-----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, SFImR+MzG3MIpWuR71OFTIly+dlX3PwuYe+347Y+orqzD8buSagEqn5JlQwI1/E5 EzfVbJywPDPVkhmzEGY4bA== 0000900092-04-000030.txt : 20040301 0000900092-04-000030.hdr.sgml : 20040301 20040301161226 ACCESSION NUMBER: 0000900092-04-000030 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040301 EFFECTIVENESS DATE: 20040301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERRILL LYNCH MUNICIPAL BOND FUND INC CENTRAL INDEX KEY: 0000225635 IRS NUMBER: 132896246 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02688 FILM NUMBER: 04639484 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-CSR 1 ml7099b.txt MUNICIPAL BOND UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSRS CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-2688 Name of Fund: Merrill Lynch Municipal Bond Fund, Inc. Fund Address: P.O. Box 9011 Princeton, NJ 08543-9011 Name and address of agent for service: Terry K. Glenn, President, Merrill Lynch Municipal Bond Fund, Inc., 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton, NJ, 08543-9011 Registrant's telephone number, including area code: (609) 282-2800 Date of fiscal year end: 06/30/04 Date of reporting period: 07/01/03 - 12/31/03 Item 1 - Report to Shareholders (BULL LOGO) Merrill Lynch Investment Managers www.mlim.ml.com Merrill Lynch Municipal Bond Fund, Inc. Semi-Annual Report December 31, 2003 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. A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863); (2) on www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's website at http://www.sec.gov. Merrill Lynch Municipal Bond Fund, Inc. Box 9011 Princeton, NJ 08543-9011 A Letter From the President Dear Shareholder In my 35 years in the asset management business, 2003 was among the more memorable. The year, which opened with unrelenting economic uncertainty and a dismal continuation of a three-year equity market slump, vigorously reversed course in the months that followed. However, amid the good economic news, fixed income investments, which had become the asset class of choice during the preceding three-year equity market decline, faced new challenges. Throughout 2003, the Federal Reserve Board remained focused on averting deflation and ensuring a sustained economic recovery. This translated into an uninterrupted easing policy and the lowest interest rates in decades. The Federal Funds rate, which opened the year at 1.25%, ended it at 1%--the lowest level since 1958. Municipal bond yields rose and fell during the year in reaction to geopolitical events, equity market performance, economic activity and employment figures. By the end of December, long-term municipal revenue bond yields--which move opposite of price levels--were slightly lower than they were one year earlier, at 5.04% as measured by the Bond Buyer Revenue Bond Index. With many state deficits at record levels, municipalities issued more than $380 billion in new long-term tax-exempt bonds during 2003. The availability of bonds, together with attractive yield ratios relative to U.S. Treasury issues, made municipal bonds a popular fixed income investment alternative. Throughout the year, our portfolio managers continued to work diligently to deliver on our commitment to provide superior performance within reasonable expectations for risk and return. This included striving to outperform our peers and the market indexes. With that said, remember that the advice and guidance of a skilled financial advisor often can mean the difference between successful and unsuccessful investing. A financial professional can help you choose those investments that will best serve you as you plan for your financial future. In closing, I wish to share one final note regarding the look of our shareholder communications. Our portfolio manager commentaries have been trimmed and organized in such a way that you can get the information you need at a glance, in plain language. Today's markets can be confusing. We want to help you put it all in perspective. The report's new size also allows us certain mailing efficiencies. Any cost savings in production or postage are passed on to the Fund and, ultimately, to Fund shareholders. We thank you for trusting Merrill Lynch Investment Managers with your investment assets, and we look forward to serving you in the New Year and beyond. Sincerely, (Terry K. Glenn) Terry K. Glenn President and Director MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 We are pleased to present to you the management teams of Merrill Lynch Municipal Bond Fund, Inc. Limited Maturity Portfolio Senior Portfolio Manager Peter Hayes joined Merrill Lynch Investment Managers in 1987 and heads the Merrill Lynch Municipal Bond Fund, Inc.--Limited Maturity Portfolio team. He received a bachelor's degree from the College of the Holy Cross. In addition to Mr. Hayes, the investment team includes Thomas Steffens. Mr. Steffens received a bachelor's degree from Villanova University. The investment team also includes ten analysts who are responsible for making contributions within different sectors. Peter J. Hayes Senior Portfoilo Manager Table of Contents A Letter From the President 2 A Discussion With Your Portfolio Managers 5 Performance Data 9 Schedule of Investments--Limited Maturity Portfolio 13 Schedule of Investments--Insured Portfolio 18 Schedule of Investments--National Portfolio 23 Financial Statements 34 Financial Highlights 40 Notes to Financial Statements 52 Officers and Directors 59 MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Insured Portfolio Senior Portfolio Manager Robert DiMella joined Merrill Lynch Investment Managers in 1993 and heads the Merrill Lynch Municipal Bond Fund, Inc.--Insured Portfolio team. Mr. DiMella received a bachelor's degree from the University of Connecticut and an MBA from Rutgers University. He is a CFA R charterholder and a member of the Association for Investment Management and Research. In addition to Mr. DiMella, the investment team includes Analysts Jeff Moore and Jim Schwartz. Mr. Moore received a bachelor's degree and an MBA from the University of Arizona and is a CFA charterholder. Mr. Schwartz received a bachelor's degree from Rutgers College and an MBA from Monmouth University. He is a CFA charterholder. Robert A. DiMella Senior Portfolio Manager National Portfolio Senior Portfolio Manager Walter O'Connor joined Merrill Lynch Investment Managers in 1991 and heads the Merrill Lynch Municipal Bond Fund, Inc.--National Portfolio team. He received a bachelor's degree from the University of Notre Dame and has 16 years of investment experience. In addition to Mr. O'Connor, the investment team includes ten analysts who are responsible for making contributions within different sectors. Walter C. O'Connor Senior Portfolio Manager MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 A Discussion With Your Portfolio Managers With short-term interest rates at historically low levels, the Portfolios generally were positioned defensively during the period to protect against losses when interest rates inevitably rise. Describe the market environment relative to municipal bonds during the period. In an effort to stimulate economic growth, the Federal Reserve Board maintained its accommodative stance after reducing the Federal Funds rate to 1% in June. This represented the lowest short-term interest rates since 1958. In turn, gross domestic product growth in the third quarter of 2003 came in at an astounding 8.2%, the fastest quarterly growth in nearly 20 years and well above the 1.4% rate registered in the first quarter of 2003. The improving economic environment helped generate rising stock prices, with the Standard & Poor's 500 Index appreciating 15.14% during the past six months. The stock market's expansion put additional upward pressure on interest rates. Accordingly, yields on long-term U.S. Treasury issues--at 5.07% as of December 31, 2003--were approximately 50 basis points (.50%) higher than they were six months earlier. Yields on the two- year Treasury also rose during the period, from 1.32% at June 30, 2003 to 1.84% at December 31, 2003. Like taxable bonds, tax-exempt bond yields generally rose over the six months as well. Long-term revenue bond yields, as measured by the Bond Buyer Revenue Bond Index, rose seven basis points during the past six months. According to Municipal Market Data, 30-year bonds with a credit rating of Aaa--the highest rating possible--saw a yield increase of almost 20 basis points. Yields on two-year general obligation bonds rated AAA rose 18 basis points - 22 basis points over the six-month period. With tax-exempt money market rates at or below 1%, and low nominal municipal bond yields in general, many investors moved increasingly further out on the municipal yield curve to generate the desired level of tax-exempt income. This maturity extension helped support the strong demand for and performance of tax-exempt products in recent months. An improvement in supply/demand dynamics also contributed to the municipal bond market's favorable performance and relative outperformance of the U.S. Treasury market in the past six months. As the period progressed and bond yields rose, the pace of new municipal bond issuance declined. For 2003 as a whole, for example, municipal issuance was 6.8% greater than in 2002. However, during the second half of 2003, municipal issuance was actually 5.5% below that of the same six months in 2002. The declining trend was especially pronounced during the final quarter of 2003, which saw $95 billion worth of new issuance, a 10% decrease compared to the fourth quarter of 2002. This decline in supply has helped strengthen the municipal market's positive technical position and enhanced recent performance. New-issue supply is expected to remain manageable in early 2004 and should help support the tax-exempt market's current position as an attractive fixed income investment alternative. Limited Maturity Portfolio How did the Portfolio perform during the period in light of the existing market conditions? For the six-month period ended December 31, 2003, Limited Maturity Portfolio's Class A, Class B, Class C and Class I Shares had total returns of +.48%, +.35%, +.25% and +.53%, respectively. This compared to respective returns of +.84% and +1.45% for the Portfolio's unmanaged benchmarks, the Lehman Brothers Municipal Bond 3-Year General Obligation Bond Index and the Lehman Brothers Municipal Bond Index, for the same period. (Portfolio results shown do not reflect sales charges and would be lower if sales charges were included. Complete performance information can be found on pages 9 - 12 of this report to shareholders.) The Portfolio's comparable Lipper category of Short Municipal Debt Funds had an average return of +.64% for the six-month period ended December 31, 2003. (Funds in this Lipper category invest primarily in municipal debt issues with dollar-weighted average maturities of less than three years.) The variance in returns versus the benchmark indexes is attributed to the Portfolio's more limited investment parameters. Whereas the indexes, particularly the Lehman Municipal Bond Index, and other funds in the Lipper category hold longer, higher-yielding securities, we are limited to a four-year maximum maturity per security. In the low interest rate environment, the longer end of the yield curve offered more attractive yields. Nevertheless, relative to many of its peers, the Portfolio provided a competitive yield. Its relatively conservative positioning also helps limit performance volatility in a rising interest rate environment. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 A Discussion With Your Portfolio Managers (continued) What changes were made to the Portfolio during the period? During the first half of the period, we generally kept the Portfolio's duration shorter than that of its peers. With interest rates at historically low levels, we were keenly aware of the risks associated with owning longer-dated securities, which would lose more of their value if interest rates were to rise. In addition, we maintained a relatively high credit quality in the Portfolio, as higher-rated securities tend to outperform lower-rated issues in periods of market volatility. Finally, we focused the Portfolio's new investments on high-quality general obligation debt or prerefunded securities with durations between 2.5 years and 3 years. The new investments were made to meet subscriptions, thus keeping the Portfolio's cash position somewhat stable. The most significant change occurred late in the period, when we reduced the Portfolio's cash reserves with only a slight increase in average duration. We made this shift after observing an increase in bond yields. Given the fact that the Federal Reserve Board seemed apt to keep short-term interest rates at current low levels, we saw this as an opportunity. With a steepening of the front end of the yield curve, slightly longer bonds offered a yield advantage with only a modest amount of added risk. Short-term municipal securities also were trading at historically attractive yields relative to their taxable counterparts, which reinforced our confidence in this move. How would you characterize the Portfolio's position at the close of the period? We ended the period with a focus on maintaining a stable net asset value for our shareholders. This meant that the Portfolio continued to be conservatively positioned, based on our belief that a strengthening economy eventually will bring an end to the low interest-rate cycle. In our view, the risks of maintaining a long portfolio duration outweigh the benefits. By year end, the Portfolio's duration stood at 1.18 years. Purchases have been focused on securities rated AA or better, as these tend to hold their value better than lower-rated securities when markets are volatile. We believe the Portfolio is well positioned if bond yields rise or if the Federal Reserve Board looks to tighten monetary policy by raising short-term interest rates. Peter J. Hayes Vice President and Senior Portfolio Manager Limited Maturity Portfolio Insured Portfolio How did the Portfolio perform during the period in light of the existing market conditions? For the six-month period ended December 31, 2003, Insured Portfolio's Class A, Class B, Class C and Class I Shares had total returns of +.96%, +.70%, +.67% and +1.08%, respectively. This compared to a return of +1.45% for the Portfolio's unmanaged benchmark, the Lehman Brothers Municipal Bond Index, for the same period. (Portfolio results shown do not reflect sales charges and would be lower if sales charges were included. Complete performance information can be found on pages 9 - 12 of this report to shareholders.) Given that the Portfolio concentrates its investment specifically in insured municipal bonds, the underperformance of the broader-based Lehman Brothers Municipal Bond Index is understandable. As expected, Portfolio returns were more in keeping with the +.94% average return of the Lipper Insured Municipal Debt Funds category for the six-month period. (Funds in this Lipper category invest primarily in municipal debt issues that are insured as to timely payment.) MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Despite the Portfolio's defensive posture for most of the period, several large holdings were called at par during the final months of 2003, and this had a negative impact on the Portfolio's total return. While returns essentially tracked the Lipper category average total return for the period, the Portfolio's net yield was very attractive on a relative basis. Our strategy of maintaining the Portfolio's fully invested stance and generally defensive market posture contributed to our ability to provide a higher degree of tax- exempt income to our shareholders. What changes were made to the Portfolio during the period? We restructured the Portfolio in search of securities we believed offered the best relative value within the insured municipal market. To that end, we increased the Portfolio's exposure to California tax- exempt bonds as the state's budget problems depressed municipal bond prices there. Given the downward pressure on insured California bonds, we felt that this sector represented good value, and we expect these bonds should perform well as the state government resolves its fiscal challenges. In addition, in light of the low interest-rate environment, we sought to limit the Portfolio's sensitivity to a potential rise in interest rates by taking a more defensive market posture. We reduced our exposure to non-callable bonds and bonds with maturities greater than 30 years because of their higher duration risk. Finally, in anticipation of a flatter yield curve and higher interest rates ahead, we reduced our exposure to bonds with maturities of less than 10 years, and increased our exposure to issues in the 15-year - 25-year range. How would you characterize the Portfolio's position at the close of the period? As the period came to an end, we were shifting the Portfolio into a more defensive position in anticipation of higher interest rates in the near future. With interest rates still at historically low levels and, in our opinion, more likely to rise than fall, we believe this is a prudent strategy. Although we have reduced the Portfolio's duration to limit interest rate sensitivity, we have been able to maintain our competitive yield. Robert A. DiMella Vice President and Senior Portfolio Manager Insured Portfolio National Portfolio How did the Portfolio perform during the period in light of the existing market conditions? For the six-month period ended December 31, 2003, National Portfolio's Class A, Class B, Class C and Class I Shares had total returns of +2.38%, +2.12%, +2.09% and +2.51%, respectively. Portfolio returns exceeded the +1.45% return of the unmanaged benchmark, the Lehman Brothers Municipal Bond Index, for the same period. (Portfolio results shown do not reflect sales charges and would be lower if sales charges were included. Complete performance information can be found on pages 9 - 12 of this report to shareholders.) In addition, the Portfolio outperformed the +1.33% average return of the Lipper General Municipal Debt Funds category for the six-month period. (Funds in this Lipper category invest primarily in municipal debt issues in the top four credit-rating categories.) The Portfolio's strong absolute and relative performance during the period is largely attributed to our emphasis on current yield through an above-industry average level of couponing, which has allowed us to "out accrue" the competition. Overall, the Portfolio's performance was attained more by enhancing the income generated from its holdings rather than through an aggressive duration stance aimed at producing capital appreciation. It is our contention that enhancing current return and avoiding large scale credit problems should produce competitive performance results until lower bond prices arrive. