -- -- -- (.19)
In excess of realized gain
on investments--net -- -- -- -- (.02)
------------ ------------ ------------ ------------ ------------
Total dividends and distribu-
tions (.25) (.51) (.52) (.52) (.73)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 10.64 $ 10.63 $ 10.37 $ 10.11 $ 10.02
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 2.48%+++ 7.55% 7.92% 6.17% 7.28%
============ ============ ============ ============ ============
Ratios to Average Expenses 1.31%* 1.31% 1.31% 1.32% 1.32%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 4.52%* 4.82% 5.10% 5.13% 5.25%
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 416,336 $ 406,798 $ 415,103 $ 399,341 $ 419,933
============ ============ ============ ============ ============
Portfolio turnover 51.87% 142.02% 99.52% 95.09% 103.65%
============ ============ ============ ============ ============
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
<CAPTION>
National Portfolio
Class C
The following per share data and ratios
have been derived from information provided For the Six For the Period
in the financial statements. Months Ended Oct. 21, 1994++
December 31, For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of
Operating period $ 10.64 $ 10.38 $ 10.11 $ 10.03 $ 9.85
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .25 .50 .52 .52 .36
Realized and unrealized gain
on investments--net .01 .26 .27 .08 .39
------------ ------------ ------------ ------------ ------------
Total from investment
operations .26 .76 .79 .60 .75
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.25) (.50) (.52) (.52) (.36)
Realized gain on invest-
ments--net --++++ -- -- -- (.19)
In excess of realized gain
on investments--net -- -- -- -- (.02)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.25) (.50) (.52) (.52) (.57)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 10.65 $ 10.64 $ 10.38 $ 10.11 $ 10.03
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 2.45%+++ 7.49% 7.97% 6.01% 7.97%+++
============ ============ ============ ============ ============
Ratios to Average Expenses 1.36%* 1.36% 1.36% 1.37% 1.37%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 4.47%* 4.76% 5.04% 5.08% 5.21%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 48,804 $ 41,087 $ 28,096 $ 13,291 $ 5,195
============ ============ ============ ============ ============
Portfolio turnover 51.87% 142.02% 99.52% 95.09% 103.65%
============ ============ ============ ============ ============
<CAPTION>
National Portfolio
The following per share data and ratios have Class D
been derived from information provided For the Six For the Period
in the financial statements. Months Ended Oct. 21, 1994++
December 31, For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 10.64 $ 10.39 $ 10.12 $ 10.03 $ 9.85
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .28 .56 .58 .57 .40
Realized and unrealized gain
on investments--net .01 .25 .27 .09 .39
------------ ------------ ------------ ------------ ------------
Total from investment
operations .29 .81 .85 .66 .79
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.28) (.56) (.58) (.57) (.40)
Realized gain on invest-
ments--net --++++ -- -- -- (.19)
In excess of realized gain
on investments--net -- -- -- -- (.02)
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.28) (.56) (.58) (.57) (.61)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 10.65 $ 10.64 $ 10.39 $ 10.12 $ 10.03
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 2.74%+++ 7.99% 8.57% 6.71% 8.37%+++
============ ============ ============ ============ ============
Ratios to Average Expenses .80%* .80% .80% .81% .81%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 5.03%* 5.32% 5.60% 5.64% 5.78%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 88,440 $ 68,162 $ 51,038 $ 43,884 $ 19,656
============ ============ ============ ============ ============
Portfolio turnover 51.87% 142.02% 99.52% 95.09% 103.65%
============ ============ ============ ============ ============
<CAPTION>
Limited Maturity Portfolio
Class A
The following per share data and ratios have
been derived from information provided in For the Six
the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 9.96 $ 9.93 $ 9.91 $ 9.92 $ 9.87
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .19 .39 .39 .38 .38
Realized and unrealized gain
(loss) on investments--net .07 .03 .04 (.01) .05
------------ ------------ ------------ ------------ ------------
Total from investment
operations .26 .42 .43 .37 .43
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.19) (.39) (.39) (.38) (.38)
Realized gain on invest-
ments--net (.01) -- (.02) -- --
------------ ------------ ------------ ------------ ------------
Total dividends and
distributions (.20) (.39) (.41) (.38) (.38)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 10.02 $ 9.96 $ 9.93 $ 9.91 $ 9.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 2.64%+++ 4.26% 4.40% 3.75% 4.53%
============ ============ ============ ============ ============
Ratios to Average Expenses .43%* .43% .39% .44% .41%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 3.78%* 3.88% 3.93% 3.83% 3.86%
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 281,312 $ 295,641 $ 343,641 $ 417,097 $ 536,474
