-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Phx5wREr/yFZVJK0+NHYEtrAqJ0USEYOT4FjbMLopYbz605/3+xjawy82+wEiRUI sI/S+QwKPIVALnU/uwSn2A== 0000900092-99-000030.txt : 19990226 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 N-30D 1 SEMI-ANNUAL REPORT 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) Recent Performance Results*
Ten Years/ Since Standardized 12 Month 3 Month Inception 30-Day Yield Total Return Total Return Total Return As of 12/31/98 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 *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.
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 SCHEDULE OF INVESTMENTS (in Thousands)
Municipal Bonds Insured Portfolio S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) 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
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Municipal Bonds Insured Portfolio S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) 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
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Municipal Bonds Insured Portfolio S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) 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
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Municipal Bonds Insured Portfolio S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) 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 ========== (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.
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 SCHEDULE OF INVESTMENTS (in Thousands)
Municipal Bonds National Portfolio S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) 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
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 SCHEDULE OF INVESTMENTS (continued) (in Thousands)
Municipal Bonds National Portfolio S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) 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
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Municipal Bonds National Portfolio S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) 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 ========== (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.
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 SCHEDULE OF INVESTMENTS (in Thousands)
Municipal Bonds Limited Maturity Portfolio S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) 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
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Municipal Bonds Limited Maturity Portfolio S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) 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 ========== (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.
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 STATEMENTS OF ASSETS AND LIABILITIES
Limited Insured National Maturity As of December 31, 1998 Portfolio Portfolio Portfolio 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 ============== ============== ============== *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.
STATEMENTS OF OPERATIONS
Limited Insured National Maturity For the Six Months Ended December 31, 1998 Portfolio Portfolio Portfolio 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.
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 STATEMENTS OF CHANGES IN NET ASSETS
Insured Portfolio National Portfolio Limited Maturity Portfolio For the Six For the For the Six For the For the Six For the 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 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.
FINANCIAL HIGHLIGHTS
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 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% ============ ============ ============ ============ ============ 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 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% ============ ============ ============ ============ ============ *Annualized. **Total investment returns exclude the effects of sales loads. +++Aggregate total investment return. See Notes to Financial Statements.
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 FINANCIAL HIGHLIGHTS (continued)
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 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% ============ ============ ============ ============ ============ 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 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% ============ ============ ============ ============ ============ 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 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% ============ ============ ============ ============ ============ 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 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% ============ ============ ============ ============ ============ *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.
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 FINANCIAL HIGHLIGHTS (continued)
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 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% ============ ============ ============ ============ ============ 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 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% ============ ============ ============ ============ ============ 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 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% ============ ============ ============ ============ ============ *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.
Merrill Lynch Municipal Bond Fund, Inc., December 31, 1998 FINANCIAL HIGHLIGHTS (concluded)
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 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% ============ ============ ============ ============ ============ 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 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% ============ ============ ============ ============ ============ 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 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% ============ ============ ============ ============ ============ *Annualized. **Total investment returns exclude the effects of sales loads. ++Commencement of operations. +++Aggregate total investment return. See Notes to Financial Statements.
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. -----END PRIVACY-ENHANCED MESSAGE-----