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 A Discussion With Your Portfolio Managers (concluded) What changes were made to the Portfolio during the period? The Portfolio experienced a number of bond calls during the year and the past six months. This was one of our biggest challenges during the period--responding to the redemption of older-dated, higher- yielding debt in a historically low interest rate environment. Generally, we sought replacement securities in some of the higher- yield areas of the municipal marketplace. We were attracted to high yield bonds because they tend to be less sensitive to increases in interest rates and more correlated to an improving economy--the opposite of most fixed income investments. This enabled us to limit the Portfolio's duration yet still supplement the coupon income lost to bond calls. Later in the period, we sold some of the higher-yielding securities as credit spreads tightened significantly. We also took profits on some of our high-grade credits, which performed particularly well. Another change during the period was the deleveraging of a portion of the Portfolio's position in inverse floating rate securities. This involved reconstituting the underlying security from which the derivative was created. In keeping with our generally conservative investment posture, the goal here was to further temper price volatility in the event of higher future interest rates. During the second half of the period, the Portfolio's position in cash equivalent reserves increased to approximately 5% of total assets. This resulted from a combination of large recent subscriptions, some sales of longer-term assets and a general lack of attractively valued investment opportunities. Although a larger cash allocation than normal, this is still considered a fully invested position, and we believe the Portfolio's asset mix will continue to offer a competitive level of current income. How would you characterize the Portfolio's position at the close of the period? We consider the Portfolio to be well prepared for the next significant move in interest rates. We expect that this move will be upward, given that interest rates remain very low by historic standards. Of course, we have anticipated this movement for some time--so long, in fact, that our viewpoint has now become the accepted wisdom. When interest rates do eventually rise, we believe the Portfolio's defensive approach will benefit relative performance. Our confidence comes from the Portfolio's ability to perform well under changeable conditions earlier in the period. In July, we witnessed a significant rise in interest rates, whereas September represented a strong rally, gradually grinding the 10-year Treasury note back down to 4%. Despite the volatility, the Portfolio performed well. This gives us comfort that our defensive positioning readies the Portfolio to perform when interest rates eventually rise further in the future. Walter C. O'Connor Vice President and Senior Portfolio Manager National Portfolio January 28, 2004 MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Performance Data About Fund Performance Effective April 14, 2003, Class A Shares were redesignated Class I Shares and Class D Shares were redesignated Class A Shares. Investors are able to purchase shares of the Fund through multiple pricing alternatives: * Class A 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). * Effective December 1, 2002, Class B Shares are subject to a maximum contingent deferred sales charge of 4%, declining to 0% after six years for Insured and National Portfolios. Limited Maturity Portfolio is subject to a maximum contingent deferred sales charge of 1% if redeemed within three years of purchase. All Class B Shares purchased prior to December 1, 2002 will maintain the four- year schedule and one-year schedule, respectively. 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 A Shares after approximately ten years. (There is no initial sales charge for automatic share conversions.) * Class C Shares are subject to a distribution fee of 0.55% and an account maintenance fee of 0.25% for Insured and National Portfolios. Limited Maturity Portfolio is subject to a distribution fee of 0.20% and an account maintenance fee of 0.15%. In addition, Class C Shares for all three Portfolios are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase. * Class I 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. None of the past results shown should be considered a representation of future performance. Current performance may be lower or higher than the performance data quoted. Refer to www.mlim.ml.com to obtain more current performance information. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Figures shown in each of the following 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. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Performance Data (continued) Recent Performance Results*
10-Year/ 6-Month 12-Month Since Inception Standardized As of December 31, 2003 Total Return Total Return Total Return 30-day Yield Limited Maturity Portfolio Class A Shares** +0.48% +1.42% +41.65% 1.07% Limited Maturity Portfolio Class B Shares** +0.35 +1.16 +39.51 0.82 Limited Maturity Portfolio Class C Shares** +0.25 +1.06 +37.42 0.83 Limited Maturity Portfolio Class I Shares** +0.53 +1.52 +44.52 1.16 Insured Portfolio Class A Shares** +0.96 +4.42 +74.99 3.69 Insured Portfolio Class B Shares** +0.70 +3.89 +55.35 3.33 Insured Portfolio Class C Shares** +0.67 +3.84 +66.25 3.28 Insured Portfolio Class I Shares** +1.08 +4.67 +67.32 3.93 National Portfolio Class A Shares** +2.38 +6.10 +78.59 3.90 National Portfolio Class B Shares** +2.12 +5.56 +60.30 3.56 National Portfolio Class C Shares** +2.09 +5.51 +69.69 3.50 National Portfolio Class I Shares** +2.51 +6.34 +72.86 4.14 Lehman Brothers 3-Year General Obligation Bond Index++ +0.84 +2.73 +60.44/+59.54 -- Lehman Brothers Municipal Bond Index++++ +1.45 +5.31 +79.51/+89.96 -- *Investment results shown do not reflect sales charges; results shown would be lower if a sales charge were 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 10-year/since inception periods are 10 years for Class B & Class I Shares and from 10/21/94 for Class A & Class C Shares. ++This unmanaged Index consists of state and local government obligation bonds that mature in 3 - 4 years, rated Baa or better. Ten-year/since inception total returns are for 10 years and from 10/31/94. ++++This unmanaged Index consists of revenue bonds, prerefunded bonds, general obligation bonds and insured bonds, all of which mature within 30 years. Ten-year/since inception total returns are for 10 years and from 10/31/94.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Performance Data (continued) Average Annual Total Return--Limited Maturity Portfolio % Return Without % Return With Sales Charge Sales Charge** Class A Shares* One Year Ended 12/31/03 +1.42% +0.41% Five Years Ended 12/31/03 +3.42 +3.22 Inception (10/21/94) through 12/31/03 +3.86 +3.75 *Maximum sales charge is 1%. **Assuming maximum sales charge. % Return % Return Without CDSC With CDSC** Class B Shares* One Year Ended 12/31/03 +1.16% +0.17% Five Years Ended 12/31/03 +3.14 +3.14 Ten Years Ended 12/31/03 +3.39 +3.39 *Maximum contingent deferred sales charge is 1% and is reduced to 0% after three years. **Assuming payment of applicable contingent deferred sales charge. % Return % Return Without CDSC With CDSC** Class C Shares* One Year Ended 12/31/03 +1.06% +0.07% Five Years Ended 12/31/03 +3.12 +3.12 Inception (10/21/94) through 12/31/03 +3.52 +3.52 *Maximum contingent deferred sales charge is 1% and is reduced to 0% after one year. **Assuming payment of applicable contingent deferred sales charge. % Return Without % Return With Sales Charge Sales Charge** Class I Shares* One Year Ended 12/31/03 +1.52% +0.50% Five Years Ended 12/31/03 +3.51 +3.30 Ten Years Ended 12/31/03 +3.75 +3.65 *Maximum sales charge is 1%. **Assuming maximum sales charge. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Performance Data (concluded) Average Annual Total Return--Insured Portfolio % Return Without % Return With Sales Charge Sales Charge** Class A Shares* One Year Ended 12/31/03 +4.42% +0.24% Five Years Ended 12/31/03 +4.88 +4.03 Inception (10/21/94) through 12/31/03 +6.27 +5.80 *Maximum sales charge is 4%. **Assuming maximum sales charge. % Return % Return Without CDSC With CDSC** Class B Shares* One Year Ended 12/31/03 +3.89% -0.09% Five Years Ended 12/31/03 +4.35 +4.02 Ten Years Ended 12/31/03 +4.50 +4.50 *Maximum contingent deferred sales charge is 4% and is reduced to 0% after six years. **Assuming payment of applicable contingent deferred sales charge. % Return % Return Without CDSC With CDSC** Class C Shares* One Year Ended 12/31/03 +3.84% +2.85% Five Years Ended 12/31/03 +4.30 +4.30 Inception (10/21/94) through 12/31/03 +5.68 +5.68 *Maximum contingent deferred sales charge is 1% and is reduced to 0% after one year. **Assuming payment of applicable contingent deferred sales charge. % Return Without % Return With Sales Charge Sales Charge** Class I Shares* One Year Ended 12/31/03 +4.67% +0.48% Five Years Ended 12/31/03 +5.14 +4.28 Ten Years Ended 12/31/03 +5.28 +4.85 *Maximum sales charge is 4%. **Assuming maximum sales charge. Average Annual Total Return--National Portfolio % Return Without % Return With Sales Charge Sales Charge** Class A Shares* One Year Ended 12/31/03 +6.10% +1.85% Five Years Ended 12/31/03 +5.09 +4.24 Inception (10/21/94) through 12/31/03 +6.51 +6.04 *Maximum sales charge is 4%. **Assuming maximum sales charge. % Return % Return Without CDSC With CDSC** Class B Shares* One Year Ended 12/31/03 +5.56% +1.56% Five Years Ended 12/31/03 +4.56 +4.23 Ten Years Ended 12/31/03 +4.83 +4.83 *Maximum contingent deferred sales charge is 4% and is reduced to 0% after six years. **Assuming payment of applicable contingent deferred sales charge. % Return % Return Without CDSC With CDSC** Class C Shares* One Year Ended 12/31/03 +5.51% +4.51% Five Years Ended 12/31/03 +4.51 +4.51 Inception (10/21/94) through 12/31/03 +5.92 +5.92 *Maximum contingent deferred sales charge is 1% and is reduced to 0% after one year. **Assuming payment of applicable contingent deferred sales charge. % Return Without % Return With Sales Charge Sales Charge** Class I Shares* One Year Ended 12/31/03 +6.34% +2.09% Five Years Ended 12/31/03 +5.37 +4.51 Ten Years Ended 12/31/03 +5.63 +5.20 *Maximum sales charge is 4%. **Assuming maximum sales charge. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments Limited Maturity Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Alabama--0.3% AAA Aaa $ 2,400 Birmingham, Alabama, GO, Refunding and Improvement, Series B, 4% due 12/01/2004 (c) $ 2,464 Arizona--2.3% AA- A1 4,000 Central Arizona, Water Conservation District, Contract Revenue Refunding Bonds (Central Arizona Project), Series A, 5.40% due 11/01/2005 4,285 Maricopa County, Arizona, Pollution Control Corporation, PCR, Refunding (Arizona Public Service Company): A- A3 5,000 Series D, 1.75% due 4/05/2004 5,001 A- A3 5,000 Series E, 1.75% due 4/05/2004 5,001 Salt River Project, Arizona, Agricuture Improvement and Power District, Electric System Revenue Refunding Bonds (Salt River Project), Series B: AAA Aa2 1,455 7% due 1/01/2005 (g) 1,540 AA Aa2 890 7% due 1/01/2005 941 Arkansas--0.2% AAA Aaa 1,500 Little Rock, Arkansas, GO (Capital Improvement), 4% due 4/01/2006 (e) 1,576 California-- BBB+ NR* 2,250 California Pollution Control Financing Authority, Solid Waste 7.3% Disposal Revenue Bonds (Republic Services Inc. Project), AMT, 2% due 12/01/2004 2,251 SP1 MIG1++ 29,600 California State, RAW, Series A, 2% due 6/16/2004 29,663 A A3 10,000 California Statewide Communities Development Authority Revenue Bonds (Kaiser Permanente), Series C, 3.70% due 6/01/2005 10,218 A- A2 4,000 Chula Vista, California, IDR, Refunding (San Diego Gas & Electric Co.), AMT, Series A, 6.75% due 3/01/2004 4,029 AAA Aaa 5,000 Long Beach, California, Harbor Revenue Refunding Bonds, AMT, Series A, 4% due 5/04/2004 (d) 5,052 AAA Aaa 3,750 Natomas, California, Unified School District, COP (Natomas High School Project), 2.50% due 12/01/2005 (c) 3,784 Colorado--0.4% AAA Aaa 3,175 Denver, Colorado, City and County Airport Revenue Refunding Bonds, AMT, Series A, 5.50% due 11/15/2004 (c) 3,292 Connecticut-- Connecticut State, GO, Refunding: 1.8% AA Aa3 2,700 Series C, 4% due 12/15/2005 2,833 AAA Aaa 5,000 Series D, 5% due 8/01/2005 (e) 5,285 AAA Aa3 2,500 Connecticut State, GO, Series C, 5.25% due 8/01/2007 (a) 2,813 AAA Aaa 2,630 Waterbury, Connecticut, GO, Refunding, 4% due 2/01/2005 (h) 2,705 Delaware--0.6% AAA Aaa 4,125 Delaware State, GO, Series A, 5% due 1/01/2006 4,408 Florida--3.1% AA+ Aa2 1,000 Florida State Board of Education, Capital Outlay, GO (Public Education), Series B, 5.625% due 6/01/2005 1,060 AAA Aaa 2,500 Florida State Board of Education, Lottery Revenue Bonds, Series B, 5.25% due 7/01/2005 (f) 2,645 AAA Aaa 400 Hillsborough County, Florida, Aviation Authority, Revenue Refunding Bonds (Tampa International Airport), AMT, Series A, 5% due 10/01/2005 (c) 423 AAA Aaa 8,365 Miami-Dade County, Florida, Water and Sewer Revenue Refunding Bonds, 4% due 10/01/2005 (d) 8,737 AAA Aaa 9,685 Orlando, Florida, Greater Orlando Aviation Authority, Airport Facilities Revenue Refunding Bonds, Series C, 5% due 10/01/2004 (d) 9,967 AAA Aaa 500 Tallahassee, Florida, Energy System Revenue Bonds, Series B, 4% due 10/01/2004 (e) 511
Portfolio Abbreviations To simplify the listings of Merrill Lynch Municipal Bond Fund, Inc.'s portfolio holdings in the Schedule of Investments, we have abbreviated the names of many of the securities according to the list at right. AMT Alternative Minimum Tax (subject to) BAN Bond Anticipation Notes CARS Complementary Auction Rate Securities COP Certificates of Participation DRIVERS Derivative Inverse Tax-Exempt Receipts EDA Economic Development Authority EDR Economic Development Revenue Bonds GO General Obligation Bonds HDA Housing Development Authority HFA Housing Finance Agency IDA Industrial Development Authority IDB Industrial Development Boards IDR Industrial Development Revenue Bonds INFLOS Inverse Floating Rate Municipal Bonds M/F Multi-Family PCR Pollution Control Revenue Bonds RAW Revenue Anticipation Warrants RIB Residual Interest Bonds RITR Residual Interest Trust Receipts S/F Single-Family STRIPES Short-Term Inverse Payment Exempt Securities TRAN Tax Revenue Anticipation Notes VRDN Variable Rate Demand Notes MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) Limited Maturity Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Georgia--2.0% NR* Aa2 $ 5,000 Coweta County, Georgia, School District, GO, Sales Tax, 4.50% due 8/01/2005 $ 5,246 A+ Aa3 2,050 Dalton, Georgia, Building Authority Revenue Bonds, 5% due 7/01/2004 2,090 AAA Aaa 2,550 Georgia State, GO, Refunding, Series A, 6.25% due 3/01/2006 2,801 Gwinnett County, Georgia, School District, GO, Refunding: AA+ Aaa 4,000 4% due 2/01/2005 4,125 AA+ Aaa 1,000 4.50% due 2/01/2006 1,060 Hawaii--0.5% AAA Aaa 3,505 Hawaii State Highway Revenue Refunding Bonds, 3% due 7/01/2005 (e) 3,590 Illinois--1.5% AAA Aaa 5,000 Chicago, Illinois, Public Building Commission, Building Revenue Bonds, Series C, 5.125% due 2/01/2004 (f) 5,017 AAA Aaa 3,000 Illinois Regional Transportation Authority Revenue Bonds, Series A, 6.25% due 6/01/2004 (a)(c) 3,125 University of Illinois, COP (Utility Infrastructure Projects), Refunding (c): AAA Aaa 1,065 4% due 8/15/2005 1,109 AAA Aaa 2,000 5% due 8/15/2006 2,164 Indiana--0.6% BBB+ Baa1 4,300 Indiana State Development Finance Authority, PCR, Refunding (Southern Indiana Gas & Electric), AMT, Series C, 5% due 3/01/2006 4,478 Iowa--1.7% Ankeny, Iowa, GO, BAN: NR* MIG1++ 6,920 Series C, 1.50% due 6/01/2005 6,937 NR* MIG1++ 5,775 Series D, 2% due 12/01/2005 5,808 Kentucky--1.1% NR* MIG1++ 2,500 Logan/Todd, Kentucky, Regional Water Commission Revenue Refunding Bonds, 4% due 2/01/2007 2,647 NR* A2 5,500 Newport, Kentucky, GO, BAN, 2.41% due 12/01/2004 5,538 Louisiana--0.6% AAA Aaa 4,000 Orleans Parish, Louisiana, School Board, GO, 7.50% due 9/01/2005 (a)(f) 4,405 Maryland--0.5% AAA Aaa 4,050 Washington Suburban Sanitation District, Maryland, Water Supply, GO, Refunding, 4.125% due 6/01/2004 4,102 Massachusetts-- BBB Baa2 3,000 Massachusetts State Development Finance Agency, Environmental 5.7% Improvement Revenue Bonds (The Mead Corporation Project), VRDN, AMT, Series A, 2.25% due 11/01/2033 (b) 3,001 Massachusetts State, GO (Consolidated Loan) (a): AAA Aaa 4,700 Series A, 5.25% due 1/01/2006 (d) 5,087 AAA Aaa 7,725 Series B, 5.75% due 6/01/2006 (f) 8,542 A1+ MIG1++ 10,000 Massachusetts State, HFA, Housing Revenue Refunding Bonds (S/F Housing), AMT, Series I, 3.25% due 6/01/2004 10,083 AA Aa2 15,070 New England Education Loan Marketing Corporation, Massachusetts, Student Loan Revenue Refunding Bonds, AMT, Series A, 5.70% due 7/01/2005 15,968 Michigan--4.2% AAA Aaa 5,000 Detroit, Michigan, Economic Development Corporation, Resource Recovery Revenue Refunding Bonds, AMT, Series A, 3.80% due 5/01/2005 (c) 5,157 AAA Aaa 25,750 Huron Valley, Michigan, School District, GO, 6.486%** due 5/01/2006 (a)(f) 9,079 Michigan Municipal Bond Authority Revenue Bonds: AAA Aa1 1,000 (Local Government Loan Program), Series C, 4% due 5/01/2006 1,053 AAA Aaa 6,890 (Pooled Project), Series B, 5.625% due 4/01/2006 (a) 7,635 Michigan State Building Authority, Revenue Refunding Bonds (Facilities Program): AA Aa2 1,500 Series I, 5% due 10/15/2005 1,594 AA Aa2 3,000 Series III, 5% due 10/15/2004 3,092 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Oakwood Obligated Group): A A2 2,000 5% due 11/01/2005 2,099 A A2 2,000 5% due 11/01/2006 2,139 Minnesota--1.7% NR* NR* 7,000 Minneapolis, Minnesota, Revenue Bonds (Minneapolis Society of Fine Arts), VRDN, 1.32% due 10/14/2015 (b) 6,999 AA+ Aa1 6,000 Minnesota State Housing Finance Agency Revenue Bonds (Residential Housing Finance), Series D, 1.40% due 7/21/2005 6,000 Missouri--0.7% NR* Aaa 4,000 Kansas City, Missouri, School District, Building Revenue Refunding Bonds, Series A, 5% due 2/01/2006 (f) 4,276 AA+ NR* 1,175 Saint Louis County, Missouri, Rockwood School District Number R-6, GO, Refunding, 3.50% due 2/01/2004 1,177 Nebraska--1.2% Nebraska Public Power District Revenue Refunding Bonds: AAA Aaa 2,000 (Power Supply System), Series C, 4.50% due 1/01/2004 (g) 2,000 AAA Aaa 6,750 Series A, 5.25% due 1/01/2004 (d) 6,750