============ ============ ============ ============ ============
Portfolio turnover 12.16% 72.69% 61.90% 88.32% 37.33%
============ ============ ============ ============ ============
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Limited Maturity Portfolio
The following per share data and ratios Class B
have been derived from information provided For the Six
in the financial statements. Months Ended
December 31, For the Year Ended June 30,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 9.97 $ 9.94 $ 9.91 $ 9.92 $ 9.87
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .18 .35 .36 .35 .35
Realized and unrealized gain
(loss) on investments--net .06 .03 .05 (.01) .05
------------ ------------ ------------ ------------ ------------
Total from investment
operations .24 .38 .41 .34 .40
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.18) (.35) (.36) (.35) (.35)
Realized gain on invest-
ments--net (.01) -- (.02) -- --
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.19) (.35) (.38) (.35) (.35)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 10.02 $ 9.97 $ 9.94 $ 9.91 $ 9.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 2.35%+++ 3.89% 4.13% 3.37% 4.14%
============ ============ ============ ============ ============
Ratios to Average Expenses .79%* .78% .75% .80% .78%
Net Assets: ============ ============ ============ ============ ============
Investment income--net 3.42%* 3.43% 3.58% 3.46% 3.50%
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 46,823 $ 44,714 $ 54,275 $ 71,075 $ 129,581
============ ============ ============ ============ ============
Portfolio turnover 12.16% 72.69% 61.90% 88.32% 37.33%
============ ============ ============ ============ ============
<CAPTION>
Limited Maturity Portfolio
Class C
The following per share data and ratios have
been derived from information provided in For the Six For the Period
the financial statements. Months Ended Oct. 21, 1994++
December 31, For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 9.94 $ 9.91 $ 9.88 $ 9.92 $ 9.83
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .17 .35 .35 .34 .25
Realized and unrealized gain
(loss) on investments--net .05 .03 .05 (.04) .09
------------ ------------ ------------ ------------ ------------
Total from investment
operations .22 .38 .40 .30 .34
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.17) (.35) (.35) (.34) (.25)
Realized gain on
investments--net (.01) -- (.02) -- --
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.18) (.35) (.37) (.34) (.25)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 9.98 $ 9.94 $ 9.91 $ 9.88 $ 9.92
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 2.25%+++ 3.88% 4.11% 2.97% 3.52%+++
============ ============ ============ ============ ============
Ratios to Average Expenses .80%* .79% .75% .80% .70%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 3.39%* 4.27% 3.57% 3.41% 3.61%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 374 $ 86 $ 108 $ 94 $ 3,965
============ ============ ============ ============ ============
Portfolio turnover 12.16% 72.69% 61.90% 88.32% 37.33%
============ ============ ============ ============ ============
<CAPTION>
Limited Maturity Portfolio
Class D
The following per share data and ratios
have been derived from information provided For the Six For the Period
in the financial statements. Months Ended Oct. 21, 1994++
December 31, For the Year Ended June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning
Operating of period $ 9.97 $ 9.94 $ 9.91 $ 9.93 $ 9.83
Performance: ------------ ------------ ------------ ------------ ------------
Investment income--net .19 .38 .38 .37 .26
Realized and unrealized gain
(loss) on investments--net .06 .03 .05 (.02) .10
------------ ------------ ------------ ------------ ------------
Total from investment
operations .25 .41 .43 .35 .36
------------ ------------ ------------ ------------ ------------
Less dividends and distri-
butions:
Investment income--net (.19) (.38) (.38) (.37) (.26)
Realized gain on invest-
ments--net (.01) -- (.02) -- --
------------ ------------ ------------ ------------ ------------
Total dividends and distri-
butions (.20) (.38) (.40) (.37) (.26)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period $ 10.02 $ 9.97 $ 9.94 $ 9.91 $ 9.93
============ ============ ============ ============ ============
Total Investment Based on net asset value
Return:** per share 2.49%+++ 4.16% 4.40% 3.55% 3.73%+++
============ ============ ============ ============ ============
Ratios to Average Expenses .53%* .54% .48% .54% .53%*
Net Assets: ============ ============ ============ ============ ============
Investment income--net 3.68%* 3.89% 3.84% 3.71% 3.78%*
============ ============ ============ ============ ============
Supplemental Net assets, end of period
Data: (in thousands) $ 79,322 $ 68,562 $ 20,383 $ 15,886 $ 11,258
============ ============ ============ ============ ============
Portfolio turnover 12.16% 72.69% 61.90% 88.32% 37.33%
============ ============ ============ ============ ============
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Commencement of operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
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.