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) Limited Maturity Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Nevada--1.6% BBB- Baa2 $12,000 Clark County, Nevada, IDR (Southwest Gas Corporation Project), AMT, Series D, 3.35% due 9/01/2004 $ 12,067 New Hampshire-- NR* A3 8,000 New Hampshire State Business Finance Authority, PCR, Refunding 1.1% (United Illuminating Company), VRDN, AMT, Series A, 3.75% due 2/01/2004 8,006 New Jersey-- SP1 MIG2++ 5,405 Jersey City, New Jersey, GO, Refunding, 2% due 1/09/2004 5,406 1.2% AAA Aaa 3,000 New Jersey EDA, Market Transition Facility Revenue Refunding Bonds, Senior Lien, Series A, 5% due 7/01/2006 (d) 3,241 New Mexico-- BBB- Baa3 6,000 Farmington, New Mexico, Public Service, PCR, Refunding (San Juan 2.9% Project), Series B, 2.75% due 4/01/2004 6,013 AA Aa2 5,000 New Mexico State Severance Tax Refunding Bonds, Series A, 5% due 7/01/2005 5,270 NR* A2 10,000 San Juan County, New Mexico, Gross Receipts Tax Revenue Bonds, Subordinate Series A, 2.50% due 8/15/2005 10,146 New York--6.7% AA- A3 5,000 Metropolitan Transportation Authority, New York, Service Contract Revenue Bonds, Series B, 5.25% due 7/01/2006 5,419 A A2 7,000 New York City, New York, GO, Refunding, Series G, 5% due 8/01/2005 7,361 A A2 5,135 New York City, New York, GO, Series H, 4.50% due 8/01/2004 5,234 A A3 6,530 New York State Dormitory Authority, Lease Revenue Bonds (Court Facilities), Series A, 4% due 5/15/2006 6,837 BBB NR* 4,500 New York State Environmental Facilities Corporation, Solid Waste Disposal Revenue Bonds (Waste Management Project), AMT, Series A, 4% due 5/01/2004 4,527 AA A2 8,250 New York State, GO, Refunding, Series C, 4% due 4/15/2006 8,682 Schenectady, New York, GO, BAN: NR* NR* 2,000 Series A, 3.75% due 5/28/2004 2,004 NR* NR* 3,000 Series B, 3.75% due 5/28/2004 2,983 Suffolk County, New York, IDA, Southwest Sewer System Revenue Refunding Bonds (h): AAA Aaa 3,000 4% due 2/01/2005 3,090 AAA Aaa 4,000 4% due 2/01/2006 4,191 North North Carolina State, Public School Building, GO: Carolina-- 1.3% AAA Aa1 4,500 4.60% due 4/01/2004 4,540 AAA Aa1 5,000 4.60% due 4/01/2006 5,334 Ohio--6.0% NR* Aaa 375 Mason, Ohio, COP (Municipal Facilities Project), 3.50% due 12/01/2004 (d) 382 BB+ NR* 4,000 Ohio State Air Quality, Development Authority, Revenue Refunding Bonds (Ohio Edison Project), Series B, 2.25% due 6/01/2005 4,001 AAA Aaa 5,000 Ohio State Building Authority, Adult Correctional Facilities Revenue Bonds, 6% due 10/01/2004 (a)(d) 5,284 Ohio State, Highway Capital Improvement, GO: AAA Aa1 5,375 Series C, 4.75% due 5/01/2005 5,627 AAA Aa1 4,850 Series F, 5% due 5/01/2005 5,094 AAA Aaa 4,500 Ohio State Revenue Refunding Bonds (Higher Education), Series II-A, 5.25% due 12/01/2005 (d) 4,825 BB+ Baa2 7,000 Ohio State Water Development Authority, Pollution Control Facilities Revenue Refunding Bonds (Ohio Edison Company), AMT, Series B, 3.35% due 1/15/2004 7,000 NR* Aa3 13,000 Rickenbacker, Ohio, Port Authority, Capital Funding Revenue Bonds (Oasbo Expanded Asset Pooled), Series A, 3.90% due 5/01/2004 13,111 Oklahoma--4.0% NR* Aaa 1,235 Midwest City, Oklahoma, Municipal Authority, Capital Improvement Revenue Bonds, 4.55% due 6/01/2005 (e)(g) 1,270 Oklahoma City, Oklahoma, Airport Trust Revenue Refunding Bonds, Junior Lien, AMT, 28th Series (d): AAA Aaa 1,000 4% due 7/01/2004 1,014 AAA Aaa 3,040 4% due 7/01/2005 3,147 AAA NR* 22,181 Oklahoma County, Oklahoma, HFA, Single Family Revenue Bonds, VRDN, Series D, 1.155% due 1/02/2005 (b) 22,181 A2 VMIG2 2,500 Oklahoma Development Finance Authority Revenue Bonds (Conoco Project), VRDN, AMT, Series B, 1.43% due 8/01/2037 (b) 2,500 Oregon--1.8% NR* Aa2 10,770 Portland, Oregon, Limited Tax, GO, Refunding, VRDN, Series B, 3% due 12/15/2004 (b) 10,961 AA+ Aa3 2,385 Tri-County, Oregon, Metropolitan Transportation District Revenue Bonds, Series A, 5.25% due 8/01/2005 2,529
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) Limited Maturity Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Pennsylvania-- NR* MIG1++ $ 3,000 Midway Sewerage Authority, Pennsylvania, Sewer Revenue Notes, 2% 0.6% due 12/01/2005 $ 3,014 AAA Aaa 1,500 Pennsylvania Inter-Governmental Cooperative Authority, Special Tax Revenue Bonds (Philadelphia Funding Program), 6.75% due 6/15/2005 (a)(f) 1,619 Rhode Island-- AA+ Aa2 2,500 Rhode Island Housing and Mortgage Finance Corporation, Homeowner 1.8% Opportunity Revenue Bonds, AMT, Series 41-C, 3.375% due 11/01/2005 2,567 A+ Aa3 10,000 Rhode Island State Economic Development Corporation, Grant Anticipation Bonds (Rhode Island Department of Transportation), Series A, 5% due 6/15/2006 10,757 South AAA Aaa 500 South Carolina State Highway, GO, Series B, 5.25% due 4/01/2005 525 Carolina--0.1% Tennessee-- NR* Aaa 3,815 Hamilton County, Tennessee, GO, Refunding, 4% due 10/01/2005 (f) 3,984 1.3% AA Aa2 5,605 Tennessee State, GO, Refunding, Series B, 5.50% due 5/01/2004 5,688 Texas--13.5% AAA Aaa 1,000 El Paso, Texas, Airport Revenue Refunding Bonds (El Paso International Airport), AMT, 4% due 8/15/2005 (e) 1,038 AA+ Aa1 2,000 Forth Worth, Texas, GO, Refunding, Series A, 4% due 3/01/2004 2,010 AA Aa2 6,075 Fort Worth, Texas, Water and Sewer Revenue Refunding and Improvement Bonds, 5.50% due 2/15/2004 6,108 AA+ Aa1 7,000 Gulf Coast, Texas, Waste Disposal Authority, PCR, Refunding (Amoco Oil Company Project), VRDN, 2% due 10/01/2006 (b) 7,002 BBB NR* 4,000 Gulf Coast, Texas, Waste Disposal Authority (Waste Management of Texas), AMT, Series C, 2.85% due 5/01/2004 4,009 AAA Aaa 3,870 Harris County, Texas, Toll Road Revenue Bonds, Senior Lien, Series A, 6.25% due 8/15/2004 (a)(d) 4,072 AA Aa3 5,250 Houston, Texas, Independent School District, GO (Public Property Finance Contractual Obligations), 3% due 7/15/2005 5,380 AAA Aaa 2,750 Houston, Texas, Water and Sewer System Revenue Refunding Bonds, Junior Lien, Series A, 6.2% due 12/01/2005 (a)(d) 2,999 A A1 1,000 Lower Colorado River Authority, Texas, Revenue Refunding Bonds, 5% due 5/15/2005 1,047 A A2 2,750 Lower Colorado River Authority, Texas, Transmission Contract Revenue Refunding Bonds (LCRA Transmission Services Corp. Project), Series C, 5% due 5/15/2005 2,880 Matagorda County, Texas, Navigation District No. 1, PCR, Refunding (Central Power and Light Company Project): BBB Baa2 5,000 AMT, Series B, 2.35% due 11/01/2004 4,998 BBB Baa2 5,000 Series A, 2.15% due 1/04/2004 4,998 AA+ Aa1 15,000 San Antonio, Texas, Electric and Gas Revenue Refunding Bonds, 4% due 2/01/2005 15,460 Texas State, Public Finance Authority, GO, Refunding: AA Aa1 1,500 Series A, 5% due 10/01/2006 1,629 AA Aa1 5,750 Series B, 6% due 10/01/2004 (c) 5,960 SP1+ MIG1++ 13,600 Texas State, TRAN, 2% due 8/31/2004 13,685 AAA Aaa 3,000 Trinity River Authority, Texas, Regional Wastewater System Revenue Refunding Bonds, 5% due 8/01/2004 (d) 3,068 AAA Aaa 4,950 University of Houston, Texas, University Revenue Refunding Bonds, Series B, 5% due 2/15/2005 (e) 5,161 AAA Aaa 10,000 Weatherford, Texas, Independent School District, GO, Series A, 2.50% due 8/01/2005 10,076 Utah--0.4% AAA Aaa 3,200 Utah State, GO, Refunding, Series A, 5% due 7/01/2004 3,263 Virginia--2.8% BBB NR* 7,000 Amelia County, Virginia, IDA, Solid Waste Disposal Revenue Refunding Bonds (Waste Management Project), AMT, 4.90% due 4/01/2005 7,199 Louisa, Virginia, IDA, Solid Waste and Sewer Disposal Revenue Bonds (Virginia Electric & Power Company Project), AMT, Series A: BBB+ A3 2,000 1.85% due 4/01/2004 2,003 BBB+ A3 2,500 1.85% due 4/01/2004 2,504 AAA Aaa 4,850 Norfolk, Virginia, GO, Refunding (Capital Improvements), 4% due 12/01/2005 (e) 5,087 AA+ Aa1 3,900 Virginia State Public School Authority, School Financing, GO, Series B, 4% due 8/01/2005 4,063
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (concluded) Limited Maturity Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Washington-- AA+ Aa1 $ 3,345 King County, Washington, GO, Refunding, 5% due 12/01/2005 $ 3,567 3.2% AAA Aa1 5,000 Seattle, Washington, GO, Refunding and Improvement, 4% due 8/01/2005 5,205 AAA Aaa 2,180 Seattle, Washington, GO, Refunding, Series A, 5.25% due 3/01/2005 2,283 AA+ Aa1 7,195 Washington State, GO, Series B and AT-7, 6.10% due 6/01/2006 7,925 AAA Aaa 5,000 Washington State Public Power Supply System, Revenue Refunding Bonds (Nuclear Project Number 1), Series A, 6% due 7/01/2005 (c) 5,337 Wisconsin--4.4% NR* MIG1++ 7,105 Menomonee Falls, Wisconsin, BAN, Refunding, 3.20% due 6/01/2004 7,117 SP1+ NR* 7,500 Racine, Wisconsin, Waterworks System, BAN, 2.125% due 9/01/2005 7,540 Wisconsin State, GO: AA- Aa3 5,605 Series A, 5.50% due 5/01/2004 5,687 AA- Aa3 11,795 Series C, 4% due 5/01/2006 12,416 Puerto Rico-- Puerto Rico Commonwealth, GO, Refunding: 2.7% A- Baa1 50 5.30% due 7/01/2004 (c) 51 A- Baa1 850 5.30% due 7/01/2004 867 Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue Refunding Bonds, Series AA: A Baa1 13,505 5% due 7/01/2005 14,195 A Baa1 5,000 5% due 7/01/2006 5,377 Total Municipal Bonds (Cost--$712,756)--95.4% 717,154 Shares Held Short-Term Securities 27,114 Merrill Lynch Institutional Tax-Exempt Fund (i) 27,114 Total Short-Term Securities (Cost--$27,114)--3.6% 27,114 Total Investments (Cost--$739,870)--99.0% 744,268 Other Assets Less Liabilities--1.0% 7,271 ---------- Net Assets--100.0% $ 751,539 ========== (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, 2003. (c)AMBAC Insured. (d)MBIA Insured. (e)FSA Insured. (f)FGIC Insured. (g)Escrowed to maturity. (h)XL Capital Insured. (i)Investments in companies considered to be an affiliate of the Fund (such companies are defined as "Affiliated Companies" in Section 2(a)(3) of the Investment Company Act of 1940) are as follows: (in Thousands) Net Dividend Affiliate Activity Income Merrill Lynch Institutional Tax-Exempt Fund (34,300) $246 *Not Rated. **Represents a zero coupon bond; the interest rate shown reflects the effective yield at the time of purchase by the Fund. ++Highest short-term rating issued by Moody's Investors Service, Inc. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments Insured Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Alabama--2.1% Alabama Water Pollution Control Authority Revenue Bonds (b): AAA Aaa $ 3,020 5.75% due 8/15/2018 $ 3,416 AAA Aaa 1,585 Revolving Fund Loan, Series A, 6.75% due 8/15/2017 1,714 AAA Aaa 10,000 Lauderdale County and Florence, Alabama, Health Care Authority, Revenue Refunding Bonds (Coffee Health Group), Series A, 6% due 7/01/2029 (e) 11,292 AAA Aaa 7,000 University of Alabama, University Revenue Bonds (Birmingham), 6% due 10/01/2020 (g) 8,022 Arkansas--0.6% NR* Aaa 6,060 University of Arkansas, University Revenue Bonds (Various Facilities--Fayetteville Campus), 5.50% due 12/01/2021 (g) 6,702 California-- AAA Aaa 13,000 California Infrastructure and Economic Development Bank Revenue Bonds 16.0% (Bay Area Toll Bridges), 1st Lien, Series A, 5.25% due 7/01/2021 (i) 14,092 AAA Aaa 27,250 California Pollution Control Financing Authority, PCR, Refunding (Pacific Gas & Electric), AMT, Series A, 5.35% due 12/01/2016 (e) 29,264 AAA Aaa 2,075 California State Department of Veteran Affairs, Home Purpose Revenue Refunding Bonds, Series A, 5.35% due 12/01/2027 (b) 2,165 AAA Aaa 12,000 California State, Department of Water Resources, Power Supply Revenue Bonds, Series A, 5.375% due 5/01/2017 (j) 13,147 AAA Aaa 3,000 California State, GO, Refunding, 5% due 2/01/2017 (e) 3,224 Carson, California, Redevelopment Agency, Tax Allocation Bonds (Redevelopment Project Area 1), Series B (e): AAA Aaa 3,520 5.25% due 10/01/2021 3,792 AAA Aaa 3,940 5.25% due 10/01/2022 4,216 Industry, California, Urban Development Agency, Tax Allocation Bonds, Series 1-B (e): AAA Aaa 5,645 5% due 5/01/2020 5,922 AAA Aaa 6,000 5% due 5/01/2021 6,262 AAA Aaa 26,085 Los Angeles, California, Community College District, GO, Series A, 5.50% due 8/01/2019 (e) 29,108 AAA Aaa 5,000 Los Angeles, California, GO, Series A, 5% due 9/01/2019 (e) 5,296 Los Angeles, California, Unified School District, GO: AAA Aaa 10,540 (Election of 1997), Series F, 5% due 7/01/2021 (g) 11,153 AAA Aaa 10,000 Series A, 5.375% due 7/01/2017 (e) 11,221 Milpitas, California, Redevelopment Agency, Tax Allocation Refunding Bonds (Redevelopment Project Area Number 1) (e): AAA Aaa 7,080 5.25% due 9/01/2017 7,813 AAA Aaa 6,055 5.25% due 9/01/2018 6,641 AAA Aaa 5,450 Oakland, California, Joint Powers Financing Authority, Lease Revenue Refunding Bonds (Oakland Convention Centers), 5.50% due 10/01/2013 (b) 6,331 Pasadena, California, Electric Revenue Bonds (e): AAA Aaa 2,500 5.25% due 6/01/2020 2,701 AAA Aaa 2,630 5.25% due 6/01/2021 2,830 AAA Aaa 11,685 Rialto, California, Unified School District, GO, Series A, 6.24%** due 6/01/2025 (g) 3,819 AAA Aaa 8,390 San Joanquin Hills, California, Transportation Corridor Agency, Toll Road Revenue Refunding Bonds, Series A, 5.28%** due 1/15/2024 (e) 2,970 AAA Aaa 15,000 San Jose, California, Redevelopment Agency, Tax Allocation Refunding Bonds, DRIVERS, Series 158, 9.40% due 8/01/2014 (d)(e) 15,704 AAA Aaa 2,000 University of California Revenue Refunding Bonds, Series A, 5.125% due 5/15/2020 2,147 Colorado--6.1% AAA Aaa 19,250 Aurora, Colorado, COP, 6% due 12/01/2025 (b) 21,990 Denver, Colorado, City and County Airport Revenue Refunding Bonds: AAA Aaa 2,000 AMT, Series D, 5.50% due 11/15/2015 (i) 2,192 AAA Aaa 4,850 AMT, Series D, 5.50% due 11/15/2017 (i) 5,255 AAA Aaa 2,500 AMT, Series D, 5.50% due 11/15/2018 (i) 2,697 NR* Aaa 31,160 RIB, Series 153, 9.921% due 11/15/2025 (d)(e) 35,901 AAA Aaa 4,000 Logan County, Colorado, Justice Center Finance Corporation, COP, 5.50% due 12/01/2020 (e) 4,425 Connecticut-- AAA NR* 2,790 Connecticut State, HFA, Housing Mortgage Finance Revenue Bonds, AMT, 0.2% Sub-Series B-2, 5.35% due 11/15/2032 (e) 2,883
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) Insured Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Florida--2.1% AAA Aaa $ 5,500 Dade County, Florida, Water and Sewer System Revenue Bonds, 5.25% due 10/01/2026 (g) $ 5,785 NR* Aaa 15,000 Escambia County, Florida, Health Facilities Authority, Health Facility Revenue Bonds (Florida Health Care Facility Loan), 5.95% due 7/01/2020 (b) 15,842 AAA Aaa 2,240 West Coast Regional Water Supply Authority, Florida, Capital Improvement Revenue Bonds, 10.40% due 10/01/2010 (a)(b) 3,072 Georgia--3.1% Georgia Municipal Electric Authority, Power Revenue Bonds, Series Y (b): AAA Aaa 490 6.40% due 1/01/2013 (c) 591 AAA Aaa 8,510 6.40% due 1/01/2013 10,246 AAA Aaa 20,000 Georgia Municipal Electric Authority, Power Revenue Refunding Bonds, Series EE, 7% due 1/01/2025 (b) 26,452 Illinois--4.1% Chicago, Illinois, O'Hare International Airport, Airport Revenue Bonds, 3rd Lien, AMT, Series B-2 (i): AAA Aaa 9,030 5.75% due 1/01/2023 9,885 AAA Aaa 9,215 5.75% due 1/01/2024 10,041 AAA Aaa 17,690 Chicago, Illinois, O'Hare International Airport, General Airport Revenue Bonds, Third Lien, AMT, Series B-2, 6% due 1/01/2027 (e) 19,763 AAA Aaa 2,000 Chicago, Illinois, O'Hare International Airport Revenue Bonds (Passenger Facility Charge), Series A, 5.625% due 1/01/2015 (b) 2,168 AAA Aaa 6,800 Illinois State, GO, 5.75% due 5/01/2021 (e) 7,445 Indiana--0.5% AAA Aaa 5,555 Indiana State Office Building Commission, Facilities Revenue Bonds (Miami Correctional Facility--Phase 1), Series A, 5.50% due 7/01/2015 (b) 6,274 Kansas--1.4% AAA Aaa 11,000 Kansas City, Kansas, Utility System Revenue Refunding and Improvement Bonds, 6.25% due 9/01/2014 (g) 11,578 AAA Aaa 5,145 Manhattan, Kansas, Hospital Revenue Bonds (Mercy Health Center), 5.50% due 8/15/2020 (i) 5,647 Maryland--0.5% AAA Aaa 4,400 Maryland State Health and Higher Educational Facilities Authority Revenue Bonds (University of Maryland Medical System), Series B, 7% due 7/01/2022 (g) 5,732 Massachusetts-- AAA Aaa 1,220 Massachusetts Educational Loan Authority, Education Loan Revenue 1.3% Bonds, AMT, Issue D, Series A, 7.25% due 1/01/2009 (e) 1,254 AAA Aaa 4,000 Massachusetts State, HFA, Rental Housing Mortgage Revenue Bonds, AMT, Series C, 5.60% due 1/01/2045 (i) 4,150 AAA Aaa 10,000 Massachusetts State Health and Educational Facilities Authority Revenue Bonds (Beth Israel Deaconess Medical Center), INFLOS, Series G-4, 10.653% due 7/01/2025 (b)(d) 10,265 Michigan--2.5% AAA Aaa 4,910 Michigan State, HDA, Rental Housing Revenue Refunding Bonds, Series B, 6.15% due 10/01/2015 (e) 5,114 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds: AAA Aaa 10,000 (Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (e) 10,919 AAA Aaa 13,145 (Detroit Edison Company Project), AMT, Series A, 5.50% due 6/01/2030 (j) 13,885 Minnesota--1.3% NR* Aaa 5,860 Delano, Minnesota, Independent School District Number 879, GO, Series A, 5.875% due 2/01/2025 (i) 6,622 Sauk Rapids, Minnesota, Independent School District Number 047, GO, Series A (e): NR* Aaa 3,735 5.65% due 2/01/2020 4,200 NR* Aaa 4,440 5.70% due 2/01/2021 4,999 Mississippi-- AAA Aaa 1,320 Harrison County, Mississippi, Wastewater Management District, Revenue 1.1% Refunding Bonds (Wastewater Treatment Facilities), Series A, 8.50% due 2/01/2013 (g) 1,823 NR* Aaa 10,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds (Forrest County General Hospital Project), 6% due 1/01/2030 (i) 11,164 Missouri--2.1% Kansas City, Missouri, Airport Revenue Refunding and Improvement Bonds, Series A (e): AAA Aaa 12,990 5.50% due 9/01/2013 14,609 AAA Aaa 9,000 5.50% due 9/01/2014 10,122 Nevada--4.8% AAA Aaa 10,000 Clark County, Nevada, IDR (Power Company Project), AMT, Series A, 6.70% due 6/01/2022 (g) 10,316 AAA Aaa 45,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power Company), AMT, 6.65% due 6/01/2017 (e) 47,237
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) Insured Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value New Jersey-- AAA Aaa $ 6,810 Cape May County, New Jersey, Industrial Pollution Control Financing 4.7% Authority Revenue Refunding Bonds (Atlantic City Electric Company Project), Series A, 6.80% due 3/01/2021 (e) $ 8,867 AAA Aaa 23,000 Garden State Preservation Trust, New Jersey, Revenue Bonds, Series B, 5.17%** due 11/01/2024 (i) 8,187 NR* Aaa 12,500 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds (NUI Corporation), RIB, Series 371, 11.32% due 10/01/2022 (b)(d) 13,868 Salem County, New Jersey, Industrial Pollution Control Financing Authority, Revenue Refunding Bonds (Public Service Electric & Gas), RIB (d)(e): AAA Aaa 10,000 Series 380, 10.99% due 6/01/2031 10,784 AAA Aaa 12,500 Series 381, 11.02% due 8/01/2030 13,662 New York-- NR* Aaa 12,075 New York City, New York, City Municipal Water Finance Authority, 10.7% Water and Sewer System Revenue Bonds, RIB, Series 158, 10.017% due 6/15/2026 (d)(e) 14,439 New York City, New York, GO: AAA NR* 11,500 Series C, 5.625% due 3/15/2018 (j) 12,958 AAA Aaa 21,000 Series I, 6% due 4/15/2012 (i) 23,664 New York City, New York, GO, Refunding, Series G: AAA Aaa 7,655 5.75% due 2/01/2014 (e) 8,336 AAA Aaa 5,155 5.75% due 2/01/2017 (i) 5,584 AAA Aaa 7,210 New York State Dormitory Authority Revenue Bonds (School Districts Financing Program), Series D, 5.25% due 10/01/2023 (e) 7,699 New York State Dormitory Authority, Revenue Refunding Bonds, Series A (e): AAA Aaa 365 5.75% due 2/15/2007 409 AAA Aaa 9,635 5.75% due 5/01/2010 (a) 10,939 AAA Aaa 160 New York State Medical Care Facilities Finance Agency Revenue Bonds, Series E, 6.25% due 8/15/2004 (a)(g) 168 Niagara Falls, New York, GO, Public Improvement (e): AAA Aaa 2,975 6.90% due 3/01/2023 3,061 AAA Aaa 3,190 6.90% due 3/01/2024 3,282 AAA Aaa 34,830 Tobacco Settlement Financing Corporation of New York, Revenue Bonds, Series A-1, 5.25% due 6/01/2022 (b) 36,734 North AAA Aaa 3,500 North Carolina HFA, Home Ownership Revenue Bonds, AMT, Series 14-A, Carolina--0.3% 5.35% due 1/01/2022 (b) 3,633 North Dakota-- AAA NR* 4,485 North Dakota State, HFA Revenue Bonds (Housing Finance Program), 0.4% Series C, 5.30% due 7/01/2022 (b) 4,623 Ohio--0.6% AAA Aaa 6,000 Ohio State Water Development Authority, Pollution Control Facilities Revenue Bonds (Water Control Loan Fund--Water Quality Series), 5.50% due 6/01/2014 (e) 6,763 Oklahoma--0.6% AAA Aaa 6,385 Oklahoma State IDR, Refunding (Health System), Series A, 6.25% due 8/15/2016 (e) 7,411 Oregon--1.3% AAA Aaa 8,700 Oregon State Department, Administrative Services, COP, Series A, 6.25% due 5/01/2010 (a)(b) 10,494 AAA Aaa 3,865 Port of Portland, Oregon, Airport Revenue Refunding Bonds (Portland International Airport), AMT, Series 7-B, 7.10% due 1/01/2012 (a)(e) 4,804 Pennsylvania-- AAA NR* 5,000 Pennsylvania HFA, S/F Revenue Bonds, AMT, Series 72A, 5.25% due 1.5% 4/01/2021(e) 5,166 AAA Aaa 6,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 12th Series B, 7% due 5/15/2020 (c)(e) 7,591 AAA Aaa 4,420 Philadelphia, Pennsylvania, Redevelopment Authority Revenue Bonds (Neighborhood Transformation), Series A, 5.50% due 4/15/2020 (g) 4,864 Rhode Island-- AAA Aaa 6,815 Rhode Island State Economic Development Corporation, Airport Revenue 0.6% Bonds, Series B, 6% due 7/01/2028 (g) 7,688 South AAA Aaa 4,200 South Carolina State Public Service Authority, Revenue Refunding Carolina--0.4% Bonds, Series A, 6.25% due 1/01/2022 (b) 4,615
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) Insured Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Texas--8.6% AAA Aaa $11,190 Austin, Texas, Utility System Revenue Bonds, Combined, 9.25% due 11/15/2008 (e) $ 11,528 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, AMT: AAA NR* 17,975 DRIVERS, Series 202, 10.415% due 11/01/2028 (d)(g) 22,173 AAA Aaa 28,500 Series A, 5.50% due 11/01/2033 (e) 30,162 El Paso, Texas, Water and Sewer Revenue Refunding and Improvement Bonds, Series A (I): AAA Aaa 4,375 6% due 3/01/2018 5,102 AAA Aaa 4,645 6% due 3/01/2019 5,410 AAA Aaa 3,500 Houston, Texas, Water Conveyance System Contract, COP, Series J, 6.25% due 12/15/2013 (b) 4,248 AAA Aaa 11,800 Matagorda County, Texas, Navigation District Number 1, Revenue Refunding Bonds (Houston Light and Power Company), Series A, 6.70% due 3/01/2027 (b) 11,901 AAA Aaa 6,000 San Antonio, Texas, Electric and Gas Revenue Bonds, 5.375% due 2/01/2006 (a)(e) 6,525 Texas State Department of Housing and Community Affairs, S/F Mortgage Revenue Bonds, AMT, Series A (e)(f): AAA Aaa 2,180 5.45% due 9/01/2023 2,267 AAA Aaa 2,800 5.50% due 3/01/2026 2,902 Utah--1.5% AAA NR* 9,535 Utah Transit Authority, Sales Tax and Transportation Revenue Bonds (Salt Lake County Light Rail Transit Project), 5.375% due 12/15/2022 (i) 10,348 Utah Water Finance Agency Revenue Bonds (Pooled Loan Financing Program), Series A (b): NR* Aaa 2,515 5.75% due 10/01/2015 2,876 NR* Aaa 3,770 6% due 10/01/2020 4,369 Virginia--3.7% AAA Aaa 19,755 Fairfax County, Virginia, EDA, Resource Recovery Revenue Refunding Bonds, AMT, Series A, 6.10% due 2/01/2011 (b) 22,835 Virginia State, HDA, Commonwealth Mortgage Revenue Bonds (e): AAA Aa1 2,285 AMT, Series A, Sub-Series A-4, 5.40% due 1/01/2011 2,402 AAA Aaa 2,270 AMT, Series A, Sub-Series A-4, 5.50% due 1/01/2012 2,278 AAA Aaa 16,365 Series J, Sub-Series J-1, 5.20% due 7/01/2019 16,817 Washington-- AAA Aaa 4,960 Chelan County, Washington, Public Utility District Number 001, 3.4% Consolidated Revenue Bonds (Chelan Hydro System), AMT, Series A, 5.45% due 7/01/2037 (b) 5,164 AAA Aaa 33,535 Seattle, Washington, Municipal Light and Power Revenue Bonds, 6.625% due 7/01/2004 (a)(g) 35,137 West AAA Aaa 12,250 Pleasants County, West Virginia, PCR, Refunding (Potomac-Pleasants), Virginia--1.1% Series C, 6.15% due 5/01/2015 (b) 13,223 Wisconsin-- AAA Aaa 9,000 Superior, Wisconsin, Limited Obligation Revenue Refunding Bonds 2.8% (Midwest Energy Resources), Series E, 6.90% due 8/01/2021(g) 11,732 AAA Aaa 4,650 Wisconsin Public Power Inc., Power Supply System Revenue Bonds, Series A, 5.75% due 7/01/2006 (a)(e) 5,202 Wisconsin State, GO: AAA Aaa 1,585 AMT, Series B, 6.50% due 5/01/2025 (e) 1,677 AAA Aaa 13,570 Series F, 5.50% due 5/01/2019 (i) 15,040 Puerto Rico-- Puerto Rico Commonwealth, Highway and Transportation Authority, 2.5% Transportation Revenue Bonds (g): AAA Aaa 2,900 5.25% due 7/01/2017 3,250 AAA Aaa 3,100 5.25% due 7/01/2018 3,456 AAA Aaa 1,750 Series G, 5.25% due 7/01/2017 1,961 AAA Aaa 1,250 Series G, 5.25% due 7/01/2018 1,393 AAA Aaa 1,000 Series G, 5.25% due 7/01/2020 1,101 AAA Aaa 16,705 Puerto Rico Public Finance Corporation, Commonwealth Appropriation Revenue Bonds, Series A, 5.375% due 8/01/2023 (e) 18,227 Total Municipal Bonds (Cost--$1,043,359)--94.5% 1,124,506
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (concluded) Insured Portfolio (In Thousands)
Shares Held Mutual Funds Value 270 BlackRock Insured Municipal 2008 Term Trust, Inc. $ 4,658 134 BlackRock Insured Municipal Term Trust, Inc. 1,484 Total Mutual Funds (Cost--$6,177)--0.5% 6,142 Short-Term Securities 21,317 Merrill Lynch Institutional Tax-Exempt Fund (h) 21,317 Total Short-Term Securities (Cost--$21,317)--1.8% 21,317 Total Investments (Cost--$1,070,853)--96.8% 1,151,965 Unrealized Depreciation on Forward Interest Rate Swaps***--(0.1%) (1,062) Other Assets Less Liabilities--3.3% 38,826 ---------- Net Assets--100.0% $1,189,729 ========== (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, 2003. (e)MBIA Insured. (f)FNMA/GNMA Collateralized. (g)FGIC Insured. (h)Investments in companies considered to be an affiliate of the Fund (such companies are defined as "Affiliated Companies" in Section 2(a)(3) of the Investment Company Act of 1940) are as follows: (in Thousands) Net Dividend Affiliate Activity Income Merrill Lynch Institutional Tax-Exempt Fund 20,300 $135 (i)FSA Insured. (j)XL Capital Insured. *Not Rated. **Represents a zero coupon or step bond; the interest rate shown reflects the effective yield at the time of purchase by the Fund. ***Forward interest rate swaps entered into as of December 31, 2003 were as follows: (in Thousands) Notional Unrealized Amount Depreciation Receive a variable rate equal to 7-Day Bond Market Association Municipal Swap Index rate and pays a fixed rate of 4.325%. Broker, J.P. Morgan Chase Expires March 2024 Tax-Exempt Fund $60,000 $ (1,062) ---------- Total $ (1,062) ========== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Alabama--0.4% AAA Aaa $ 3,820 Alabama Incentives Financing Authority, Special Obligation Revenue Refunding Bonds, Series A, 6% due 10/01/2029 (c) $ 4,376 Alaska--0.6% AAA Aaa 3,000 Alaska State Housing Financial Corporation, General Mortgage Revenue Refunding, Series A, 6% due 6/01/2027 (f) 3,148 Anchorage, Alaska, School, GO, Series B (e): AAA Aaa 1,760 5.875% due 12/01/2016 2,030 AAA Aaa 2,100 5.875% due 12/01/2017 2,422 Arizona--3.5% BBB Baa1 2,000 Arizona Health Facilities Authority Revenue Bonds (Catholic Healthcare West), Series A, 6.625% due 7/01/2020 2,208 NR* Aa1 2,000 Arizona Student Loan Acquisition Authority, Student Loan Revenue Refunding Bonds, AMT, Senior Series B, 6.60% due 5/01/2010 2,073 AAA Aaa 2,000 Gilbert, Arizona, Water and Sewer Revenue Refunding Bonds, 6.50% due 7/01/2022 (e) 2,069 AAA NR* 1,000 Glendale, Arizona, Development Authority, Educational Facilities Revenue Refunding Bonds (American Graduate School International), 7.125% due 7/01/2005 (j)(l) 1,097 Maricopa County, Arizona, Alhambra Elementary School District 068, GO, Series A (c): AAA Aaa 1,000 6.75% due 7/01/2004 (j) 1,048 AAA Aaa 525 6.75% due 7/01/2014 550 BBB Baa1 1,000 Maricopa County, Arizona, Hospital Revenue Refunding Bonds (Sun Health Corporation), 6.125% due 4/01/2018 1,035 BBB Baa1 1,625 Maricopa County, Arizona, IDA, Health Facilities Revenue Refunding Bonds (Catholic Healthcare West Project), Series A, 5% due 7/01/2021 1,623 AAA Aaa 1,000 Maricopa County, Arizona, IDA, M/F Housing Revenue Bonds (Metro Gardens--Mesa Ridge Project), Series A, 5.65% due 7/01/2019 (f) 1,025 Maricopa County, Arizona, Pollution Control Corporation, PCR, Refunding, Series A: BB+ Ba1 1,200 (El Paso Electric Company Project), 6.25% due 5/01/2037 1,257 BBB- Baa3 1,000 (Public Service Company of New Mexico Project), 6.30% due 12/01/2026 1,037 Peoria, Arizona, Improvement District No. 8401, Special Assessment Bonds No. 8802: BBB+ NR* 430 7.20% due 1/01/2010 446 BBB+ NR* 510 7.20% due 1/01/2013 530 Peoria, Arizona, Improvement District, Special Assessment Bonds No. 8801: BBB+ NR* 190 7.30% due 1/01/2009 197 BBB+ NR* 395 7.30% due 1/01/2011 410 AAA Aaa 2,330 Phoenix, Arizona, Civic Improvement Corporation, Municipal Facilities, Excise Tax Revenue Bonds, 5.75% due 7/01/2016 (e) 2,668 NR* Caa3 5,000 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds (America West Airlines Inc. Project), AMT, 6.30% due 4/01/2023 3,875 NR* Aaa 2,720 Phoenix, Arizona, IDA, Revenue Bonds (Camelback Crossing), 6.20% due 9/20/2020 (d) 2,912 B+ Ba3 1,000 Pima County, Arizona, IDA, Industrial Revenue Refunding Bonds (Tucson Electric Power Company Project), Series B, 6% due 9/01/2029 968 BBB- NR* 545 Prescott Valley, Arizona, Improvement District, Special Assessment Bonds (Sewer Collection System Roadway Repair), 7.90% due 1/01/2012 571 A NR* 1,600 Sedona, Arizona, Sewer Revenue Refunding Bonds, 7% due 7/01/2012 1,660 AA NR* 3,515 Tucson, Arizona, IDA, Senior Living Facilities Revenue Bonds (Christian Care Tucson Inc. Project), Series A, 6.125% due 7/01/2024 (m) 3,965 AAA Aaa 3,180 University of Arizona, COP, Refunding, Series A, 5.50% due 6/01/2018 (c) 3,540 AAA Aaa 1,000 University of Arizona, COP (University of Arizona Parking and Student Housing), 5.75% due 6/01/2019 (c) 1,135 NR* NR* 3,000 Vistancia, Arizona, Community Facilities District, GO, 6.75% due 7/15/2022 3,076 Arkansas--0.2% AAA NR* 120 Arkansas State Development Finance Authority, S/F Mortgage Revenue Bonds (Mortgage-Backed Securities Program), Series H, 6.15% due 7/01/2016 (i) 127 NR* A2 250 Arkansas State Student Loan Authority Revenue Bonds, AMT, Sub-Series B, 7.25% due 6/01/2009 282 BBB Baa2 625 Camden, Arkansas, Environmental Improvement Revenue Bonds (International Paper Co. Project), AMT, Series A, 7.625% due 11/01/2018 659 AAA Aaa 250 Fort Smith, Arkansas, Water, Sewer and Construction Revenue Refunding Bonds, 6% due 4/01/2004 (f)(j) 256 AAA Aaa 200 Jonesboro, Arkansas, Residential Housing and Health Care Facilities Board, Hospital Revenue Refunding Bonds (Saint Bernards Regional Medical Center), Series B, 5.90% due 7/01/2016 (c) 221 AAA Aaa 250 University of Central Arkansas, Housing System Revenue Bonds, 6.50% due 1/01/2031 (h) 295
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value California-- NR* NR* $ 2,500 Agua Caliente Band of Cahuilla Indians, California, Casino Revenue 9.9% Bonds, 6% due 7/01/2018 $ 2,524 AAA Aaa 9,465 Alameda County, California, COP (Financing Project), 6% due 9/01/2006 (f)(j) 10,684 BBB+ A3 7,500 California State, Department of Water Resources, Power Supply Revenue Bonds, Series A, 5.75% due 5/01/2017 8,279 BBB Baa1 2,000 California State, GO, Refunding, 5.75% due 5/01/2030 2,075 BBB Baa1 14,100 California State, Various Purpose, GO, 5.50% due 11/01/2033 14,487 A- A3 6,010 California Statewide Communities Development Authority, Health Facility Revenue Bonds (Memorial Health Services), Series A, 6% due 10/01/2023 6,404 NR* NR* 2,880 Capistrano, California, Unified School District, Community Facility District, Special Tax Bonds (No. 90-2 Talega), 6% due 9/01/2032 2,928 Chula Vista, California, Community Facilities District, Special Tax Bonds (No. 06-1, Eastlake Woods Area), Series A: NR* NR* 1,080 6.05% due 9/01/2020 1,094 NR* NR* 2,965 6.15% due 9/01/2026 3,008 Contra Costa County, California, Special Tax Bonds (Community Facilities District Number 2001-01): NR* NR* 1,585 6% due 9/01/2026 1,629 NR* NR* 1,200 6.10% due 9/01/2031 1,239 NR* NR* 3,100 Elk Grove, California, Poppy Ridge Community Facilities Number 3 Special Tax, Series 1, 6% due 9/01/2028 3,111 Golden State Tobacco Securitization Corporation of California, Tobacco Settlement Revenue Bonds: BBB Baa2 1,000 Series A-2, 7.90% due 6/01/2042 1,076 BBB Baa2 1,000 Series A-3, 7.875% due 6/01/2042 1,074 BBB Baa2 4,200 Series A-4, 7.80% due 6/01/2042 4,490 BBB Baa2 2,785 Series A-5, 7.875% due 6/01/2042 2,992 NR* NR* 4,000 Long Beach, California, Special Tax Bonds (Community Facilities District No. 3-Pine Ave.), 6.375% due 9/01/2023 4,207 Los Angeles, California, Department of Water and Power, Electric Plant Revenue Refunding Bonds: AA- Aaa 7,000 6% due 2/15/2005 (j) 7,448 NR* Aa3 5,160 RIB, Series 370, 10.49% due 2/15/2024 (g) 5,819 BBB- NR* 2,740 Pomona, California, Public Financing Authority Revenue Refunding Bonds (Merged Redevelopment Project), Series AI, 5.75% due 2/01/2034 2,749 NR* NR* 1,100 Poway, California, Unified School District, Special Tax Bonds (Community District No. 6), Series A, 6.05% due 9/01/2025 1,113 NR* NR* 2,695 Riverside, California, Improvement Bond Act of 1915, Special Assessment (Riverwalk Assessment District), 6.375% due 9/02/2026 2,805 Roseville, California, Special Tax (Stoneridge Community Facilities Number 1): NR* NR* 1,250 6.20% due 9/01/2021 1,295 NR* NR* 1,125 6% due 9/01/2025 1,149 NR* NR* 2,500 6.30% due 9/01/2031 2,586 Sacramento, California, Special Tax (North Natomas Community Facilities): NR* NR* 2,200 Series 01-03, 6% due 9/01/2028 2,237 NR* NR* 2,270 Series 4-C, 6% due 9/01/2028 2,297 San Francisco California, City and County Redevelopment Agency Revenue Bonds (Community Facilities District Number 6-Mission): NR* NR* 5,000 6% due 8/01/2021 5,079 NR* NR* 2,500 GO, Series A, 6% due 8/01/2025 2,507 NR* Aaa 1,075 San Francisco, California, Uptown Parking Corporation, Parking Revenue Bonds (Union Square), 6% due 7/01/2020 (f) 1,240 Santa Margarita, California, Water Disposal Special Tax Refunding Bonds (Community Facilities District Number 99-1): NR* NR* 3,680 6.20% due 9/01/2020 3,805 NR* NR* 3,000 6.25% due 9/01/2029 3,079 Colorado--2.9% AA NR* 500 Boulder County, Colorado, Hospital Development Revenue Bonds (Longmont United Hospital Project), 6% due 12/01/2030 (m) 562 AAA NR* 555 Boulder County, Colorado, M/F Mortgage Revenue Bonds (Sinton Apartments Project), AMT, 6.625% due 7/01/2034 (b) 566 Colorado HFA, Revenue Refunding Bonds (S/F Program), AMT: AA Aa2 195 Senior Series B-2, 7.25% due 10/01/2031 201 NR* Aa2 175 Senior Series B-3, 6.80% due 11/01/2028 177 AA Aa2 185 Senior Series C-2, 7.25% due 10/01/2031 (b) 191
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Colorado AAA Aaa $ 550 Colorado Water Resource and Power Development Authority, Small (concluded) Water Resource Revenue Bonds, Series A, 5.80% due 11/01/2020 (e) $ 628 A A2 2,575 Denver, Colorado, City and County Airport Revenue Bonds, AMT, Series A, 7.50% due 11/15/2023 2,747 Elk Valley, Colorado, Public Improvement Revenue Bonds (Public Improvement Fee): NR* NR* 7,560 Series A, 7.35% due 9/01/2031 7,812 NR* NR* 1,400 Series B, 7% due 9/01/2031 1,433 AAA Aaa 3,685 Larimer County, Colorado, Poudre School District Number R-1, GO, 6% due 12/15/2016 (e) 4,292 BB+ Ba1 6,170 Northwest Parkway, Colorado, Public Highway Authority Revenue Bonds, First Tier, Sub-Series D, 7.125% due 6/15/2041 6,332 NR* Aa3 750 Pitkin County, Colorado, GO, Refunding and Improvement Bonds, 6.875% due 12/01/2004 (j) 805 NR* NR* 7,700 Plaza Metropolitan District No. 1, Colorado, Tax Allocation Revenue Bonds (Public Improvement Fees), 8% due 12/01/2025 7,762 Connecticut-- AAA Aaa 1,000 Connecticut State Development Authority, Governmental Lease Revenue 1.9% Bonds, 6.60% due 6/15/2014 (f) 1,044 AA A1 2,000 Connecticut State Development Authority Revenue Bonds (General Fund), Series A, 6.375% due 10/15/2024 2,115 AAA Aaa 1,500 Connecticut State Development Authority, Solid Waste Disposal Facilities Revenue Bonds (Pfizer Inc. Project), AMT, 7% due 7/01/2025 1,646 AAA NR* 1,250 Connecticut State Development Authority, Water Facility Revenue Bonds (Bridgeport Hydraulic Company), AMT, 6.15% due 4/01/2035 (c) 1,397 AA Aa3 1,000 Connecticut State, GO, Series B, 5.50% due 11/01/2018 1,122 Connecticut State, HFA Revenue Refunding Bonds (Housing Mortgage Finance Program): AAA Aaa 1,000 AMT, Series B, Sub-Series B-2, 5.70% due 5/15/2017 1,061 AAA Aaa 1,200 Series C-1, 6.30% due 11/15/2017 1,265 Connecticut State Health and Educational Facilities Authority Revenue Bonds: AAA Aaa 1,000 (Bridgeport Hospital), Series A, 6.625% due 7/01/2018 (f) 1,014 AAA Aaa 1,400 (Newington Children's Hospital), Series A, 6.30% due 7/01/2021 (f) 1,460 AA NR* 1,500 (Waterbury Hospital Issue), Series C, 5.75% due 7/01/2020 (m) 1,627 AA NR* 1,000 (Westover School), Series A, 5.70% due 7/01/2030 (m) 1,095 A1+ VMIG1++ 200 (Yale University), VRDN, Series U, 1.25% due 7/01/2033 (a) 200 Connecticut State Health and Educational Facilities Authority, Revenue Refunding Bonds: AA NR* 2,000 (Eastern Connecticut Health Network), Series A, 6.50% due 7/01/2030 (m) 2,339 AA NR* 640 (Sacred Heart University), 6.625% due 7/01/2026 (m) 716 AAA Aaa 1,000 (Yale--New Haven Hospital Issue), Series H, 5.70% due 7/01/2025 (f) 1,088 Connecticut State Higher Education, Supplemental Loan Authority Revenue Bonds (Family Education Loan Program), AMT, Series A: NR* Aa3 370 6.40% due 11/15/2014 372 NR* Aaa 1,130 5.50% due 11/15/2020 (f) 1,144 NR* NR* 1,000 Connecticut State Regional Learning Educational Service Center Revenue Bonds (Office/Education Center Facility), 7.75% due 2/01/2015 1,028 AA Baa2 860 Waterbury, Connecticut, GO, 6% due 2/01/2017 (m) 966 Florida--5.7% NR* NR* 1,100 Bonnet Creek Resort, Florida, Community Development District, Special Assessment Revenue Bonds, 7.50% due 5/01/2034 1,159 NR* NR* 50 Brooks of Bonita Springs II, Florida, Community Development District, Capital Improvement Revenue Bonds, Series B, 6.60% due 5/01/2007 50 NR* Aaa 2,725 Duval County, Florida, School Board, COP, 5.75% due 7/01/2017 (h) 3,096 NR* NR* 5,000 Fiddlers Creek, Florida, Community Development District Number 2, Special Assessment Revenue Bonds, Series A, 6.375% due 5/01/2035 5,071 AAA Aaa 6,330 Florida HFA, Revenue Bonds (Antigua Club Apartments), AMT, Series A-1, 7% due 2/01/2035 (c) 6,556 NR* NR* 1,700 Heritage Isles Community Development District, Florida, Special Assessment Revenue Refunding Bonds, 5.90% due 11/01/2006 1,702 A+ Aa3 9,500 Jacksonville, Florida, Electric Authority, Water and Sewer Revenue Bonds, Series A, 6% due 10/01/2024 10,097 NR* NR* 645 Lakewood Ranch Community, Florida, Development District Number 5, Special Assessment Revenue Refunding Bonds, Series B, 6% due 5/01/2011 655 AAA NR* 7,000 Lee County, Florida, Airport Revenue Bonds, RIB, AMT, Series 580X, 10.39% due 10/01/2029 (g)(h) 8,837 AAA Aaa 4,500 Lee County, Florida, Transportation Facilities Revenue Bonds, 5.75% due 10/01/2005 (f)(j) 4,927
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Florida Mediterra, Florida, South Community Development District, Capital (concluded) Improvement Revenue Bonds: NR* NR* $ 1,075 6.85% due 5/01/2031 $ 1,133 NR* NR* 1,000 Series A, 6.375% due 5/01/2034 1,015 NR* NR* 20 Series B, 6.25% due 5/01/2004 20 NR* NR* 2,000 Series B, 5.50% due 5/01/2010 1,985 AAA NR* 515 Orange County, Florida, HFA, Mortgage Revenue Bonds, AMT, Series A, 8.375% due 3/01/2021 (b)(d) 516 AAA Aaa 5,000 Orange County, Florida, Tourist Development, Tax Revenue Bonds, 5.50% due 10/01/2020 (c) 5,558 NR* NR* 475 Panther Trace, Florida, Community Development District, Special Assessment Revenue Bonds, Series B, 6.50% due 5/01/2009 480 Park Place Community Development District, Florida, Special Assessment Revenue Bonds: NR* NR* 1,000 6.75% due 5/01/2032 1,049 NR* NR* 2,500 6.375% due 5/01/2034 2,544 AAA Aaa 2,000 Saint Lucie, Florida, West Services District, Utility Revenue Refunding Bonds, Senior Lien, 6% due 10/01/2022 (f) 2,313 NR* NR* 1,000 Sterling Hill, Florida, Community Development District, Capital Improvement Revenue Bonds, Series B, 5.50% due 11/01/2010 1,004 NR* NR* 2,010 Stoneybrook West, Florida, Community Development District, Special Assessment Revenue Bonds, Series B, 6.45% due 5/01/2010 2,045 NR* NR* 1,015 Verandah West, Florida, Community Development District, Capital Improvement Revenue Bonds, Series B, 5.25% due 5/01/2008 1,010 NR* NR* 4,430 Vista Lakes Community, Florida, Development District, Capital Improvement Revenue Bonds, Series B, 5.80% due 5/01/2008 4,460 Georgia--1.3% NR* NR* 5,000 Atlanta, Georgia, Tax Allocation Revenue Bonds (Atlantic Station Project), 7.90% due 12/01/2024 5,171 AAA Aaa 5,210 College Park, Georgia, Business and IDA, Revenue Bonds (Civic Center Project), 5.75% due 9/01/2026 (c) 5,804 AAA Aaa 3,450 Fulton County, Georgia, Development Authority Revenue Bonds (Morehouse College Project), 5.875% due 12/01/2030 (c) 3,916 Hawaii--0.1% BBB Baa1 1,410 Kuakini, Hawaii, Health System, Special Purpose Revenue Bonds, Series A, 6.30% due 7/01/2022 1,451 Idaho--0.3% BB+ Ba3 4,000 Power County, Idaho, Industrial Development Corporation, Solid Waste Disposal Revenue Bonds (FMC Corporation Project), AMT, 6.45% due 8/01/2032 3,890 Illinois--8.2% AAA NR* 10,620 Chicago, Illinois, Board of Education, GO, DRIVERS, Series 199, 9.953% due 12/01/2020 (c)(g) 13,315 AAA Aaa 1,400 Chicago, Illinois, GO (Neighborhoods Alive 21 Program), 5.875% due 1/01/2019 (e) 1,612 AAA Aaa 20,100 Chicago, Illinois, O'Hare International Airport, Airport Revenue Bonds, 3rd Lien, AMT, Series B-2, 6% due 1/01/2029 (n) 22,267 CCC Caa2 3,000 Chicago, Illinois, O'Hare International Airport, Special Facility Revenue Refunding Bonds (American Airlines Inc. Project), 8.20% due 12/01/2024 2,090 AAA Aaa 2,265 Chicago, Illinois, Park District, GO, Refunding, Series B, 5.75% due 1/01/2015 (e) 2,567 AAA Aaa 1,500 Chicago, Illinois, Park District, GO, Series A, 5.75% due 1/01/2016 (e) 1,700 NR* NR* 2,000 Chicago, Illinois, Special Assessment Bonds (Lake Shore East), 6.75% due 12/01/2032 2,004 AAA Aaa 3,210 Cicero, Illinois, GO, Refunding (Corporate Purpose), 6% due 12/01/2028 (f) 3,644 NR* Aaa 7,000 Decatur, Illinois, GO, Refunding, 6% due 3/01/2025 (e) 7,765 BBB Baa1 10,000 Hodgkins, Illinois, Environmental Improvement Revenue Bonds (Metro Biosolids Management LLC Project), AMT, 6% due 11/01/2023 10,154 Illinois State, GO, 1st Series (f): AAA Aaa 8,890 5.75% due 12/01/2015 10,172 AAA Aaa 3,745 5.75% due 12/01/2016 4,273 AAA Aaa 4,000 5.75% due 12/01/2017 4,564 NR* Aa3 3,000 Illinois State, Sales Tax Revenue Bonds, 6% due 6/15/2020 3,451 AAA Aaa 2,000 Lake County, Illinois, Forest Preservation District, GO (Land Acquisition and Development), 5.75% due 12/15/2016 2,318 NR* Aaa 4,400 Southwestern Illinois Development Authority, Sewer Facilities Revenue Bonds (Monsanto Company Project), AMT, 7.30% due 7/15/2015 4,536 Indiana--0.2% NR* NR* 2,595 Indiana State Educational Facilities Authority, Revenue Refunding Bonds (Saint Joseph's College Project), 7% due 10/01/2029 2,749 Iowa--0.8% AAA Aaa 1,000 Iowa City, Iowa, Sewer Revenue Bonds, 5.75% due 7/01/2021 (f) 1,082 NR* NR* 6,930 Iowa Finance Authority, Health Care Facilities Revenue Refunding Bonds (Care Initiatives Project), 9.25% due 7/01/2025 8,039