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 "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 Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the
Distributor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing shareholder
and distribution-related services to Class B and Class C
shareholders.
For the six months ended December 31, 1998, 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 $ 8,155 $ 4,635 $ 289
MLPF&S 95,486 52,529 2,760
Class D Shares:
MLFD 6,296 5,820 1,200
MLPF&S 125,152 255,378 12,255
For the six months ended December 31, 1998, MLPF&S received
contingent deferred sales charges of $452,215 relating to
transactions in Class B Shares, amounting to $159,367, $23,262 and
$269,586 in the Insured, National and Limited Maturity Portfolios,
respectively, and $13,674 relating to transactions in Class C
Shares, amounting to $7,432, $5,575 and $667 in the Insured,
National and Limited Maturity Portfolios, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of
$128,354 relating to transactions subject to front-end sales charge
waivers in Class D Shares, amounting to $49,520, $37,014 and $41,820
in the Insured, National and Limited Maturity Portfolios,
respectively.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, PFD, FDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended December 31, 1998 were as follows:
Purchases Sales
Insured Portfolio $671,475,530 $721,322,635
National Portfolio 768,966,238 747,592,297
Limited Maturity Portfolio 67,377,507 44,627,739
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
NOTES TO FINANCIAL STATEMENTS (continued)
Net realized gains (losses) for the six months ended December 31,
1998 and net unrealized gains as of December 31, 1998 were as
follows:
Realized Unrealized
Insured Portfolio Gains Gains
Long-term investments $ 21,394,978 $ 117,925,708
------------- --------------
Total $ 21,394,978 $ 117,925,708
============= ==============
Realized Unrealized
National Portfolio Gains (Losses) Gains
Long-term investments $ 18,296,653 $ 70,252,439
Short-term investments (175) --
Financial futures contracts 1,192,719 --
------------- --------------
Total $ 19,489,197 $ 70,252,439
============= ==============
Realized Unrealized
Limited Maturity Portfolio Gains Gains
Long-term investments $ 209,019 $ 4,439,511
Short-term investments 170,748 --
------------- --------------
Total $ 379,767 $ 4,439,511
============= ==============
As of December 31, 1998 net unrealized appreciation for Federal
income tax purposes were as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Appreciation
Insured Portfolio $119,829,482 $(1,903,774) $117,925,708
National Portfolio 78,934,874 (8,682,435) 70,252,439
Limited Maturity
Portfolio 4,439,511 -- 4,439,511
The aggregate cost of investments at December 31, 1998 for Federal
income tax purposes was $1,813,030,503 for the Insured Portfolio,
$1,399,389,441 for the National Portfolio, and $395,807,086 for the
Limited Maturity Portfolio.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions for the six months ended December 31, 1998 and the year
ended June 30, 1998 were $(14,074,757) and $(160,344,787),
respectively, for the Insured Portfolio; $16,120,853 and
$(33,702,285), respectively, for the National Portfolio, and
$(3,232,673) and $(10,589,244), respectively, for the Limited
Maturity Portfolio.