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Kansas--0.4% BBB Baa1 $ 4,500 Wyandotte County, Kansas, Kansas City Unified Government Revenue Refunding Bonds (General Motors Corporation Project), 6% due 6/01/2025 $ 4,726 Kentucky--1.3% Kenton County, Kentucky, Airport Board Special Facilities, Airport Revenue Bonds (Delta Airlines Project), AMT, Series A: B B3 4,950 7.50% due 2/01/2020 4,900 B B3 2,100 7.125% due 2/01/2021 1,996 BBB Baa2 8,000 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds (TJ International Project), AMT, 7% due 6/01/2024 8,277 Louisiana--1.3% B NR* 2,290 Hodge, Louisiana, Utility Revenue Refunding Bonds (Stone Container Corporation), AMT, 7.45% due 3/01/2024 2,372 BB- NR* 13,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain Company Project), 7.50% due 7/01/2013 13,250 Maine--1.3% BB+ Ba1 8,635 Maine Finance Authority, Solid Waste Recycling Facilities Revenue Bonds (Great Northern Paper Project--Bowater), AMT, 7.75% due 10/01/2022 8,652 AA+ Aa1 6,045 Maine State Housing Authority, Mortgage Purpose Revenue Bonds, DRIVERS, AMT, Series 170, 10.401% due 11/15/2028 (g) 6,608 Maryland--1.0% NR* NR* 500 Anne Arundel County, Maryland, Special Obligation Revenue Bonds (Arundel Mills Project), 7.10% due 7/01/2029 542 NR* VMIG1++ 200 Baltimore County, Maryland, EDR, Refunding (Garrison Forest School Project), VRDN, 1.25% due 6/01/2026 (a) 200 AA Aa2 600 Carrol County, Maryland, Consolidated Public Improvement, GO, 6.50% due 10/01/2004 (j) 636 NR* Aa2 1,000 Maryland State Community Development Administration, Department of Housing and Community Development, Housing Revenue Bonds, AMT, Series B, 6.15% due 1/01/2021 1,068 NR* Aa2 1,180 Maryland State Community Development Administration, Department of Housing and Community Development, Residential Revenue Refunding Bonds, Series A, 5.60% due 3/01/2017 (b) 1,242 NR* Aaa 1,000 Maryland State Community Development Administration, Department of Housing and Community Development Revenue Bonds (Waters Landing II Apartments), AMT, Series A, 5.875% due 8/01/2033 1,064 NR* Aa2 360 Maryland State Community Development Administration, Department of Housing and Community Development Revenue Refunding Bonds, S/F Program, 4th Series, 6.45% due 4/01/2014 369 NR* NR* 345 Maryland State Economic Development Corporation Revenue Bonds (Health and Mental Hygiene Program), Series A, 7.125% due 3/01/2006 361 A- NR* 1,000 Maryland State Energy Financing Administration, Solid Waste Disposal Revenue Bonds, Limited Obligation (Wheelabrator Water Projects), AMT, 6.45% due 12/01/2016 1,065 Maryland State Health and Higher Educational Facilities Authority, Revenue Refunding Bonds: AAA Aaa 1,470 (Maryland General Hospital), 6.125% due 7/01/2019 (f) 1,532 NR* NR* 900 (Memorial Hospital of Cumberland), 6.50% due 7/01/2004 (j) 923 Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue Bonds, Series A: AA Aa2 300 6.375% due 9/01/2010 310 AA Aa2 470 6.55% due 9/01/2014 474 NR* Aa2 340 Montgomery County, Maryland, Housing Opportunities Commission, S/F Mortgage Revenue Refunding Bonds, Series A, 5.75% due 7/01/2013 364 AAA NR* 500 Prince George's County, Maryland, Housing Authority, Mortgage Revenue Refunding Bonds (Parker Apartments Project), Series A, 7.25% due 11/20/2016 (d) 506 AA+ Aa3 1,000 University of Maryland, System Auxiliary Facility and Tuition Revenue Bonds, Series A, 5.75% due 10/01/2019 1,137 Massachusetts-- AA Aa2 1,000 Massachusetts Bay Transportation Authority Revenue Bonds (General 1.4% Transportation System), Series A, 7% due 3/01/2021 1,301 AAA Aaa 390 Massachusetts Education Loan Authority, Education Loan Revenue Bonds, AMT, Issue E, Series A, 7.375% due 1/01/2012 (c) 400 AAA Aaa 540 Massachusetts Educational Financing Authority, Education Loan Revenue Refunding Bonds, AMT, Issue E, 5.85% due 7/01/2014 (c) 572 BB+ NR* 1,000 Massachusetts State Development Finance Agency, Revenue Refunding Bonds (Eastern Nazarine College), 5.625% due 4/01/2029 754 AAA Aaa 2,500 Massachusetts State, HFA, Housing Revenue Refunding Bonds, Series B, 6.05% due 12/01/2009 (f) 2,622 AAA Aaa 625 Massachusetts State, HFA, S/F Housing Revenue Bonds, AMT, Series 48, 6.35% due 6/01/2026 (f) 653 AA Aa2 635 Massachusetts State, HFA, S/F Housing Revenue Refunding Bonds, AMT, Series 40, 6.65% due 12/01/2027 659
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Massachusetts Massachusetts State Health and Educational Facilities Authority (concluded) Revenue Bonds: BBB- NR* $ 1,500 (Jordan Hospital), Series E, 6.75% due 10/01/2033 $ 1,477 AAA Aaa 2,575 (Medical Center of Central Massachusetts), CARS, Series B, 11.72% due 6/23/2022 (c)(g) 3,291 Massachusetts State Health and Educational Facilities Authority, Revenue Refunding Bonds: NR* Ba2 180 (Bay Cove Human Services Issue), Series A, 5.85% due 4/01/2004 181 AAA Aaa 1,900 (Massachusetts General Hospital), Series F, 6.25% due 7/01/2012 (c) 2,235 NR* Ca 723 (New England Memorial Hospital), Series B, 6.125% due 7/01/2013 (k) 43 NR* Ca 8,924 (New England Memorial Hospital), Series B, 6.25% due 7/01/2023 (k) 535 AA+ Aaa 130 Massachusetts State Water Pollution Abatement Trust, Water Abatement Revenue Bonds, Series A, 6.375% due 2/01/2015 133 NR* Aaa 1,600 Montachusett, Massachusetts, Regional Vocational Technical School District, GO, 5.95% due 1/15/2020 (f) 1,844 Michigan--1.4% BBB Baa2 5,000 Delta County, Michigan, Economic Development Corporation, Environmental Improvement Revenue Refunding Bonds (Mead Westvaco--Escanaba), Series A, 6.25% due 4/15/2027 5,235 BBB Baa2 500 Dickinson County, Michigan, Economic Development Corporation, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), Series A, 5.75% due 6/01/2016 544 AAA Aaa 1,000 Eastern Michigan University, Revenue Refunding Bonds, 6% due 6/01/2024 (c) 1,144 BBB- Baa3 3,000 Flint, Michigan, Hospital Building Authority, Revenue Refunding Bonds (Hurley Medical Center), 6% due 7/01/2020 2,857 AAA Aaa 615 Kalamazoo, Michigan, Hospital Finance Authority, Hospital Facility Revenue Refunding and Improvement Bonds (Bronson Methodist Hospital), Series A, 6.375% due 5/15/2017 (f) 630 BBB- NR* 3,325 Macomb County, Michigan, Hospital Finance Authority, Hospital Revenue Bonds (Mount Clemens General Hospital), Series B, 5.875% due 11/15/2034 3,163 AAA Aaa 1,500 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Mercy Mount Clemens), Series A, 6% due 5/15/2014 (f) 1,728 AAA Aaa 1,060 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds (Detroit Edison Company), Series AA, 6.40% due 9/01/2025 (f) 1,157 Minnesota-- A A1 1,255 Anoka County, Minnesota, Solid Waste Disposal Revenue Bonds (Natural 1.1% Rural Utilities), AMT, Series A, 6.95% due 12/01/2008 1,281 NR* A1 1,000 Eden Prairie, Minnesota, M/F Housing Revenue Bonds (Rolling Hills Project), Series A, 6.15% due 8/20/2031 (d) 1,103 Minneapolis and Saint Paul, Minnesota, Metropolitan Airports Commission, Airport Revenue Bonds, AMT, Sub-Series D (e): AAA Aaa 470 5.75% due 1/01/2012 526 AAA Aaa 470 5.75% due 1/01/2014 519 AAA Aaa 2,060 5.75% due 1/01/2015 2,270 A- NR* 750 Minneapolis, Minnesota, Community Development Agency, Supported Development Revenue Bonds (Common Bond Fund), AMT, Series 2, 6.20% due 6/01/2017 789 NR* A3 1,500 Minneapolis, Minnesota, Health Care System Revenue Bonds (Allina Health System), Series A, 5.70% due 11/15/2022 1,574 AA+ Aa1 235 Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT, Series L, 6.70% due 7/01/2020 240 NR* Aa2 1,110 Ramsey County, Minnesota, Housing and Redevelopment Authority, M/F Housing Revenue Bonds (Hanover Townhouses Project), AMT, 6% due 7/01/2031 1,152 NR* Aaa 1,000 Saint Cloud, Minnesota, Health Care Revenue Refunding Bonds (Saint Cloud Hospital Obligation Group), Series A, 6.25% due 5/01/2020 (h) 1,166 AAA Aaa 1,000 Saint Francis, Minnesota, Independent School District No. 015, GO, Series A, 6.35% due 2/01/2013 (h) 1,094 AA NR* 1,500 Waconia, Minnesota, Health Care Facilities Revenue Bonds (Ridgeview Medical Center Project), Series A, 6.125% due 1/01/2029 (m) 1,685 Mississippi-- NR* Aaa 1,315 Mississippi Home Corporation, S/F Mortgage Revenue Bonds (Access 0.1% Program), AMT, Series A, 6.90% due 6/01/2024 (d) 1,336 Missouri--0.5% Fenton, Missouri, Tax Increment Revenue Refunding and Improvement Bonds (Gravois Bluffs): NR* NR* 1,530 6.75% due 10/01/2015 1,584 NR* NR* 4,000 7% due 10/01/2021 4,329
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Nevada--2.0% NR* NR* $ 1,550 Clark County, Nevada, Improvement District No. 142 Special Assessment, 6.375% due 8/01/2023 $ 1,568 NR* NR* 3,000 Henderson, Nevada, Local Improvement Districts, Special Assessment, Series No. T-14, 5.80% due 3/01/2023 2,950 Las Vegas, Nevada, Local Improvement Bonds, Special Assessment, Special Improvement District Number 808, Summerlin: NR* NR* 1,770 5.875% due 6/01/2009 1,836 NR* NR* 2,045 6.125% due 6/01/2012 2,118 NR* NR* 2,280 6.25% due 6/01/2013 2,362 NR* NR* 2,000 Reno, Nevada, Special Assessment District Number 4 (Somerset Parkway), 6.625% due 12/01/2022 2,034 Sparks, Nevada, Redevelopment Agency, Tax Allocation Revenue Refunding Bonds, Series A (m): AA NR* 3,110 6% due 1/15/2015 3,515 AA NR* 6,315 6% due 1/15/2023 7,010 New Hampshire-- BBB+ Baa1 1,750 New Hampshire Health and Education Facilities Authority, Revenue 0.2% Refunding Bonds (Elliot Hospital), Series B, 5.60% due 10/01/2022 1,758 New Jersey-- CCC B2 670 Camden County, New Jersey, Pollution Control Financing Authority, 3.6% Solid Waste Resource Recovery Revenue Refunding Bonds, AMT, Series B, 7.50% due 12/01/2009 650 NR* NR* 3,300 New Jersey EDA, Retirement Community Revenue Bonds (Cedar Crest Village Inc. Facility), Series A, 7.25% due 11/15/2031 3,360 New Jersey Health Care Facilities Financing Authority Revenue Bonds: BBB Baa1 2,250 (Capital Health System Inc.), Series A, 5.75% due 7/01/2023 2,330 BB+ NR* 3,000 (Pascack Valley Hospital Association), 6% due 7/01/2013 2,971 New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds (f): NR* Aaa 10,000 DRIVERS, Series 155, 9.99% due 1/01/2018 (g) 12,601 AAA Aaa 10,000 Series A, 5.75% due 1/01/2018 11,301 BBB Baa2 9,000 Tobacco Settlement Financing Corporation of New Jersey Revenue Bonds, 7% due 6/01/2041 9,089 New Mexico-- BBB- Baa3 8,000 Farmington, New Mexico, PCR, Refunding (Public Service Company of 0.8% New Mexico--San Juan), Series B, 6.30% due 12/01/2016 8,368 AAA Aaa 300 Las Cruces, New Mexico, Health Facilities Revenue Refunding Bonds (Evangelical Lutheran Project), 6.45% due 12/01/2017 (h) 304 AAA NR* 250 New Mexico Mortgage Finance Authority, Revenue Refunding Bonds, Mortgage-Backed Securities, Series F, 7% due 1/01/2026 (e)(i) 281 AAA Aaa 250 Santa Fe County, New Mexico, Correctional System Revenue Bonds, 6% due 2/01/2027 (h) 301 New York-- AAA Aaa 9,500 Metropolitan Transportation Authority, New York, Commuter Facilities, 12.6% Service Contract Revenue Refunding Bonds, Series 8, 5.50% due 7/01/2013 (h)(j) 11,125 AAA Aaa 10,000 Metropolitan Transportation Authority, New York, Transit Facilities Revenue Bonds, Series A, 5.625% due 7/01/2007 (f)(j) 11,378 NR* NR* 3,230 New York City, New York, City IDA, Civic Facility Revenue Bonds (Special Needs Facilities Pooled Program), Series C-1, 6% due 7/01/2012 3,244 NR* NR* 2,000 New York City, New York, City IDA, Revenue Bonds (Visy Paper Inc. Project), AMT, 7.95% due 1/01/2028 2,068 BB+ Ba2 4,050 New York City, New York, City IDA, Special Facility Revenue Bonds (British Airways PLC Project), AMT, 7.625% due 12/01/2032 3,986 NR* Aaa 10,000 New York City, New York, City Municipal Water Finance Authority, Water and Sewer System Revenue Bonds, RIB, Series 158, 10.017% due 6/15/2026 (f)(g) 11,957 AAA Aaa 3,000 New York City, New York, City Transit Authority, Triborough Metropolitan Transportation Authority, COP, 5.75% due 1/01/2020 (c) 3,380 New York City, New York, City Transitional Finance Authority, Revenue Refunding Bonds, Series C: AA+ Aa2 12,015 5.875% due 11/01/2015 13,890 AA+ Aa2 8,000 Future Tax Secured, 5.875% due 11/01/2017 9,223 New York City, New York, GO, Refunding: AAA Aaa 8,910 Series A, 6.25% due 5/15/2010 (j)(n) 10,773 AAA Aaa 6,600 Series A, 6% due 5/15/2021 (n) 7,645 AAA Aaa 1,090 Series A, 6.25% due 5/15/2026 (n) 1,271 AAA Aaa 4,000 Series B, 8.25% due 6/01/2006 (n) 4,603 AAA Aaa 4,000 Series C, 5.875% due 2/01/2016 (e) 4,406 AAA Aaa 15,000 Series G, 5.75% due 2/01/2014 (f) 16,334 AAA Aaa 1,000 Series H, 6% due 8/01/2017 (n) 1,123
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value New York AAA Aaa $10,000 New York City, New York, GO, Series B, 5.875% due 8/01/2015 (f) $ 11,598 (concluded) AA- A3 5,000 New York State Dormitory Authority, Revenue Refunding Bonds (State University Educational Facilities), Series A, 7.50% due 5/15/2013 6,520 New York State Environmental Facilities Corporation, State Clean Water and Drinking Revenue Bonds (Revolving Funds), Series B: NR* NR* 1,990 5.875% due 7/15/2009 (j) 2,352 NR* NR* 1,360 5.875% due 1/15/2019 1,551 NR* NR* 95 Suffolk County, New York, IDA, Civic Facility Revenue Bonds (Special Needs Facilities Pooled Program), Series D-1, 6% due 7/01/2012 95 NR* NR* 705 Westchester County, New York, IDA, Civic Facilities Revenue Bonds (Special Needs Facilities Pooled Program), Series E-1, 6% due 7/01/2012 708 NR* NR* 8,095 Westchester County, New York, IDA, Continuing Care Retirement, Mortgage Revenue Bonds (Kendal on Hudson Project), Series A, 6.50% due 1/01/2034 8,050 North AAA Aaa 920 Brunswick County, North Carolina, COP, 6% due 6/01/2016 (h) 1,070 Carolina--2.3% BBB A3 500 Chatham County, North Carolina, Industrial Facilities and Pollution Control Financing Authority Revenue Bonds (Carolina Power and Light Company), 6.30% due 6/15/2014 509 AAA Aaa 1,000 Cumberland County, North Carolina, COP (Civic Center Project), Series A, 6.40% due 12/01/2004 (c)(j) 1,069 NR* Baa2 1,500 Haywood County, North Carolina, Industrial Facilities and Pollution Control Financing Authority Revenue Bonds (Champion International Corporation Project), AMT, 6.25% due 9/01/2025 1,547 BBB Baa2 2,000 Martin County, North Carolina, Industrial Facilities and Pollution Control Financing Authority Revenue Bonds (Solid Waste Disposal-- Weyerhaeuser Company), AMT, 6.80% due 5/01/2024 2,062 North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds: AAA Aaa 1,500 Series B, 5.875% due 1/01/2021 (f) 1,667 BBB Baa3 4,000 Series D, 6.75% due 1/01/2026 4,444 North Carolina HFA, S/F Revenue Bonds: AA Aa2 35 AMT, Series X, 6.70% due 9/01/2026 36 AA Aa2 720 Series W, 6.50% due 3/01/2018 733 NR* NR* 2,500 North Carolina Medical Care Commission, Health Care Facilities, First Mortgage Revenue Bonds (Presbyterian Homes Project), 6.875% due 10/01/2021 2,675 North Carolina Medical Care Commission, Retirement Facilities, First Mortgage Revenue Bonds: NR* NR* 1,625 (Forest at Duke Project), 6.375% due 9/01/2032 1,638 NR* NR* 2,500 (Givens Estates Project), Series A, 6.50% due 7/01/2032 2,534 North Carolina Municipal Power Agency Number 1, Catawba Electric Revenue Refunding Bonds, Series B: BBB+ Baa1 500 6.375% due 1/01/2013 570 A NR* 1,080 6.375% due 1/01/2013 1,234 NR* A2 1,175 North Carolina State Educational Assistance Authority Revenue Bonds (Guaranteed Student Loan), AMT, Sub-Lien, Series C, 6.35% due 7/01/2016 1,232 Piedmont, North Carolina, Triad Airport Authority, Airport Revenue Refunding Bonds, Series A (h): AAA Aaa 1,000 6.375% due 7/01/2016 1,176 AAA Aaa 1,000 6% due 7/01/2024 1,130 AAA Aaa 1,000 Randolph County, North Carolina, COP, 5.75% due 6/01/2022 (h) 1,119 Ohio--2.1% NR* NR* 1,000 Cuyahoga County, Ohio, Health Care Facilities Revenue Refunding Bonds (Benjamin Rose Institute Project), 5.50% due 12/01/2028 848 AAA Aaa 1,200 Huron County, Ohio, GO, Human Services Building, 7.25% due 12/01/2005 (f)(j) 1,350 NR* NR* 2,000 Lucas County, Ohio, Hospital Revenue Bonds (Flower Hospital), 6.125% due 12/01/2004 (j) 2,104 BBB Baa1 2,000 Moraine, Ohio, Solid Waste Disposal Revenue Bonds (General Motors Corp. Project), AMT, 6.75% due 7/01/2014 2,214 AAA Aaa 3,000 North Canton, Ohio, City School District GO, 6.70% due 12/01/2004 (c)(j) 3,214 Ohio HFA, Mortgage Revenue Bonds, AMT (d): NR* Aaa 790 Series A-1, 6.15% due 3/01/2029 833 AAA Aaa 235 Series B-2, 6.70% due 3/01/2025 242 NR* Aaa 500 Ohio HFA, Residential Mortgage Revenue Bonds, Series A-1, 6.35% due 9/01/2031 (d) 512 AAA Aaa 8,000 Ohio State Air Quality Development Authority, Revenue Refunding Bonds (Dayton Power & Light Company), Series B, 6.40% due 8/15/2027 (f) 8,111 AAA Aaa 1,000 Ohio State Water Development Authority, Pollution Control Facilities Revenue Refunding Bonds (Pennsylvania Power Co. Project), 6.15% due 8/01/2023 (c) 1,046
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Ohio AAA Aaa $ 3,005 Toledo-Lucas County, Ohio, Lodging Tax Revenue Refunding Bonds (concluded) (Convention Center Project), 5.70% due 10/01/2015 (f) $ 3,339 NR* Aa3 1,000 Toledo-Lucas County, Ohio, Port Authority Revenue Refunding Bonds (Cargill Inc. Project), 5.90% due 12/01/2015 1,030 Oregon--0.9% Forest Grove, Oregon, Campus Improvement Revenue Refunding Bonds (Pacific University) (m): AA NR* 250 6% due 5/01/2015 283 AA NR* 250 6.20% due 5/01/2020 284 AAA Aaa 2,485 Jackson County, Oregon, Central Point School District Number 006, GO, 5.75% due 6/15/2017 (e) 2,824 Oregon State Housing and Community Services Department, Mortgage Revenue Refunding Bonds (S/F Mortgage Program), Series A: NR* Aa2 205 6.40% due 7/01/2018 211 NR* Aa2 85 AMT, 6.20% due 7/01/2027 89 NR* Aaa 500 Portland, Oregon, M/F Housing Authority Revenue Bonds (Lovejoy Station Apartments Project), AMT, 5.90% due 7/01/2023 (f) 527 AAA Aaa 1,000 Portland, Oregon, Sewer System Revenue Bonds, Series A, 5.75% due 8/01/2018 (e) 1,138 NR* Aaa 3,190 Portland, Oregon, Urban Renewal and Redevelopment Revenue Bonds (South Park Blocks), Series A, 5.75% due 6/15/2018 (c) 3,651 NR* Aaa 1,000 Portland, Oregon, Urban Renewal and Redevelopment Revenue Refunding Bonds (Downtown Waterfront), Series A, 5.75% due 6/15/2018 (c) 1,144 Pennsylvania-- AAA Aaa 2,220 Allegheny County, Pennsylvania, Sanitation Authority, Sewer Revenue 1.2% Bonds, 5.75% due 12/01/2017 (f) 2,553 A NR* 4,000 Pennsylvania State Higher Educational Facilities Authority Revenue Bonds (University of Pennsylvania Medical Center Health System), Series A, 6% due 1/15/2031 4,224 NR* NR* 1,265 Philadelphia, Pennsylvania, Authority for IDR, Commercial Development, 7.75% due 12/01/2017 1,285 A- NR* 5,750 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds (Guthrie Health), Series A, 5.875% due 12/01/2031 5,974 Rhode Island-- AAA Aaa 6,815 Rhode Island State Economic Development Corporation, Airport Revenue 0.8% Bonds, Series B, 6% due 7/01/2028 (e) 7,688 AA NR* 1,000 Rhode Island State Economic Development Corporation Revenue Bonds (Providence Place Mall), 6.125% due 7/01/2020 (m) 1,132 South BBB+ Baa2 5,400 Medical University, South Carolina, Hospital Authority, Hospital Carolina--0.5% Facilities Revenue Refunding Bonds, Series A, 6.375% due 8/15/2027 5,645 South Dakota-- NR* Aaa 3,750 Pierre, South Dakota, School District Number 32-2, GO, 5.75% due 0.4% 8/01/2020 (h) 4,256 Tennessee--2.2% Chattanooga, Tennessee, Industrial Development Board, Lease Rent Revenue Bonds (Southside Redevelopment Corporation) (c): AAA Aaa 4,485 5.75% due 10/01/2017 5,119 AAA Aaa 3,740 5.75% due 10/01/2018 4,269 BB+ Ba1 4,950 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds (Recycling Facility--Calhoun Newsprint), AMT, 7.40% due 12/01/2022 4,955 AA Aa2 5,000 Metropolitan Government of Nashville and Davidson County, Tennessee, GO, 5.875% due 5/15/2026 5,418 NR* NR* 2,000 Metropolitan Knoxville, Tennessee, Airport Authority, Special Purpose Revenue Bonds (Northwest Airlines Inc. Project), AMT, 8% due 4/01/2032 1,931 A- Baa1 3,800 Shelby County, Tennessee, Health, Educational and Housing Facility Board, Hospital Revenue Refunding Bonds (Methodist Healthcare), 6.50% due 9/01/2026 4,138 Texas--10.4% Austin, Texas, Convention Center Revenue Bonds (Convention Enterprises Inc.), First Tier, Series A: BBB- Baa3 5,300 6.60% due 1/01/2021 5,587 BBB- Baa3 2,300 6.70% due 1/01/2028 2,439 AAA Aaa 5,300 Austin, Texas, Revenue Bonds (Town Lake Community Events Center Venue), 6.20% due 11/15/2029 (e) 6,084 Bexar County, Texas, Health Facilities Development Corporation Revenue Refunding Bonds (Army Retirement Residence Project): BBB- NR* 600 6.125% due 7/01/2022 626 BBB- NR* 1,750 6.30% due 7/01/2032 1,828 BBB- Ba1 4,250 Brazos River Authority, Texas, Revenue Refunding Bonds (Reliant Energy Inc. Project), Series B, 7.75% due 12/01/2018 4,614
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (continued) National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Texas AAA NR* $ 1,270 Cameron County, Texas, Housing Finance Corporation, S/F Mortgage (concluded) Revenue Refunding Bonds, Series B-1, 6.75% due 9/01/2025 (i) $ 1,303 AAA NR* 10,125 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT, Series 201, 10.536% due 11/01/2024 (e)(g) 12,501 AA NR* 1,260 Fort Bend County, Texas, Municipal Utility District Number 23, GO, 6.625% due 9/01/2024 (m) 1,419 AA+ Aa1 1,400 Fort Worth, Texas, Certificates of Obligation, GO, 6.25% due 3/01/2005 (j) 1,482 AA NR* 1,000 Gregg County, Texas, Health Facilities Development Corporation, Hospital Revenue Bonds (Good Shepherd Medical Center Project), 6.875% due 10/01/2020 (m) 1,198 BBB- Ba1 8,080 Matagorda County, Texas, Navigation District Number 1, Revenue Refunding Bonds (Reliant Energy Inc.), Series C, 8% due 5/01/2029 8,812 AAA Aaa 1,000 Pflugerville, Texas, Independent Industrial School District, GO, 5.75% due 8/15/2020 1,129 BB Ba3 4,825 Port Corpus Christi, Texas, Individual Development Corporation, Environmental Facilities Revenue Bonds (Citgo Petroleum Corporation Project), AMT, 8.25% due 11/01/2031 5,047 BBB Baa2 2,495 Red River Authority, Texas, PCR, Refunding (Celanese Project), Series A, 6.45% due 11/01/2030 2,628 AA NR* 1,000 Red River, Texas, Education Finance Revenue Bonds (Saint Mark's School--Texas Project), 6% due 8/15/2019 1,102 NR* Aaa 450 South Plains, Texas, Housing Finance Corporation, S/F Mortgage Revenue Bonds, AMT, Series A, 7.30% due 9/01/2031 (i) 499 Southeast Texas, Housing Finance Corporation Revenue Bonds, AMT (d)(o): NR* Aaa 1,100 Series A, 8% due 11/01/2025 1,173 NR* Aaa 475 Series B, 8.50% due 11/01/2025 485 AA Aa1 800 Texas State, GO, Veterans' Housing Assistance Fund II, AMT, Series A, 7% due 8/01/2004 826 AA NR* 805 Texas State, GO, Water Development Board, 7% due 8/01/2004 (j) 833 Texas State Public Finance Authority, Building Revenue Bonds (h): AAA Aaa 2,100 (General Services Commission Project), Series A, 6% due 2/01/2020 2,398 AAA Aaa 1,000 (State Preservation Project), Series B, 6% due 8/01/2015 1,155 NR* Baa3 1,750 Texas State Student Housing Corporation, Student Housing Revenue Bonds (Midwestern State University Project), 6.50% due 9/01/2034 1,722 AAA Aaa 45,000 Texas State Turnpike Authority, Central Texas Turnpike System Revenue Bonds, First Tier, Series A, 5.75% due 8/15/2038 (c) 49,487 AAA Aaa 4,930 Upper Trinity Regional Water District, Texas, Water Revenue Bonds (Regional Treated Water Supply System), Series A, 6% due 8/01/2020 (e) 5,680 Utah--1.1% AAA Aaa 12,000 Weber County, Utah, Municipal Building Authority, Lease Revenue Bonds, 7.50% due 12/15/2004 (j)(m) 12,974 Virginia--0.5% BBB+ A3 2,425 Chesterfield County, Virginia, IDA, PCR (Virginia Electric and Power Company), Series B, 5.875% due 6/01/2017 2,628 BB NR* 4,250 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior-Series A, 5.50% due 8/15/2028 (l) 3,385 Washington-- AAA Aaa 2,065 Kitsap County, Washington, GO, 5.875% due 7/01/2020 (c) 2,349 1.4% AAA Aaa 3,000 Port Seattle, Washington, Special Facilities Revenue Bonds, Series A, 6% due 9/01/2029 (f) 3,423 AAA Aaa 3,010 Seattle, Washington, Drain and Wastewater Utility Revenue Bonds, 5.75% due 11/01/2022 (f) 3,362 Seattle, Washington, Housing Authority Revenue Bonds: NR* NR* 2,750 (Newholly Project), AMT, 6.25% due 12/01/2035 2,709 NR* NR* 2,470 (Replacement Housing Project), 6.125% due 12/01/2032 2,455 AAA Aaa 1,625 University of Washington, University Revenue Bonds (Student Facilities Fee), 5.875% due 6/01/2017 1,874 West Virginia-- BBB Baa2 7,500 Upshur County, West Virginia, Solid Waste Disposal Revenue Bonds 0.7% (TJ International Project), AMT, 7% due 7/15/2025 8,074 Wisconsin--1.0% NR* Aaa 2,050 Waterford, Wisconsin, Graded Joint School District Number 1, GO, Refunding, 5.75% due 4/01/2018 (e)(h) 2,324 AA Aa2 1,775 Wisconsin Housing and EDA, Home Ownership Revenue Refunding Bonds, RITR, AMT, Series 18, 10.362% due 9/01/2028 (g) 1,849 AAA Aaa 4,285 Wisconsin State, GO, AMT, Series B, 6.20% due 11/01/2026 (f) 4,567 BBB+ NR* 3,250 Wisconsin State Health and Educational Facilities Authority Revenue Bonds (Synergyhealth Inc.), 6% due 11/15/2023 3,319
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Schedule of Investments (concluded) National Portfolio (In Thousands)
S&P Moody's Face State Ratings Ratings Amount Municipal Bonds Value Wyoming--1.1% AAA Aaa $ 8,400 Sweetwater County, Wyoming, PCR, Refunding (Idaho Power Company Project), Series A, 6.05% due 7/15/2026 (f) $ 9,298 BB+ Ba3 4,000 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC Corporation Project), AMT, Series A, 7% due 6/01/2024 4,038 Guam--0.0% AAA NR* 115 Guam Housing Corporation, S/F Mortgage Revenue Bonds, AMT, Series A, 5.75% due 9/01/2031 (o) 127 Puerto Rico-- Puerto Rico Commonwealth Highway and Transportation Authority, 2.5% Transportation Revenue Bonds: A- Baa2 8,045 5.75% due 7/01/2022 8,934 AAA Aaa 2,000 Series B, 5.875% due 7/01/2021 (f) 2,328 A Baa1 1,000 Series B, 6% due 7/01/2026 1,064 AAA Aaa 785 Puerto Rico Commonwealth, Public Improvement, GO, Refunding, 5.70% due 7/01/2020 (f) 899 Puerto Rico Electric Power Authority, Power Revenue Bonds: AAA Aaa 800 STRIPES, Series T, 5.80% due 7/01/2004 (g)(h)(j) 870 A- A3 5,000 Series NN, 5.125% due 7/01/2029 5,150 NR* Aa2 2,000 Puerto Rico Industrial Tourist Educational, Medical and Environmental Control Facilities Revenue Bonds (Ascension Health), RIB, Series 377, 10.74% due 11/15/2030 (g) 2,431 Puerto Rico Public Finance Corporation, Commonwealth Appropriation Revenue Bonds, Series E: BBB+ Baa3 2,750 5.70% due 8/01/2025 2,927 BBB+ Baa3 3,995 5.50% due 8/01/2029 4,216 BBB+ Baa3 1,000 5.75% due 8/01/2030 1,073 Virgin BBB- Baa3 8,000 Virgin Islands Government Refinery Facilities Revenue Refunding Islands--0.7% Bonds (Hovensa Coker Project), AMT, 6.50% due 7/01/2021 8,355 Total Municipal Bonds (Cost--$1,045,605)--94.8% 1,112,775 Shares Held Short-Term Securities 32,023 Merrill Lynch Institutional Tax-Exempt Fund** 32,023 Total Short-Term Securities (Cost--$32,023)--2.8% 32,023 Total Investments (Cost--$1,077,628)--97.6% 1,144,798 Other Assets Less Liabilities--2.4% 28,677 ---------- Net Assets--100.0% $1,173,475 ========== (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, 2003. (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, 2003. (h)FSA Insured. (i)FNMA/GNMA Collateralized. (j)Prerefunded. (k)Non-income producing security. (l)Connie Lee Insured. (m)Radian Insured. (n)XL Capital Insured. (o)FHLMC Collateralized. *Not Rated. **Investments in companies considered to be an affiliate of the Fund (such companies are defined as "Affiliated Companies" in Section 2(a)(3) of the Investment Company Act of 1940) are as follows: (in Thousands) Net Dividend Affiliate Activity Income Merrill Lynch Institutional Tax-Exempt Fund 8,600 $105 ++Highest short-term rating by Moody's Investors Service, Inc. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Statements of Assets and Liabilities
Limited Maturity Insured National As of December 31, 2003 Portfolio Portfolio Portfolio Assets Investments, at value* $ 744,267,614 $ 1,151,964,510 $ 1,144,798,335 Cash 33,179 14,526,199 34,347 Receivables: Interest 8,073,870 19,181,696 19,153,495 Securities sold 16,230,000 9,836,827 13,573,677 Capital shares sold 540,096 269,319 1,370,966 Dividends from affiliates 748 78,437 884 Prepaid registration fees and other assets 111,791 773,106 48,898 --------------- --------------- --------------- Total assets 769,257,298 1,196,630,094 1,178,980,602 --------------- --------------- --------------- Liabilities Unrealized depreciation on swaps -- 1,062,060 -- Payables: Securities purchased 11,840,115 -- -- Capital shares redeemed 5,176,417 2,022,270 1,872,656 Dividends to shareholders 534,676 3,484,422 3,149,130 Distributor 94,094 176,689 277,500 Other affiliates 45,924 98,356 145,546 Investment adviser 27,044 46,785 60,534 Accrued expenses -- 10,571 -- --------------- --------------- --------------- Total liabilities 17,718,270 6,901,153 5,505,366 --------------- --------------- --------------- Net Assets Net assets $ 751,539,028 $ 1,189,728,941 $ 1,173,475,236 =============== =============== =============== Net Assets Consist of Class A Common Stock, $.10 par value++ $ 2,665,535 $ 2,390,304 $ 2,201,209 Class B Common Stock, $.10 par value++++ 715,998 1,698,095 2,577,486 Class C Common Stock, $.10 par value++++++ 1,551,814 832,968 719,849 Class I Common Stock, $.10 par value++++++++ 2,491,734 10,042,115 5,660,434 Paid-in capital in excess of par 740,160,489 1,113,219,689 1,135,473,226 --------------- --------------- --------------- Undistributed investment income--net 478,583 1,146,028 588,742 Accumulated realized capital losses on investments--net (923,176) (19,650,220) (40,915,946) Unrealized appreciation on investments--net 4,398,051 80,049,962 67,170,236 --------------- --------------- --------------- Total accumulated earnings--net 3,953,458 61,545,770 26,843,031 --------------- --------------- --------------- Net Assets $ 751,539,028 $ 1,189,728,941 $ 1,173,475,236 =============== =============== ===============
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Statements of Assets and Liabilities (concluded)
Limited Maturity Insured National As of December 31, 2003 Portfolio Portfolio Portfolio Net Asset Value Class A: Net assets $ 270,167,021 $ 190,015,036 $ 231,579,082 =============== =============== =============== Shares outstanding 26,655,352 23,903,036 22,012,086 =============== =============== =============== Net asset value and redemption price per share $ 10.14 $ 7.95 $ 10.52 =============== =============== =============== Class B: Net assets $ 72,520,034 $ 134,935,189 $ 270,942,662 =============== =============== =============== Shares outstanding 7,159,975 16,980,945 25,774,858 =============== =============== =============== Net asset value and redemption price per share $ 10.13 $ 7.95 $ 10.51 =============== =============== =============== Class C: Net assets $ 156,496,673 $ 66,208,857 $ 75,709,589 =============== =============== =============== Shares outstanding 15,518,142 8,329,675 7,198,487 =============== =============== =============== Net asset value and redemption price per share $ 10.08 $ 7.95 $ 10.52 =============== =============== =============== Class I: Net assets $ 252,355,300 $ 798,569,859 $ 595,243,903 =============== =============== =============== Shares outstanding 24,917,335 100,421,150 56,604,342 =============== =============== =============== Net asset value and redemption price per share $ 10.13 $ 7.95 $ 10.52 =============== =============== =============== *Identified cost $ 739,869,563 $ 1,070,852,488 $ 1,077,628,099 =============== =============== =============== ++Authorized shares--Class A 150,000,000 500,000,000 375,000,000 =============== =============== =============== ++++Authorized shares--Class B 150,000,000 375,000,000 375,000,000 =============== =============== =============== ++++++Authorized shares--Class C 150,000,000 375,000,000 375,000,000 =============== =============== =============== ++++++++Authorized shares--Class I 150,000,000 500,000,000 375,000,000 =============== =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Statements of Operations
Limited Maturity Insured National For the Six Months Ended December 31, 2003 Portfolio Portfolio Portfolio Investment Income Interest $ 8,207,610 $ 33,773,104 $ 34,463,459 Dividends from affiliates 246,189 134,550 104,775 Dividends -- 103,657 -- --------------- --------------- --------------- Total income 8,453,799 34,011,311 34,568,234 --------------- --------------- --------------- Expenses Investment advisory fees 1,266,376 2,224,988 2,820,553 Professional fees 14,540 26,863 29,136 Account maintenance and distribution fees--Class B 140,137 548,101 1,096,740 Account maintenance and distribution fees--Class C 268,897 262,269 305,429 Account maintenance fees--Class A 133,642 235,487 257,008 Transfer agent fees--Class A 27,318 37,178 149,781 Transfer agent fees--Class B 10,504 34,829 84,506 Transfer agent fees--Class C 19,113 15,725 21,893 Registration fees 54,236 28,530 33,079 Printing and shareholder reports 13,280 26,918 25,599 Accounting services 108,627 184,475 177,857 Directors' fees and expenses 5,341 10,253 10,004 Transfer agent fees--Class I 26,162 162,337 50,664 Custodian fees 18,731 29,385 28,026 Pricing services 9,229 11,392 24,403 Other 13,774 27,441 29,428 --------------- --------------- --------------- Total expenses before waiver 2,129,907 3,866,171 5,144,106 Waiver of expenses (61,891) (32,801) (26,361) --------------- --------------- --------------- Total expenses after waiver 2,068,016 3,833,370 5,117,745 --------------- --------------- --------------- Investment income--net 6,385,783 30,177,941 29,450,489 --------------- --------------- --------------- Realized & Unrealized Gain (Loss) on Investments--Net Realized gain (loss) on investments--net (344,819) 1,412,675 318,018 Change in unrealized appreciation on investments--net (2,802,405) (21,175,873) (3,698,727) --------------- --------------- --------------- Total realized and unrealized loss on investments--net (3,147,224) (19,763,198) (3,380,709) --------------- --------------- --------------- Net Increase in Net Assets Resulting from Operations $ 3,238,559 $ 10,414,743 $ 26,069,780 =============== =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Statements of Changes in Net Assets Limited Maturity Portfolio
For the Six For the Months Ended Year Ended December 31, June 30, Increase (Decrease) in Net Assets: 2003 2003 Operations Investment income--net $ 6,385,783 $ 13,390,424 Realized gain (loss) on investments--net (344,819) 474,301 Change in unrealized appreciation on investments--net (2,802,405) 1,115,437 --------------- --------------- Net increase in net assets resulting from operations 3,238,559 14,980,162 --------------- --------------- Dividends to Shareholders Investment income--net: Class A (2,313,124) (4,590,844) Class B (591,229) (1,899,081) Class C (1,133,653) (1,287,536) Class I (2,343,705) (5,543,293) --------------- --------------- Net decrease in net assets resulting from dividends to shareholders (6,381,711) (13,320,754) --------------- --------------- Capital Share Transactions Net increase in net assets derived from capital share transactions 35,422,688 288,357,426 --------------- --------------- Net Assets Total increase in net assets 32,279,536 290,016,834 Beginning of period 719,259,492 429,242,658 --------------- --------------- End of period* $ 751,539,028 $ 719,259,492 =============== =============== *Undistributed investment income--net $ 478,583 $ 474,511 =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Statements of Changes in Net Assets Insured Portfolio
For the Six For the Months Ended Year Ended December 31, June 30, Increase (Decrease) in Net Assets: 2003 2003 Operations Investment income--net $ 30,177,941 $ 63,092,264 Realized gain on investments--net 1,412,675 18,978,718 Change in unrealized appreciation/depreciation on investments--net (21,175,873) 25,252,894 --------------- --------------- Net increase in net assets resulting from operations 10,414,743 107,323,876 --------------- --------------- Dividends to Shareholders Investment income--net: Class A (4,573,394) (8,594,352) Class B (3,179,499) (7,434,794) Class C (1,408,667) (2,290,564) Class I (20,999,802) (44,741,184) --------------- --------------- Net decrease in net assets resulting from dividends to shareholders (30,161,362) (63,060,894) --------------- --------------- Capital Share Transactions Net decrease in net assets derived from capital share transactions (60,352,342) (30,345,541) --------------- --------------- Net Assets Total increase (decrease) in net assets (80,098,961) 13,917,441 Beginning of period 1,269,827,902 1,255,910,461 --------------- --------------- End of period* $ 1,189,728,941 $ 1,269,827,902 =============== =============== *Undistributed investment income--net $ 1,146,028 $ 1,129,449 =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Statements of Changes in Net Assets National Portfolio
For the Six For the Months Ended Year Ended December 31, June 30, Increase (Decrease) in Net Assets: 2003 2003 Operations Investment income--net $ 29,450,489 $ 62,500,439 Realized gain on investments--net 318,018 23,064,897 Change in unrealized appreciation on investments--net (3,698,727) 8,215,548 --------------- --------------- Net increase in net assets resulting from operations 26,069,780 93,780,884 --------------- --------------- Dividends to Shareholders Investment income--net: Class A (5,178,519) (9,204,187) Class B (6,630,246) (16,020,155) Class C (1,711,469) (3,170,397) Class I (16,075,370) (33,985,291) --------------- --------------- Net decrease in net assets resulting from dividends to shareholders (29,595,604) (62,380,030) --------------- --------------- Capital Share Transactions Net increase (decrease) in net assets derived from capital share transactions (46,682,086) 79,473,855 --------------- --------------- Net Assets Total increase (decrease) in net assets (50,207,910) 110,874,709 Beginning of period 1,223,683,146 1,112,808,437 --------------- --------------- End of period* $ 1,173,475,236 $ 1,223,683,146 =============== =============== *Undistributed investment income--net $ 588,742 $ 733,857 =============== =============== See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights Limited Maturity Portfolio