Transactions in capital shares for each class were as follows:
Insured Portfolio
Class A Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 1,134,887 $ 9,442,937
Shares issued to shareholders
in reinvestment of dividends
and distributions 3,516,696 28,898,237
------------- --------------
Total issued 4,651,583 38,341,174
Shares redeemed (7,772,757) (64,605,776)
------------- --------------
Net decrease (3,121,174) $ (26,264,602)
============= ==============
Insured Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 2,602,916 $ 21,473,195
Shares issued to shareholders
in reinvestment of dividends
and distributions 3,893,110 32,056,227
------------- --------------
Total issued 6,496,026 53,529,422
Shares redeemed (18,381,072) (151,209,859)
------------- --------------
Net decrease (11,885,046) $ (97,680,437)
============= ==============
Insured Portfolio
Class B Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 3,503,294 $ 29,160,094
Shares issued to shareholders
in reinvestment of dividends
and distributions 1,388,487 11,400,442
------------- --------------
Total issued 4,891,781 40,560,536
Automatic conversion of shares (703,250) (5,856,940)
Shares redeemed (4,863,238) (40,413,002)
------------- --------------
Net decrease (674,707) $ (5,709,406)
============= ==============
Insured Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 4,428,347 $ 36,455,981
Shares issued to shareholders
in reinvestment of dividends
and distributions 1,474,207 12,130,689
------------- --------------
Total issued 5,902,554 48,586,670
Automatic conversion of shares (286,423) (2,350,040)
Shares redeemed (14,644,280) (120,322,635)
------------- --------------
Net decrease (9,028,149) $ (74,086,005)
============= ==============
Insured Portfolio
Class C Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 674,341 $ 5,633,590
Shares issued to shareholders
in reinvestment of dividends
and distributions 56,509 463,670
------------- --------------
Total issued 730,850 6,097,260
Shares redeemed (333,919) (2,763,174)
------------- --------------
Net increase 396,931 $ 3,334,086
============= ==============
Insured Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 600,875 $ 4,950,738
Shares issued to shareholders
in reinvestment of dividends
and distributions 42,007 345,869
------------- --------------
Total issued 642,882 5,296,607
Shares redeemed (348,588) (2,863,946)
------------- --------------
Net increase 294,294 $ 2,432,661
============= ==============
Insured Portfolio
Class D Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 3,391,249 $ 28,193,568
Automatic conversion of shares 702,887 5,856,940
Shares issued to shareholders
in reinvestment of dividends
and distributions 188,832 1,549,575
------------- --------------
Total issued 4,282,968 35,600,083
Shares redeemed (2,530,972) (21,034,918)
------------- --------------
Net increase 1,751,996 $ 14,565,165
============= ==============
Insured Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 23,577,522 $ 193,830,379
Automatic conversion of shares 286,423 2,350,040
Shares issued to shareholders
in reinvestment of dividends
and distributions 140,376 1,155,893
------------- --------------
Total issued 24,004,321 197,336,312
Shares redeemed (22,861,619) (188,347,318)
------------- --------------
Net increase 1,142,702 $ 8,988,994
============= ==============
National Portfolio
Class A Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 2,130,846 $ 22,869,072
Shares issued to shareholders
in reinvestment of dividends
and distributions 1,263,325 13,495,458
------------- --------------
Total issued 3,394,171 36,364,530
Shares redeemed (5,385,788) (57,642,052)
------------- --------------
Net decrease (1,991,617) $ (21,277,522)
============= ==============
National Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 4,266,519 $ 45,187,344
Shares issued to shareholders
in reinvestment of dividends 2,527,972 26,788,694
------------- --------------
Total issued 6,794,491 71,976,038
Shares redeemed (10,854,978) (114,962,452)
------------- --------------
Net decrease (4,060,487) $ (42,986,414)
============= ==============
National Portfolio
Class B Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 4,375,357 $ 46,871,141
Shares issued to shareholders
in reinvestment of dividends
and distributions 461,270 4,926,757
------------- --------------
Total issued 4,836,627 51,797,898
Automatic conversion of shares (380,941) (4,074,870)
Shares redeemed (3,590,060) (38,373,717)
------------- --------------
Net increase 865,626 $ 9,349,311
============= ==============
National Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 6,485,604 $ 68,758,999
Shares issued to shareholders
in reinvestment of dividends 914,162 9,684,295
------------- --------------
Total issued 7,399,766 78,443,294
Automatic conversion of shares (244,397) (2,584,813)
Shares redeemed (8,908,400) (94,243,672)
------------- --------------
Net decrease (1,753,031) $ (18,385,191)
============= ==============
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
National Portfolio
Class C Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 1,131,700 $ 12,115,370
Shares issued to shareholders
in reinvestment of dividends
and distributions 59,068 631,288
------------- --------------
Total issued 1,190,768 12,746,658
Shares redeemed (469,066) (5,014,373)
------------- --------------