Class A The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30,++++ Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 10.18 $ 10.14 $ 10.06 $ 9.86 $ 9.92 ---------- ---------- ---------- ---------- ---------- Investment income--net .09++ .24++ .32 .38 .37 Realized and unrealized gain (loss) on investments--net (.04) .04 .08 .20 (.06) ---------- ---------- ---------- ---------- ---------- Total from investment operations .05 .28 .40 .58 .31 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income--net (.09) (.24) (.32) (.38) (.37) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.14 $ 10.18 $ 10.14 $ 10.06 $ 9.86 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .48%+++ 2.77% 3.99% 5.96% 3.20% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .50%* .52% .56% .54% .50% ========== ========== ========== ========== ========== Expenses .52%* .53% .56% .54% .50% ========== ========== ========== ========== ========== Investment income--net 1.73%* 2.31% 3.13% 3.80% 3.72% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 270,167 $ 248,454 $ 140,744 $ 42,619 $ 39,090 ========== ========== ========== ========== ========== Portfolio turnover 31.35% 44.61% 74.74% 51.94% 51.42% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Based on average shares outstanding. ++++Effective April 14, 2003, Class D Shares were redesignated Class A Shares. +++Aggregate total investment return. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (continued) Limited Maturity Portfolio
Class B The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30, Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 10.17 $ 10.13 $ 10.06 $ 9.86 $ 9.92 ---------- ---------- ---------- ---------- ---------- Investment income--net .08++ .21++ .29 .35 .35 Realized and unrealized gain (loss) on investments--net (.04) .04 .07 .20 (.06) ---------- ---------- ---------- ---------- ---------- Total from investment operations .04 .25 .36 .55 .29 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income--net (.08) (.21) (.29) (.35) (.35) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.13 $ 10.17 $ 10.13 $ 10.06 $ 9.86 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .35%+++ 2.51% 3.62% 5.69% 2.94% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .76%* .78% .82% .80% .76% ========== ========== ========== ========== ========== Expenses .77%* .79% .82% .80% .76% ========== ========== ========== ========== ========== Investment income--net 1.47%* 2.10% 2.87% 3.55% 3.47% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 72,520 $ 83,886 $ 81,967 $ 31,480 $ 32,742 ========== ========== ========== ========== ========== Portfolio turnover 31.35% 44.61% 74.74% 51.94% 51.42% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Based on average shares outstanding. +++Aggregate total investment return. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (continued) Limited Maturity Portfolio
Class C The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30, Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 10.13 $ 10.09 $ 10.01 $ 9.82 $ 9.88 ---------- ---------- ---------- ---------- ---------- Investment income--net .08++ .19++ .29 .35 .34 Realized and unrealized gain (loss) on investments--net (.05) .06 .08 .19 (.06) ---------- ---------- ---------- ---------- ---------- Total from investment operations .03 .25 .37 .54 .28 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income--net (.08) (.21) (.29) (.35) (.34) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.08 $ 10.13 $ 10.09 $ 10.01 $ 9.82 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .25%+++ 2.52% 3.72% 5.59% 2.93% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .75%* .78% .82% .81% .76% ========== ========== ========== ========== ========== Expenses .77%* .79% .82% .81% .76% ========== ========== ========== ========== ========== Investment income--net 1.47%* 1.92% 2.91% 3.53% 3.46% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 156,497 $ 135,782 $ 1,596 $ 602 $ 308 ========== ========== ========== ========== ========== Portfolio turnover 31.35% 44.61% 74.74% 51.94% 51.42% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Based on average shares outstanding. +++Aggregate total investment return. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (continued) Limited Maturity Portfolio
Class I The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30,++++ Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 10.17 $ 10.13 $ 10.05 $ 9.85 $ 9.91 ---------- ---------- ---------- ---------- ---------- Investment income--net .09++ .27++ .34 .39 .38 Realized and unrealized gain (loss) on investments--net (.04) .02 .08 .20 (.06) ---------- ---------- ---------- ---------- ---------- Total from investment operations .05 .29 .42 .59 .32 ---------- ---------- ---------- ---------- ---------- Less dividends from investment income--net (.09) (.25) (.34) (.39) (.38) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.13 $ 10.17 $ 10.13 $ 10.05 $ 9.85 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .53%+++ 2.87% 4.10% 6.07% 3.31% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .40%* .42% .46% .44% .40% ========== ========== ========== ========== ========== Expenses .42%* .43% .46% .44% .40% ========== ========== ========== ========== ========== Investment income--net 1.83%* 2.44% 3.30% 3.91% 3.83% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 252,355 $ 251,137 $ 204,936 $ 191,481 $ 215,421 ========== ========== ========== ========== ========== Portfolio turnover 31.35% 44.61% 74.74% 51.94% 51.42% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Based on average shares outstanding. ++++Effective April 14, 2003, Class A Shares were redesignated Class I Shares. +++Aggregate total investment return. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (continued) Insured Portfolio
Class A The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30,++++ Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 8.07 $ 7.79 $ 7.69 $ 7.36 $ 7.79 ---------- ---------- ---------- ---------- ---------- Investment income--net .19+++++ .39+++++ .39 .37 .38 Realized and unrealized gain (loss) on investments--net (.12) .28 .10 .33 (.32) ---------- ---------- ---------- ---------- ---------- Total from investment operations .07 .67 .49 .70 .06 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.19) (.39) (.39) (.37) (.38) Realized gain on investments--net -- -- --++ -- -- In excess of realized gain on investments--net -- -- -- -- (.11) ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.19) (.39) (.39) (.37) (.49) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 7.95 $ 8.07 $ 7.79 $ 7.69 $ 7.36 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .96%+++ 8.77% 6.63% 9.74% .96% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .70%* .71% .72% .70% .68% ========== ========== ========== ========== ========== Expenses .71%* .71% .72% .70% .68% ========== ========== ========== ========== ========== Investment income--net 4.84%* 4.88% 5.10% 4.94% 5.10% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 190,015 $ 187,805 $ 161,110 $ 145,688 $ 99,326 ========== ========== ========== ========== ========== Portfolio turnover 21.93% 38.17% 32.78% 64.39% 94.08% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Amount is less than $(.01) per share. ++++Effective April 14, 2003, Class D Shares were redesignated Class A Shares. +++Aggregate total investment return. +++++Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (continued) Insured Portfolio
Class B The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30, Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 8.07 $ 7.79 $ 7.68 $ 7.36 $ 7.78 ---------- ---------- ---------- ---------- ---------- Investment income--net .17+++++ .35+++++ .36 .34 .34 Realized and unrealized gain (loss) on investments--net (.12) .28 .11 .32 (.31) ---------- ---------- ---------- ---------- ---------- Total from investment operations .05 .63 .47 .66 .03 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.17) (.35) (.36) (.34) (.34) Realized gain on investments--net -- -- --++ -- -- In excess of realized gain on investments--net -- -- -- -- (.11) ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.17) (.35) (.36) (.34) (.45) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 7.95 $ 8.07 $ 7.79 $ 7.68 $ 7.36 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .70%+++ 8.21% 6.23% 9.04% .57% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver 1.21%* 1.22% 1.23% 1.21% 1.19% ========== ========== ========== ========== ========== Expenses 1.21%* 1.22% 1.23% 1.21% 1.19% ========== ========== ========== ========== ========== Investment income--net 4.34%* 4.38% 4.58% 4.43% 4.56% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 134,935 $ 160,177 $ 182,241 $ 223,710 $ 276,154 ========== ========== ========== ========== ========== Portfolio turnover 21.93% 38.17% 32.78% 64.39% 94.08% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Amount is less than $(.01) per share. +++Aggregate total investment return. +++++Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (continued) Insured Portfolio
Class C The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30, Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 8.07 $ 7.79 $ 7.68 $ 7.36 $ 7.78 ---------- ---------- ---------- ---------- ---------- Investment income--net .17+++++ .34+++++ .35 .33 .34 Realized and unrealized gain (loss) on investments--net (.12) .28 .11 .32 (.31) ---------- ---------- ---------- ---------- ---------- Total from investment operations .05 .62 .46 .65 .03 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.17) (.34) (.35) (.33) (.34) Realized gain on investments--net -- -- --++ -- -- In excess of realized gain on investments--net -- -- -- -- (.11) ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.17) (.34) (.35) (.33) (.45) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 7.95 $ 8.07 $ 7.79 $ 7.68 $ 7.36 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share .67%+++ 8.16% 6.18% 8.99% .52% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver 1.26%* 1.27% 1.28% 1.26% 1.24% ========== ========== ========== ========== ========== Expenses 1.26%* 1.27% 1.28% 1.26% 1.24% ========== ========== ========== ========== ========== Investment income--net 4.29%* 4.31% 4.56% 4.38% 4.52% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 66,209 $ 66,089 $ 34,541 $ 14,392 $ 12,856 ========== ========== ========== ========== ========== Portfolio turnover 21.93% 38.17% 32.78% 64.39% 94.08% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Amount is less than $(.01) per share. +++Aggregate total investment return. +++++Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (continued) Insured Portfolio
Class I The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30,++++ Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 8.07 $ 7.80 $ 7.69 $ 7.36 $ 7.79 ---------- ---------- ---------- ---------- ---------- Investment income--net .20+++++ .41+++++ .41 .39 .40 Realized and unrealized gain (loss) on investments--net (.12) .27 .11 .33 (.32) ---------- ---------- ---------- ---------- ---------- Total from investment operations .08 .68 .52 .72 .08 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.20) (.41) (.41) (.39) (.40) Realized gain on investments--net -- -- --++ -- -- In excess of realized gain on investments--net -- -- -- -- (.11) ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.20) (.41) (.41) (.39) (.51) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 7.95 $ 8.07 $ 7.80 $ 7.69 $ 7.36 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share 1.08%+++ 8.88% 7.03% 10.01% 1.21% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .45%* .46% .47% .45% .43% ========== ========== ========== ========== ========== Expenses .46%* .46% .47% .45% .43% ========== ========== ========== ========== ========== Investment income--net 5.10%* 5.13% 5.35% 5.19% 5.33% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 798,570 $ 855,757 $ 878,018 $ 920,597 $ 972,420 ========== ========== ========== ========== ========== Portfolio turnover 21.93% 38.17% 32.78% 64.39% 94.08% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Amount is less than $(.01) per share. ++++Effective April 14, 2003, Class A Shares were redesignated Class I Shares. +++Aggregate total investment return. +++++Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (continued) National Portfolio
Class A The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30,++++ Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 10.54 $ 10.27 $ 10.15 $ 9.71 $ 10.22 ---------- ---------- ---------- ---------- ---------- Investment income--net .26+++++ .53+++++ .53 .52 .54 Realized and unrealized gain (loss) on investments--net (.01) .27 .12 .44 (.51) ---------- ---------- ---------- ---------- ---------- Total from investment operations .25 .80 .65 .96 .03 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.27) (.53) (.53) (.52) (.54) Realized gain on investments--net -- -- --++ -- -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.27) (.53) (.53) (.52) (.54) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.52 $ 10.54 $ 10.27 $ 10.15 $ 9.71 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share 2.38%+++ 7.98% 6.72% 10.04% .43% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .83%* .84% .87% .83% .81% ========== ========== ========== ========== ========== Expenses .84%* .84% .87% .83% .81% ========== ========== ========== ========== ========== Investment income--net 5.00%* 5.10% 5.30% 5.16% 5.50% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 231,579 $ 200,108 $ 137,225 $ 124,082 $ 86,701 ========== ========== ========== ========== ========== Portfolio turnover 12.28% 37.75% 35.75% 80.88% 108.43% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Amount is less than $(.01) per share. ++++Effective April 14, 2003, Class D Shares were redesignated Class A Shares. +++Aggregate total investment return. +++++Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (continued) National Portfolio
Class B The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30, Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 10.53 $ 10.26 $ 10.14 $ 9.70 $ 10.21 ---------- ---------- ---------- ---------- ---------- Investment income--net .24+++++ .48+++++ .53 .46 .49 Realized and unrealized gain (loss) on investments--net (.03) .27 .12 .44 (.51) ---------- ---------- ---------- ---------- ---------- Total from investment operations .21 .75 .65 .90 (.02) ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.23) (.48) (.53) (.46) (.49) Realized gain on investments--net -- -- --++ -- -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.23) (.48) (.53) (.46) (.49) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.51 $ 10.53 $ 10.26 $ 10.14 $ 9.70 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share 2.12%+++ 7.43% 6.18% 9.49% (.09%) ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver 1.34%* 1.34% 1.38% 1.34% 1.32% ========== ========== ========== ========== ========== Expenses 1.34%* 1.35% 1.38% 1.34% 1.32% ========== ========== ========== ========== ========== Investment income--net 4.50%* 4.59% 4.80% 4.67% 4.98% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 270,943 $ 321,477 $ 295,827 $ 227,592 $ 254,860 ========== ========== ========== ========== ========== Portfolio turnover 12.28% 37.75% 35.75% 80.88% 108.43% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Amount is less than $(.01) per share. +++Aggregate total investment return. +++++Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (continued) National Portfolio
Class C The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30, Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 10.54 $ 10.26 $ 10.14 $ 9.71 $ 10.22 ---------- ---------- ---------- ---------- ---------- Investment income--net .23+++++ .47+++++ .53 .46 .48 Realized and unrealized gain (loss) on investments--net (.01) .28 .12 .43 (.51) ---------- ---------- ---------- ---------- ---------- Total from investment operations .22 .75 .65 .89 (.03) ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.24) (.47) (.53) (.46) (.48) Realized gain on investments--net -- -- --++ -- -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.24) (.47) (.53) (.46) (.48) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.52 $ 10.54 $ 10.26 $ 10.14 $ 9.71 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share 2.09%+++ 7.48% 6.13% 9.33% (.13%) ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver 1.39%* 1.39% 1.43% 1.39% 1.37% ========== ========== ========== ========== ========== Expenses 1.39%* 1.40% 1.43% 1.39% 1.37% ========== ========== ========== ========== ========== Investment income--net 4.45%* 4.54% 4.76% 4.61% 4.92% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 75,710 $ 77,906 $ 52,822 $ 31,880 $ 30,303 ========== ========== ========== ========== ========== Portfolio turnover 12.28% 37.75% 35.75% 80.88% 108.43% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Amount is less than $(.01) per share. +++Aggregate total investment return. +++++Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Financial Highlights (concluded) National Portfolio
Class I The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended December 31, For the Year Ended June 30,++++ Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000 Per Share Operating Performance Net asset value, beginning of period $ 10.54 $ 10.26 $ 10.14 $ 9.70 $ 10.22 ---------- ---------- ---------- ---------- ---------- Investment income--net .28+++++ .56+++++ .62 .54 .56 Realized and unrealized gain (loss) on investments--net (.02) .28 .12 .44 (.52) ---------- ---------- ---------- ---------- ---------- Total from investment operations .26 .84 .74 .98 .04 ---------- ---------- ---------- ---------- ---------- Less dividends and distributions: Investment income--net (.28) (.56) (.62) (.54) (.56) Realized gain on investments--net -- -- --++ -- -- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions (.28) (.56) (.62) (.54) (.56) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.52 $ 10.54 $ 10.26 $ 10.14 $ 9.70 ========== ========== ========== ========== ========== Total Investment Return** Based on net asset value per share 2.51%+++ 8.34% 6.98% 10.32% .58% ========== ========== ========== ========== ========== Ratios to Average Net Assets Expenses, net of waiver .58%* .59% .62% .58% .56% ========== ========== ========== ========== ========== Expenses .59%* .59% .62% .58% .56% ========== ========== ========== ========== ========== Investment income--net 5.26%* 5.35% 5.55% 5.42% 5.74% ========== ========== ========== ========== ========== Supplemental Data Net assets, end of period (in thousands) $ 595,244 $ 624,192 $ 626,935 $ 653,685 $ 682,553 ========== ========== ========== ========== ========== Portfolio turnover 12.28% 37.75% 35.75% 80.88% 108.43% ========== ========== ========== ========== ========== *Annualized. **Total investment returns exclude the effects of sales charges. ++Amount is less than $(.01) per share. ++++Effective April 14, 2003, Class A Shares were redesignated Class I Shares. +++Aggregate total investment return. +++++Based on average shares outstanding. See Notes to Financial Statements.
MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 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 amended, as a diversified, open-end management investment company. The Fund's financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, 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 multiple classes of shares. Shares of Class A and Class I 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 A, Class B and Class C 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. Income, expenses (other than expenses attributable to a specific class) and realized and unrealized gains and losses on investments and foreign currency transactions are allocated daily to each class based on its relative net assets. 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 investment strategies both to increase the return of the Fund and to hedge, or protect, its exposure to interest rate movements and movements in the securities markets. * Financial futures contracts--The Fund's Portfolios may purchase or sell financial futures contracts and options on such futures contracts. 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. * Forward interest rate swaps--The Fund's Portfolios may enter into forward interest rate swaps. In a forward interest rate swap, the Portfolios and the counterparty agree to pay or receive interest on a specified notional contract amount, commencing on a specified future effective date, unless terminated earlier. The value of the agreement is determined by quoted fair values received daily by the Portfolios from the counterparty. When the agreement is closed, the Portfolios record a realized gain or loss in an amount equal to the value of the agreement. (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. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Notes to Financial Statements (continued) (d) Security transactions and investment income--Security transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on security transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Interest income is recognized on the accrual basis. The Portfolios amortize all premiums and discounts on debt securities. (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. (g) Expenses--Certain expenses have been allocated to the individual Portfolios in the Fund on a pro rata basis based upon the respective aggregate net asset value of each Portfolio included in the Fund. 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 FAM Distributors, Inc. ("FAMD" or the "Distributor"), 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 Maturity Insured National Combined Portfolios Portfolio Portfolio Portfolio Not exceeding $250 million .40 % .40 % .50 % In excess of $250 million but not exceeding $400 million .375 .375 .475 In excess of $400 million but not exceeding $550 million .35 .375 .475 In excess of $550 million but not exceeding $1.5 billion. .325 .375 .475 In excess of $1.5 billion .325 .35 .475 For the six months ended December 31, 2003, FAM earned fees of $1,266,376, $2,224,988 and $2,820,553, of which $61,891, $32,801 and $26,361 were waived for the Limited Maturity Portfolio, Insured Portfolio and National Portfolio, respectively. 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 Portfolio Class A Class B Class C Limited Maturity .10% .15% .15% Insured .25% .25% .25% National .25% .25% .25% Distribution Fees Portfolio Class A Class B Class C Limited Maturity -- .20% .20% Insured -- .50% .55% National -- .50% .55% Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., also provides account maintenance and distribution services to the Fund. The ongoing account maintenance fee compensates the Distributor and MLPF&S for providing account maintenance services to Class A, Class B and Class C 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, 2003, FAMD earned underwriting discounts and direct commissions and MLPF&S earned dealer concessions on sales of the Fund's Class A and Class I Shares follows: FAMD MLPF&S Portfolio Class A Class I Class A Class I Limited Maturity $2,911 $ 315 $32,890 $ 4,303 Insured $5,105 $4,799 $34,940 $38,638 National $4,781 $6,513 $35,678 $32,695 MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Notes to Financial Statements (continued) For the six months ended December 31, 2003, MLPF&S received contingent deferred sales charges of $234,041 relating to transactions in Class B Shares, amounting to $23,180, $87,402 and $123,459 in the Limited Maturity, Insured and National Portfolios, respectively, and $114,766 relating to transactions in Class C Shares, amounting to $82,057, $12,744 and $19,965 in the Limited Maturity, Insured and National Portfolios, respectively. Furthermore, MLPF&S received contingent deferred sales charges of $28,335 relating to transactions subject to front-end sales charge waivers in Class A Shares, amounting to $335 and $28,000 in the Insured and National Portfolios and $6,772 relating to transactions subject to front-end sales charge waivers in Class I Shares, amounting to $462 and $6,310 in the Insured and National Portfolios, respectively. In addition, MLPF&S received $12,117 in commissions on the execution of portfolio security transactions in the Insured Portfolio for the six months ended December 31, 2003. Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is the Fund's transfer agent. For the six months ended December 31, 2003, the Fund reimbursed FAM $8,196, $12,884 and $12,761 for the Limited Maturity, Insured and National Portfolios, respectively, for certain accounting services. Certain officers and/or directors of the Fund are officers and/or directors of FAM, PSI, FAMD, FDS, and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the six months ended December 31, 2003 were as follows: Purchases Sales Limited Maturity Portfolio $ 182,154,976 $ 171,031,352 Insured Portfolio 257,192,728 355,587,982 National Portfolio 137,981,789 207,186,954 Net realized gains (losses) for the six months ended December 31, 2003 and net unrealized gains (losses) as of December 31, 2003 were as follows: Realized Unrealized Limited Maturity Portfolio Losses Gains Long-term investments $ (344,819) $ 4,398,051 -------------- --------------- Total $ (344,819) $ 4,398,051 ============== =============== Realized Unrealized Insured Portfolio Gains Gains (Losses) Long-term investments $ 1,412,675 $ 81,112,022 Forward interest rate swaps -- (1,062,060) -------------- --------------- Total $ 1,412,675 $ 80,049,962 ============== =============== Realized Unrealized National Portfolio Gains Gains Long-term investments $ 318,018 $ 67,170,236 -------------- --------------- Total $ 318,018 $ 67,170,236 ============== =============== As of December 31, 2003 net unrealized appreciation for Federal income tax purposes were as follows: Gross Gross Net Unrealized Unrealized Unrealized Appreciation Depreciation Appreciation Limited Maturity Portfolio $ 4,608,867 $ 172,393 $ 4,436,474 Insured Portfolio 81,994,560 808,423 81,186,137 National Portfolio 78,305,738 10,986,772 67,318,966 The aggregate cost of investments at December 31, 2003 for Federal income tax purposes was $739,831,140 for the Limited Maturity Portfolio, $1,070,778,373 for the Insured Portfolio and $1,077,479,369 for the National Portfolio. 4. Capital Share Transactions: Net increase (decrease) in net assets derived from capital share transactions for the six months ended December 31, 2003 and for the year ended June 30, 2003 were $35,422,688 and $288,357,426, respectively, for the Limited Maturity Portfolio; $(60,352,342) and $(30,345,541), respectively, for the Insured Portfolio; $(46,682,086) and $79,473,855, respectively, for the National Portfolio. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Notes to Financial Statements (continued) Transactions in capital shares for each class were as follows: Limited Maturity Portfolio Class A Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 9,673,383 $ 98,216,745 Automatic conversion of shares 503,610 5,110,986 Shares issued to shareholders in reinvestment of dividends 148,326 1,505,471 -------------- --------------- Total issued 10,325,319 104,833,202 Shares redeemed (8,079,573) (81,988,967) -------------- --------------- Net increase 2,245,746 $ 22,844,235 ============== =============== Limited Maturity Portfolio Class A Shares for the Year Dollar Ended June 30, 2003++ Shares Amount Shares sold 19,163,398 $ 195,049,800 Automatic conversion of shares 599,540 6,100,091 Shares issued to shareholders in reinvestment of dividends 306,969 3,122,566 -------------- --------------- Total issued 20,069,907 204,272,457 Shares redeemed (9,539,525) (97,085,514) -------------- --------------- Net increase 10,530,382 $ 107,186,943 ============== =============== ++Effective April 14, 2003, Class D Shares were redesignated Class A Shares. Limited Maturity Portfolio Class B Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 783,009 $ 7,941,958 Shares issued to shareholders in reinvestment of dividends 38,634 391,809 -------------- --------------- Total issued 821,643 8,333,767 Automatic conversion of shares (503,844) (5,110,986) Shares redeemed (1,405,170) (14,253,413) -------------- --------------- Net decrease (1,087,371) $ (11,030,632) ============== =============== Limited Maturity Portfolio Class B Shares for the Year Dollar Ended June 30, 2003 Shares Amount Shares sold 3,419,780 $ 34,748,313 Shares issued to shareholders in reinvestment of dividends 120,074 1,220,502 -------------- --------------- Total issued 3,539,854 35,968,815 Automatic conversion of shares (599,877) (6,100,091) Shares redeemed (2,781,128) (28,284,229) -------------- --------------- Net increase 158,849 $ 1,584,495 ============== =============== Limited Maturity Portfolio Class C Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 4,700,749 $ 47,480,510 Shares issued to shareholders in reinvestment of dividends 76,078 767,953 -------------- --------------- Total issued 4,776,827 48,248,463 Shares redeemed (2,666,360) (26,919,753) -------------- --------------- Net increase 2,110,467 $ 21,328,710 ============== =============== Limited Maturity Portfolio Class C Shares for the Year Dollar Ended June 30, 2003 Shares Amount Shares sold 14,075,218 $ 142,489,128 Shares issued to shareholders in reinvestment of dividends 81,130 821,390 -------------- --------------- Total issued 14,156,348 143,310,518 Shares redeemed (906,813) (9,187,709) -------------- --------------- Net increase 13,249,535 $ 134,122,809 ============== =============== Limited Maturity Portfolio Class I Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 4,100,074 $ 41,583,009 Shares issued to shareholders in reinvestment of dividends 153,462 1,556,285 -------------- --------------- Total issued 4,253,536 43,139,294 Shares redeemed (4,029,208) (40,858,919) -------------- --------------- Net increase 224,328 $ 2,280,375 ============== =============== MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Notes to Financial Statements (continued) Limited Maturity Portfolio Class I Shares for the Year Dollar Ended June 30, 2003++ Shares Amount Shares sold 9,361,219 $ 95,197,425 Shares issued to share holders in reinvestment of dividends 334,427 3,399,346 -------------- --------------- Total issued 9,695,646 98,596,771 Shares redeemed (5,228,193) (53,133,592) -------------- --------------- Net increase 4,467,453 $ 45,463,179 ============== =============== ++Effective April 14, 2003, Class A Shares were redesignated Class I Shares. Insured Portfolio Class A Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 585,693 $ 4,635,352 Automatic conversion of shares 1,842,089 14,522,688 Shares issued to shareholders in reinvestment of dividends 285,108 2,250,393 -------------- --------------- Total issued 2,712,890 21,408,433 Shares redeemed (2,080,097) (16,382,859) -------------- --------------- Net increase 632,793 $ 5,025,574 ============== =============== Insured Portfolio Class A Shares for the Year Dollar Ended June 30, 2003++ Shares Amount Shares sold 1,950,736 $ 15,635,023 Automatic conversion of shares 4,209,407 33,525,703 Shares issued to shareholders in reinvestment of dividends 494,242 3,937,026 -------------- --------------- Total issued 6,654,385 53,097,752 Shares redeemed (4,057,088) (32,406,400) -------------- --------------- Net increase 2,597,297 $ 20,691,352 ============== =============== ++Effective April 14, 2003, Class D Shares were redesignated Class A Shares. Insured Portfolio Class B Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 673,661 $ 5,328,642 Shares issued to shareholders in reinvestment of dividends 186,710 1,472,471 -------------- --------------- Total issued 860,371 6,801,113 Automatic conversion of shares (1,842,089) (14,522,688) Shares redeemed (1,891,550) (14,873,787) -------------- --------------- Net decrease (2,873,268) $ (22,595,362) ============== =============== Insured Portfolio Class B Shares for the Year Dollar Ended June 30, 2003 Shares Amount Shares sold 4,003,377 $ 31,944,128 Shares issued to shareholders in reinvestment of dividends 426,816 3,396,402 -------------- --------------- Total issued 4,430,193 35,340,530 Automatic conversion of shares (4,210,678) (33,525,703) Shares redeemed (3,757,787) (29,873,911) -------------- --------------- Net decrease (3,538,272) $ (28,059,084) ============== =============== Insured Portfolio Class C Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 998,917 $ 7,909,230 Shares issued to shareholders in reinvestment of dividends 100,029 789,514 -------------- --------------- Total issued 1,098,946 8,698,744 Shares redeemed (959,099) (7,554,476) -------------- --------------- Net increase 139,847 $ 1,144,268 ============== =============== Insured Portfolio Class C Shares for the Year Dollar Ended June 30, 2003 Shares Amount Shares sold 4,603,403 $ 36,689,714 Shares issued to shareholders in reinvestment of dividends 153,209 1,221,255 -------------- --------------- Total issued 4,756,612 37,910,969 Shares redeemed (999,396) (7,980,994) -------------- --------------- Net increase 3,757,216 $ 29,929,975 ============== =============== MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Notes to Financial Statements (continued) Insured Portfolio Class I Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 1,007,409 $ 7,957,793 Shares issued to shareholders in reinvestment of dividends 1,162,698 9,181,005 -------------- --------------- Total issued 2,170,107 17,138,798 Shares redeemed (7,746,117) (61,065,620) -------------- --------------- Net decrease (5,576,010) $ (43,926,822) ============== =============== Insured Portfolio Class I Shares for the Year Dollar Ended June 30, 2003++ Shares Amount Shares sold 2,669,821 $ 21,281,651 Shares issued to shareholders in reinvestment of dividends 2,353,883 18,745,764 -------------- --------------- Total issued 5,023,704 40,027,415 Shares redeemed (11,649,682) (92,935,199) -------------- --------------- Net decrease (6,625,978) $ (52,907,784) ============== =============== ++Effective April 14, 2003, Class A Shares were redesignated Class I Shares. National Portfolio Class A Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 2,828,020 $ 29,741,627 Automatic conversion of shares 2,100,199 21,801,583 Shares issued to shareholders in reinvestment of dividends 247,256 2,571,358 -------------- --------------- Total issued 5,175,475 54,114,568 Shares redeemed (2,147,913) (22,285,576) -------------- --------------- Net increase 3,027,562 $ 31,828,992 ============== =============== National Portfolio Class A Shares for the Year Dollar Ended June 30, 2003++ Shares Amount Shares sold 1,817,741 $ 18,919,074 Automatic conversion of shares 4,211,990 43,907,704 Shares issued resulting from reorganization 2,781,396 28,790,872 Shares issued to shareholders in reinvestment of dividends 419,512 4,367,054 -------------- --------------- Total issued 9,230,639 95,984,704 Shares redeemed (3,612,689) (37,612,997) -------------- --------------- Net increase 5,617,950 $ 58,371,707 ============== =============== ++Effective April 14, 2003, Class D Shares were redesignated Class A Shares. National Portfolio Class B Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 673,852 $ 7,000,448 Shares issued to shareholders in reinvestment of dividends 280,637 2,914,401 -------------- --------------- Total issued 954,489 9,914,849 Automatic conversion of shares (2,101,767) (21,801,583) Shares redeemed (3,601,720) (37,303,344) -------------- --------------- Net decrease (4,748,998) $ (49,190,078) ============== =============== National Portfolio Class B Shares for the Year Dollar Ended June 30, 2003 Shares Amount Shares sold 3,808,847 $ 39,620,050 Shares issued resulting from reorganization 9,719,653 100,571,771 Shares issued to shareholders in reinvestment of dividends 661,896 6,880,683 -------------- --------------- Total issued 14,190,396 147,072,504 Automatic conversion of shares (4,215,216) (43,907,704) Shares redeemed (8,289,076) (86,180,280) -------------- --------------- Net increase 1,686,104 $ 16,984,520 ============== =============== MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Notes to Financial Statements (concluded) National Portfolio Class C Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 820,718 $ 8,538,705 Shares issued to shareholders in reinvestment of dividends 97,952 1,018,480 -------------- --------------- Total issued 918,670 9,557,185 Shares redeemed (1,113,370) (11,521,753) -------------- --------------- Net decrease (194,700) $ (1,964,568) ============== =============== National Portfolio Class C Shares for the Year Dollar Ended June 30, 2003 Shares Amount Shares sold 2,368,509 $ 24,696,245 Shares issued resulting from reorganization 1,042,309 10,790,909 Shares issued to shareholders in reinvestment of dividends 172,937 1,799,753 -------------- --------------- Total issued 3,583,755 37,286,907 Shares redeemed (1,337,070) (13,921,043) -------------- --------------- Net increase 2,246,685 $ 23,365,864 ============== =============== National Portfolio Class I Shares for the Six Months Ended Dollar December 31, 2003 Shares Amount Shares sold 1,237,785 $ 12,801,078 Shares issued to shareholders in reinvestment of dividends 811,709 8,438,316 -------------- --------------- Total issued 2,049,494 21,239,394 Shares redeemed (4,689,231) (48,595,826) -------------- --------------- Net decrease (2,639,737) $ (27,356,432) ============== =============== National Portfolio Class I Shares for the Year Dollar Ended June 30, 2003++ Shares Amount Shares sold 1,981,190 $ 20,668,840 Shares issued resulting from reorganization 2,488,551 25,766,020 Shares issued to shareholders in reinvestment of dividends 1,624,924 16,902,499 -------------- --------------- Total issued 6,094,665 63,337,359 Shares redeemed (7,943,755) (82,585,595) -------------- --------------- Net decrease (1,849,090) $ (19,248,236) ============== =============== ++Effective April 14, 2003, Class A Shares were redesignated Class I Shares. 5. Short-Term Borrowings: The Fund, along with certain other funds managed by MLIM and its affiliates, is a party to a $500,000,000 credit agreement with Bank One, N.A. and certain other lenders. The Fund may borrow under the credit agreement to fund shareholder redemptions and for other lawful purposes other than for leverage. The Fund may borrow up to the maximum amount allowable under the Fund's current prospectus and statement of additional information, subject to various other legal, regulatory or contractual limits. The Fund pays a commitment fee of ..09% per annum based on the Fund's pro rata share of the unused portion of the credit agreement. Amounts borrowed under the credit agreement bear interest at a rate equal to, at each fund's election, the Federal Funds rate plus .50% or a base rate as determined by Bank One, N.A. On November 28, 2003, the credit agreement was renewed for one year under the same terms. The Fund did not borrow under the credit agreement during the six months ended December 31, 2003. 6. Capital Loss Carryforward: At June 30, 2003, the Limited Maturity Portfolio had a net capital loss carryforward of $545,507, of which $119,413 expires in 2008 and $426,094 expires in 2009; the Insured Portfolio had a net capital loss carryforward of $19,667,073, all of which expires in 2009; and the National Portfolio had a net capital loss carryforward of $37,277,880, of which $23,598 expires in 2004, $2,310,368 expires in 2007, $15,425,491 expires in 2008 and $19,518,423 expires in 2009. These amounts will be available to offset like amounts of any future taxable gains. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Officers and Directors Terry K. Glenn, President and Director Ronald W. Forbes, Director Cynthia A. Montgomery, Director Charles C. Reilly, Director Kevin A. Ryan, Director Roscoe S. Suddarth, Director Richard R. West, Director Edward D. Zinbarg, Director Kenneth A. Jacob, Senior Vice President John M. Loffredo, Senior Vice President Robert A. DiMella, Vice President Peter J. Hayes, Vice President Walter C. O'Connor, Vice President Donald C. Burke, Vice President and Treasurer Brian D. Stewart, Secretary Effective January 1, 2004, Charles C. Reilly, Director of Merrill Lynch Municipal Bond Fund, Inc., retired. The Fund's Board of Directors wishes Mr. Reilly well in his retirement. Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent Financial Data Services, Inc. 4800 Deer Lake Drive East Jacksonville, FL 32246-6484 800-637-3863 Electronic Delivery The Fund offers electronic delivery of communications to its shareholders. In order to receive this service, you must register your account and provide us with e-mail information. To sign up for this service, simply access this website http://www.icsdelivery.com/live and follow the instructions. When you visit this site, you will obtain a personal identification number (PIN). You will need this PIN should you wish to update your e-mail address, choose to discontinue this service and/or make any other changes to the service. This service is not available for certain retirement accounts at this time. MERRILL LYNCH MUNICIPAL BOND FUND, INC., DECEMBER 31, 2003 Item 2 - Code of Ethics - Not Applicable to this semi-annual report Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-annual report Item 4 - Principal Accountant Fees and Services - Not Applicable to this semi-annual report Item 5 - Audit Committee of Listed Registrants - Not Applicable Item 6 - Reserved Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies - Not Applicable Item 8 - Reserved Item 9 - Controls and Procedures 9(a) - The registrant's certifying officers have reasonably designed such disclosure controls and procedures to ensure material information relating to the registrant is made known to us by others particularly during the period in which this report is being prepared. The registrant's certifying officers have determined that the registrant's disclosure controls and procedures are effective based on our evaluation of these controls and procedures as of a date within 90 days prior to the filing date of this report. 9(b) - There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 10 - Exhibits attached hereto 10(a) - Not Applicable 10(b) - Attached hereto Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Merrill Lynch Municipal Bond Fund, Inc. By: _/s/ Terry K. Glenn_______ Terry K. Glenn, President of Merrill Lynch Municipal Bond Fund, Inc. Date: February 23, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: _/s/ Terry K. Glenn________ Terry K. Glenn, President of Merrill Lynch Municipal Bond Fund, Inc. Date: February 23, 2004 By: _/s/ Donald C. Burke________ Donald C. Burke, Chief Financial Officer of Merrill Lynch Municipal Bond Fund, Inc. Date: February 23, 2004 EX-99.CERT 3 ex99cert.txt EX-99 CERT EX-99. CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Terry K. Glenn, President of Merrill Lynch Municipal Bond Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of Merrill Lynch Municipal Bond Fund, Inc. (the "Fund"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Fund as of, and for, the periods presented in this report; 4. The Fund's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the Fund and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Fund, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the Fund's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) disclosed in this report any change in the Fund's internal control over financial reporting that occurred during the Fund's most recent fiscal half-year (the Fund's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting; and 5. The Fund's other certifying officer(s) and I have disclosed, based on our most recent evaluation, to the Fund's auditors and the audit committee of the Fund's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Fund's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal control over financial reporting. Date: February 23, 2004 /s/ Terry K. Glenn Terry K. Glenn, President of Merrill Lynch Municipal Bond Fund, Inc. EX-99. CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Donald C. Burke, Chief Financial Officer of Merrill Lynch Municipal Bond Fund, Inc., certify that: 1. I have reviewed this report on Form N-CSR of Merrill Lynch Municipal Bond Fund, Inc. (the "Fund"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Fund as of, and for, the periods presented in this report; 4. The Fund's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the Fund and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Fund, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the Fund's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) disclosed in this report any change in the Fund's internal control over financial reporting that occurred during the Fund's most recent fiscal half-year (the Fund's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting; and 5. The Fund's other certifying officer(s) and I have disclosed, based on our most recent evaluation, to the Fund's auditors and the audit committee of the Fund's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Fund's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal control over financial reporting. Date: February 23, 2004 /s/ Donald C. Burke Donald C. Burke, Chief Financial Officer of Merrill Lynch Municipal Bond Fund, Inc. Exhibit 99.1350CERT Certification Pursuant to Section 906 of the Sarbanes Oxley Act I, Terry K. Glenn, President of Merrill Lynch Municipal Bond Fund, Inc. (the "Fund"), certify that: 1. The N-CSR of the Fund (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. Dated: February 23, 2004 /s/ Terry K. Glenn Terry K. Glenn, President of Merrill Lynch Municipal Bond Fund, Inc. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Merrill Lynch Municipal Bond Fund, Inc. and will be retained by Merrill Lynch Municipal Bond Fund, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. Exhibit 99.1350CERT Certification Pursuant to Section 906 of the Sarbanes Oxley Act I, Donald C. Burke, Chief Financial Officer of Merrill Lynch Municipal Bond Fund, Inc. (the "Fund"), certify that: 1. The N-CSR of the Fund (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. Dated: February 23, 2004 /s/ Donald C. Burke Donald C. Burke, Chief Financial Officer of Merrill Lynch Municipal Bond Fund, Inc. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Merrill Lynch Municipal Bond Fund, Inc. and will be retained by Merrill Lynch Municipal Bond Fund, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----