Net increase 721,702 $ 7,732,285
============= ==============
National Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 2,076,332 $ 21,976,496
Shares issued to shareholders
in reinvestment of dividends 81,934 868,569
------------- --------------
Total issued 2,158,266 22,845,065
Shares redeemed (1,002,742) (10,604,512)
------------- --------------
Net increase 1,155,524 $ 12,240,553
============= ==============
National Portfolio
Class D Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 3,770,054 $ 40,332,199
Automatic conversion of shares 99,173 4,074,870
Shares issued to shareholders
in reinvestment of dividends
and distributions 380,594 1,060,033
------------- --------------
Total issued 4,249,821 45,467,102
Shares redeemed (2,350,513) (25,150,323)
------------- --------------
Net increase 1,899,308 $ 20,316,779
============= ==============
National Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 24,013,327 $ 254,654,607
Automatic conversion of shares 244,216 2,584,813
Shares issued to shareholders
in reinvestment of dividends 157,029 1,665,789
------------- --------------
Total issued 24,414,572 258,905,209
Shares redeemed (22,922,793) (243,476,442)
------------- --------------
Net increase 1,491,779 $ 15,428,767
============= ==============
Limited Maturity Portfolio
Class A Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 815,484 $ 8,151,777
Shares issued to shareholders
in reinvestment of dividends
and distributions 338,835 3,388,147
------------- --------------
Total issued 1,154,319 11,539,924
Shares redeemed (2,735,621) (27,343,241)
------------- --------------
Net decrease (1,581,302) $ (15,803,317)
============= ==============
Limited Maturity Portfolio
Class A Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 1,637,467 $ 16,313,195
Shares issued to shareholders
in reinvestment of dividends 689,267 6,863,420
Shares issued resulting from
reorganization 610,766 6,117,207
------------- --------------
Total issued 2,937,500 29,293,822
Shares redeemed (7,862,688) (78,301,847)
------------- --------------
Net decrease (4,925,188) $ (49,008,025)
============= ==============
Limited Maturity Portfolio
Class B Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 917,728 $ 9,413,848
Shares issued to shareholders
in reinvestment of dividends
and distributions 79,744 564,193
------------- --------------
Total issued 997,472 9,978,041
Automatic conversion of shares (487) (4,879)
Shares redeemed (809,207) (8,091,246)
------------- --------------
Net increase 187,778 $ 1,881,916
============= ==============
Limited Maturity Portfolio
Class B Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 2,835,507 $ 28,244,737
Shares issued to shareholders
in reinvestment of dividends 110,626 1,101,933
------------- --------------
Total issued 2,946,133 29,346,670
Automatic conversion of shares (17,299) (172,475)
Shares redeemed (3,905,076) (38,899,023)
------------- --------------
Net decrease (976,242) $ (9,724,828)
============= ==============
Limited Maturity Portfolio
Class C Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 45,045 $ 449,624
Shares issued to shareholders
in reinvestment of dividends
and distributions 293 2,825
------------- --------------
Total issued 45,338 452,449
Shares redeemed (16,536) (165,108)
------------- --------------
Net increase 28,802 $ 287,341
============= ==============
Limited Maturity Portfolio
Class C Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 212,120 $ 2,106,982
Shares issued to shareholders
in reinvestment of dividends 265 2,632
------------- --------------
Total issued 212,385 2,109,614
Shares redeemed (214,575) (2,131,347)
------------- --------------
Net decrease (2,190) $ (21,733)
============ ==============
Limited Maturity Portfolio
Class D Shares for the Six Months Dollar
Ended December 31, 1998 Shares Amount
Shares sold 4,333,458 $ 43,339,448
Automatic conversion of shares 487 4,879
Shares issued to shareholders
in reinvestment of dividends
and distributions 68,908 689,382
------------- --------------
Total issued 4,402,853 44,033,709
Shares redeemed (3,364,334) (33,632,322)
------------- --------------
Net increase 1,038,519 $ 10,401,387
============= ==============
Limited Maturity Portfolio
Class D Shares for the Year Dollar
Ended June 30, 1998 Shares Amount
Shares sold 6,883,210 $ 68,670,633
Automatic conversion of shares 17,300 172,475
Shares issued to shareholders
in reinvestment of dividends 70,267 700,217
Shares issued resulting from
reorganization 2,546,189 25,330,576
------------- --------------
Total issued 9,516,966 94,873,901
Shares redeemed (4,689,176) (46,708,559)
------------- --------------
Net increase 4,827,790 $ 48,165,342
============= ==============
5. Capital Loss Carryforward:
At June 30, 1998, the Fund had a net capital loss carryforward of
approximately $10,677,000 in the National Portfolio, all of which
expires in 2004 and approximately $2,327,000 in the Limited Maturity
Portfolio, of which $22,000 expires in 1999, $25,000 expires in
2002, and $2,280,000 expires in 2003. These amounts will be
available to offset like amounts of any future taxable gains.
Expired capital loss carryforward in the amount of $2,413,650 has
been reclassified to paid-in capital in excess of par.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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